'Why we need a wealth tax' | Free Lunch on Film
A well-designed net wealth tax can raise revenue and tackle inequality, argues the FT's Martin Sandbu. But critics say a wealth tax is hard to value, unfair to savers and inefficient. Welcome to Free Lunch on Film where unorthodox economic ideas are put to the test. Sign up for Martin Sandbu's Free Lunch newsletter, ft.com/newsletters.
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"Won't somebody think of the suffering of the rich!?" - Blue sweater woman
Right? Also gotta love when she said no tax has been abolished ever and therefore we shouldn't reintroduce the previously abolished wealth tax. HMMMM...
God that blue shirt woman really riled me up. All the issues she says would be caused for rich people with a wealth tax are the same the poor get. They’re told “if you don’t have a cash inflow then get back to work, make sure you have enough savings, this is your fault.”
Oof and then the well we’ll just avoid it or leave. Such a sneering threat.
If you want to keep your inherited castle then get a job!
So it wasn't just me. She's extremely annoying - instead of providing her own ideas or entertaining the other perfectly reasonable suggestions, she's just shooting everything down. And some of her arguments are trivial at best.
or just sell that f.cking villa and buy a smaller one. the difference is enough for your whole live to pay the tax. f.ck them.
Let's hope karma returns her a favor
If you want to live in a well functional country you have to pay the costs. I am proud to pay my taxes in Norway. I consider it an investment in safty, good education, professional health systemes etc. I want my country to be a well functional place to live. Big hugs 🇳🇴
@D C That's right. In the UK we seem to want something for nothing. The UK is already below average amongst successful OECD countries for its tax burden. The US is lower but has largely private healthcare. The real problem with a skewed wealth distribution is that it is economically inefficient. The wealthy can only spend so much each year and any surpluses tend to go into assets like property and shares, with increased demand pushing up prices. This then has a negative effect on the economy, particularly from higher rental costs.
@Sean Downey Explain. How is it immoral? That doesn't make any sense. Also, net worth isn't a guess, its a valuation done on a basis defined by tax law.
@D C How is that? The UK is below average amongst successful OECD countries for tax burden compared with GDP. The US is lower but they don't have a properly funded health service. Perhaps you prefer a dog eat dog society where those who are not capable of holding down a job are just left to rot, but many of us expect a level of decency in our society.
@D C Complete nonsense. Why should society pay you anything? If you don't want to take part in society then perhaps you should be excluded. Your selfish me, me, me only attitude is grotesque and the insurance based system that you refer to only works by excluding a proportion of the population.
@Sean Downey Hardly greed, just common sense. A wealth tax can only realistically be applied to the wealthy and that as a minimum would be family's with net assets over about £1 million. The problem that the UK has at present is that there is a inefficiently skewed distribution of wealth. The wealthy are unable to spend enough. They always have a surprise of income and that surplus tends to go into the purchase of assets such as shares and property and the increasing amounts being diverted here tends to push up prices. Working people then have to pay increasingly higher rents and their disposable income then gets drained with a knock on effect in a downward spiral on the working economy for jobs and business.
My income tax rate alone is already 49.5% how much more tax must I pay the Dutch Government?! 😅😂
The moment when the lady wearing blue described it as ‘terribly cruel’ that millionaire retirees might have to ‘change their lifestyle’ in order to create some cash to pay a proposed wealth tax. She doesn’t know the meaning of cruel…
You dont consider kicking people out of their homes to be cruel?
"Cruel" can mean different things to different people. In this case, imagine working hard your entire life so that you can retire comfortably, then the government ORDERS you to pay a huge amount of money just because your house is nice and expensive. If you don't have the cash, then you have to sell that house. Pretty cruel to me.
@@killectronewday8585 we are talking about wealth tax not home eviction. Many people working extremely hard on lower incomes are genuinely facing home evictions despite doing everything they can to make ends meet, with no safety nets to fall back on. People in the top 1% of wealth ownership will always have options, even in the face of a wealth tax. The desperation people at the bottom are facing is not due to their lack of input, far from it - they are working hard all their lives and end up with nothing. The economy desperately needs rebalancing, in a fair, calm, and carefully considered way.
@@bocanjm215 whole industries will evolve around this to circumvent wealthy people having to sell their houses, e.g. renting unused rooms via platforms such as airbnb - this will mean that 'dead' assets will now be contributing more to the economy rather than just sitting there stagnant. Many people on lower incomes are already having to do this just to make ends meet. Also banks will front the money to older people in return for a percentage of the properties value, this already exists and again it is mostly people with smaller assets who have to use this model today to pay for care etc - there will always be ways around having to sell the property.
Picture this, you were born in a beautiful historical palace (say worth 20 millions) full of art and memories from generations of your family. Your father before dying and being able to pass anything on to you dies in ruin because of bad investments. Because you also had most of your wealth tied in your father's business you also go bankrupt. Now you face a 1% wealth tax on your family home (i.e. 200k a year). The home is yours, your family owned it for generations, it has all your memories and history, but the state wants its 200k a year, so pay up or move somewhere else, you are not cash-rich enough now to live here. Imagine a similar situation where you are a widow and you have to deal with that in the last years of your life. People need to be able to feel secure in their own homes, that at least no matter what they can live there. If you wanna tax wealth, tax productive assets that make money. If you don't want housing speculation, tax the houses people don't actually live in, don't tax the only home that someone has.
This is the first balanced news article I’ve seen for a long time
Its because the FT think its so unlikely to happen that they let him make it, so they can 'appear' fair and unbiased
You know shit’s bad when the FT is putting out content on a wealth tax.
If we were to introduce a wealth tax we would then need to be able to better identify ownership of trust property and other similar interests. This is how the majority of wealth is held and unfortunately, the vast majority is offshore. Thanks City of London.
This is what the vast majority of people do not realise, that the wealthy are so wealthy that they are able to legally give away their wealth, in order to avoid paying taxation on it, whilst simultaneously retaining legal control of that wealth.
Oy Vey! Don't mention the City of London, talk about London instead. Keep them confused.
change the motivation, the tax system says earn more pay more, the answer is staring you in the face.
You're a moron. London is part of the AEI which means they report financial accounts held by foreigners to their respective countries. Your critique stems from ignorance.
@@Davos-st8ok☝🤓
We wouldn't even be having this conversation if countries hadn't basically legalised tax avoidance and evasion, allowing multi-national corporations to get away with effective Corporation Tax rates in the low single digits whilst SMEs have to pay the full whack (because they can't afford to pay for creative accountants). We have enough taxes already, the problem is that governments aren't collecting them.
🤔
change the motivation, the tax system says earn more pay more, the answer is staring you in the face.
It is quite obvious that the western governments will have to charge a wealth/capital tax because the governments are not going to get much income tax when companies are paying minimum wage knowing that the government will pay universal credit to make up people's incomes. That is the reason that the rich are keeping their assets in "foundations" or off their personal balance sheet in off shore companies. Switzerland has a wealth tax where you pay 0.2% on your net assets depending on the canton you are resident in. That is the reason that people keep undisclosed bars of gold to avoid the capital tax and inheritance tax.
I have noticed some small/medium businesses being taken over by big company's ( probably offshore) . So that real profit generated is redirected offshore avoiding taxes. Its all such a mess.
@@chiquita683 by who? - themselves :)
@@chiquita683 They are, they get voted out if they are thought to be doing a bad job.
@@meiko_kaji you everywhere on this, maybe this video is directly talking to you. pipe down and present a rational debate than throwing your ignorance on every comment.
we can make it punishingly hard for them to realise those hidden assets.
Maybe instead of a wealth tax, just look at the tax on the books and how people avoid them. Or do we assume people will be honest with this new tax ?
There is already a push to eliminate tax havens with a global corporate tax rate
It would lead to the same ending. You gotta have a certain amount of money to be able to avoid taxes successfully. So if a bill was passed doing that you would see alot of billionaires/millionaires standing against it
@@katana2k .. which has achieved very little.
It's not that they're dishonest, it's that there are deliberate loopholes to support certain purposes. For people with a liquid net worth of between $1m to $25m, they are great and cause the changes they are intended to make. However, for people with far higher net worths, they present opportunities to reduce tax. A possible solution is to put a cap on these loopholes. For example, there are tax deductions on property if you develop affordable housing. Many of the rich spend billions on developing large luxury residential skyscrapers but just not sell the apartments so they can benefit from these tax deductions. Add a cap of say $20m, and suddenly it's more beneficial to billionaires to build affordable housing instead of empty towers.
That was discussed towards the end of this video..
What I understood from this video is as below: 1) You make money through business or other means and pay income tax. After that you save some money and buy non performing assets like jewelry and art while paying sales tax/vat/gst/ other taxes. And 1 year later as per the wealth tax rules you will have to pay taxes for owning these non performing assets. 2) If you are a middle aged, monetarily successful person and choose to purchase home for your children to own once they grow up, then you will be taxed for owning those homes as they are part of your wealth legally even though you have already paid all the relevant taxes while purchasing the homes. Kindly correct me if I am wrong in the above scenarios. Note: I just thought of the above 2 examples where I believe wealth tax is not a justified tax. There are many more scenarios which could show that the wealth tax is an unjustified money grabbing mechanism rather than legitimate need of the society like regular income taxes and other various taxes.
Don't forget that no one knows how much something non-monetary is worth unless it's sold. That means the govt will appraise it for the maximum possible, while the market will pay the least possible. The govt will claim your jewelry, art, etc., is worth more than it actually is and tax you accordingly. When you are forced to sell it to pay the tax, you won't get a refund. Also note that a wealth tax requires the govt knowing everything that you own. How will they do that? What level of invasion will they have into your life that can track it for everyone? And how much will such a state apparatus cost? The new taxes they extract may only cover the cost of 'doing business' (not to mention the erosion of the economy and disincentive for future transactions) meaning no problems were actually solved.
So I'm from the Netherlands and the Netherlands has the worst wealth inequality in the world with a Gini Coefficient of 0.902. To better visualize this, consider the fact that the top 10% controls 60% of net wealth in all of the Netherlands. Do you know what else the netherlands has? A wealth tax. So does it tackle inequality? I would wager it does not, else my country wouldnt have such a bad gini coefficient.
The reason why the rich got richer is bc when the state prints money, it goes to those who produce the products that ppl have to buy. The concentration of wealth followa the concentration of production. It will go on as long as the big companies continue to eat up the small shps and producers.
change the motivation, the tax system says earn more pay more, the answer is staring you in the face.
No, that is not true. Wealth has always gone to the rich. That is why Marx called free enterprise, "Capitalism". Because the guy with the capital wins. In the 1960's, when America was great, we had 90% income tax on people and companies along with great infrastructure and schools. California had a 6% property tax that funded the greatest university system in the history of the world. Reagan killed it and America has suffered every since.
@@homergee3381 Hahaha keep dreaming. The answer is staring you in the face, because who makes the rules are the rich themselves
@@acton7150 Why does a channel with zero content have 6 subscribers acton7150? Monopolies are the problem because they accumulate all the wealth, eventually we all get owned by those who make the rules.
When the state prints money it increase the price of assets. Not people who produce things. If you own assets you become richer for doing nothing.
People with income above 5 million euros/year are exempt from showing publicly their detailed earnings and debts and must declare taxes using a special platform, all this is in Portugal.😂😂😂😂
I often find those people who try and dismiss a wealth tax have a vested interest in keeping one from happening.
It is glaringly obvious that the gap between the very rich and the very poor has become an enormous chasm that needs to be bridged. It is not just the job of one government to do something about this but all governments as wealth is being generated in a global economy which cannot be controlled by any single government. What is needed to cope with this problem is a new form of global governance that addresses the obscene inequalities that currently exist globally. It is essential to to this as a matter of urgency as the climate crisis, the threat of further pandemics and unsolved conflicts are set to make the situation much worse than it is at present triggering a massive rise in migration and the destruction of poorly built physical infrastructure and loosely held together social structures. We have no other choice but to get to work on the abolition of extremes of wealth and poverty in order to ensure the future stability of civilisation which now finds itself at a critical juncture.
@@meiko_kaji Uh, it's glaringly obvious when I see tent-cities, and armies of broken, impoverished people, and when I get perpetually panhandled on the street. And actually, it has never brought to mind any consideration of personal underachievement. What the "achievement" it does bring to mind is, isn't there a better way to "achieve" fixing social ills than just me putting a buck in a cup and side-stepping past a rough-sleeper?
The article itself proclaims that only £400 would be available to each household. This doesn't bridge some massive wealth gap. Also, the focus of your position is wrong if you want to improve the lives of the majority. Being envious of the most wealthy does not help the population as a whole gain wealth. You need to focus on policies that increase the wealth/living standard of the majority in the long term. Look at the data for China from 1990, the wealth gap has increased massively, but over the same period your saw the greatest increase in people pulled out of poverty ever. The investment banker in the video shows the opportunity available in the UK. He was from a poor family. Create a society with a good average standard of living with relatively high levels of opportunity, and it will out perform a society that achieves a tiny distribution of wealth by taxing the richest, out perform in terms of making the majority better off. Also, a society with greater investment in achievement will be more likely to generate the technological advancements needed to beat climate problems.
getting all the goverment in the world to agree on something would be immpossible.countries, cities counties and even villages cant even agree on anything
They might agree on paper, but definitely welcome wealthy to invest in their country
Is it fair for small island countries that the only way they can compete is to have low taxes? Like why would any one bank or invest in the Cayman Islands if taxes are the same as in the US? What happens to the people that are cayman nationals if that money leaves?
One important point is that we don't add wealth taxes on top of existing tax. If you want to institute a wealth tax, you should eliminate other taxes such as inheritance taxes on the wealthy. Make one tax that applies to everyone who has say 10 million or more, no loopholes. That would be a start.
Nope. The point is to generate more tax revenue, not to reduce beuracracy
The big question is how is this going to address inequality, in a sense how is this going to change the situation of the poor.
One obvious answer is that government debt is reduced, and austerity can be avoided. Stop making the poor suffer whilst the rich accumulate wealth.
Where do you think the taxes go
@@Abc123hdbrit's well known that the state isn't capable of running itself properly
@@viwelolwane the idea that the rich will share their money if allowed to keep more of it is a fantasy
The wealthy doesn't actually have a proper income, they have their wealth (principal) which they borrow against, generating positive cashflow. Instead of a wealth tax, it would be a lot easier to implement a cashflow tax, since all cashflows are recorded and can be easily identified both on and offshore.
I agree with this. Or even some kind of interest rate tax on loans made against capital assets that the wealthy would have to pay annually.
My opinion of Merryn Somerset Webb has fallen several points while watching this piece.
You just noticed? She's been talking out of her backside for years!
In 2007, Warren Buffett famously complained that he pays a lower rate of tax than his secretary. Fifteen years later and that hasn't changed. I'd happily bet than in another fifteen years it will still be the case. I suppose it can be fun to theorise like this but until there's a significant shift in our political landscape these ideas will remain just that.
Hmmm. Wonder why he didn't offer to pay more taxes voluntarily? I'm sure he is a bigger man than his cohorts, so why wouldn't he?
@@rayweil9942"Why doesn't the person advocating a fairer tax system pay just pay more themselves?" Maybe because that would do nothing to address the problem he's highlighting. Also, governments can't budget on the benevolence of billionaires, best they just pay a fair rate of tax.
Merrim's comment about having never seen a tax being abolished is missing the point. The suggestion was that a wealth tax could reduce other taxes, not remove them entirely.
Merrim has a fairly crummy attitude toward the whole thing; the gov't is incompetent, the rich are persecuted, etc. Maybe she thinks the widening wealth gap is good and the starving masses ought to just leave the idle rich to their art collections. If she thinks a wealth tax is cruel, wait until she sees what happens without it.
Merryn has a beautiful track record of being wrong, a good rule is to always do the opposite of what Merryn says.
Since when has a new tax reduced another tax? Govt has never met a tax it didn't like, and if it can get a new one, it has no incentive to reduce others unless it is somehow punished not to do it.
I am not against it BUT we should check if reform of existing tax systems and loopholes could spare us the trouble of another tax that could be avoided and bring new troubles like "how to define wealth". I have a friend that inherited his great-uncles house and he had to go to court because the value of the house was priced so high he couldnt pay the inheritance tax without going into considerable debt and he even considered to not inherit at all for a house that had to be renovated extensively.
the fun fact about the people working at OECD (to device strategies to make people and companies pay taxes) is that they do not pay taxes on the wage they receive for working at the OECD. it is always good to make regulations that don't apply to yourself
well it kind of makes sense, no conflict of interest.
Also they’re talking about a wealth tax, you’re talking about an income tax. Those are two separate things.
We had a wealth tax before. Look in the 1960s and 70s. Its a very bad idea because administering it is very hard. Consider how you can apply inheritance tax. Have you ever considered - why we did not charge an inheritance tax on King Charles? That would have raised tons of revenue. So instead of coming up with superficially appealing ideas - we need to figure out how we can make sure that the current rules are applied efficiently.
To my opinion just a wealth tax will not solve the problem . Wherever there ist a loophole to avoid taxes, this will be used. Governments should agree on harmonized corporate and income taxes in order to avoid unnessesary competition. A part of this tax should be paid directly into a separate Account for special projects, especially economic infra structure. This could be invested in assets as well to raise more investments. These funds should be administrated together with an Economy/Industry council out of representatives from the various industrial associations as well as trade associations and trade unions. A bit like the industry council in Japan METI, but not top down, but in coordination with ministry for economics and direct advice on how these funds should be invested for the national infra structure. This would be a win win situation for all, Independently from current Ideologies.
Wealth tax is inefficient, there will always be loopholes to avoid it, and it is also unfair to those who actually work to increase their wealth. Plus, how to make sure the money flows from rich to poor people through the governments? Governments already have big budget from where they waste lots of money. Inequality is only solved sustainably by increasing social responsibility and awareness and increase financial knowledge on how to manage own money and income, but these 2 are hard to achieve and on the long run only
A wealth tax would be great, because currently especially in the U.K., income tax is unfair due to the fact that the wealthy quite often don’t earn relatively a lot through an “income” but through their asset wealth. I think in the U.K. we really need to lower the percentage of income tax taken from the bottom earners significantly. Basic rate is currently 20% on income of 12-50k? Let’s make it 10% on 12-40k, 20% on 40-60k, 35% on 60-80k and 45% on 80k-100k and 55% on 100k+.
Tax is a political issue as well as a numbers thing. People see redistributive taxation of any sort as being about taking collective responsibility. The symbolism of this tax is much more important than the revenue. Although it should be carefully designed to maximise the public benefit.
@2:10 countries removing "wealth tax" @9:40 "I've never seen a tax abolished, not once, ever..." 🤦♂️
It's only bloody obvious we should tax those filthy rich🤞🏻🤞🏻🤞🏻✌ And u can spare me that they'd move some place else or invest less - it's all a load of rubbish, the only way they'd suffer would be them ending up having 2 luxurious yachts/jets etc instead of 3.
Hahaha keep dreaming u poor commie
“… I have been in this business for a long time, but I have never seen a tax abolished …” Except for wealth taxes.
Would love to see a sequel, commenting on the tax cuts that were announced last week..
The combined wealth and dividend taxes in Norway is almost like a confiscation of the assets. The Norwegian wealth tax is skewed and too high. Norwegian private investors cannot compete with foreign investors and the Norwegian state (who pays no tax). The effective tax rate on dividend can be 100% when wealth taxes are included.
Well, that's the reason why we would never see a Norwegian Spotify, Nokia, HM, Ericsson, Ikea or something alike the amazing companies and startups that have come out of the other Nordic countries. It would be specially hard to create something like Spotify in Norway, which was worth millions while still having negative revenue.
@@felipesuarez5041 Norway is one of the richest countries per capita in the world. They obviously aren't doing to badly with all of their progressive tax systems. While they are one of the richest they also have some of the best quality of life as well as general happiness levels even though they spend nearly 6 months in darkness
@@benfulford3943 I am not saying anything about the quality of life in Norway, I am saying that if you are planning to innovate or create a company, Norway is not the place to do it. Besides everybody knows that Norway's wealth is because of oil, not because of the tax system. Sweden had the same tax system in the 70's and 80's and in the 90's they had to drop it, because they realized they were becoming poor.
Great article. As said at the end - when society becomes so unequal that it becomes a mainstream discussion point then the politicians will act, but not before. However they will only have a fairly small window in which to act before public anger leads to them taking action themselves. As things stand inequality is growing and the greater the crises we face - be that covid or climate change - the faster the growth in inequality. There are a minority of super-rich who recognise this - like the Gates's and Buffets of this world - but too few as it currently stands.
I agree with you. We also need to factor in the incredible capacity of the wealthy to manipulate public opinion. One side effect is voters simply staying home.
Look at history and Putin. Buy politicians who fund police and security and laws to keep poorer in their place. Get the middle class to police everone below them by bribing them with tidbits like marginal rate tax cuts.
If the public tries to take action against the super-rich, the super-rich _will_ flee.
Gates and Buffet +++use charities as tax havens, they are still in full control are less regulated grow there wealth through shrewd charitable investing and get high praise for the deception. Mircosoft and Berkshire Hathaway do the opposite to the charity so its PR only. Tax their personal wealth on a sliding tax scale just like the rest of us, they're not special.
Let them. Good bye. good luck moving that housing estate you own. And historically, what's happened isn't that they flee. Its that they end up defenestrated or 12 inches shorter. Which is a good reason for putting in a wealth tax before it gets that far. I certainly don't want to live through times like that.
11:40 "it's incredibly cruel..." But what it's not incredibly cruel to do the same to the poor? 🤷
I think a wealth tax would be good, but not because it will somehow magically fix inequality. But we have an overarching income tax and a patchwork of inconsistent wealth taxes on individual asset types. It would be better to draw together property taxes, capital gains, tax on interest, stamp duty etc into a unified, consistent regime with a single tax rate and consistent rules. Far from being overcomplicated, it would simplify the mess we have now. And it would allow a rebalancing of taxation away from income. Taxing people for having stuff instead of doing stuff. Finally, in some cases it would mobilise underused assets that are kept idle because of inertia in their owners. E.g. keeping a house or a shop empty would be more painful, so this could press owners to use or sell their idle assets
This is a good argument
Best comment sir
In the meantime the Tories give millionaires a tax cut.
It wouldn't matter if they used or sold the assets. The tax would be the same. The incentive would be to get the assets appraised at a very low amount. That luxury mansion? For wealth-tax purposes, it's worth 5 bucks.
rich people pay zero tax likes jeff bezos or elon musk or trump. they own the wealth, take low interest loans against their assests for lifestyle spending. the value of their assests appreciates over time ( property, gold, shares etc) more then the interest on the loan. so, the rich keep getting richer. while sheeple pay tax on their income before they can touch it.
Love your take on this issue!
It's crazy that some argue that the rich are too heavily taxed. Most of their money is offshore, in property or in trusts so they would not be taxed on their true worth.
Your guest, I forget his name, said that any list of the highest earners, is totally different from a list of the wealthiest people, this group is far more wealthy than the highest earners. Very wealthiest people do not earn income and do not pay much income tax. They receive dividends, rents, increases in capital gains, etc. Unearned income. Yes, I think there should be a wealth tax.
The way the proponents of this idea presented the idea in this video made it sound like a pretty feasible idea. Just focusing on the top few thousand richest people/families who are "ultra-millionaires" makes a great deal of sense. A lot of good can be done for those at the very bottom with that money.
Amazing how "rich" always seems to be someone who has more money than the person being interviewed
@@benrae9044 which is why we should let the top global experts on wealth taxes - for example Emmanuel Saez and Gabriel Zucman - advise politicans on the best way to decide the boundaries of the tax. A good example of this was the Elizabeth Warren 2020 presidential campaign, who was advised by the two names I mentioned. She proposed that the top 0.1% of households (a net worth of $50 million or more) would be taxed [2% on every dollar above $50m] and [6% on every dollar above $1 billion]. It would bring in $3.75 trillion ($3,750,000,000,000) over 10 years. Very well put together, and quite tidy. The point here is that you'd quickly start to run out of "people being interviewed" because there simply aren't that many people who have a net worth of $50m+.
It wouldn't go to those people at all. Like tax payers money isn't going to them now... LOL.
@@MRkriegs the way things are now don’t have to be the way they are forever. politics changes things, every now and again
Basic tax rates in the UK are 20% , most people pay this, why not all?.
It’s very simple: if we had a truly progressive tax system, financial inequality wouldn’t have soared to historic levels. As if we should be taking advice from elite, rich economists from privileged backgrounds who have advised our systems into this dysfunctional state.
Merryn Somerset Webb claims that she has "never seen a tax abolished, not once" - yet this very same video discusses how wealth taxes in a handful of European countries were abolished, including specifically by Emmanuel Macron in France in 2017
any Politian in any country in the world can do this and that with tax , but as we have seen just recently with lizz Truss even good ideas to grow the economy can be fatal to their political career. Lizz Truss meant well but the public and markets didn't want a bar of it, but doesn't mean that in the future it may be welcomed and a viable way forward.
You explained Net Wealth tax = Wealth - Debts, won't that just promote debt borrowing?? If I had a lot of assets and I know I will fall in the New Wealth Tax zone, I'll try to acquire more debt by keeping my assets as collateral. Why can't there be a Wealth Tax irrespective of debt?? If someone owns assets worth $10 Million or more apply a Super Tax on them say 2% or something?
Maybe there could be a conditional exception to the asset net wealth tax for business owners and executives. If the company they run pays the lowest worker (employee and contractors included) are above a certain threshold in proportion to their own compensation (including stocks and bonuses) and none of the workers are on any income based welfare programs like food stamps, then these executives won't need to pay the wealth tax. This may encourage them to pay their worker more and act as a PR boost for their company. For a large company, the tax revenue from higher paid workers may be even more than the possible revenue gained from a wealth tax on the executives.
Just imposed a one-off wealth tax using a wealth ladder system. If individual reached wealth of 10M then taxed at 1%, 50M at 2% and 100M and so on at 4-5%. Its horrible if wealth tax are imposed anually.
How about making the inheritance tax system work... Like making Mogg, Sunak and Johnson pay?
I am not an economist, but one thing I learned is that 'real wealth' should never be personalised. The rich people I knew, never owned their wealth; is there a difference in enjoying your wealth despite that its ownership is 5 trusts/companies away and on paper belongs to your cleaner? Another issue, why after people, whereas corporate wealth is 'free floating' over the planet... is morale more than responsibility?
A tax on wealth should be to balance the budget only!!!!!!
It’s very hard to valuate art, private business, etc….unless you want to sell or insure. 🤔
Really hate the “hard admin” effort argument. Bruh people are paid to do that work. Also it’s not like they can’t base the tax provisions on previous iterations or currently existing ones, all you’d need to do then is make modifications to suit the country’s aims. The tax being “unfair” to cash strapped people, especially to landlords, is the reason for why the tax is being proposed. Houses for leasing aren’t productive assets, and so are stocks. Previous tax cuts were intended so that people would invest into the society and make productive assets but that hasn’t happened. Hence, the wealth tax would force people who did not fulfil the intended purpose of tax cuts to either make productive investments, or redistribute their assets to the rest of society.
workers who actually work, i.e. they get money for the time and labour they put in, and don't own shares of the company should pay no income tax at all ever. tax should be paid on income-generating assets, such as land, buildings, capital, patents, etc. the worker already contributes to society with their time, sweat and tears.
Following WW II, the U.S. had a marginal tax rate on wealth above 90%. And the nation thrived. This is a tax rate which has dropped significantly. I don't know where one contributor claims particular taxes don't go away. And didn't President Macron eliminate the wealth tax?
Should there be any corporation tax along with wealth tax?
Everyone is discussing who must pay tax, but nobody is asking what happens to that tax money
Norway and Switzerland's strong economic positions are not due to a wealth tax, one is due to nationalised oil and the other is a glorified world bank
Bingo.
Would it not be more effective to increase the disposable income of the poorer individuals? Raise the threshold for tax free allowance, reduce the NI burden and work to increase efficiency - cheaper transport, less burden for bills via better insulation and sustainable energy production. If the government is truly interested in levelling out the playing field, perhaps increase the efficacy of its current taxes rather than just introducing new taxes. The ultra wealthy do not pay their fair share, middle class and working class folk have to bear the burden
Well with that all your doing is reducing the pot by which services can be provided. So goodbye NHS and free schools, or so long firemen, policemen and armed forces. There needs to be a state to provide public services and uphold social civility. Personal responsibility isn’t universal, but is very arbitrary.
It is not mutually exclusive. The solution is not one of those but a combination. There is a distinction between well paid, hard working people and ultra rich or very well paid people like top managers. Those that can influence the economy and politics and also those that take decisions but are shielded from the consequences of their decisions.
The government is certainly NOT interested in Levelling Up, that was a Genocide Johnson and ‘collective cabinet government’ ruse.
europeans and now amrikis wont understand all this. There is a reason why Indian cities have more electric buses (much cheaper than diesel ones) than all of USA. the upword mobility in european society was hindered by the brit caaste system. what do you think potter in harry potter means ??
There is no point getting a bigger tax-collection bucket if we're just going to drill big holes around the halfway mark. Likewise, there's little point getting a bigger bucket if the content is just going to be wasted on unproductive expenditure. There is, however, absolutely a case for more taxation of the wealthiest in society, most of whom don't actually work anyway. The amount of wealth disparity in countries like the US and UK hasn't just appeared out of nowhere, it has been created by policy choices and social conditioning. The only way to address it, if indeed with agree it is a problem, is through policy choices which are designed to counter the causes of the problem. Further, a big BIG part of the problem is a complete lack of accountability within our political systems which feeds the kind of political dysfunction which creates and allows these problems to continue in the first place. We've had decades of astronomical wealth growth for those at the top whilst the everyone else has experienced stagnation and decline. Yet, every time a crisis comes along it is those suffering the stagnation and decline who are expected to pay whilst the former group are protected. How on earth did so few people go to prison in the aftermath of the Global Financial Crisis? Because the system is rigged by those who create these crises to protect them when they cause the next crisis. Who paid for it all in the end? Those who were hurt the most but had the least direct involvement. Most average people still haven't really recovered from the GFC. But the top 0.1% - 5% have never been better off. We literally live in a system which incentivises risky, even darn-right stupid and fraudulent activities by the rich because there is absolutely zero accountability for their class strata because no matter what the result is the same - poor and middle earners picking up the tab. It's Capitalism for the poor, Socialism for the rich.
A wealth tax is honestly stupid if you think about it.
Another thing to think about is how universal it is to avoid (or at least dread) paying taxes (even among people calling for expanded government spending). For example I don't know anyone who would consider putting "the government" in their will, or would give to it, like one might give to a charitable organization. My own view of a good charity is one where most of the money goes to the people the charity is trying to help, and not so much to the people who work there (and especially not to people who only used to work there, but are now retired but still being paid by getting a pension). I enjoyed the discussion on wealth tax and will continue to think about it (guarded support), and it would also be nice to hear a discussion on specifically what is wrong with the levels of inequality (there certainly is a problem with poverty but is the argument that there is also a problem because the rich are so much richer than the middle class than before?).
The problem is that money follows money and it never stops. The more you get the faster you'll accumulate it. So when the common people are ripped off then next will be those in the top 10%. When that happens you want to be in the top 1% cause you, as a 10%er, have no change against a 1%er. You might have had a good ride for a long time but at the end you are bone dry.
Would a wealth tax force the rich to invest in more productive assets, or would it push down the price of less productive assets?
It would certainly encourage people with assets that generate no income to move abroad, sell part of their assets or transfer their assets to income producing ones. For example, growth companies that pay no dividends, would need to start paying dividend or higher salaries to their owners just to pay for the tax.
Lady in the blue has clearly never had to worry about where her next meal will come from or whether she'll go without heating through winter, bc that's what's cruel. The way I see it, we can do it, we just have to make all the considerations and make sure we do it properly, keeping as many people if not happy, at least not actively riotous.
Having studied tax philosophy and worked for a Ministry of Taxation I cannot underline this enough: a wealth tax levied on people's total assets is the worst kind of tax imaginable. It easily leads to ridiculous marginal tax rates as in Sweden where they started taxing people over 100% of their income. Just don't. There are much better ways of taxing assets. Also, the fact that wealth tax encourages spending and punishes investments should scare everyone. Lots of economists think/claim it is a great idea - but they have no clue about how taxes actually work. 7:47 is an excellent example. What is the problem if someone is a zillionaire in stocks and never ever sells them? Its a massive investment in companies that provide jobs to lots of people who pay taxes and pay taxes themselves. The zillionaire never gets any benefit from the shares. He/she only provides risk money that keeps lots of people employed that are on average productive and create a solid tax basis for everyone. What's not to like? Its as if investments are a loss to anyone - its not - its what makes the economy grow and adds welfare. If shares are sold off you can clip it with a capital gains tax. This is the right time for taxes to step in; when you spend - not while you invest. Otherwise the tax will only deplete the amount of capital investments in an economy - making us all poorer. Finally, the example mentioned of a multi-millionaire paying 5K in wealth tax is totally crazy - either the tax gives a decent revenue running into hundreds of millions or it will cost more to have it than not.
You can't discuss wealth tax without discussing the means by which this wealth is created! Lots of wealth are made on the back of the government, bailouts, subsidies, the concept of "too big to fail" and many other ways (let alone lobbying for more anti wealth tax laws). The means that the majority of ppl are not able to have access to. Plus that anti-wealth tax ppl are missing one important point, that has been mentioned in this video, which is that wealth tax is healthier to the overall economy than just taxing the income. Especially in these days. Inflation is hitting all time highs, income is not increasing, yet still taxable, ppl are left with money that has less purchase power with time, more working hours, less health care, more recession, more expensive stuff, and the loop continues. The value must be seen in other figures, not just GDP and numbers in banks. it must be discussed in healthcare, housing, quality of life, unemployment rate, etc. Otherwise, you will have the whole country suffering for the sake of the top 1% not to pay some tax that is not gonna affect their life in anyway. (which what is happening basically)
@@chiquita683 read my comment again pls. that's what I meant by the "means of this wealth creation! " many ppl do not name it loopholes, they called it being an "entrepreneur" or "successfully increasing wealth."
i find this ignorant. how is taxing the one percent gonna help the poor. show me this first then am all in for it.
It baffles me that so many common people defend the rich.
it should because they would rather than defend the government. the tax money is gonna end up in the government coffers and how are they gonna manage it to benefit the poor. the poor have got lots of experience with government promises.
Actually after watching the whole argument I'd agree. Can't see ANY party voting for it other than maybe the Green Party, when do you think they'll gain power?
wealth tax plus a land value tax. A wealth tax reduces inequality in a way income tax doesn't ANYMORE.
I would definitely recommend this video to a public finance student
The fundamental problem post-Brexit is off-shore tax evasion, where the richest own nothing personally, all held on offshore/blind trusts in different tax jurisdictions ie tax havens. Needs to be illegal to be resident and do so. Either believe in the country or leave.
As long as people who are affected by a wealth tax are not tied to the country and have the opportunity to leave the country and travel elsewhere with their skills and capital so the tax system is subject to competition. Then it's fine with me. But, perhaps the focus should be turned and instead focus on how to ensure that existing tax revenue are used and allocated efficiently by the government. Every thriving society needs a Hank Rearden who feels fairly treated and sees that his tax revenue is being used effectively, without him society will decay.
they won't though cause people don't just uproot and move cause they can. Especially below the super rich.
'Hank Reardon' So you're a moron who has no idea how an economy actually functions.
@@aminulhussain2277 Thanks for your reply. You are welcome to elaborate on what you mean by that.
Am pretty sure very wealthy people have the options of multiple passports.
@@rayweil9942 Yes, they probably can, but that is because they are citizens who have something to offer and who are valuable to society.
In answer to the idea they would move too Portugal. High wealth people create their own unique problems for a city. They cause house prices to become unaffordable, they buy up homes to rent on AirBnB. They buy business, farms , vineyards. They privatise beaches, marina's and forest walks. Local politicians soon realise that they are a unmitigated headache. There is no such thing as trickle down economics. Portugal would soon introduce a wealth tax. As for moving to Dubai etc. They are welcome to it, 40 degree heat and sand storms. If you taxed them a bit extra, they would still live in the UK. Because in comparison, everywhere else is rubbish.
Inequality is not an excuse to over tax another whole sector that's functioning well. I think inequality is about skills of what you want to do, values and know how. It's often blamed on the rich which I think is wrong.
No. Just like income tax. Starts with the top 1% and before you know it, middle class paying 35% of their income. The wealthy are always provided a loophole.
What are you talking about? it's just a negative comment with nothing to add. Besides, if you're paying 35%, of you're income, it means you're doing very well
@@jimo1150 not as well as the top 1% (who can escape paying taxes legally)
The author got its facts wrong. There still is a wealth tax in France, it's called IFI and is levied on real estate.
Yeh that's what I thought. The French experience has been an encourgaement for the idea of a Land-Value Tax in the U.K.. But it could never happen, Brit voters will never be that sensible.
We would not need a wealth tax if asset prices were not artificially inflated through private banks money creation & negative real interest rates.
spot on
The objection sating its hard to value tgjngs, doesn't stop the tax office doing it. Calling it intrusive is joke.
Isn’t the problem more that people don’t reinvest their wealth back in the economy? Having hoards of cash and investments that aren’t used to aid the economy but just sit in someone’s account seems to be the problem. 🤨 We should incentivize more capital investments that sustain and grow the economy.
According to the ONS, 60% of UK net wealth is in land which is the easiest asset class to tax
People would continue to avoid taxes as much as they can, and governments would mismanage any they get.
Just start implementing a LVT (Land Value Tax). Even the Tax Hawk Milton Friedman liked it. Most people's wealth is in land anyway. Taxing your overall wealth, that includes stuff like cars and horses, discourages buying of that stuff. You'll loose jobs and slow the economy.
Precisely. LVT: "Cinderella", "the love that knows no name" etc. Very well studied by economists. Therefore, Brit voters will never want it.
how are average Joes gonna be able to afford a house then
Cars and horses generally aren't included in wealth taxes (unless they're owned as an investment) it tends to be about targeting capital, so things you own in order to make a profit from, over a certain amount, say $50m. Undervaluing your assets to avoid tax can be penalized by ensuring the sale price of the property be the same as the declared price to the tax man. Of course there are a few issues with this too, and wealth taxes only really work at a global scale, but it's clear the level of wealth inequality is getting out of hand.
@@etobillion7805 The LVT would make homes more affordable. And as had been remarked elsewhere, no-one would suffer thru inability to pay. The plight of "property-rich, cash poor old people" can easily be tackled by deferring the tax payment until death.
Instead of trying to tax people more, how about the government starts spending its money more wisely
Three words: LAND VALUE TAX. - Much easier to value than 'wealth' writ large. - Much harder to evade, (you either own a plot of land or you don't and the government knows that, you can't hide it in the Cayman Islands). - Reduces/stabilizes rental prices, (if you the raise rent then you admit that your land is worth more and therefore will be taxed more). - Could raise huge amounts of revenue, eclipsing that of a wealth tax, which can be used to reduce taxes on income i.e. peoples time and effort. - Encourages productive usage of land, (if you buy land and are simply waiting for the value to increase then you will be taxed while you wait). - Progressive and mitigates inequality, (The more valuable your land holdings the more you'll be taxed). - Proven to work in places from Alaska to Singapore. - Widely accepted by people from all across the political spectrum and economics profession to be a preferable way of raising tax revenue. This needs to be talked about much more. It's not a silver bullet but it would solve a lot of problems in the UK economy if a government just had the guts to do it.
A "land value" tax has been tried many times throughout history via amount of windows or fireplaces etc...people avoided the tax by building with less fireplaces than needed or boarding up windows which always came at a cost to renters (often lower income) in the form of negative health benefits. There is ALWAYS a trade off! Those avoiding paying "their fair share" are often doing so because they're permitted, regularly a "loophole" was written into legislation as a result of supporting someones campaign. Rather than discovering ways to increase revenue (which again will come with a negative trade off) how about the discussion starts with reducing fraud, waste and abuse?
The amount of wealth tax can not compensate the amount of legal tax avoidance multi internationals are doing. The issue comes due to the conflict of interest politicians have where MOST of them will not implement legislations closing loops holes for multi corporates as they will want jobs (yes jobs not a job) from them when they finish their political careers. Just look at George Osborne and Philip Hammond now. This wealth tax will not work when most wealthy people already have financial structures where they don't legally "own" their wealth for tax avoidance and hidding assets from their spouse due to divorce like an offshore which again the Brits set up to favor the high net worth. Another issue is social behaviour, even you give some more money to them, a lot will use them for others things which may not going towards "stepping up" in their social standing, e.g spend on drugs and hookers. If you look at Asia, personal tax are relatively low Vs the West, this is because you don't want a population to simply claim benefits and have no incentivea to better their lives. Just look at Asia now, they are legitimately buying the West AFTER the West had robbed them out of their wealth. Is like two runners, where one runner had broken the legs of the other but some how during the relay, the disadvantaged team is winning the race, one has to wonder is the other team is running at all?
It's not the worst idea but it seems fixing loopholes to make wealthy people/companies actually pay the taxes they should be paying but aren't would have a bigger impact and be easier/less expensive to implement. If this was implemented with as many loopholes as the current taxes it'd likely be a relatively expensive to collect tax that would hit folks worth millions to tens of millions but mostly be avoided by the richest of the rich.
I pay personal income tax on a sliding scale but because the scale stops for the rich it's open season on the rest of us, close this loophole because it makes them unstoppable gods.
If we didn't distribute wealth unequally in the first place we wouldn't need to tax it away, which is just a patch but doesn't fix the root problem.
It’s 💯 needed, when certain people are spending £35,000 a day on holidays to the Maldives etc when people are freezing in their homes - then a wealth tax is quite simply needed. However, even though I am someone on the opposite side to the rich I would still agree that wealth tax shouldn’t be aggressive, like anything it should be well thought out.
We used to have this crap for fourty years in my country. Thing is that at the end you'll have two guys freezing in their homes and one guy hungry in Maledives.
Ahh so you're gonna take 35k away from the starving people of maldives and give it to your government? How cruel
@@mastersinr If that 35k actually went to the people of the Maldives you'd have a point, but it will go into the pockets of the multinational that owns the resort.
@@ferguscampbell5828 the idea that the "ruling class" takes all applies everywhere for you, right?
A must have for all countries. Full support.
Like the idea very much, doubt any government would have the courage to implement it.
many did, many failed. Personal taxation is a different from company taxation, let companies thrive but tax people the same and the motivation will change completely.
Wealth tax has been tried multiple times in many different countries and always failed. When an already successful country implements a wealth tax, it remains more or less successful _despite_ that tax, not because of it.
How so? I mean, what are the mechanisms that cause a wealth tax to be a drag on the economy? The Netherlands have a form of wealth tax (though no capital gains tax for individuals) and they seem to be doing fine.
Great video. As far as I understand, the MMT people would say a wealth tax is not needed to fund government expenditure but is primarily for social/redistributive reasons.
Wealth tax should first be paid by those who advocate for it. Do unto others as you want it done unto you.
Wealth will move to where it is least taxed. The question should be: Do you want wealth working in your community or somewhere else? Fair tax is a much better idea.
That the FT is talking about wealth taxes, tells me that its time has come
@18:41 how long were you waiting for the gold McLaren to go by?
Interesting overview, but in the end not convincing that a wealth tax would achieve anything. I see it as a way to punish the well-off rather than focusing on fixing what is not working well. As someone who grew up on the other side of advantage and who has done well financially (lots of personal sacrifice and hard work), if a wealth tax is passed, I am prepared to leave the country I grew up in (Canada) in search of a better place where hard work and creativity are appreciated. The talk alone of a wealth tax makes me want to leave.
Here’s one for you… VAT is charged on all aspects of renovating property from paying for labour to buy materials and services however newbuilds are VAT exempt This should be reversed i.e. renovations should be exempt from VAT (value added tax 20%) and newbuilds should be charged VAT….. that way people will be encouraged to renovate repair insulate and extend existing buildingsCreating more living space out of the existing building stock and more energy efficient buildings which is far more kind to the environment… also. Why not cut ourt spending on BOMBS & BULLETS. Then you want have to steal so much money from citizens th fund things that are designed only to murder maim and destroy life
One problem with valuing a Pension Plan, is that would be unfair compared to unfunded pensions (like my public sector pension, plus the state pension when I get there). My pension has no fund value as such, so it would be unjust to treat holders of funds differently.