Comment by bashtoni
18 days ago
The British government closed this loophole because it's politically easier than the strategy which is actually needed: properly taxing assets.
This is much harder to evade - if you own most of Mayfair, you can't just move your assets elsewhere - they are very clearly tied to the location.
Of course, this would mean taxing powerful aristocrats, including the royal family. With their large majority, the British government had the opportunity to do this, but decided to take an easier path. The reason why this path was easier is now becoming clear to them.
As you pay more tax, you get less services, and I dont just mean, where you elect to avoid them. You get less (or none at this point) free childcare. No umemployment benefits if you get fired. No child benefit. You can't save as much in your pension.
Then there are the semi-elective things like healthcare, education, home security. These kinda dont work for the whole society. The rich are thus paying for their own out of pocket. But they are also paying for the semi-working system for everyone else.
I think introducing a wealth tax just to balance the books without rethinking who and how accesses public funds, will just end with the rich leaving. Some may say good riddance, but the UK budget is now beyond creaking and heading for collapse.
Oh and when I say "the rich", that probably covers many people here. IIRC earning 90k per year puts you in the top 1%. A 10-15 year experience NHS doctor is in that bracket.
People earning 90k aren’t “the rich” that are doing the most egregious tax avoidance. They’re still working class. They still have to work or face destitution.
The very top sliver who own the majority of the land and assets and who never need to work a day in their life are who must be looked at; that hereditary wealth needs to begin to find itself flowing into public services more and more.
They are, I fear, the ones that pay this tax. The actual millionaires will surely figure out how to avoid it, just as they did with all the other ones.
Of course this will be an unpopular comment, but when it comes to things like this .. have you ever simply looked up the total net worth of all billionaires in the UK, and divided it by the total number of people living in the UK? Like .. you need to do one single division between two numbers to prove that your idea of just "seizing and redistributing the rich people's wealth" will accomplish nothing you think it will. A single division is all it takes.
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millionaires looking at billionaires: "really, I'm not that rich, more middle class really"
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> IIRC earning 90k per year puts you in the top 1%.
According to the public data for 2023-2024, top 1% is around £180-200k, so you're off by quite a bit. £90k is around 5-6%. This is gross, not net.
In the U.S., the top 1% is around $570-600k according to 2024 census numbers.
Fine. I'll take top 5%.
In the mind of probably at least 75% electorate, the top 5% are filthy rich who should make up any tax shortfall. But also 90k puts you, I believe, out of reach of all the services I listed above.
I'm all for paying tax, and even more tax if need be, where I get equal access to services. But not when I'm literally excluded for paying more tax.
Interestingly, according to an FT article, high earners in the UK pay comparable amounts of tax as they would on the "high tax" continent. It is the low earners who oay substantially less, bringing down the effective average. But they in turn pay outsized housing rent, so arent better off either.
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To maybe explain the confusion, there’s a difference between national and global. I bet it is true that if you earn 90k/year in the UK then you are in the global 1%, but that is different from what most people in the UK mean when they talk about “the 1%”.
The rich benefit most from a stable society and the rule of law though.
No point owning most of Mayfair if you don't feel safe enough to enjoy your lifestyle.
And it's not just funding the police and courts that leads to this - it's making sure there aren't too many desperate people with no hope. ie paying unemployment benefit so people can live while looking for work - is all part of that stable society from which everyone benefits - but particularly the rich as they have more to lose.
It's why some much money ( doubious sources or clean ) ends up in places like London.
Often it's looted ( or comes from exploitation ) from unstable countries where the weak rule of law has allowed the looting ( corruption or whatever ), and then moved to London to ensure nobody can then steal it back directly or via political revolution.
Taxes are the price of civilisation - if you want the good life - you have to help support civilisation - not free load.
The rich generally derive their wealth from the labours of a healthy and educated population. In most Western countries, these are proceeded at least in part paid by taxes and amount to a massive subsidy to those who need labour. Arguably this includes the "free childcare" mentioned above.
“As you pay more tax, you get less services”
This is a lie. In US, most food our rules, legal system, government agencies (that are not direct transfers like doc security & Medicare) exist to protect properties and interest of the rich.
That higher income people are not seeing much of direct transfers does not mean they are not getting more benefits from the government. Even our bloated military and foreign policy is primarily still protecting US business interests globally. It’s not minimum wage peon that benefits from that. It’s owners of large capital
> This is a lie. [Followed by nonsense about other countries, rather than the UK]
I earn over £90k in the UK. It is very much true, a lot of things are "means tested".
Yes. Progressive taxation. That's the point. Tax those who can afford it, fund equal opportunity and a basic standard of living for those who can't. Pull society up from the bottom.
As much as one can complain about specific inefficiencies or not being able to send young Jasper and Tabitha to private school because of VAT and tapered tax relief, I do think we don't take it far enough.
The reason it not working is that we have stapled our personal wealth and economy to housing. 60 years of financiers pushing for higher lending limits with looser regulation resulted in more people able to "afford" a £1m house. That drags up all the prices.
There's no simple way to reverse it this distortion but it had a knock on effect: the generationally rich, the landed gentry through to farmers have become insanely rich, through no work but HODLling all the land until they got planning permission.
I agree, wealth tax is scary but not addressing how wealth works won't fix things either.
For now only earnings are taxed.
Earn £300k a year, you pay 65% on more than half of it, and obviously 45, 40, and so on of the first half of it)
Get £3 million from the stocks? You pay 20% (above £50k threshold)
People are obsessed with workers paying all their taxes and letting off the wealthy avoiding the most.
The royal family is exempt from a lot of tax laws.
There was a bit of a scandal a few years back at just how much input the Queen got to those sort of laws, but it didn't really have legs as everyone thought she was brilliant.
But if the same thing comes out about King Charles you can bet it's going to be a bigger stink.
Genuine question as I’ve been interested in the conversation around taxing wealth: how do we do it?
I assume a new government dept. has to be set up to oversee it. Or do the wealthy self assess? Are things like shares and investments valued once? Once per year? How is a company valued? How do you know if you qualify as wealthy? Do we value everyone’s wealth? Can’t the wealthy just relocate or move assets out of reach?
I don’t expect answers to this, I’m just thinking out loud as there seem to be a lot of challenges.
A few countries seem to have tried and continued to tax wealth but it seems far from proven and only seems to “work” in Switzerland, which is a bit of an outlier
Switzerland does it and my understand is they basically just ask you to fill in a tax return every year and say how much wealth you have (all the assets you own).
Presumably they do have a department of people checking this to make sure people aren't lying, but also Switzerland is a relatively high trust society, and taxes are reasonable, so people probably don't mind paying too much.
In the UK in 2025 I'm not sure this would work, people would try and evade it and the UK government isn't competent enough to stop them
I think by "asset" OP actually means "real property", otherwise the subsequent statement of "if you own most of Mayfair, you can't just move your assets elsewhere - they are very clearly tied to the location" doesn't really make sense. You could easily move corporations around, for instance, so the statement is only really true when applied to real estate.
This isn't limited to property.
Britain could just as easily tax profits on the sale of shares in British companies, regardless of the country of domicile of the company or individual that sold the shares.
We don't need wealth taxes, we just need parity between tax on earned and unearned income.
My answer to this (good) question is: do whatever banks do to value illiquid assets when they lend against them (this is how the wealthy largely have cash at all), then levy taxes accordingly. Hell if you want, add the taxes to the interest rate.
I think The Netherlands has it running quite OK.
You don’t need new govt. dept. tax authority is enough. You do your yearly tax statement.
In NL they have access to your bank accounts or more like banks and brokers are obliged to provide state of accounts as per 1st of January.
Downside is you pay wealth tax on „possible gains” not actual gains on wealth above 40k€. If you have mortgage it of course is deducted from value of your house or any debts that you have documented.
In case you think collecting watches can make you hide the wealth, there are of course tax authority checks most likely if your wealth suddenly changes.
The Netherlands is an accountant's wet dream. Everyone with assets here has a personal double-layered corporate structure where the assets are held by the one company, but they're nominally employed by the second one. Even cars for every-day use can be business-owned and then leased back to yourself. And the corporate tax rate is nowhere near the personal wealth tax, people here don't even bother with registering their assets in foreign holdings.
Just tax land and you'll get 80/20
I don’t think the wealth taxes, fundamentally workable because you have issues you raised above, but other things like liquidity and indivisibility of assets.
I think the simpler solution if simply passing along the original cost basis to heirs (and without documentation it’s assumed to be zero). That way people or even families can defer taxes on income, but eventually they get paid.
That Socialist hotspot, Texas, taxes property at 1.8%, vs. 0% in the UK. Can't inconvenience the feudal aristocracy (i.e. parasites descended from thugs), starting with Chuck von Battenberg, Sachsen, Coburg und Gotha.
The UK has council tax, which is quite similar to a property tax
It's capped. The Duke of Westminster is not paying 1.8% on his substantial feudal holdings in London.
Yeah but they have No Income tax right?
No, Texas residents pay income tax to the federal government. On a state level, yes, there is no income tax.
However, the tax burden in Texas is not significantly lower than a state like California.
Wait are you suggesting that we tax assets instead of income?
There's been a big shift of rich people avoiding taking pay or dividends. Instead they get paid in stock, and then get interest free loans secured on that stock to actually spend money.
It's a loophole the mega-rich are using to avoid tax.
The other thing that's happened is that a lot of the mega-rich have lobbied to gradually chip away at inheritance taxes. So again they just pass the asset, paying a fraction of the taxes they'd have paid had they been a "normal" tax payer.
And one of the big things they've got? No capital gains on those stocks when passed to children.
So yeah, we need to tax assets as well as income. Because anything that's not taxed the rich just funnel money into it to avoid paying tax.
Not just rich people. Here in estonia small startups like mine pay minimum tax, and reinvest the rest in company.
> There's been a big shift of rich people avoiding taking pay or dividends. Instead they get paid in stock, and then get interest free loans secured on that stock to actually spend money.
They have a stockholding in a firm, and the firm pays CIT on income earned. That sounds fair.
> The other thing that's happened is that a lot of the mega-rich have lobbied to gradually chip away at inheritance taxes. So again they just pass the asset, paying a fraction of the taxes they'd have paid had they been a "normal" tax payer.
Why should my kids be liable to pay a tax when they inherit my house? That house was bought by my income on which PIT was duty fully paid. Again sounds very fair to me.
> And one of the big things they've got? No capital gains on those stocks when passed to children.
Again sounds fair to me.
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I think taxing assets is a horrible idea, but the simple solution to all of this is simply not having any step up in basis when assets are transferred to heirs - that way the tax eventually gets paid even if it’s deferred.
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It's not a revolutionary idea. That I know of, the Netherlands does it, somewhat. How it works is: rather than taxing capital gains, with its myriad loopholes and counterloopholes, you tax assets directly: assume a neutral sort of "risk-free" rate of return, and then tax a percentage of that. E.g. assume yearly return of 1% on cash and savings, 6% on other assets, etc, then levy tax of 30% on that (past a tax-free allowance of 25k€ per person).
Simple, and more effective!
Americans become idiots when it comes to tax, unable to understand even the simplest concepts or fathom that things might have been possibly implemented elsewhere.
Hell even Switzerland taxes global assets. You just declare your stocks, property, etc at some instantaneous value and that’s that. Capital gains aren’t taxed.
The system is easy to cheat and until recently it was possible for HNW people to get a bespoke deal when moving there. But the tax rate is low enough and the risk is high enough that it’s more beneficial to just pay.
I would consider it very destabilizing idea and an affront to fairness really.
As an example, Wouldn't that mean that if my startup raises a round of 1m for 10%, my NW would go to 0 to 9m. 6% of that would be around 0.5m, and 30% tax would mean I would have to pay 162,000 EUR in taxes.
As a cash poor founder how do you suggest I pay that.
That's why taxing income and not wealth has been the norm.
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Yep - Cayman Islands, Isle of Man, Channel Islands, British Virgin Islands etc etc.
It's these that need to be tackled - not just because of tax evasion, but because they are also a large part of the workings of organised crime.
The real solution to the UK’s stagnation is accepting the truly politically difficult truth - the UK is getting poorer, year after year. The empire is long dead and gone, and their number 1 growth company and success story of the last decade is OnlyFans, a global smut purveyor.
The UK needs to radically reduce its social safety net and simultaneously cut taxes, at least for new companies and small businesses. The only way out is real, sustained, long term growth and innovation. Stealing ever more of a shrinking pie is already running out of steam.
Privatisation and attacking social security does not work, it just makes the wealthy even wealthier.
Not the solution is fair taxation every trade made in the country, if you make business in a country you need pay taxes there for the transactiona made there.
Otherwise you just extract value out of the country, without giving back.
To me there is no worse thievery than tax evasion, it's literally robing a nation.
The US continues to be a magnet for entrepreneurs around the world. We just increased the max amount for 0% tax rate for successful startup investments to $15 million in profit (lookup up QSBS expansion). Our pie is so incredibly large, and growing, that we can tax a small percent of income to provide a very large safety net.
This takes a long time to get - you have to sacrifice now to get the future growth
Why do so many people think that cutting social safety nets is a cheat code?
With the exception of certain pension benefits there isn't much money flowing into these programs to begin with.
Its so stupid.
There are loads of people not participating in the economy because they do t have money, just give them money to spend.
The multiplier effect means it pays for itself.
Doesn't apply to the super rich where the money is just hoarded.
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> Why do so many people think that cutting social safety nets is a cheat code?
The people who don't (currently) need them see them as a waste.
If the state only paid for defense and the justice system, there would be very little reason to tax!
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> The UK needs to radically reduce its social safety net and simultaneously cut taxes, at least for new companies and small businesses. The only way out is real, sustained, long term growth and innovation. Stealing ever more of a shrinking pie is already running out of steam.
I was under the impression they had done that already.
https://en.wikipedia.org/wiki/United_Kingdom_government_aust...
Though one can't help but think it wont be radical enough for conservatives until we simply dispose of those unable to work through some dystopic mechanism or other.
This was a long time ago. Since then we've been running full speed in the opposite direction.
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Oh wow I had no idea OnlyFans is from UK. Always thought it was US.
>The UK needs to radically reduce its social safety net and simultaneously cut taxes
Unfortunately that is not a popular opinion in the UK. They want to tax everything, taxing the rich is popular among voters which is why they are doing it. And again the consequence have long been known or told. They are doing it anyway.
Most of the street in London is empty. UK is either number 1 or number 2 in millionaires fleeing the country after China. Property pricing are falling somewhat not because of more supply but because those asset are being sold as part of those moving abroad.
> Most of the street in London is empty.
I live there and this is just wrong.
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