Coffee House

The dangerous attraction of wealth taxes

28 September 2012

I’ve written about the deceptive attraction of wealth tax in my Telegraph column today, and I wish I was wasting my time. Once, you could say it was an idea so flawed that it stood no chance of getting into government. In the coalition era, there is no such thing.  Tory ministers will wave through an idea they regard as nuts because the Lib Dems want it, and that coalition is about compromise. Political horsetrading has supplanted rational economic debate, and if the Lib Dems want a wealth tax there is a horribly high chance that Osborne may give way — as he almost did over Mansion Tax. Not because he is weak, but because that’s how this coalition works. Here are my main points.

1. The idea of a wealth tax is superficially attractive. You pick something — property, or even all assets — and say that the state will take 1 per cent of the value of this every year. And you use the money to cut taxes on income. It seems fair, as wealth is certainly distributed far less equally than income, and use the money to help the low paid. Two of writers whom I greatly admire, Tim Montgomerie and Janan Ganesh, have spoken in support about the general idea, and I can see what attracts them. As Tim tweets: would I rather save the money of a £2 million homeowner, or give it to a striver? It’s a no-brainer: if that were a genuine choice, I’d tax the rich guy and lift the burden from the poor guy. But taxes never quite work out the way you think.

2. Denis Healey agreed with Tim Montgomerie when he was Chancellor, and his experience is instructive. A wealth tax (a kind of Mansion Tax writ large) had been on Labour’s wish list since the 1950s and was in its 1974 manifesto. The case was clear: 1pc of the nation held 33pc of the wealth. Couldn’t they pay a little more? But when it was tried in government (and announced in a Green Paper) it had to be abandoned. We now know why, thanks to declassified Treasury memos unearthed by the LSE (pdf) and published last year. Healey was delighted to be told by Treasury officials that they’d get right to it:-

“Although there will of course be many problems to be resolved we see no reason why a wealth tax should not be introduced reasonably quickly

Within a year, the headlines on these memos had changed to stuff like ‘Wealth Tax — possible exodus of UK capital’ a warning that it just wasn’t doable. Healey wanted to squeeze the rich “until the pips squeak” but even he worked out how naive he had been about advocating a wealth tax without thinking of the practicalities. In his 1989 memoirs, he he had this to say:-

“Another lesson was that you should never commit yourself in Opposition to new taxes unless you have a very good idea how they will operate in practice. We had committed ourselves to a Wealth Tax: but in five years I found it impossible to draft one which would yield enough revenue to be worth the administrative cost and political hassle.‟

3. Practical problems of wealth tax. Think about a Mansion Tax: do councils externally value every house? Do they factor in who has a massive mortgage and who has none? Who would do that, and how much would it cost? How about those who have massive mortgages: are they taxes as much as those who have none? Indications are that a Mansion Tax on properties over £2m would bring in under £2bn, a Treasury rounding error nowadays. Is it really worth re-rating everyone’s houses for such a paltry sum?

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If you want a broader wealth tax, do you tax just the UK-held assets? If so, people will move their investments abroad. Or tax worldwide income? If so, much-needed foreign businessmen would stay away. As these problems became more apparent to the Treasury in late 1974, they admitted to Healey that his wealth tax would have the following likely impact:-

‘1. It will lead people to seek non-resident status, result in a considerable outflow of funds in the form of dividends and interest.

2. Since it will apply to all wealth held world-wide foreign employees in foreign companies resident here would be subject to tax. This would result in a big movement of banks, insurance and shipping business moving out of the UK.

3. Assets held here would be affected. This would reduce the level of business in UK’

4. That’s why wealth tax has been abandoned all over Europe. Dumped by Austria, Denmark and Germany in 1997, by Finland, Iceland and Luxembourg in 2006 and by Sweden in 2007. These countries ditched the wealth tax to get more revenue, not less. If the world was too mobile for wealth taxes in the 1970s, just imagine what it’s like now.

5. Osborne probably thinks a mansion tax is a daft idea, but he’s not 100 per cent in control of economic policy. If he was, he wouldn’t have gone along with a mansion tax in the last Budget to assuage Clegg (until David Cameron stopped it.) Perhaps Osborne thought it would collapse under its own contradictions (that the hassle of evaluating everyone’s house would be too much). But after this year’s Budget, the Treasury needs to recover its reputation for competence. It can’t really afford the instability of announcing something it needs to scrap later.

6. Osborne will now have learned: never work with children, animals or new taxes. They never behave the way you think. The surprise North Sea raid led to a 50pc drop in exploration. His last Budget became defined by pasty taxes, granny taxes etc – and this stunned him. Since his 7 per cent stamp duty on properties over £2 million, the effect has been stunning. Forthcoming research from Savills has this to say: ‘since the 2012 budget we have seen sales in the £2.0 million to £2.2 million price bracket fall by 29 per cent, whilst those between £1.8 million and £2.0 million have risen by 37 per cent.’ Does anybody think the Treasury factored this in, when projecting how much money its new tax would make?

The 7pc stamp duty, of course, was just to assuage Clegg. It is a bad, ineffective and hugely distorting tax brought in so Clegg could have something to show his party members: precisely the mechanism through which  a wealth tax could emerge. Even the Institute for Fiscal Studies attached the 7pc stamp duty:-

“To see another Chancellor increase again such a poorly designed and distorting tax does not bode well for tax reformers. It will now cost at least £140,000 in stamp duty to buy a house worth more than £2 million. That may not cause much popular outcry but the problem is that this will do even more to lock people into their current housing.

I met a Londoner recently who said he now afford to move thanks to this stamp duty, so was staying put in his six-bedroom house, even now that the kids had left. This is just one tiny example of the unintended consequences of new taxes.

Osborne will have a few people urging him to tax wealth, many of them on the right. He should resist this. There is a good reason that pretty much everyone in Europe has dumped wealth taxes. A gamble with wealth tax would be the biggest Tory fiscal mistake since the Poll Tax.

7. If I believed that a wealth tax was workable, I’d back it too. My heart does not bleed for millionaires, but so often the people who end up getting hit are middle-income taxpayers who are already confronted by living costs, etc. The worst mistake you can make in politics is to judge something by its intentions, not its results. And if the result of a policy is to chase away the super-taxpayers, leaving everyone else to shoulder a heavier burden and retarding growth, there can be nothing progressive or compassionate about a wealth tax.

8. The last word ought to  go to Geoffrey Howe and Keith Joseph in a pamphlet they wrote the last time a wealth tax was a popular idea in 1977. It feels odd referring to the seventies to make a point about 2012, but it really has been a while since these ideas have been advocated. Here’s what they had to say about wealth tax:

‘We will have no part in introducing a wealth tax in the United Kingdom. We can see that if there were an opportunity in an ideal and simplified world to redesign the entire tax system, there might be a place for a wealth tax instead of other capital taxes. In Britain today, with its multiplicity of different ownership patterns, varied investment forms, property rights and existing taxes on capital and investment, we believe a wealth tax is out of the question. Either it would be crude and unjust, leaving a mass of loopholes to be exploited by the ingenious, or it would be equitable and level handed, in which case it would be extremely expensive to run.’


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Show comments
  • Olaf

    The problem government have with taxing the rich is that they soon realise it’ll hit them or their pals so they modify it and change it and hit the middle earners again. Because they know they earn and can therefore be taxed but they’ve not got enough to run away and escape the taxes. So you end up with a middle class worse off than the underclass and totally disincentivised to achieve any more.

  • JohnMcEvoy

    Here’s the part I don’t understand about the proposed ‘Mansion Tax’. I buy a crumbling pile for £2m. The chap who sold it waltzes off into the sunset with two million in cash in his back pocket. I am now skint. So on what basis does the State think it should come after me for twenty grand a year, this year, next year and every year thereafter?

  • Daniel Maris

    I think if we had a universal credit, a flat rate income tax, a progressive property tax and a progressive sales tax we would have a simple, minimal admin system of tax and welfare, one which would not require a vast army of bureaucrats and would be recognised as fair. There would be every incentive to work for people at the bottom end of the income scale and no rich person would be disincentivised from seeking to increase their income.

    Universal credit might be something like £3000 per adult and income tax around 20% perhaps (with no allowances). A progressive sales tax would range from 0% to perhaps 35%. A property tax might be set between 1% and 3% of value per annum.

    Put it altogether and you would have a core workable system I think that delivers incentive and fairness.

    Of course this is not about tax take – you could change the variables according to how much you want to take in tax. But I just give those figures to show the system is workable, producing similar tax.benefit ratios for most families compared to what they have now.

  • andagain

    “Practical problems of wealth tax.”

    We seem to have managed it with council taxes and the rates.

    They are taxes on property values, after all.

    Frankly, I am tired of right-wingers demanding spending cuts and tax rises that hurt people poorer than themselves, and then objecting to anything that would hurt themselves. I vote Tory, and I find that I loathe the people I am voting for.

    • Augustus

      ” I vote Tory, and I find that I loathe the people I am voting for.”
      Well, for at least a hundred years socialists have embraced class warfare as their primary political strategy and redistribution of wealth as their primary political tactic. The unintended (or perhaps intended) consequence for redistribution of wealth has been the creation of a permanent underclass totally dependent on the government for their well-being. Political power is maintained by retaining this dependence in exchange for political support. And ‘fairness’ is the vehicle used to
      promote and implement socialism. Fairness is the mantra of socialists. Fair share of tax payments, fairness in controlled markets, fairness for the environment through green energy, and so on. All of this fairness must be executed and enforced through an all-powerful centralized government by controlling everyone to be able to provide all of life’s needs from the cradle to the grave. Cameron’s Tories may not be cut out of the same cloth as earlier socialists, but he is a ‘born to rule’ type with a socialist agenda nevertheless. Just another socialist violating the rights of the people in the name of some ‘common good’.

      • andagain

        So you would be happy to abolish planning restrictions on what landowners can do with their own property, and replace income taxes with property taxes? Property can not run away, so it sounds like a good thing to tax, from the point of view of expediency.

    • Fergus Pickering

      Ah, but you loathe the other lot more, don’t you?

      • andagain

        No. I have more contempt for them, but I think the Tories are more loathsome.

  • Baron

    Fraser, why has everyone fallen so easily into the trap set up by the politicians?

    What we should be talking about is not how to bring in yet another tax, but how to cut government spending. The Treasury, or the guy who runs it, has about as much to spend each year as the rest of us put together, that’s what needs addressing, the average burgher works for six months for the Treasury, six months for himself, what he saves after consumption equals investment, hence it follows that if his consumption remains the same, the more he’s taxed the less investment there is, and it’s investment that creates wealth.

    We are, or may soon be at a point where the wealth creation will fall off the cliff, then the only solution being a full Monty of socialism, the Government will take over all assets, exchange controls will come in, salaries for all jobs will get fixed, 5-year plans brought in….

    Madness, pure madness.

  • Daniel Maris

    1. The idea of a wealth tax is superficially attractive. All taxes have pros and cons. A tax on property has the great advantage it can’t be dodged.

    2. Denis Healey agreed with Tim Montgomerie
    Not doable? Virtually all developed countries have proper property taxes. The average seems to be something like 1.5% of value.

    3. Basic problems of asset tax.
    There is no problem with valuation. Tell people to self-value unless they want to pay the government to do so. A cheap computer system could easily compare self-valuations with Zoopla style sites and other valuations in the area. Any valuations that seem wildly out could be checked on an exceptions basis (with the valuation charged to the resident).

    4. That’s why wealth tax has been abandoned all over Europe.
    I think you are deliberately confusing wealth tax and property tax for political reasons. You need a bit of Wikipedia style disambiguation.

    5. Osborne probably thinks a mansion tax is a daft idea, but he’s not 100 per cent in control of economic policy. Osborne should return to being social sec to the Bullingdon Club, a time when all Club Members were satisfied. He’s useless as Chancellor and so any opposition from him can be disregarded.

    6. Osborne will now have learned: never work with children, animals or new taxes. A correctly structured property tax with well thought out transition arrangements will work, as it does in most countries. The greatest advantage is that

    it means we can make income tax incentive-friendly with a single tax rate on all incomes.

    7. If I believed that a wealth tax was workable, I’d back it too. The super tax payers won’t be frightened away by paying £15000 per annum on a million pound house.

    8. The last word
    The wealth tax proposed in the 70s would have been a bureaucratic nightmare – with taxmen trying to tot up the wealth of the super-rich. A property tax is an entirely different proposition. It’s not something that can be evaded and it can be assessed almost automatically.

    • itdoesntaddup

      I think you should visit Detroit if you think that property taxes are such a good idea. Buildings don’t pay taxes: people do. Tax too highly, and the people move out, leaving empty shells for the tax department to fight with the rats for possession.

      • Daniel Maris

        Don’t be silly. There are lots of countries with property taxes and many of them, like Denmark, are highly successful:


        We are a small island with a big population and a lot of pressure on housing resources. A property tax makes good sense.

  • Augustus

    We’re not living in the Soviet Union. Success belongs to the person who succeeded. Wealth is not limited. When someone becomes rich there is not someone at the bottom getting poorer. The pie can get bigger, and if you are willing to work for it, you can get a piece of that growing pie too. Instead of taking more taxes from the wealthy, who are the producers and the job creators, how about cutting spending instead? Soaking the rich is a Communist concept. Who else but the wealthy produce jobs and grow the economy. How insane is it to go after those that makes our economy work? Class warfare always results in a larger gap, not a smaller one. People who want different rules for the rich want you to hate them, and then use that hate to win your votes. That’s pandering. That’s populism. That’s Communism.

    • Noa

      But we are living in the EU, where success is measured by how far up and into it its labyrinthine structures you impel yourself. The higher you go the more your take and with little or no tax to pay.
      Tax is for the little people.

    • Noa

      But we are living in the EU, where success is measured by how far up and into it its labyrinthine structures you impel yourself. The higher you go the more your take and with little or no tax to pay.
      Tax is for the little people.

    • Daniel Maris

      Most rich people had rich parents. The idea that being rich is the equivalent of being successful if nonsense.

      • Augustus

        Wealth is the result of hard work, and wealth is available to all if they are willing to just pursue it. If someone inherited it, fine, someone down the line worked hard to get the family there, wanting his children to live better than he did. There is nothing wrong with that. Wealth shouldn’t be something people should be feeling guilty of, or be punished for. Wealth is something that everyone should want to attain, strive for, work harder than others to achieve, and wear like the crown of achievement that it is. There is no reason to be defensive about one’s wealth.

        • Daniel Maris

          The Duke of Westminster must have been working very hard then. And so must have those sugar plantation owners back in the 1700s. And so must the Adidas shareholders – they’re the hard workers not the kids making the shoes.

          If everyone was looking to become wealthy life would be quite intolerable. Fortunately not everyone does want that – or they are happy to buy a lottery ticket once a week as their main effort towards that goal.

          I am not asking people to be defensive about their wealth. I’m just asking them to chip in to make the good society. If they don’t like that they can see how far libertarian values will get in a democracy.

        • Fergus Pickering

          Wealth is often the result of criminal activity or the result of your ancestors’ criminal activity. Have you ever meditated on the aphorism that property is theft?. I vote Conservative, not from a love of justice but from fear of the low-born mob who loot and burn.

      • itdoesntaddup

        I think you’re out of date on the statistics. The truly wealthy in the UK tend to have made their money themselves these days. Generations of IHT and estate duty have seen to that. Not much old money in this lot:

        Several foreigners of course – including Russians who had no wealth as recently as 30 years ago.

        • Daniel Maris

          That link is not to statistics – it’s just a list which includes the Duke of Westminster, making my point.

    • Hobbes

      “When someone becomes rich there is not someone at the bottom getting poorer. The pie can get bigger, and if you are willing to work for it, you can get a piece of that growing pie too.” – This is fast becoming a myth. The pie is not growing as fast as the global populace, so invariably what’s happening is more and more people are holding a small slice of the pie whilst fewer and fewer people hold a large slice. Ultimately this ends badly, because at some point people are going to get mighty antsy at fighting over the crumbs left behind.

  • BuBBleBus

    Strapworld, your fear about handing over pay to the Govt is very real, RE Real Time Information:
    “The downside of RTI is a massive increase in administration and red tape for payroll. This is part of a long term aim of HMRC to augment their systems with the universal tax credit system. In future HMRC will be able to see what any individual is paid and consequentially amend any benefits. What is really worrying is that long term, HMRC want to administer the pay themselves. They are aiming for employers to transfer salaries to the Revenue who will then forward onto employees their pay less tax.”

    • strapworld

      BuBBleBus. You certainly are not upstairs collecting fares. Thanks for this. Quite frightening. But I imagine this has its origins in the EUSSR.

  • Noa

    Yes, yes but….Rotherham, Rochdale…consideration of consequences, implications, reviews, reforms?

    And the link to mass immigration and Neathergate?

    • James102

      Never mind; lessons will have been learnt: as they will the next time and the next time and…

  • strapworld

    Mr Nelson. I do believe your heading should have been “THE DANGEROUS
    Is there nothing other than taxation this ruddy government and commentators, like yourself, can think of? We all might as well hand over our salaries, pensions and savings to the government and all receive the same weekly allowance (taxable, of course).
    Our family saloon costs around £80 – £90 to fill. We are informed that instead of the road fund (or excise) licence we shall all be paying a road toll when we use the roads. Of course, they tell us it will not cost anymore than the road tax…where have we heard that before? Remember the good old days when the RFL was the same for everyone now you can get it for nowt, if you drive a pedal car.
    VAT went up. Food has shot up and Brussels wants to plonk VAT on more goods now. Council tax to be re-valuated (not downwards we can rest assured). The Rich must pay more for living in a bigger home. I reckon window tax will be brought in, that was a winner last time, What about a widow or widower tax? Why should one person be allowed to live in a house on their own? Tax them heavily.
    We have got one track politicians, Useless people whose matra is TAX THEM!
    There will come a time, and I do not believe we are from that point, when enough will be enough.
    Surely less taxation creates a world were new businesses will grow, were people will work harder and the country would benefit. The way we are going is towards hell.
    Perhaps The Spectator could organise a competition for organisations or individuals to propose a new way for government. Should government, other than for defence of the Realm, need money from the people? We certainly cannot afford the NHS as it is presently constructed. Let the ideas great and small come forward and Fraser Nelson and co could lead the way.

    • Noa

      Good to see you back and in strapping form.

      • strapworld

        Tanks Noa.

    • Polleetickle of twttr

      this view (strapworld) is slightly utopian.

      the bottom line is; those supposedly collecting the taxes have not performed at all well. And, not only this, they’ve been brokering sweetheart deals with behemoth corporations. The latter I kind of understand but not all these and the other scenario’s together leaving tax collection by HMRC found wanting.

      I understand this; the staff at HMRC dont conservative or lib-dem – they are lefty voters in vast numbers whose peers are now complaining about the lack of funds leading to cuts.

      Pls let me know where I’ve got any of this wrong. @polleetickle

  • Polleetickle of twttr

    Wealth for people like me (state-educated, the results of aspiration, commercial success and entrepreneurialsm,) is accrued from taxed income that already gets fleeced with purchase and taxes on lifestyle.

    For some, wealth is the result of shrewd or thrifty living. For others wealth is the result of ancestors fighting to defend a nation – should we now penalise this? Or, those that defrauded the banking system? Politicians that experimented with the futures of the next generations?

    Either way, taxing the wealthy is simply an easy option for Govts to garner huge votes from national workforces that even now struggle to make themselves productive due to militant unionists.

    Targeting the wealthy is a primative and gross failure of European society if implemented.

    But closing off this entire debate is this; it is the welfare-grabbing lefties already failing to apply and enforce the collection of taxes in the first place. How can they hope to raise more of what they already fail on?

  • mongoose

    We should look at why wealth taxes were abandoned in other European countries. In the German case it was the practicality of reconciling its administration with the constitution. The tax on net wealth conflicted with the principle of equality of all citizens, as real estate valuations could only be adjusted infrequently while other assets were valued at ongoing present values. Other European countries were then influenced by the German decision even though the German constitution does not apply to them, because European borders are not impermeable to net wealth.

  • Hexhamgeezer

    How about a temporary solution that would satisfy both the right and the cameronian and clegg left? Invite the ECB, Commission, and IMF in to carry out an austerity programme similar to that of Greece and Spain?
    Cam the Libs and Labour get the European rule they so fervently desire for a while and the rest of us get real cuts and ,who knows, we might get our percentage deficit in FY 13-14 under that of Greece and Spain.

  • alexsandr

    Actually there is already a wealth tax. its called elderly care. Those that have saved have to pay, those that have been feckless get it free. Now they want to tax the wealth before they take it for care costs.

  • James102

    I suppose with equal outcomes the preferred performance indicator in so many areas regression to the mean does require we all have a statistically valid equal amount of wealth.
    There will have to be exceptions, just as there seems to be for the children of politicians being chosen for winnable seats. Also anyone trying to get their hands on Blair’s wealth will have a fight on their hands.
    Inflation seems to be the preferred way for the government to solve its debt problem so it won’t be long before most people join the nominally wealthy at 2012 prices.

  • Ian Walker

    Liquid asset taxes are as pointless as income taxes in the 21st century. Both have become so mobile and nebulous that it would be easier to herd cats.

    The only thing that makes sense is a gradual transition to a Land Value Tax. Tax what is obviously Britain, and spend it on the security and wellbeing of Britain and its inhabitants. Let them earn what they want and spend what they want while they’re here.

    That’s the big problem with the current proposals – they’re all talking about topping up the current tax system. On the other hand, an LVT with zero income taxes would make Britain an incredibly attractive place for the world’s wealthy to come and spend their money.

    • itdoesntaddup

      If you wish to become the serf of a Chinese or Russian billionaire, I’m sure it’s fine…

    • andagain

      “The only thing that makes sense is a gradual transition to a Land Value Tax. ”

      The Conservative Party is disproportionately elderly, wealthy, and living in southern England, where land values are high. They will NEVER agree to this.

      But they will complain for the rest of time that it is not fair that people think they are selfish, without ever coming up with a single example of their supporting a policy which would hurt themselves.

      • FergusPickering

        Everybody ought to vote for their self-interest or the interests of their children. That is democracy. Altruism is deeply narcissistic and unhealthy.

        • andagain

          In that case, I should vote to have the government steal money from other people, and give some of it to me.

          • Ian Walker

            Or ‘socialism’ as it’s otherwise known.

  • TomTom

    We have a Wealth Tax albeit regressive. It is called IHT and kills the middle class if only by having to file IHT400. Why the HMRC needs to know details of very estate >£5000 is known only to Gordon Brown

  • alexsandr

    once its been done it will grow and grow. not replacing other taxes but as a new government cash cow. Look how VAT has doubled from 10% when it started to 20% now.

    I can see wealth taxes hitting he ‘rich’ with £250k houses in a very short time.

    • Nicholas

      Agreed. The focus is wrong. It should be on what the government spends (or more often wastes) tax revenue on rather than dreaming up new “socially acceptable” ways to increase it. This is just a rather nasty procession from spin to cynical exploitation, “the rich” becoming a demonised generalisation in order to sell a soundbite without substance. The way to stimulate growth is to reduce the tax burden on everyone, reduce the size of government and rein in regulation and bureaucracy. The country would flourish and attract business.

    • TomTom

      VAT used to be 25% under Denis Healey. Purchase Tax was 50% on records as did radio electronics. 1942 Purchase Tax increased from 33.33% to 66.66% and to 100% in 1943 falling to 33.33% in 1946

  • In2minds

    Wealth taxes might not work but then UK politics has never been bothered about results, just gestures.

    • James102

      Modern UK politics.

  • ScaryBiscuits

    This would cause the mother of all Tory rebellions. Osborne doesn’t have the votes in the house to get it through. Many backbenchers supported his last budget through gritted teeth. This time they would probably be prepared to bring down the government if it went ahead with something as mad as this – a vote on a budget is treated as the same as a confidence vote.
    The Cameroons always seem to forget about their backbenchers. They cook up these schemes in their bunker, agree with the LibDems and then push forwrd hard. Only at the last minute do they realise they can’t get it past their own party, by which time the political damage is done and they look foolish for having attempted the impossible. You have to wonder why they keep making this mistake.

  • jebediah

    Wealth is a residual of a life of earnings after tax. To come back to the honeypot to tax again is in my view immoral. It says the successful will be punished, those who worked less hard or not at all, those who didn’t plan, those who squandered, will be rewarded.
    It’s not a good message for society.

    • Julian Green

      What about those who inherited their wealth?

      • Andy H

        Good luck to them. Some people are born good looking and / or intelligent, some are not. What would you do about that?

        • Keith

          I’m not sure that I’d do very much, but a good socialist would I imagine be in favour of the mutilation of the beautiful. How else can you build a more equal world?.

          Eh, Tel?

          • The_Savage

            Or tax the beautiful to pay for cosmetic surgery for the ugly. Then we’d all be beautiful, wouldn’t we?

            • Fergus Pickering

              Nope. Have you seen people who have had cosmetic surgery? Some look less ugly than they did before. Very few look beautiful.

          • The_Savage

            Or tax the beautiful to pay for cosmetic surgery for the ugly. Then we’d all be beautiful, wouldn’t we?

      • jebediah

        I don’t mind. On a different note the bulk of people acquire their own wealth. And here I’m talking about the 99% of “wealthy” people with say net assets from £500,000 to £10,000,000. Not billionaire oligarchs but those who as creators of a business, high ranking professionals and other that have made the money conventionally and therefore have already paid over a million in tax.

      • TomTom

        Unless they are very rich they pay IHT and CGT – the very rich don’t pay

        • Jebediah

          Yes that might well be true. But it’s irrelevant to a wealth tax on ordinary Brits. The super rich can flee the “wealthy” surgeon, lawyer, small business owner, account, and so on, cannot. They can however, try less hard as they can’t see the point. They would also probably try to hide wealth. This is how tax take declines and entrepreneurial activity collapses.
          This is what happens when what you thought was a secure legacy is suddenly at risk.

          • TomTom

            The Middle Class pay IHT and CGT – the rich don’t. What is your point Jedediah ? You think the middle class should continue to get bashed and impoverished ?

      • Polleetickle of twttr

        get over the envy FFS.

    • james102

      So what do we mean by ‘wealth’? Is it just houses? As I
      wrote below what of the £1million pension pots public servants have. Even a
      junior teacher or police officer has a pension worth over £250k.

      Clegg, Mandelson, Kinnock etc would still not pay anything
      on their EU pensions just their UK houses and flats. The same with the
      Blairs.Their enormous wealth would be left in companies and ‘charities’ and
      just the Lancaster Gate Mansion taxed.

      Are Art Collections wealth? Share portfolios? Jewellery

    • Fergus Pickering

      You are assuming that the rich are rich because of their efforts and their thrift. Like me, for instance. Some are. Some got it from criminal activity. Most got it from daddy and grandaddy..

    • dalai guevara

      nonsense – only when we understand that in a Romneyesk-style society, where income is taxed but assets are not – will we get to the point to demand a higher taxation of assets that produce income, but are not in any way linked to the real economy. Tax the hell out of my derivative backside, now!

  • Eric

    I am unlikely to be affected by this idea (if only). However, if it is to appease the LDs why not have a ‘sunset clause’ (say 5th April 2016) so that everyone can see it for what it is – not real Tory policy?

  • Heartless etc.,

    Dear Fraser – have Patience!

    The H2B will respond to all these and other anxieties – including those regarding the EUSSR – in what will I’m sure be a devastating speech to ‘Conference’ (sic).

  • alexsandr

    surely a wealth tax would be so avoidable, with undocumented wealth being hidden. What about people holding gold for instance?

  • John Staines

    Lots of reasons not to introduce a general wealth tax – fair enough, it wouldn’t work. But your one argument against a mansion tax is that it would cost a lot to administer. Well, maybe – depends how it is designed. Councils seem to manage to administer Council Tax.

    • pilsden

      I go along with the idea of an extra/extra tax bands on higher value properties- But I would insist that the revenue raised locally was used locally for the elderly care our demographic problem.

    • telemachus

      So the Treasury told Healy it was not doable
      Of course it is
      Not only do we have the Council Tax bands but back this up by registered sale prices that allow re-evaluation of whole areas
      Self declaration of mortgages with existing penalties for untruths would complete the picture.
      OK this does not get other assets but as you point out those can be shifted abroad
      Most people see the rising gap between rich and poor which has to be addresed in some form for the cohesion of society.

      • TomTom

        Countries that tax on Sale Values also have large exemptions for Owner Occupancy and tax-deductibility of Property Tax against Income Tax

        • James102

          Would the pension pots of public sector employees be considered wealth?

          • James102

            For instance a police officer or teacher would need a pot of between £350K and £500k many public servants have pension provisions worth £1million.

      • Nicholas

        “Self declaration of mortgages with existing penalties for untruths would complete the picture.”

        So Stalin. So Beria. So East Germany. The “cohesion of society”? Pff! More socialist claptrap. British society has never been so divided, so mutually hostile from government-sponsored pigeon holes for class, wealth, race, religion, education and sexuality. And all that is thanks to bloody socialists and their “progressive” nonsense. Still when disorder and civil war comes on a scale not seen since the 17th Century the policies of Marxist wonks like Milliband or barmy old bats like Harmon won’t matter anymore.

      • Keith

        But you’re overlooking the other side of the equation! The government can solve its financial problems by simply spending less!

      • Augustus

        “Most people see the rising gap between rich and poor which has to be addresed in some form for the cohesion of society.”
        I have 5 potatoes, you have one, so just grab a couple of mine. A wonderfully moral idea. An absolutely brilliant and creative solution to not having something you want. You differ with the owner of the potatoes on how they’re being used, so the mere fact of your different opinion gives you the right to enforce it over anyone else’s opinion, especially the owner’s. Brilliant logic. No wonder you have just 1 potato.

        • Daniel Maris

          That’s pure libertarian nonsense, as dangerous as pure socialist nonsense. Every society has to tax. The discussion is over how much and what is taxed.

          • ButcombeMan

            An important issue for any method of taxation is how effective any particular mechanism is, what proportion of the due tax does it collect in real world rather than theory application, how easy is it to evade and what it costs to run that mechanism.

            A wealth tax as described will not work effectively Expecting telemachus to understand that is a bridge too far..

    • Stiffit

      The council tax bureaucracy is already in place. It has facilities to establish notional 1991 values for newly built houses. There’s absolutely nothing stopping us adding several more higher value bands so palaces are charged more than 4-bedroom detached houses in the suburbs. There’s no reason why both local and national government couldn’t collect taxes on houses on the basis of the same value bands as, I believe, emergency services already do. You might even get rid of Stamp duty on houses purchases and rid yourself of a whole chunk of bureaucracy,tax code, and case law.

      Personally, I’d favour a Land Tax. But if you object to taxing houses, don’t argue it on the grounds of impracticality. Because it isn’t impractical.

      • Coffeehousewall

        Why should my father be taxed because he has a relatively large and valuable house, the fruit of a lifetime of very hard work? And for what? Simply to fund those who will not work, the overwhelming tide of immigrants on benefit, and the corrupt activities of Government departments. Increased taxation has as its end the complete dominance of the state over all economic activity and it is totalitarian.

      • Acacia Avenue

        Not so sure about this. The new 7% stamp duty charge has killed off property sales over £2m in the London suburbs (ie outside the foreign buyer catchment areas of Chelsea and Ken) and houses priced at £2m-£3m are frozen. I am seeing houses priced at eg. £2.5m falling below £2m to sell.
        So what should these houses be priced at for council tax purposes? Certainly not above £2m.
        Cable’s 7% stamp duty is crowding houses into the below £2m bracket.
        Osborne needs to re-jig stamp duty to remove its stepped structure. An even gradient could pull in more tax. He can then claim to tax the rich whle improving market liquidity and tax take.

        • ButcombeMan


          The Treasury knows all about it. It has not been done because we have Chancellors of limited brain power. Fiddling with pasties etc and missing the big picture. Osborne is a classic such.

          Smoothing would help the turnover of property, any slight drop in income from stamp duty, by smoothing and lowering the lower rates, would get made up from other taxation on increased economic activity in all the peripheral fields associated with buying, selling, fitting out, furnishing and improving houses.

      • ButcombeMan

        I suggest Stamp Duty is very cheap to administer. It ought to be smoothed of course, the current system is idiocy, it ought to go higher for very high value homes, it should start start lower and all sales should be caught.

        Broadening the base of VAT and lowering the rate for some goods is the cheapest way to make tax collection cheaper and bring in more money, the mechanism already exists, the extra tax would be every easy to collect without too much in the way of extra adminstrative costs VAT is quite hard for the truly rich to avoid.

    • Owen_Morgan

      Sending out council tax demands, occasionally emptying my bins and depositing sweet-wrappers (not originating from my bin) on my doorstep are the only things my council does. I’m not surprised it can afford to administer council tax. It’s money for nothing.

  • Sackosborne

    Has Osborne given up on growth in order to pay off the deficit?

    • James102

      Inflation is the way it will be dealt with. Our population has increased by 4 million or so since Labour opened our borders so if this wealth tax (which seems to be a house tax)is kept at say £1million that will capture a lot of people in a few years
      Never mind ,as we become more equally poor we will start emigrating to Eastern Europe to earn a living.

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