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The British government closed this loophole because it's politically easier than the strategy which is actually needed: properly taxing assets. This is much ha

The British government closed this loophole because it's politically easier than the strategy which is actually needed: properly taxing assets. This is much harder to evade - if you own most of Mayfair, you can't just move your assets elsewhere - they are very clearly tied to the location. Of course, this would mean taxing powerful aristocrats, including the royal family. With their large majority, the British government had the opportunity to do this, but decided to take an easier path. The reason why this path was easier is now becoming clear to them.

shivasaxena 1y ago
Wait are you suggesting that we tax assets instead of income?
- andrepd 1y ago
  It's not a revolutionary idea. That I know of, the Netherlands does it, somewhat. How it works is: rather than taxing capital gains, with its myriad loopholes and counterloopholes, you tax assets directly: assume a neutral sort of "risk-free" rate of return, and then tax a percentage of that. E.g. assume yearly return of 1% on cash and savings, 6% on other assets, etc, then levy tax of 30% on that (past a tax-free allowance of 25k€ per person). Simple, and more effective!
  - shivasaxena 1y ago
    I would consider it very destabilizing idea and an affront to fairness really. As an example, Wouldn't that mean that if my startup raises a round of 1m for 10%, my NW would go to 0 to 9m. 6% of that would be around 0.5m, and 30% tax would mean I would have to pay 162,000 EUR in taxes. As a cash poor founder how do you suggest I pay that. That's why taxing income and not wealth has been the norm.
    - balderdash 1y ago
      Not to mention no one would pay you $9m for your stake and for you to walk away…
    - polyomino 1y ago
      I think you missed the part that this was in Europe, no need to worry about startups
    - andrepd 1y ago
      Have you considered taking a measly 20 seconds out of your day—surely a fraction of the time you took to type this comment—to google this information? Another point: have you considered that the authorities and people of the Netherlands, a very rich country with several valuable companies, may have possibly thought of this absolutely trivial argument when designing their tax code? Do you really think nobody thought of it? Jesus --- To your point: stakes in your _own_ company are not taxed as assets, but as income, precisely to avoid the ridiculous situation you point out. Simply put: your retirement savings, your brokerage account = assets, your startup, your company, your farm = income.
      - shivasaxena 1y ago
        > To your point: stakes in your _own_ company are not taxed as assets, but as income, precisely to avoid the ridiculous situation you point out. Enlightening, so you mean this policy isn't for the so called "1%"? Only for middle class folks and their stock portfolios? That's not what the GP was proposing. > Another point: have you considered that the authorities and people of the Netherlands, a very rich country with several valuable companies, may have possibly thought of this absolutely trivial argument when designing their tax code? Do you really think nobody thought of it? Yes, because I can point to an even richer country, with even more valuable companies where the left proposed same destructive policy only a few months ago and almost came close to winning. Lastly, you did make me look it up and it seems Netherlands and other European countries really didn't think it through. https://www.leideninternationalcentre.nl/get-advice/blogs/supreme-court-overturns-wealth-tax-bill-implications-for-expats https://www.leideninternationalcentre.nl/get-advice/blogs/su... https://www.linkedin.com/posts/jasoncalacanis_norways-wealth-tax-and-the-founder-exodus-activity-7267550807858810880-9FDO/ https://www.linkedin.com/posts/jasoncalacanis_norways-wealth...
        anton-c 1y ago
        > the wealth tax was based on assumed returns rather than actual returns That does sound poorly thought thru. Why not just calculate it instead of "assumed returns"? Seems unfair on its face and bound to go wrong.
        1y ago
  - ml-anon 1y ago
    Americans become idiots when it comes to tax, unable to understand even the simplest concepts or fathom that things might have been possibly implemented elsewhere. Hell even Switzerland taxes global assets. You just declare your stocks, property, etc at some instantaneous value and that’s that. Capital gains aren’t taxed. The system is easy to cheat and until recently it was possible for HNW people to get a bespoke deal when moving there. But the tax rate is low enough and the risk is high enough that it’s more beneficial to just pay.
- mattmanser 1y ago
  There's been a big shift of rich people avoiding taking pay or dividends. Instead they get paid in stock, and then get interest free loans secured on that stock to actually spend money. It's a loophole the mega-rich are using to avoid tax. The other thing that's happened is that a lot of the mega-rich have lobbied to gradually chip away at inheritance taxes. So again they just pass the asset, paying a fraction of the taxes they'd have paid had they been a "normal" tax payer. And one of the big things they've got? No capital gains on those stocks when passed to children. So yeah, we need to tax assets as well as income. Because anything that's not taxed the rich just funnel money into it to avoid paying tax.
  - shivasaxena 1y ago
    Not just rich people. Here in estonia small startups like mine pay minimum tax, and reinvest the rest in company. > There's been a big shift of rich people avoiding taking pay or dividends. Instead they get paid in stock, and then get interest free loans secured on that stock to actually spend money. They have a stockholding in a firm, and the firm pays CIT on income earned. That sounds fair. > The other thing that's happened is that a lot of the mega-rich have lobbied to gradually chip away at inheritance taxes. So again they just pass the asset, paying a fraction of the taxes they'd have paid had they been a "normal" tax payer. Why should my kids be liable to pay a tax when they inherit my house? That house was bought by my income on which PIT was duty fully paid. Again sounds very fair to me. > And one of the big things they've got? No capital gains on those stocks when passed to children. Again sounds fair to me.
    - barrkel 1y ago
      The heart of this is what you think tax is. If you just think it's the government stealing your stuff, then it seems very unfair to have your stuff taxed after you die. But what tax is, under another lens, is a way to divert the capacity of a state to social ends. Everything from the military to the police to prisons and the justice system is what enables you to live in peace and accumulate stuff in the first place. Those are social goods. So how do you fund this spending? How do you incentivize other people to protect your house? Well, the solution of tax is they take a little bit of your stuff over time, in a predictable way, according to rules that are pre-agreed and can be changed with consensus.
aosaigh 1y ago
Genuine question as I’ve been interested in the conversation around taxing wealth: how do we do it? I assume a new government dept. has to be set up to oversee it. Or do the wealthy self assess? Are things like shares and investments valued once? Once per year? How is a company valued? How do you know if you qualify as wealthy? Do we value everyone’s wealth? Can’t the wealthy just relocate or move assets out of reach? I don’t expect answers to this, I’m just thinking out loud as there seem to be a lot of challenges. A few countries seem to have tried and continued to tax wealth but it seems far from proven and only seems to “work” in Switzerland, which is a bit of an outlier
- sorcerer-mar 1y ago
  Just tax land and you'll get 80/20
- balderdash 1y ago
  I don’t think the wealth taxes, fundamentally workable because you have issues you raised above, but other things like liquidity and indivisibility of assets. I think the simpler solution if simply passing along the original cost basis to heirs (and without documentation it’s assumed to be zero). That way people or even families can defer taxes on income, but eventually they get paid.
- gruez 1y ago
  I think by "asset" OP actually means "real property", otherwise the subsequent statement of "if you own most of Mayfair, you can't just move your assets elsewhere - they are very clearly tied to the location" doesn't really make sense. You could easily move corporations around, for instance, so the statement is only really true when applied to real estate.
  - bashtoni 1y ago
    This isn't limited to property. Britain could just as easily tax profits on the sale of shares in British companies, regardless of the country of domicile of the company or individual that sold the shares. We don't need wealth taxes, we just need parity between tax on earned and unearned income.
mattmanser 1y ago
The royal family is exempt from a lot of tax laws. There was a bit of a scandal a few years back at just how much input the Queen got to those sort of laws, but it didn't really have legs as everyone thought she was brilliant. But if the same thing comes out about King Charles you can bet it's going to be a bigger stink.
monero-xmr 1y ago
The real solution to the UK’s stagnation is accepting the truly politically difficult truth - the UK is getting poorer, year after year. The empire is long dead and gone, and their number 1 growth company and success story of the last decade is OnlyFans, a global smut purveyor. The UK needs to radically reduce its social safety net and simultaneously cut taxes, at least for new companies and small businesses. The only way out is real, sustained, long term growth and innovation. Stealing ever more of a shrinking pie is already running out of steam.
- silverquiet 1y ago
  > The UK needs to radically reduce its social safety net and simultaneously cut taxes, at least for new companies and small businesses. The only way out is real, sustained, long term growth and innovation. Stealing ever more of a shrinking pie is already running out of steam. I was under the impression they had done that already. https://en.wikipedia.org/wiki/United_Kingdom_government_austerity_programme https://en.wikipedia.org/wiki/United_Kingdom_government_aust... Though one can't help but think it wont be radical enough for conservatives until we simply dispose of those unable to work through some dystopic mechanism or other.
  - adammarples 1y ago
    This was a long time ago. Since then we've been running full speed in the opposite direction.
    - ojno 1y ago
      (from the linked Wikipedia article) > Coalition and Conservative governments in office from 2010 to 2019 used the term, and it was applied again by many observers to describe Conservative Party policies from 2021 to 2024, during the cost of living crisis. 2024, last year, is "a long time ago"?
      - adammarples 1y ago
        People use terms, they're often wrong. The last few years since 2019 we've been breaking ever greater records on state spending and borrowing, this is not austerity.
fmajid 1y ago
That Socialist hotspot, Texas, taxes property at 1.8%, vs. 0% in the UK. Can't inconvenience the feudal aristocracy (i.e. parasites descended from thugs), starting with Chuck von Battenberg, Sachsen, Coburg und Gotha.
- nebula8804 1y ago
  Yeah but they have No Income tax right?
  - const_cast 1y ago
    No, Texas residents pay income tax to the federal government. On a state level, yes, there is no income tax. However, the tax burden in Texas is not significantly lower than a state like California.
- ojhughes 1y ago
  The UK has council tax, which is quite similar to a property tax
  - fmajid 1y ago
    It's capped. The Duke of Westminster is not paying 1.8% on his substantial feudal holdings in London.
rich_sasha 1y ago
As you pay more tax, you get less services, and I dont just mean, where you elect to avoid them. You get less (or none at this point) free childcare. No umemployment benefits if you get fired. No child benefit. You can't save as much in your pension. Then there are the semi-elective things like healthcare, education, home security. These kinda dont work for the whole society. The rich are thus paying for their own out of pocket. But they are also paying for the semi-working system for everyone else. I think introducing a wealth tax just to balance the books without rethinking who and how accesses public funds, will just end with the rich leaving. Some may say good riddance, but the UK budget is now beyond creaking and heading for collapse. Oh and when I say "the rich", that probably covers many people here. IIRC earning 90k per year puts you in the top 1%. A 10-15 year experience NHS doctor is in that bracket.
- newdee 1y ago
  People earning 90k aren’t “the rich” that are doing the most egregious tax avoidance. They’re still working class. They still have to work or face destitution. The very top sliver who own the majority of the land and assets and who never need to work a day in their life are who must be looked at; that hereditary wealth needs to begin to find itself flowing into public services more and more.
  - rf15 1y ago
    millionaires looking at billionaires: "really, I'm not that rich, more middle class really"
    - muro 1y ago
      90k / year is not a millionaire, if it's pre-tax. With 35% tax (picked a random reasonable sounding number), it would take 17years to earn a million if you have 0 expenses.
  - rich_sasha 1y ago
    They are, I fear, the ones that pay this tax. The actual millionaires will surely figure out how to avoid it, just as they did with all the other ones.
DrScientist 1y ago
Yep - Cayman Islands, Isle of Man, Channel Islands, British Virgin Islands etc etc. It's these that need to be tackled - not just because of tax evasion, but because they are also a large part of the workings of organised crime.

shivasaxena 1y ago

Wait are you suggesting that we tax assets instead of income?

andrepd 1y ago
It's not a revolutionary idea. That I know of, the Netherlands does it, somewhat. How it works is: rather than taxing capital gains, with its myriad loopholes and counterloopholes, you tax assets directly: assume a neutral sort of "risk-free" rate of return, and then tax a percentage of that. E.g. assume yearly return of 1% on cash and savings, 6% on other assets, etc, then levy tax of 30% on that (past a tax-free allowance of 25k€ per person). Simple, and more effective!
- shivasaxena 1y ago
  I would consider it very destabilizing idea and an affront to fairness really. As an example, Wouldn't that mean that if my startup raises a round of 1m for 10%, my NW would go to 0 to 9m. 6% of that would be around 0.5m, and 30% tax would mean I would have to pay 162,000 EUR in taxes. As a cash poor founder how do you suggest I pay that. That's why taxing income and not wealth has been the norm.
  - balderdash 1y ago
    Not to mention no one would pay you $9m for your stake and for you to walk away…
  - polyomino 1y ago
    I think you missed the part that this was in Europe, no need to worry about startups
  - andrepd 1y ago
    Have you considered taking a measly 20 seconds out of your day—surely a fraction of the time you took to type this comment—to google this information? Another point: have you considered that the authorities and people of the Netherlands, a very rich country with several valuable companies, may have possibly thought of this absolutely trivial argument when designing their tax code? Do you really think nobody thought of it? Jesus --- To your point: stakes in your _own_ company are not taxed as assets, but as income, precisely to avoid the ridiculous situation you point out. Simply put: your retirement savings, your brokerage account = assets, your startup, your company, your farm = income.
    - shivasaxena 1y ago
      > To your point: stakes in your _own_ company are not taxed as assets, but as income, precisely to avoid the ridiculous situation you point out. Enlightening, so you mean this policy isn't for the so called "1%"? Only for middle class folks and their stock portfolios? That's not what the GP was proposing. > Another point: have you considered that the authorities and people of the Netherlands, a very rich country with several valuable companies, may have possibly thought of this absolutely trivial argument when designing their tax code? Do you really think nobody thought of it? Yes, because I can point to an even richer country, with even more valuable companies where the left proposed same destructive policy only a few months ago and almost came close to winning. Lastly, you did make me look it up and it seems Netherlands and other European countries really didn't think it through. https://www.leideninternationalcentre.nl/get-advice/blogs/supreme-court-overturns-wealth-tax-bill-implications-for-expats https://www.leideninternationalcentre.nl/get-advice/blogs/su... https://www.linkedin.com/posts/jasoncalacanis_norways-wealth-tax-and-the-founder-exodus-activity-7267550807858810880-9FDO/ https://www.linkedin.com/posts/jasoncalacanis_norways-wealth...
      - anton-c 1y ago
        > the wealth tax was based on assumed returns rather than actual returns That does sound poorly thought thru. Why not just calculate it instead of "assumed returns"? Seems unfair on its face and bound to go wrong.
      - 1y ago
- ml-anon 1y ago
  Americans become idiots when it comes to tax, unable to understand even the simplest concepts or fathom that things might have been possibly implemented elsewhere. Hell even Switzerland taxes global assets. You just declare your stocks, property, etc at some instantaneous value and that’s that. Capital gains aren’t taxed. The system is easy to cheat and until recently it was possible for HNW people to get a bespoke deal when moving there. But the tax rate is low enough and the risk is high enough that it’s more beneficial to just pay.
mattmanser 1y ago
There's been a big shift of rich people avoiding taking pay or dividends. Instead they get paid in stock, and then get interest free loans secured on that stock to actually spend money. It's a loophole the mega-rich are using to avoid tax. The other thing that's happened is that a lot of the mega-rich have lobbied to gradually chip away at inheritance taxes. So again they just pass the asset, paying a fraction of the taxes they'd have paid had they been a "normal" tax payer. And one of the big things they've got? No capital gains on those stocks when passed to children. So yeah, we need to tax assets as well as income. Because anything that's not taxed the rich just funnel money into it to avoid paying tax.
- shivasaxena 1y ago
  Not just rich people. Here in estonia small startups like mine pay minimum tax, and reinvest the rest in company. > There's been a big shift of rich people avoiding taking pay or dividends. Instead they get paid in stock, and then get interest free loans secured on that stock to actually spend money. They have a stockholding in a firm, and the firm pays CIT on income earned. That sounds fair. > The other thing that's happened is that a lot of the mega-rich have lobbied to gradually chip away at inheritance taxes. So again they just pass the asset, paying a fraction of the taxes they'd have paid had they been a "normal" tax payer. Why should my kids be liable to pay a tax when they inherit my house? That house was bought by my income on which PIT was duty fully paid. Again sounds very fair to me. > And one of the big things they've got? No capital gains on those stocks when passed to children. Again sounds fair to me.
  - barrkel 1y ago
    The heart of this is what you think tax is. If you just think it's the government stealing your stuff, then it seems very unfair to have your stuff taxed after you die. But what tax is, under another lens, is a way to divert the capacity of a state to social ends. Everything from the military to the police to prisons and the justice system is what enables you to live in peace and accumulate stuff in the first place. Those are social goods. So how do you fund this spending? How do you incentivize other people to protect your house? Well, the solution of tax is they take a little bit of your stuff over time, in a predictable way, according to rules that are pre-agreed and can be changed with consensus.

aosaigh 1y ago

Genuine question as I’ve been interested in the conversation around taxing wealth: how do we do it? I assume a new government dept. has to be set up to oversee it. Or do the wealthy self assess? Are things like shares and investments valued once? Once per year? How is a company valued? How do you know if you qualify as wealthy? Do we value everyone’s wealth? Can’t the wealthy just relocate or move assets out of reach? I don’t expect answers to this, I’m just thinking out loud as there seem to be a lot of challenges. A few countries seem to have tried and continued to tax wealth but it seems far from proven and only seems to “work” in Switzerland, which is a bit of an outlier

sorcerer-mar 1y ago
Just tax land and you'll get 80/20
balderdash 1y ago
I don’t think the wealth taxes, fundamentally workable because you have issues you raised above, but other things like liquidity and indivisibility of assets. I think the simpler solution if simply passing along the original cost basis to heirs (and without documentation it’s assumed to be zero). That way people or even families can defer taxes on income, but eventually they get paid.
gruez 1y ago
I think by "asset" OP actually means "real property", otherwise the subsequent statement of "if you own most of Mayfair, you can't just move your assets elsewhere - they are very clearly tied to the location" doesn't really make sense. You could easily move corporations around, for instance, so the statement is only really true when applied to real estate.
- bashtoni 1y ago
  This isn't limited to property. Britain could just as easily tax profits on the sale of shares in British companies, regardless of the country of domicile of the company or individual that sold the shares. We don't need wealth taxes, we just need parity between tax on earned and unearned income.

mattmanser 1y ago

The royal family is exempt from a lot of tax laws. There was a bit of a scandal a few years back at just how much input the Queen got to those sort of laws, but it didn't really have legs as everyone thought she was brilliant. But if the same thing comes out about King Charles you can bet it's going to be a bigger stink.

monero-xmr 1y ago

The real solution to the UK’s stagnation is accepting the truly politically difficult truth - the UK is getting poorer, year after year. The empire is long dead and gone, and their number 1 growth company and success story of the last decade is OnlyFans, a global smut purveyor. The UK needs to radically reduce its social safety net and simultaneously cut taxes, at least for new companies and small businesses. The only way out is real, sustained, long term growth and innovation. Stealing ever more of a shrinking pie is already running out of steam.

silverquiet 1y ago
> The UK needs to radically reduce its social safety net and simultaneously cut taxes, at least for new companies and small businesses. The only way out is real, sustained, long term growth and innovation. Stealing ever more of a shrinking pie is already running out of steam. I was under the impression they had done that already. https://en.wikipedia.org/wiki/United_Kingdom_government_austerity_programme https://en.wikipedia.org/wiki/United_Kingdom_government_aust... Though one can't help but think it wont be radical enough for conservatives until we simply dispose of those unable to work through some dystopic mechanism or other.
- adammarples 1y ago
  This was a long time ago. Since then we've been running full speed in the opposite direction.
  - ojno 1y ago
    (from the linked Wikipedia article) > Coalition and Conservative governments in office from 2010 to 2019 used the term, and it was applied again by many observers to describe Conservative Party policies from 2021 to 2024, during the cost of living crisis. 2024, last year, is "a long time ago"?
    - adammarples 1y ago
      People use terms, they're often wrong. The last few years since 2019 we've been breaking ever greater records on state spending and borrowing, this is not austerity.

fmajid 1y ago

That Socialist hotspot, Texas, taxes property at 1.8%, vs. 0% in the UK. Can't inconvenience the feudal aristocracy (i.e. parasites descended from thugs), starting with Chuck von Battenberg, Sachsen, Coburg und Gotha.

nebula8804 1y ago
Yeah but they have No Income tax right?
- const_cast 1y ago
  No, Texas residents pay income tax to the federal government. On a state level, yes, there is no income tax. However, the tax burden in Texas is not significantly lower than a state like California.
ojhughes 1y ago
The UK has council tax, which is quite similar to a property tax
- fmajid 1y ago
  It's capped. The Duke of Westminster is not paying 1.8% on his substantial feudal holdings in London.

rich_sasha 1y ago

As you pay more tax, you get less services, and I dont just mean, where you elect to avoid them. You get less (or none at this point) free childcare. No umemployment benefits if you get fired. No child benefit. You can't save as much in your pension. Then there are the semi-elective things like healthcare, education, home security. These kinda dont work for the whole society. The rich are thus paying for their own out of pocket. But they are also paying for the semi-working system for everyone else. I think introducing a wealth tax just to balance the books without rethinking who and how accesses public funds, will just end with the rich leaving. Some may say good riddance, but the UK budget is now beyond creaking and heading for collapse. Oh and when I say "the rich", that probably covers many people here. IIRC earning 90k per year puts you in the top 1%. A 10-15 year experience NHS doctor is in that bracket.

newdee 1y ago
People earning 90k aren’t “the rich” that are doing the most egregious tax avoidance. They’re still working class. They still have to work or face destitution. The very top sliver who own the majority of the land and assets and who never need to work a day in their life are who must be looked at; that hereditary wealth needs to begin to find itself flowing into public services more and more.
- rf15 1y ago
  millionaires looking at billionaires: "really, I'm not that rich, more middle class really"
  - muro 1y ago
    90k / year is not a millionaire, if it's pre-tax. With 35% tax (picked a random reasonable sounding number), it would take 17years to earn a million if you have 0 expenses.
- rich_sasha 1y ago
  They are, I fear, the ones that pay this tax. The actual millionaires will surely figure out how to avoid it, just as they did with all the other ones.

DrScientist 1y ago

Yep - Cayman Islands, Isle of Man, Channel Islands, British Virgin Islands etc etc. It's these that need to be tackled - not just because of tax evasion, but because they are also a large part of the workings of organised crime.