The government could raise up to £174 billion annually if it taxed wealth at the same rate as it taxes income. But what does it mean to tax riches in reality? Should rich people pay taxes? let’s talk on this matter.
Wealth: What is it?
Wealth “measures the value of all the assets of worth owned by an individual, community, company, or country,” according to Investopedia.
Your assets as well as your money are considered when determining your level of wealth. Your home, any other property you own, your automobile, the worth of any shares you own, your furniture, your bonds, your artwork, etc. can all be considered in this.
How do you determine your net worth?
To determine your entire worth, subtract debts like your mortgage, credit card balances, and loans after totalling your money and assets.
Why is that not just?
This is why implementing a wealth tax becomes challenging.
Paying tax on your overall worth could be a significant financial burden if you have many assets but little money, meaning that your assets make you disproportionately more ‘wealthy’ than your income. It might be challenging to find the money to actually pay the tax.
Give us an instance.
Let’s consider Richard Branson as an example. His £3.24 billion net worth is made up of all of his assets and enterprises combined, not just his yearly salary. The following companies have been a part of Branson’s empire for the past 40 years:
Models of wealth taxes around the world
Only four European nations currently impose a wealth tax: Switzerland, Norway, Spain, and Belgium.
More than a dozen nations adopted it in the 1990s, but as a result of the way it was implemented, usage has slowly declined.
What was the wealth tax’s main point of contention?
One of the primary problems was that there wasn’t anything in place to stop the wealthiest citizens of each nation from taking their possessions and money outside.
In essence, the funds may be transferred to a nation without a wealth tax, which would be detrimental.
In America, is there a wealth tax?
Some Democrats in America have discussed the idea of enacting a wealth tax in order to redistribute some of the nation’s riches, but the discussion hasn’t gone any further than that.
What might a wealth tax in the UK entail?
The Guardian claimed that study of the years between 2011 to 2018 revealed that although wealth (produced by rising pensions and property prices) has been taxed at just 3.4%, income has been taxed at 29.4%.
The most affected families are those with lower incomes. The wealthy in the UK are getting richer because money is taxed at such a low rate, but those with the lowest incomes are struck the hardest by council tax, VAT, the BBC licence fee, and charges on alcohol and tobacco.
What might happen next?
Although a rigorous wealth tax has not yet been proposed in the UK, certain ideas have been made to mimic one:
adding a capital gains tax to properties transferred after death
a one-time NHS levy that levies a modest wealth-based tax
taxing income and capital gains at the same rates
the annual Capital Gains Tax exemption being cut
removing higher-rate tax reliefs for contributions to pensions
What do you think about all that? Must share your opinion with public.
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