The UK deputy prime minister's call for an
emergency wealth tax has a whiff of political opportunism: things are
tough, let's get those fat cats. Yet Nick Clegg is partly right. But a
tax on the wealthy needs to be fair and predictable, not the quick grab
that he advocates. Property tax is the way to do it.
Taxing the wealthy is tricky. The government reduced the top rate of income tax from 50 percent to 45 percent in the budget. George Osborne, the Chancellor, claimed on shaky evidence that the higher rate didn't raise additional revenue. Clegg's statement may be his political response. Furthermore, disappointing fiscal numbers are another spur. In the first four months of the tax year, government borrowing was 11.6 billion pounds higher than a year ago. The deficit is rising, not falling.
There is scope to raise more from the wealthy and the best way to do it is to tax their homes. Britain's wealthiest tend to live in properties, sometimes more than one, whose multi-million valuations reflect their wealth. Unfortunately the only current property tax, the council tax, is based on obsolete 1991 valuations. And the top band starts at 320,000 pounds - now the value of a small flat in some prime locations. Moreover, the rate isn't progressive enough: the top tax bill on a property stands at a paltry 2,536 pounds.
Read more: http://uk.reuters.com/article/2012/08/29/us-breakingviews-uk-wealth-tax-idUSBRE87S0PZ20120829
Taxing the wealthy is tricky. The government reduced the top rate of income tax from 50 percent to 45 percent in the budget. George Osborne, the Chancellor, claimed on shaky evidence that the higher rate didn't raise additional revenue. Clegg's statement may be his political response. Furthermore, disappointing fiscal numbers are another spur. In the first four months of the tax year, government borrowing was 11.6 billion pounds higher than a year ago. The deficit is rising, not falling.
There is scope to raise more from the wealthy and the best way to do it is to tax their homes. Britain's wealthiest tend to live in properties, sometimes more than one, whose multi-million valuations reflect their wealth. Unfortunately the only current property tax, the council tax, is based on obsolete 1991 valuations. And the top band starts at 320,000 pounds - now the value of a small flat in some prime locations. Moreover, the rate isn't progressive enough: the top tax bill on a property stands at a paltry 2,536 pounds.
Read more: http://uk.reuters.com/article/2012/08/29/us-breakingviews-uk-wealth-tax-idUSBRE87S0PZ20120829
1 comment:
It is an appalling proposal to tax people on what, unless it happens to be for sale, is the purely notional value of an asset which they might not necessarily own anyway, and which in any case they could not possibly sell unless they were expected to go, apply for a wageday advance loans and live up a tree or something. But we sold the pass on this one more than 20 years ago, when we effectively restored the hated rates, and with them all their impeccably middle and upper-middle-class exemptions for students, clergy, second homes, and so on.
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