Abolish capital gains tax.

Proposer
timcowlishaw
State

Accepted

Vote Score

2

Age

2649 days


@timcowlishaw edited economy.md - over 7 years ago

The personal income tax allowance will be set at the level of a full time living wage (currently £14,458.50 based on 252 working days of 7.5 hours per day at £7.65) and will rise inline with the living wage.

The capital gains tax for individuals will be abolished, and all capital gains will be treated as income for tax purposes.

Housing

Stamp Duty Land Tax (paid on house purchases) should be reformed, with tax band thresholds linked to the regional average house price. Purchases up to the regional average house price should be zero-rated. In addition, the 'slab' approach of current taxation will be changed to an incremental approach, where only the amount above a threshold is taxed at that rate.

Business

Personal income tax is calculated on income generated prior to expenses being deducted. But in business, corporation tax is calculated on any profit generated after expenses have been deducted from income. It is proposed that a study is conducted into the feasability and fairness of calculating them both in the same way: either personal income tax being revised and only calculated after household costs have been deducted (ie taxing household surplus or amount put into savings rather than income), or corporation tax being calculated on the basis of revenue alone.

Personal income tax is calculated on income generated prior to expenses being deducted. But in business, corporation tax is calculated on any profit generated after expenses have been deducted from income. It is proposed that a study is conducted into the feasability and fairness of calculating them both in the same way: either personal income tax being revised and only calculated after household costs have been deducted (ie taxing household surplus or amount put into savings rather than income), or corporation tax being calculated on the basis of revenue alone.

timcowlishaw

@timcowlishaw - over 7 years ago

Maybe a contentious one (and I'm perhaps being a terrible entryist trot here :-)), but I'd quite like to have a serious debate around why cap gains are taxed separately to income.

In my view, the seperation between the two is purely an ideological one, based in the capitalist assumption that 'wealth creators' should be especially rewarded for creating economic activity and therefore employment. A claim which I've never actually seen any real evidence for. If anyone can provide some, please do!

There's also practical reasons for this. Treating earning income as capital gains is a common tax-avoidance technique, and this would close that particular loophole in one fell swoop, as well as simplifying the tax system overall).

Floppy

@Floppy - over 7 years ago

I'm all for simplification of the tax system and closing loopholes, but I don't feel knowledgeable enough in the area to vote on this yet. Anyone else?

stringfellow

@stringfellow - over 7 years ago

Ditto, would love to know more about the difference. Can you link us up to some facts and studies? (Both sides of the argument if possible)

timcowlishaw

@timcowlishaw - about 7 years ago

No problem at all, will look something out this week!

PaulJRobinson

@PaulJRobinson - about 7 years ago

Sorry I'm not onboard for this one. Apologies if I'm 'teaching granny to suck eggs' etc but Capital Gains Tax is levied on any profit an individual makes from the growth in value of an asset, at the point at which that asset is sold. That could be a company, shares, a property, a Van Gogh masterpiece, a classic ferrari. So the tax ensures that those people who are already wealthy, and have invested that wealth in assets they think will grow, are taxed on any profit they make when they sell their investment. If their asset falls in value, there is no Capital Gains Tax to pay.

It is a brilliant tax that ensures people who haven't 'earned' their income through hard work and graft each day (they could sit and watch telly and do nothing whilst their assets rise in value), make a contribution.

Income tax though, is a tax that targets people who go out every day and graft. The harder you graft, the more you earn, the more you pay. Personally I think people who work extremely hard should be encouraged to do so.

That's why I'm not in favour of this PR. Sorry!

with kind regards, Paul Robinson

about.me/pauljrobinson

On 13 January 2014 08:07, Tim Cowlishaw [email protected] wrote:

No problem at all, will look something out this week!

— Reply to this email directly or view it on GitHubhttps://github.com/openpolitics/manifesto/pull/59#issuecomment-32150770 .

Floppy

@Floppy - about 7 years ago

Is the upshot of this PR not that capital gains are taxed at the same rate as income though, not a lower rate as it is now? I agree with taxing capital gains, but I think the idea here is that it's taxed just the same as income.

PaulJRobinson

@PaulJRobinson - about 7 years ago

But they shoudn't be taxed at the same rate. Capital Gains should be taxed more than Income that has been 'honestly' earned. That won't happen if they are merged, or if Capital Gains is abolished.

with kind regards, Paul Robinson

about.me/pauljrobinson

On 13 January 2014 09:10, James Smith [email protected] wrote:

Is the upshot of this PR not that capital gains are taxed at the same rate as income though, not a lower rate as it is now? I agree with taxing capital gains, but I think the idea here is that it's taxed just the same as income.

— Reply to this email directly or view it on GitHubhttps://github.com/openpolitics/manifesto/pull/59#issuecomment-32153560 .

timcowlishaw

@timcowlishaw - about 7 years ago

aah, @PaulJRobinson makes an excellent point. Perhaps we could change the proposal to "harmonize the rate of capital gains and income tax, and pool their allowances, to ensure that work is incentivised at least as much as investment". This gives us scope to increase CGT > Income later on if we wanted too. (I'd probably be in favour of a higher rate of CGT than Income to be honest, but I don't yet know if the openpolitics consensus is as far to the left of centre as I am, and in spite of jokes I might have made on twitter, I'm trying not to be a one man entryist trot tendency here :-)

timcowlishaw

@timcowlishaw - about 7 years ago

If we are all grizzled old reds though, bring it on, obviously! :-)

Floppy

@Floppy - about 7 years ago

That wording seems to reflect the general consensus more, yes. Want to update your proposed change?

@timcowlishaw edited economy.md - over 7 years ago

The personal income tax allowance will be set at the level of a full time living wage (currently £14,458.50 based on 252 working days of 7.5 hours per day at £7.65) and will rise inline with the living wage.

The rate of capital gains tax for individuals will be harmonized with the rate of tax on earned income, and all allowances for each will be pooled, in order to ensure that work is rewarded and incentivised to the same extent as investment.

Housing

Stamp Duty Land Tax (paid on house purchases) should be reformed, with tax band thresholds linked to the regional average house price. Purchases up to the regional average house price should be zero-rated. In addition, the 'slab' approach of current taxation will be changed to an incremental approach, where only the amount above a threshold is taxed at that rate.

Business

Personal income tax is calculated on income generated prior to expenses being deducted. But in business, corporation tax is calculated on any profit generated after expenses have been deducted from income. It is proposed that a study is conducted into the feasability and fairness of calculating them both in the same way: either personal income tax being revised and only calculated after household costs have been deducted (ie taxing household surplus or amount put into savings rather than income), or corporation tax being calculated on the basis of revenue alone.

Personal income tax is calculated on income generated prior to expenses being deducted. But in business, corporation tax is calculated on any profit generated after expenses have been deducted from income. It is proposed that a study is conducted into the feasability and fairness of calculating them both in the same way: either personal income tax being revised and only calculated after household costs have been deducted (ie taxing household surplus or amount put into savings rather than income), or corporation tax being calculated on the basis of revenue alone.

philipjohn

@philipjohn - about 7 years ago

I like the current wording on this one, the harmonisation route makes sense. We should also be careful not to penalise people for making the choice to earn a living through assets, given it's probably where they've found they have skills and it isn't inherently a dishonest way to earn (antiques dealers come to mind).

Floppy

@Floppy - about 7 years ago

We may have reached consensus here - can we get some votes? I'm a 👍.

timcowlishaw

@timcowlishaw - about 7 years ago

Obviously a 👍 from me

PaulJRobinson

@PaulJRobinson - about 7 years ago

Sorry I'm 👎 as I prefer taxing unearned wealth over earned income so I don't wish to abolish CGT.

Floppy

@Floppy - about 7 years ago

@PaulJRobinson have a read of the current changes - it's more about harmonization of rates than abolition. The title is misleading. The current text is "The rate of capital gains tax for individuals will be harmonized with the rate of tax on earned income, and all allowances for each will be pooled, in order to ensure that work is rewarded and incentivised to the same extent as investment."

Floppy

@Floppy - about 7 years ago

@timcowlishaw might be worth updating the PR title here.

PaulJRobinson

@PaulJRobinson - about 7 years ago

Sorry you're right I was focussing on the title. 👍

with kind regards, Paul Robinson

about.me/pauljrobinson

On 29 January 2014 09:30, James Smith [email protected] wrote:

@timcowlishaw https://github.com/timcowlishaw might be worth updating the PR title here.

Reply to this email directly or view it on GitHubhttps://github.com/openpolitics/manifesto/pull/59#issuecomment-33568549 .