A Political Thread pt. 2

[odw26]

Is it generational or is it just the middle classes are now being squeezed out?

Both.

 

[Which Tyler]

Is "Wealth being handed directly from one generation to another within the same family 'generational' "?
Yes, yes it is

As is indirect wealth transfer such as private education and old-boys-ties etc.

Which doesn't mean that the middle classes aren't being squeezed out as well (they absolutely are) - but that's a separate issue (austerity, price-gouging, rampant-capitalism, tax loopholes for those who can afford it etc)

 

[TRF_Olyy]

Both.

Yeah, I think they go hand in hand

Wage stagnation and skyrocketing house prices (squeezing the middleclass) mean for a lot of people who would be considered middle class previously home ownership is either a pipedream or something they will achieve significantly later in their lives than previous generations - unless they get money from family and/or an inheritance (generational)

Everybody that I know that owns a home either had an inheritance or were gifted most of their deposit - if your family isn't in a position to do that then saving for a deposit is a very steep hill to climb

I'm not anticipating owning somewhere of my own until I'm pushing 40

 

[General Melchett]

to keep blaming old people isn't a fix.

Naughty boy Harold - that's not what he was doing and you know it.

 

[odw26]

Yeah, I think they go hand in hand

Wage stagnation and skyrocketing house prices (squeezing the middleclass) mean for a lot of people who would be considered middle class previously home ownership is either a pipedream or something they will achieve significantly later in their lives than previous generations - unless they get money from family and/or an inheritance (generational)

Everybody that I know that owns a home either had an inheritance or were gifted most of their deposit - if your family isn't in a position to do that then saving for a deposit is a very steep hill to climb

I'm not anticipating owning somewhere of my own until I'm pushing 40

It's difficult to say it's not a systematic erosion of the middle class.

Edit: Accidentally pressed submit

The generational aspect has just ensured the wealth continues to trickle up, not down, which means the middle class is being pushed downwards.

 

[dirty harry]

Yeah too much netflix and avocado toast


No one is blaming old people, just recognising the overwhelming amount of money certain classes have gained through property ownership
Billions? Trillions?
The countries on its arse and so much of the wealth is tied up in something that gives nothing back at this stage

Generally I'm against inheritance tax, but sometimes tough decisions have to be made - not that I trust Labour (or anyone else, really) to make them after they keep flopping whenever they suggest anything that might get some revenue

I was thinking more like 1k phones, 35k cars etc... but also variety, Netflix is absolutely part of the problem.

30 years ago, subscriptions were limited to the local tic man, Avon and catalogues lol. They were pennies in comparison to what people pay for today.

WiFi, Netflix, Disney, amazon, sky are pretty common, that's 150 per month straight off the bat for TV alone. Then theres the TV license, Spotify, premium for online services etc...

Car payments, uber eats, kids are financing getting shitty takeaway food delivered these days lol, uber, bicycle and scooter hire schemes...

None of these existed really 30 years ago, thousands of pounds per month. Spending habits of 18 to 24 year olds will terrify you! They've been spoiled by their parents, and want to maintain a lifestyle they can't afford.

Fixing the wealth problem has to be to incentives, not degenerate.

 

[dirty harry]

Naughty boy Harold - that's not what he was doing and you know it.

I don't think enough attention is paid to how much damage the hoarding of wealth in 1 generation is doing to the economy.

How would you interpret this quote?

 

[Which Tyler]

I don't think enough attention is paid to how much damage the hoarding of wealth in 1 generation is doing to the economy.

How would you interpret this quote?

Blaming the society, not the individuals.

But then, you know that already, and are just being an arse because it amuses you.

 

[dirty harry]

Blaming the society, not the individuals.

But then, you know that already, and are just being an arse because it amuses you.

Thisnis a lie. You dont believe this. The word Hoarding relates to the peoples act, not a societal one.

 

[Bada-Bing!]

Rachel Reeves autumn Budget will see significant tax rises

Repeatedly borrowing more is not a long-term solution to rising day-to-day spending pressures.

www.bbc.co.uk

No doubt taxes will have to rise. On IHT it is the most hated tax because it feels like a double tax on assets which have been brought with income which was already taxed during our parents/GPs lifetimes.

So it hits into that emotional unfairness because it’s so natural to want to pass those assets onto your loved ones.

The Non-Doms don’t want to pay 40% on their offshore assets paid from earning they earned when they were abroad and are now trapped here under a new tax regime until they leave after a set period.

She’s already ****** off the farmers with limiting Agricultural Property relief, which was being exploited by the likes of Clarkson and Dyson. I am sure small business owners are also aggrieved.

She’s included pensions in estates on death so better spend it before you die.

She touches things like £1m NRB then the likes of the Daily Mail will kick up an almighty fuss and she’ll lose Labour the middle class vote.

Peeps say they’ll pay IHT gladly until they see the bill for it.

Of all the taxes IHT brings in a minute amount compared to the big earners - IT, NIC, VAT.

It’s going to be a big political gamble for her regardless IMO whatever she raises.

 

[TRF_Olyy]

I don't know if there's already something like that in there, but could they do Inheritance Tax mixed with Capital Gains Tax?

Still tax the inheritance over a certain level but only the capital gains over a certain level, that way you're not taxing the purchase twice you're taxing the inflation on it

 

[Bada-Bing!]

I don't know if there's already something like that in there, but could they do Inheritance Tax mixed with Capital Gains Tax?

They are two separate taxes.

IHT is on the value transferred ie lifetime gifts and on your estate on death.

CGT is a tax on chargeable disposal (sale or gift) of a chargeable asset by a chargeable person. But if an asset is transferred to a “connected person” ie parent to their son/daughter then for tax purposes that’s deemed at market value and can give rise to a CGT charge.

There are of course reliefs/exemptions available.

Still tax the inheritance over a certain level but only the capital gains over a certain level, that way you're not taxing the purchase twice you're taxing the inflation on it

They already do. So for normal peeps you have a nil rate band for IHT of £325k each, above which you pay 40%. That can be doubled if you are married. On top of that there is the residential Nil rate band boosting it to £1m. Hence why I think it’ll be political suicide for Reeves to touch that.

For CGT they have reduced the annual exemption to £3k per tax year. It used to be as high as £12.1k before you paid CGT rates as low as 10%. Now it’s 18%/24%.

But yes, removal of indexation allowance which was a relief for inflation was a real bummer in terms of eating into any profit earned.

 

[TRF_Olyy]

Yeah, sorry, I meant combine the two into new IHT reforms - so increase IHT but only on capital gains

 

[General Melchett]

You just know that the Tories are going to try and capitalise by promising to abolish IHT in their next manifesto along with other tax breaks at the expense of public services being improved. I can see many lapping it up as people want money in their pockets now rather than thinking about long term planning and improvements.

I would charge 5% CGT rate on the sale of a primary residence where the gain is over £1m unless they roll it forward by buying a more expensive property where stamp duty would be payable. This would target multi millionaire pensioners downsizing their multi million pound homes to smaller homes as they get older. It wouldn't affect most pensioners and only the mega rich.

 

[Bada-Bing!]

Yeah, sorry, I meant combine the two into new IHT reforms - so increase IHT but only on capital gains

There is already overlap between the two taxes like on Gifts. When you say combine the two regimes - I think it would too complex from a legislative and administrative POV.

We already apparently have the longest tax code in the world. Adding even more complexity will be a an even greater headache.

 

[TRF_Olyy]

Fairs, I'm talking solely about property/land ownership though

 

[Bada-Bing!]

Yeh so home ownership/property is one which IHT and CGT both applies to. it just depends on the transaction - gift to descendants then IHT applies, sell it to third party then CGT applies subject to it being your main residence.

 

[ncurd]

On IHT its also definitely one of those things where people dont realise the vast majority of people won't pay it. Although it definitely needs to move up with inflation.

I like Olyy's of shifting it more in lines with Capital Gains though which is real problem. Its not the assest themselves.

 

[Bada-Bing!]

Depends where you live. With house prices in the southeast it will drag a lot of ordinary peeps above the IHT threshold, which it is already doing. They may be asset rich, but cash poor.

The other thing with CGT is to align rates with IT as Nigel Lawson did in the 1980s. Would Stop motivation to shift income into capital gains.

 

[Ragey Erasmus]

I always find the idea that its an entire generations fault that they benefitted from better financial times a bad thing lol.

I'd argue that they went through tough times, but the biggest difference is the spoiled nature and entitlement thay generation instilled into their children.

When times get tough historically, people tighten their belts and hold on for the turn, but currently people believe they are entitled to high value and luxury items as a standard.

The predatory nature of business hasn't helped, the subscription model is a killer, but at some point some responsibility has to be considered, to keep blaming old people isn't a fix.

Not what I'm saying. What I'm saying is that boomers have statistically been one of the most fortunate generations for a long time, having a larger share of the overall wealth in the economy at a younger age and without having to be especially skilled or trained to do so. When this same generation got hold of the levers of power, support for the same system that gave them this was pulled away and solidified further transfer of wealth into the boomer generation.

It's nothing to do with spending habits, Millennials and others have a vastly reduced share of the overall economy by the same age as boomers did. I can't find the figures right now but it's something to the effect of a Gen X'er has 50% of the wealth a boomer did by the age of 25 proportional to the economy as a whole. That's not down to spending habits, that's down to mass wage stagnation and vast increases in day to day expenses. Biggest expenses are renting and mortgages, eclipsing what boomers faced at the same age. A single unskilled labourer now cannot support a family in the same way they could during boomer times, no matter how careful they are. It's not a case of financial prudence any more, it's a case of it being simply impossible now.

A common argument against having to fix any of this was that the next generation would inherit all this boomer wealth when they were done with it (which is pretty ******* condescending, you may have the sort of life we had in our 30's when we are all done with it). Now we're being told that this common argument for why it actually isn't so bad for the following generations is turning out to likely not be true, it will get taxed to hell and that wealth goes into the pockets of governments for a few years then vanishes into the ether.

It's not just a case of inheritance, it's inheritance AND the fact living standards have been squeezed so much.