Total economic meltdown

[Thedelldays]

comrade pap has a blog....

 

christ, sheer propaganda

[pap]

comrade pap has a blog....

 

christ, sheer propaganda

 

I actually have several, sir - don't update them all as frequently as I'd like.

 

Think you'll need to do slightly better than "comrade pap", me old mucker. I'm as like to take that as a compliment.

 

The bit about "sheer propaganda" is a bit better. Work on that angle.

[Verbal]

The government's move on house prices may seem odd, given the generally agreed over-valuation of property. But property collapses have been at the heart of all the major triggers of economic recession (and possibly depression) since 2008. The US property collapse in 2008 exposed massive over-lending to people who couldn't afford it (and the use of derivatives to conceal this problem), and when they all defaulted, the banking system was exposed as a ruin in in need of 100s of billions of dollars of federal guarantees. Exactly the same has happened in Spain (other debt levels are actually much lower there) and Ireland. Both countries are now littered with abandoned houses and incomplete housing-estate ghost towns. The government no doubt wouldn't mind gentle falls in house prices, but any collapse would put yet more pressure on British banks. Of course, the way Osborne has gone about it may only stoke the bubble.

[dvaughanwilliams]

The problem with money creation is that it isn't free. The US Federal Reserve is a great example. It has sole authority to print money. Every dollar it prints is loaned to the government at a rate of interest, which they can never pay back. Every new dollar that they'd create to pay back the interest would also attract a rate of interest. That's a system that is fundamentally broken, especially since the Federal Reserve isn't part of the US Government.

 

 

 

The Federal Reserve Act, which brought the Federal Reserve into being, slipped into law faster than a greased weasel. It essentially placed the supply of US money into the hands of private bankers, putting the US into perpetual never never. I'm not as clued up on the Bank of England, but if the world's largest market's economy is broken, that has serious implications.

 

Even if we work on the premise that money can be freely printed, what does it say about the value of money when we've just created it out of thin air? It isn't earned. Doesn't reflect any skill. It exists because we say it exists, and it has the value we say it has.

 

I can appreciate that you have some affinity with the current financial system, but I'm not really sure that's relevant to my position. I'm calling the entire financial system into question. I'm saying that I don't understand why a country like Greece is going through so much crap because of arbitrary numbers created from nothing, nor do I get why people are losing their collective sh*t over this financial crisis.

 

Hypothetical scenario. Man gets dropped in the wilderness with no way of contacting anyone. Is he worried about money at this point? Nope. He's worried about survival, and is probably contriving ways of using the physical environment to achieve that objective. If the EU goes bust, so what? It still has a physical environment that can support its citizens. Are we going to starve over these "phantom" numbers? Go to war for it?

 

I thought part of our remit of being the dominant species on the planet was getting to make the rules. This system will crash at some point. It already is in some places. Are we to repeat the mistakes of the past, or do we have the wit to be the ones to say "nah, it's all boll*cks - let's try something else"?

 

I find your post interesting. The points you raise about the Federal Reserve are points normally raised by US conservatives. I am also unconvinced that they are true.

 

Money is just 'keeping score'. The example given by Cullen Roche is that money is like points in a basketball game. The scorekeepers have an infinite number of points available to distribute, but someone has to score to gain the points.

 

The other problem is that there is a debate, with no consensus about how banks work. We have set the rules, but do not understand everything about the game. The article that started this thread is a good case. The theory underlying the views of central banks are that banks need deposits or to borrow money first[\b] to lend it on to borrowers in society. Therefore, the Central Banks think that by supplying more money to banks, it will increase lending and stimulate the economy.

 

The other possibility is that loans create money and after the loan is made the banks fund the reserves they require under our Fractional Reserve Banking system.

 

If people can't agree on how banks, credit and the money supply actually operate, what hope is there of them agreeing on a solution.

 

I have no affinity with the current system or its main proponents and ultimately the cost of monetary printing would hit surprisingly few people and would not create inflation. I also agree that Greek people should not be going without medicine because the Germans do not want to allow the possibility of 'moral hazard'.

 

The views of Monetary Realism and MMT might be closer to your politics than you think.

[Special K]

I do a lot of work in manufacturing. Business model there is pretty simple. Bill of materials + labour + profit margin = cost to customer. That wouldn't be a bad start for new builds.

 

Well it's a start, but by the time you factor in land costs, architects fees, engineers fees, (hugely overinflated) 106 contributions, 278 works and bond, air tests, sound tests, building warranty insurance, SAP calcs, Part L Bui;ding reg upgrades, finance costs, gas, electric, water and BT upgrades, not to mention the actual cost of building the house and any BREEAM assessments and/or specific planning consents, then guess what, you pretty much come up to the level that house prices are at present.

[saintfully]

At the risk of stating the bleedin' obvious, my (basic) understanding is that money is supposed to conveniently represent value.

 

When a central bank creates it, it is able to do so because it has been granted the authority (explicitly or otherwise) to do so on the basis that it has an accurate understanding/measure of value within/of the state. Since the gold standard was replaced by fiat money, I would argue that all states have allowed themselves to drift away from this simple reality. Hence the creation of debt that cannot be re-paid.

 

Solution? First we need to decide what we want our societies to look like, then we can devise a system that enables it to happen. The alternative, of trying to recognise the 'rules' by which economies operate and then to match society to it, is, in my view, somewhat defeatist. But then I'm a scientist, so what do I know?

[saintfully]

Well it's a start, but by the time you factor in land costs, architects fees, engineers fees, (hugely overinflated) 106 contributions, 278 works and bond, air tests, sound tests, building warranty insurance, SAP calcs, Part L Bui;ding reg upgrades, finance costs, gas, electric, water and BT upgrades, not to mention the actual cost of building the house and any BREEAM assessments and/or specific planning consents, then guess what, you pretty much come up to the level that house prices are at present.

 

The largest cost?

[bridge too far]

The largest cost?

 

It's market forces, isn't it. Given the current inability of many people to buy houses, thus stagnating the housing market, the developers simply build up their land banks. If they were to start to build on that land, the price of new houses would be a tad more realistic because the supply of new housing would increase (and also this would include social housing as permissions tend to require a percentage of affordable / social housing on any reasonably sized development).

 

There used to be a rule of thumb - the tradesman working on an 'average' house used to be able to afford to buy it. Not the case now, I think.

[Thedelldays]

we probably have too many people living here....for one reason or another

[Verbal]

we probably have too many people living here....for one reason or another

 

What does this mean and how is it relevant?

[manji]

comrade pap has a blog....

 

christ, sheer propaganda

The article on the Council Estates is very good. Why do you have to be a "commie" to agree with with he has written ? Its a good example of how American style free market practices have damaged the fabric of our country in the last 20 or so years.

[Saintandy666]

The article on the Council Estates is very good. Why do you have to be a "commie" to agree with with he has written ? Its a good example of how American style free market practices have damaged the fabric of our country in the last 20 or so years.

 

It's part of this ridiculous American right-wing culture where anyone left wing of say Thatcher is dubbed a communist and the words 'liberal' and 'intellectual' are dirty. It's ridiculous because Obama is not really that left wing.

[dubai_phil]

Just back from hols.

 

In order to blag a few extra days in Italy FMDP "volunteered" to go visit some of the manufacturers that supply the Italian Furniture store where she works. Business here has been improving from the utter disaster of Dubai's "Bankruptcy" some 3 years ago and can now be termed a steady trickle.

 

My role in Italy was as "chaffeur" but also in her meetings I was asked to chip in with some general overviews on the economy down here.

 

What I wasn't expecting was the total carnage that I saw in the Industrial estates around Northern Italy. The factories are admittedly getting close to their summer shut downs but every one we visited was a classical 1960's style big operation, but there were only a handful of cars in each car park, no more than half a dozen workers on the shop floors with one piece of "mdf' seeming to come past on a machine about every 5 minutes. The number of empty (and dusty) offices - well over 2/3rds of them seemed empty.

 

As the guys said at our first visit "business has simply stopped", it is everywhere. It turned out that the few orders FMDP had placed this year made her one of their biggest customers. The guys said it had hit everywhere, LIDL's were much more popular, the bigger "Ipermarkets" had empty car parks, we had no trouble getting a table in the best restaurant in Treviso even in a wife beater top, shorts & Timberland sandals despite the collar & tie dress code notice in the window.

 

It simply seemed in the towns and shops (that were NOT catering for tourists) life has come to a standstill in the country. They pointed out that on a personal level, none of their friends had had a pay rise for 3 years, and each month, new taxes or cost increases (Electricty Bill had risen 80 Euros in 6 months) meant that people were just hanging on and trying to survive.

 

Anyway the image it gave was of the end of the melt down, and I couldn't help but compare it to my recent trips back to the UK which by comparison seems to be absolutely booming. Perhaps the worst is really yet to come.

[Lord Duckhunter]

This is one of the best articles I've seen recently, I particulary agree with the bits;

 

 

 

 

 

 

 

"The heart of the matter is the way public debt allows the current generation of voters to live at the expense of those as yet too young to vote or as yet unborn."

 

" today's Western democracies now play such a large part in redistributing income that politicians who argue for cutting expenditures nearly always run into the well-organised opposition of one or both of two groups: recipients of public sector pay and recipients of government benefits."

 

"The present system is, to put it bluntly, fraudulent. There are no regularly published and accurate official balance sheets. Huge liabilities are simply hidden from view.Not even the current income and expenditure statements can be relied upon in some countries. No legitimate business could possible carry on in this fashion."

 

 

 

 

 

http://www.bbc.co.uk/news/world-18456131

[dune]

It's part of this ridiculous American right-wing culture where anyone left wing of say Thatcher is dubbed a communist and the words 'liberal' and 'intellectual' are dirty. It's ridiculous because Obama is not really that left wing.

 

Never have two words been less compatible.

[bridge too far]

Never have two words been less compatible.

 

http://phys.org/news186236813.html

 

 

"Data from the National Longitudinal Study of Adolescent Health (Add Health) support Kanazawa's hypothesis. Young adults who subjectively identify themselves as "very liberal" have an average IQ of 106 during adolescence while those who identify themselves as "very conservative" have an average IQ of 95 during adolescence"

[saintfully]

This is one of the best articles I've seen recently, I particulary agree with the bits;

 

 

 

 

 

 

 

"The heart of the matter is the way public debt allows the current generation of voters to live at the expense of those as yet too young to vote or as yet unborn."

 

" today's Western democracies now play such a large part in redistributing income that politicians who argue for cutting expenditures nearly always run into the well-organised opposition of one or both of two groups: recipients of public sector pay and recipients of government benefits."

 

"The present system is, to put it bluntly, fraudulent. There are no regularly published and accurate official balance sheets. Huge liabilities are simply hidden from view.Not even the current income and expenditure statements can be relied upon in some countries. No legitimate business could possible carry on in this fashion."

 

 

 

 

 

http://www.bbc.co.uk/news/world-18456131

 

 

Re: cutting expenditure runs into interest groups of public sector/benefits recipients (I summarise).

 

There is another way of cutting expenditure and thats by increasing taxes. Specifically, tax on inherited wealth and land. Let the successful be rewarded, not their feckless offspring.

[dune]

http://phys.org/news186236813.html

 

Clearly written by a tree hugger. Personally I prefer to deal in facts and the west (our standing in the world relative to poorer countries) was not built by liberal sorts.

[bridge too far]

Clearly written by a tree hugger. Personally I prefer to deal in facts and the west (our standing in the world relative to poorer countries) was not built by liberal sorts.

 

What a shame you didn't take the time and trouble to read the whole article published in an academic American journal. Or is 'academic' beyond you? QED

[dune]

What a shame you didn't take the time and trouble to read the whole article published in an academic American journal. Or is 'academic' beyond you? QED

 

I don't need to read articles.

[bridge too far]

I am unable to read articles.

 

Corrected

[Lord Duckhunter]

Re: cutting expenditure runs into interest groups of public sector/benefits recipients (I summarise).

 

There is another way of cutting expenditure and thats by increasing taxes. Specifically, tax on inherited wealth and land. Let the successful be rewarded, not their feckless offspring.

 

If increasing taxes was the answer then the Labour Gov. of the 70's would be the most sucsessful we've had. Income tax take went up after Nigel Lawson's tax cutting budgets.

 

If I am sucsessful, surely I should be able to leave the fruits of my sucsess it to my "feckless offspring". Rather that than it going to feckless wasters who've not worked as hard as me, or to be spent on a national celebration in honour of a family that have the greatest inherited wealth in the whole Country.

 

My Father in Law left school at 14 with nothing, he built up a sucsessful Night Club business and made a lot of money. He went without holidays and worked many many hours building it up. He is now comfortably off, why should he be taxed more when leaving HIS hard earned money to his children, especially when he's already paid a higher rate of income tax on that money anyway? Had he pi ssed it all up, blown the lot, there would be no tax to pay.

[dune]

If increasing taxes was the answer then the Labour Gov. of the 70's would be the most sucsessful we've had. Income tax take went up after Nigel Lawson's tax cutting budgets.

 

If I am sucsessful, surely I should be able to leave the fruits of my sucsess it to my "feckless offspring". Rather that than it going to feckless wasters who've not worked as hard as me, or to be spent on a national celebration in honour of a family that have the greatest inherited wealth in the whole Country.

 

My Father in Law left school at 14 with nothing, he built up a sucsessful Night Club business and made a lot of money. He went without holidays and worked many many hours building it up. He is now comfortably off, why should he be taxed more when leaving HIS hard earned money to his children, especially when he's already paid a higher rate of income tax on that money anyway? Had he pi ssed it all up, blown the lot, there would be no tax to pay.

 

Fair taxation is what is needed, and the 50p rate of income tax (bearing in mind 50P in the pound is only paid over and above a generous threshold) was fair. The argument given that it was a bad tax because so many avoided/evaded paying it was a disgraceful argument to support a reduction. If people aren't paying it then make them pay it, just like benefits slobs should be tackled.

 

In that one move the government lost the next election. The whole line of "all being in it together" was shown to be a lie and they won't regain that trust. That is the mood I detect among most of the people I know.

Edited 17 June, 2012 by dune

[aintforever]

My Father in Law left school at 14 with nothing, he built up a sucsessful Night Club business and made a lot of money. He went without holidays and worked many many hours building it up. He is now comfortably off, why should he be taxed more when leaving HIS hard earned money to his children, especially when he's already paid a higher rate of income tax on that money anyway? Had he pi ssed it all up, blown the lot, there would be no tax to pay.

 

Virtually everyone works hard, my best mate works himself to the bone but doesn't earn great money. Another mate earns an absolute fortune and spends most his life on a golf course. We all pay tax and it's right that those who can afford to pay more, you still get more money the more you work.

 

We need to reduce the tax burden on the lowest paid and cut benefits to get he work shy off their asses. people in the 50% tax bracket who moan are just plain greedy IMO.

[badgerx16]

Fair taxation is what is needed, and the 50p rate of income tax (bearing in mind 50P in the pound is only paid over and above a generous threshold) was fair. The argument given that it was a bad tax because so many avoided/evaded paying it was a disgraceful argument to support a reduction. If people aren't paying it then make them pay it, just like benefits slobs should be tackled.

 

 

Although I feel we may disagree on who qualifies as a 'benefits slob', though I accept they do exist, I otherwise totally concur with this statement

[Saintandy666]

Fair taxation is what is needed, and the 50p rate of income tax (bearing in mind 50P in the pound is only paid over and above a generous threshold) was fair. The argument given that it was a bad tax because so many avoided/evaded paying it was a disgraceful argument to support a reduction. If people aren't paying it then make them pay it, just like benefits slobs should be tackled.

 

In that one move the government lost the next election. The whole line of "all being in it together" was shown to be a lie and they won't regain that trust. That is the mood I detect among most of the people I know.

 

I agree with you on the 50p tax band. They didn't really give it a chance. In the first year, people moved income forward and this year they will move it back so we'll never discover whether it works or not. It was a purely ideological decision, and you are right it does mess up their 'We're all in this together' crap.

 

Like the person above, I think we would disagree on the term 'Benefit slob' and the associated comments.

 

But if the Tories have lost the election... does that mean PM Miliband?!

[trousers]

If a 50p top tax rate is so blindingly and obviously 'fair' why did it take the Labour Party 12 years to increase it from 40p? #confused

[aintforever]

If a 50p top tax rate is so blindingly and obviously 'fair' why did it take the Labour Party 12 years to increase it from 40p? #confused

 

Probably because most of that time we were not skint.

[dubai_phil]

Just one question.

 

Why the fuss over 50p tax?

 

It's utter bollix. I've seen more than a few articles about "let's call them Bankers" only paying 5 or 10% of their income

 

Normal Joe Public ends up having to pay a fixed percentage of their income (after basic allowances) - say it is somewhere near to 30% with NI etc, yet the rich get allowances and write offs and brought forwards and pay a fortune to Accountants (which gets written off). Just get everyone to pay the same damn average amount.

 

30% of a lot of money is a lot more than 10% after a bunch of bullsh1t write offs. NOBODY ever paid 50% anyway, it was just PR bull to make Joe Red Flag feel better.

 

50% 80% 100% it's just like Greece, none of the wealthy will ever pay the taxes anyway

[Danbert]

That is singulalrly the worst Idea I have EVER heard about reforming the property market.

 

 

er why?

 

Dear Sir Mervyn,

 

In answer to your question above...

 

How do you think we got into the mess we're currently in?

 

House prices have got to the unsustainable level they have now reached because of lax lending practices, in particular self-certification mortgages (a.k.a. liar loans) and Britain's 4 million interest-only mortgages. That's right, 4 million "house owners" (all they really own is debt) have been banking on house prices rising inexorably. These things should come with a warning - prices may go down (and if they do you're ****ed mate).

 

In general, the more money people can borrow to purchase houses the more houses will cost. If banks extend even larger loans at still greater income multiples people will have to spend more of their income on paying off their mortgage - but they won't get a better house out of it.

 

Spreading payments over several generations would inflate house prices still further, locking people into inter-generational debt servitude and sucking even more money out of the productive economy and into an already over-inflated asset class.

 

So yes, it's a bloody awful idea.

[trousers]

Probably because most of that time we were not skint.

 

But the 50p rate is 'fair' in principle, whether we're skint or not? Probably even more logical to squeeze a bit more tax out of the high earners when the going is good...? Saving for a rainy day and all that malarkey....

[saintfully]

Just one question.

 

Why the fuss over 50p tax?

 

It's utter bollix. I've seen more than a few articles about "let's call them Bankers" only paying 5 or 10% of their income

 

Normal Joe Public ends up having to pay a fixed percentage of their income (after basic allowances) - say it is somewhere near to 30% with NI etc, yet the rich get allowances and write offs and brought forwards and pay a fortune to Accountants (which gets written off). Just get everyone to pay the same damn average amount.

 

30% of a lot of money is a lot more than 10% after a bunch of bullsh1t write offs. NOBODY ever paid 50% anyway, it was just PR bull to make Joe Red Flag feel better.

 

50% 80% 100% it's just like Greece, none of the wealthy will ever pay the taxes anyway

 

Except you can't move land out of the country. Tax wealth/land.

[dubai_phil]

But the 50p rate is 'fair' in principle, whether we're skint or not? Probably even more logical to squeeze a bit more tax out of the high earners when the going is good...? Saving for a rainy day and all that malarkey....

 

Yeah but they don't PAY it....

 

Image rights for footballers on 100k a week being just one of a myriad of examples

 

Just imagine the savings to the economy if there were NO tax breaks at all, everyone just paid 30%, no accountants to complete tax forms and thousands of public sector workers not needing overpriced pensions (let alone salaries)

 

Point is no matter WHAT the tax rate, the REALLY rich don't pay, and the concept of higher tax rates has NEVER been shown to work

Edited 17 June, 2012 by dubai_phil

[dubai_phil]

Except you can't move land out of the country. Tax wealth/land.

 

Yep.

 

Except that doesn't hit the Bankers & accountants. Tax the houses or the land they are on? That would help the middle & lower income families in London versus those up in Geordie land (or the expat "commuters" up in Scotland)

[capitalsaint]

Yeah but they don't PAY it....

 

Image rights for footballers on 100k a week being just one of a myriad of examples

 

Just imagine the savings to the economy if there were NO tax breaks at all, everyone just paid 30%, no accountants to complete tax forms and thousands of public sector workers not needing overpriced pensions (let alone salaries)

 

Point is no matter WHAT the tax rate, the REALLY rich don't pay, and the concept of higher tax rates has NEVER been shown to work

 

Except you'd have just made every accountant and tax advisor unemployed. Don't ignore the trickle down.

[Special K]

The largest cost?

 

Generally the largest individual cost, yes.

[Special K]

It's market forces, isn't it. Given the current inability of many people to buy houses, thus stagnating the housing market, the developers simply build up their land banks. If they were to start to build on that land, the price of new houses would be a tad more realistic because the supply of new housing would increase (and also this would include social housing as permissions tend to require a percentage of affordable / social housing on any reasonably sized development).

 

There used to be a rule of thumb - the tradesman working on an 'average' house used to be able to afford to buy it. Not the case now, I think.

 

Far too simplistic and inaccurate. Most developers cannot afford a) to buy spec land with no chance of getting a ticket anytime soon and b) wait for an undefined time before developing it. Berkeley's and Lindens (to some extent) were the only Developers i know of who made sure they had enough reserve to buy distressed sites in 08 and 09 and enough reserve to buy land "cheaply" whilst all the others were fretting about refinancing and renegotiating their convenants. Look at Taylor Wimpey's figures from 3 and 4 years ago for example.

 

And all Developers WANT to build on any land they have, but more often than not, it's the bureaucracy of local authorities that hold up the process.

[dune]

Just one question.

 

Why the fuss over 50p tax?

 

It's utter bollix. I've seen more than a few articles about "let's call them Bankers" only paying 5 or 10% of their income

 

Normal Joe Public ends up having to pay a fixed percentage of their income (after basic allowances) - say it is somewhere near to 30% with NI etc, yet the rich get allowances and write offs and brought forwards and pay a fortune to Accountants (which gets written off). Just get everyone to pay the same damn average amount.

 

30% of a lot of money is a lot more than 10% after a bunch of bullsh1t write offs. NOBODY ever paid 50% anyway, it was just PR bull to make Joe Red Flag feel better.

 

50% 80% 100% it's just like Greece, none of the wealthy will ever pay the taxes anyway

 

What a defeatist attitude. If loopholes are being exploited then close them.

[dubai_phil]

What a defeatist attitude. If loopholes are being exploited then close them.

 

Yeah they said that in Greece.

 

As fast as a Civil Servant dreams up a way to close them, 1,000 far more highly motivated accountants & lawyers work out new ways to beat it.

[buctootim]

Far too simplistic and inaccurate. Most developers cannot afford a) to buy spec land with no chance of getting a ticket anytime soon and b) wait for an undefined time before developing it. Berkeley's and Lindens (to some extent) were the only Developers i know of who made sure they had enough reserve to buy distressed sites in 08 and 09 and enough reserve to buy land "cheaply" whilst all the others were fretting about refinancing and renegotiating their convenants. Look at Taylor Wimpey's figures from 3 and 4 years ago for example.

 

And all Developers WANT to build on any land they have, but more often than not, it's the bureaucracy of local authorities that hold up the process.

 

The market price of my house is almost three times the cost of rebuilding it if it were flattened in an earthquake or bomb. The difference is the ridiculous price of the land. You can build a good quality good size (1,400sqft)new 3 bed house for £150,000. The government / local councils should end the land speculation of £4,000 acre as agricultural land, £2m as building and buy brownfield and agricultural sites (compulsory purchase if necessary) issue a development brief and spec (minimum size of houses, type mix, final selling price etc) and invite tenders from builders. You will have a lot more houses built, more cheaply and less boringly generic.

[Special K]

The market price of my house is almost three times the cost of rebuilding it if it were flattened in an earthquake or bomb. The difference is the ridiculous price of the land. You can build a good quality good size (1,400sqft)new 3 bed house for £150,000. The government / local councils should end the land speculation of £4,000 acre as agricultural land, £2m as building and buy brownfield and agricultural sites (compulsory purchase if necessary) issue a development brief and spec (minimum size of houses, type mix, final selling price etc) and invite tenders from builders. You will have a lot more houses built, more cheaply and less boringly generic.

 

We were talking about new build schemes, where, for bigger sites, there is no infrastructure or services. And Housing Associations already issue minimum requirements for their housing (size, spec, etc) and tender their works all around, so the current system is no different to what you propose. But they cannot just go around buying up land at will. It would fracture any withering confidence in the market and if they chose the wrong site, they would be left with the same issues as private developers.

[saintfully]

If increasing taxes was the answer then the Labour Gov. of the 70's would be the most sucsessful we've had. Income tax take went up after Nigel Lawson's tax cutting budgets.

 

If I am sucsessful, surely I should be able to leave the fruits of my sucsess it to my "feckless offspring". Rather that than it going to feckless wasters who've not worked as hard as me, or to be spent on a national celebration in honour of a family that have the greatest inherited wealth in the whole Country.

 

My Father in Law left school at 14 with nothing, he built up a sucsessful Night Club business and made a lot of money. He went without holidays and worked many many hours building it up. He is now comfortably off, why should he be taxed more when leaving HIS hard earned money to his children, especially when he's already paid a higher rate of income tax on that money anyway? Had he pi ssed it all up, blown the lot, there would be no tax to pay.

 

As I said in my post, I would prefer increased wealth/land tax, not income tax - so your point about the Labout govt of the 70's is moot.

 

I want inherited wealth to be taxed higher so we all have to work a bit harder, not just those of us with waster/unfortunate/profligate parents. I believe in equality of opportunity and so like everyone to start from a level playing field. Inherited wealth distorts that.

 

So, the reason why your father-in-law should be taxed when he dies is that his success has nothing to do with his kids. They deserve the right to succeed on thier own merits and not at the expense of others. If we've learnt anything from this crisis it should be that 'wealth' cannot simply be magic-ed out of thin air. Its finite. Thus, an accumulation of resources by one group is a denial of resources to another. This is fine if they've 'won the game', but it shouldn't happen by birth right. (Which is why I agree with your point about the royals).

 

BTW if he had ****ed it all up and blown the lot, the money would have been recirculated in the economy - which IMHO is a good thing, and better than it being stuck forever in bricks and mortar.

 

I don't think we're that far away from eachothers point of view, but disagree about how big a role the state should play. My view is that the role of the state is to facilitate an equal chance to all - hence my views on inheritance etc.

[Thedelldays]

As I said in my post, I would prefer increased wealth/land tax, not income tax - so your point about the Labout govt of the 70's is moot.

 

I want inherited wealth to be taxed higher so we all have to work a bit harder, not just those of us with waster/unfortunate/profligate parents. I believe in equality of opportunity and so like everyone to start from a level playing field. Inherited wealth distorts that.

 

So, the reason why your father-in-law should be taxed when he dies is that his success has nothing to do with his kids. They deserve the right to succeed on thier own merits and not at the expense of others. If we've learnt anything from this crisis it should be that 'wealth' cannot simply be magic-ed out of thin air. Its finite. Thus, an accumulation of resources by one group is a denial of resources to another. This is fine if they've 'won the game', but it shouldn't happen by birth right. (Which is why I agree with your point about the royals).

 

BTW if he had ****ed it all up and blown the lot, the money would have been recirculated in the economy - which IMHO is a good thing, and better than it being stuck forever in bricks and mortar.

 

I don't think we're that far away from eachothers point of view, but disagree about how big a role the state should play. My view is that the role of the state is to facilitate an equal chance to all - hence my views on inheritance etc.

won't families just transfers assets before said person pops it.....wont that just get around that plan?

[dune]

Yeah they said that in Greece.

 

As fast as a Civil Servant dreams up a way to close them, 1,000 far more highly motivated accountants & lawyers work out new ways to beat it.

 

So you just give up making the rich pay what they should? What utter nonsense. You close the loopholes. If they won't pay 50p in the pound, they won't pay 40p in the pound so the issue will always be there unless it is dealt with. Do you just give up and pay slobs benefits?

Edited 18 June, 2012 by dune

[Frank's cousin]

Oh... thought this was another Pompey thread....

[dubai_phil]

Oh... thought this was another Pompey thread....

 

[capitalsaint]

Yeah they said that in Greece.

 

As fast as a Civil Servant dreams up a way to close them, 1,000 far more highly motivated accountants & lawyers work out new ways to beat it.

 

John Whiting (tax simplification office) was a tax partner at PWC for years and he chartered the Tax Institute. Loopholes are part of the tax code, they are not accidents.

[pap]

As I said in my post, I would prefer increased wealth/land tax, not income tax - so your point about the Labout govt of the 70's is moot.

 

I want inherited wealth to be taxed higher so we all have to work a bit harder, not just those of us with waster/unfortunate/profligate parents. I believe in equality of opportunity and so like everyone to start from a level playing field. Inherited wealth distorts that.

 

So, the reason why your father-in-law should be taxed when he dies is that his success has nothing to do with his kids. They deserve the right to succeed on thier own merits and not at the expense of others. If we've learnt anything from this crisis it should be that 'wealth' cannot simply be magic-ed out of thin air. Its finite. Thus, an accumulation of resources by one group is a denial of resources to another. This is fine if they've 'won the game', but it shouldn't happen by birth right. (Which is why I agree with your point about the royals).

 

BTW if he had ****ed it all up and blown the lot, the money would have been recirculated in the economy - which IMHO is a good thing, and better than it being stuck forever in bricks and mortar.

 

I don't think we're that far away from eachothers point of view, but disagree about how big a role the state should play. My view is that the role of the state is to facilitate an equal chance to all - hence my views on inheritance etc.

 

Good post, which mirrors a lot of my feelings on the issue.

 

In isolation, there is not a lot wrong with the principle of handing over money to people in exchange for goods and services. Compare and contrast that with barter systems, and it's immediately apparent that the sheer universality of money is extremely handy.

 

The long-term cumulative effects are the problem and inheritance is a huge factor in this. Many people equate money to success. It's a dangerous assumption because like you say, people inherit wealth. Those who inherit a lot can literally do nothing for their entire lives, and still be considered a success because of the amount of money they have. Conversely, someone without those resources can work every day of his or her life and still die penniless.

 

The counter-arguments to inherited wealth often focus on small-scale emotive examples, much like Lord D's. I can understand why he has strong feelings about the achievements his father has made in life, but at the other end of the inheritance scale you have people like the Duke of Westminster, who has an inherited multi-billion property portfolio.

 

If we were to ask the simple question "who was more of a success in life", Lord D's dad or the Duke of Westminster - most people would say Duke of Westminster. Lord D's dad has worked his whole life to get a piece of this Earth. The piece he has would probably small enough to be a rounding error when compared to the Duke of Westminster's holdings.

 

Who would get more respect if they were in a room together? The self-made nightclub entrepreneur or the bloke who inherited a big chunk of Mayfair?

[dune]

John Whiting (tax simplification office) was a tax partner at PWC for years and he chartered the Tax Institute. Loopholes are part of the tax code, they are not accidents.

 

precisely.

 

I see a distinct similarity between the situation now and the situation prior to the reformation in the 16th century. Forget the issue of Henry's divorce from Catherine of Aragon in the break from Rome for one minute, there was also the pressing issue of the king running out of money. The dissolution of the monastries which followed solved that and the chain of events that followed made us the greatest nation on earth.

[Lord Duckhunter]

Probably because most of that time we were not skint.

 

Why then, did they increase NI contributions for everyone in 2002, even the very lowest paid workers?

 

Why didn't they just increase the top rate of tax and spare the poorest from paying extra NI and loading firms with an extra 1% cost on every employee?