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Social care - how to pay for it

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Everyone knows that we must do something dramatic about social care. But where is the money coming from? It seems to be regarded by politicians of every hue as political suicide to suggest that those who have the resources should be expected to use some/most/all they have to support themselves if they need such care in their later years. Many people (not all, by any means, I know) have a lot of wealth in the form of a house. When they move into care towards the end of their lives, they have no further use for their house, so why should the wealth tied up in that house be regarded as sacrosanct? Is it a god-given right for every British man or woman who owns a house to pass it on to their children, while someone else pays for their social care?

I have never been able to understand why supporters of parties of the right (and some others) assert one day that everyone should pull themselves by their own boot-straps and the next day rage against the iniquity of inheritance tax.

To play devil's advocate for a moment, why should inheritance tax not be set at or close to 100%? The money this would yield would go a long way towards paying for social care (I guess).

19
 Al Randall 16 Jul 2020
In reply to Rog Wilko:

In order to get some context, are you speaking as someone who owns a house and has kids?

Al

 Lord_ash2000 16 Jul 2020
In reply to Al Randall:

> In order to get some context, are you speaking as someone who owns a house and has kids?

First thing I was going to ask too. 

But to the OP, It's no so much the issue of paying for your own social care, it's paying for it when others don't have to. You save, pay down your mortgage, invest your money wisely through life rather than blow it all on sports cars and luxury holidays then towards the end the government comes in and takes it all away to pay for your care. Whereas the guy in the chair next to you blew all his cash and is getting a free ride now which you're subsidising by selling your house and denying your children their inheritance. 

Post edited at 14:57
9
 Lord_ash2000 16 Jul 2020
In reply to Rog Wilko:

> To play devil's advocate for a moment, why should inheritance tax not be set at or close to 100%? The money this would yield would go a long way towards paying for social care (I guess).

Much the same reason as having to pay for your social care. If inheritance tax was close to 100% or 100% over a certain threshold why not just blow all your cash on enjoying your life rather than wait until death for the government to take the lot from you? Maybe the extra spending would boost the economy but encouraging financial recklessness seems unwise to me. 

If I got to the end of my life and had spare property which would get taxed at 100% I'd rather burn it down than hand the keys to the government as a matter of principle. What I own is mine, it's not simply borrowed from the state. 

Post edited at 15:02
10
 chris_r 16 Jul 2020
In reply to Rog Wilko:

The problem I see with inheritance tax is that the ultra-rich simply avoid it. They put land, property and other assets into "Trust" or offshore to be passed down, avoiding paying the tax. 

At the moment I presume only the really wealthy take these steps, but if inheritance tax was set at 100% then even your average Joe would start to consider using these mechanisms.

4
 Wild Cyclist 16 Jul 2020
In reply to Rog Wilko:

I've no intention of using social care.  If I get to that kind of stage, I'm out.
The house etc will be getting passed onto the kids.

3
 chris_r 16 Jul 2020
In reply to Rog Wilko:

How to pay for social care?

Remove higher rate pension tax relief. Pension tax relief costs £35bn a year.

Rename National Insurance as National Health & Care insurance, raise it and direct to social care & NHS.

1
 Trangia 16 Jul 2020
In reply to Taylor's Landlord:

> I've no intention of using social care.  If I get to that kind of stage, I'm out.

An admirable statement to make when you are relatively young and fit, but a problem arises as to when do you actually reach the age or state of health to be able to make that choice? Most people with a reasonable quality of life would not contemplate taking their own life, by the time you reach the stage where life is no longer bearable, you will probably be incapable of taking matters into your own hands anyway without assistance.  And how do you engineer it without involving relatives, friends etc and possibly leaving them behind to face criminal charges? I've known quite a few people who through illness or age just want to die, but the state won't allow them to preempt nature taking it's course.

 baron 16 Jul 2020
In reply to Rog Wilko:

My local council will take just about all of the value of your house to pay for your care home (unless your partner still lives in the house) so we already have nearly 100% tax on your house.

The feckless get to have their fun and their care for free.

4
 Siward 16 Jul 2020
In reply to chris_r:

Pension tax relief is surely designed to encourage people to make provision for their old age. Abolish the relief then pensions will be consequentially smaller and they will require more from the state.

Why not have some swingeing cuts in public sector pensions while we're at it?

5
 Lord_ash2000 16 Jul 2020
In reply to Rog Wilko:

How we as a nation pay for social care is a good question though as we are heading towards an ever greater percentage of the population needing and it can be expensive.

One of the problems is the cost can vary massively from person to person, you might be fine one day then drop dead the next, or you might have several years or even decades hanging on in a state where you can't reasonably look after your self. 

It's a bit of gamble really, whether its a social care tax or paying out of your personal assets, you'll feel a bit hard done by if you'd paid an extra tax all your life to drop dead with minimal cost or needed years of expensive care where you paid yourself. 

Bringing forward the legalisation of euthanasia would help things a little and solve the problem of overly long declines of health and therefore cost of care. I for one am hoping by the time I reach my eighties (in 45 years) that it'll be a viable option.

The problem at the moment though is there are lot of old people who have little to no income or assets who will need social care and can't pay for it. So you either need to make it normal for families to look after their elders as is the norm in a lot of less developed nations and accept some will just be left to die in their homes. Or the state has to pick up the tab meaning we all need to pay more tax.

Maybe as a way of balancing the gamble, we could pay for everyone but if your care/NHS costs are less than £x in the last few months of your life you can get 50% rebait on the social care tax you've paid in. 
 

Mean the best way I can see, if to have asserts of enough value that the passive income combined with your pension payments is large enough to pay for your care indefinitely and once you're gone all your asserts remain to be passed on but you'd probably need asserts of a million plus in today's money to do that. 

1
 SteveX 16 Jul 2020
In reply to Rog Wilko:

The big inequity in my book is that a private resident of a care home will eg pay £1000 per week, whilst a person in the next room who is funded by the council, the council pays £650 ish , and receives the same care.

1
 neilh 16 Jul 2020
In reply to Lord_ash2000:

The wider issue and ,no poster mentions this, if you own a house of reasonable value then it gives you choice as to which care home you end up in. The average end of life stay in a care home is 3 years. £60 k a year say for costs for a good home. £180k. so affordable with a bit left over on an average house. 
 

and to the poster who said the council take the house, that is not strictly true. They lend you the money and take a charge on the house. You can finance it other ways if you want. It’s your choice. 
 

the advantage with the current system is choice about where care is provided if you have an average house as an asset. 

In reply to Al Randall:

> In order to get some context, are you speaking as someone who owns a house and has kids?

Yes to both of those questions.

 Snozzwanger 16 Jul 2020
In reply to Rog Wilko:

Thats not what happens though is it? At least not in my experience. My Nan of 93 (i think) was a wealthy(ish) woman prior to being taken into care due to dementia around ten years ago - the state took her assets of around 400k to pay for her care. 

Post edited at 18:06
 baron 16 Jul 2020
In reply to neilh:

> The wider issue and ,no poster mentions this, if you own a house of reasonable value then it gives you choice as to which care home you end up in. The average end of life stay in a care home is 3 years. £60 k a year say for costs for a good home. £180k. so affordable with a bit left over on an average house. 

> and to the poster who said the council take the house, that is not strictly true. They lend you the money and take a charge on the house. You can finance it other ways if you want. It’s your choice. 

> the advantage with the current system is choice about where care is provided if you have an average house as an asset. 

They’ll leave you with less than £20,000, including all your assets.

While £20,000 is still a chunk of money to have left, there’s no limit to how much they can take off you. Literally hundreds of thousands of pounds can be used up.

 neilh 16 Jul 2020
In reply to baron:

Yep.but those are generally the exception. They are not talking it off you. It’s a loan to cover the costs which you repay when the house is sold. 
 

And that is if you choose to go down that route. There are other ways of realising the assets to pay for the care you want. 
 

its your choice with your money. The worst position is not to have that choice. 

Post edited at 18:25
 baron 16 Jul 2020
In reply to neilh:

> Yep.but those are generally the exception. They are not talking it off you. It’s a loan to cover the costs which you repay when the house is sold. 

> And that is if you choose to go down that route. There are other ways of realising the assets to pay for the care you want. 

> its your choice with your money. The worst position is not to have that choice. 

I didn’t really want to get too tied up in the technical details as I am more concerned about the unfairness of the current system. Where those who have saved and been careful can see their assets disappear while others are subsidised by the state.

My mother even has to worry about how she spends her money in case she needs to go into a home and the council believe that she has made herself poor on purpose - or whatever the technical term is. That seems like too much state intrusion to me.

2
 chris_r 16 Jul 2020
In reply to Siward:

Absolutely, pension tax relief is a good idea, it encourages savings. However why should high earners get a higher subsidy?

At present someone on £100k gets more pension help from the government than a £20k earner. 

If we made a flat rate pension tax relief for all (say 20 or 30%) it would be fairer, and release money for social care. 

1
 neilh 16 Jul 2020
In reply to baron:

Well when you see the care homes who cater for subsidised care you understand  it may be better to have an asset to pay for something a lot better. 

its a choice.

and some people do not have the fortune to have that choice. 

 baron 16 Jul 2020
In reply to neilh:

> Well when you see the care homes who cater for subsidised care you understand  it may be better to have an asset to pay for something a lot better. 

> its a choice.

> and some people do not have the fortune to have that choice. 

There’s no doubt that it’s always better to have a choice.

However, in one of the richest economies in the world, a good standard of care shouldn’t depend on whether you can afford it or not.

Politicians of all parties who have, across the years, failed to address the social care problem, should hang their heads in shame.

1
 wbo2 16 Jul 2020
In reply to Rog Wilko:  this is good to think about.  One issue is that house prices have  risen so much that when their owners die someone gets a big lump of cash , and that is going to happen on a scale never seen before.  If 1 in 5 for example is going to get inheritances of  couple 100, 000 then its hard to maintain a level playing field.

 gezebo 16 Jul 2020
In reply to Rog Wilko:

I’d forget about who is going to pay but ask who is going to do it? There are and have been thousands of vacancies for these jobs and staff turnover is high but who will/want do the work with the antisocial hours and low pay even after an increase. 

In reply to baron:

> They’ll leave you with less than £20,000, including all your assets.

> While £20,000 is still a chunk of money to have left, there’s no limit to how much they can take off you. Literally hundreds of thousands of pounds can be used up.

Paying for the services that you use, some sort of taxpayer funded provision for all is socialism. I get the impression you are against such things!

In reply to Rog Wilko:

The government are just people.

Why should people take all my family's stuff?

7
 girlymonkey 16 Jul 2020
In reply to gezebo:

> I’d forget about who is going to pay but ask who is going to do it? There are and have been thousands of vacancies for these jobs and staff turnover is high but who will/want do the work with the antisocial hours and low pay even after an increase. 

When a global health pandemic hits....anyone who needs the money!! I never thought it would be where I would end up, but then Covid hit and there I am! The pay is not enough, but around here it is at least a living wage.

 thomasadixon 17 Jul 2020
In reply to Rog Wilko:

> Everyone knows that we must do something dramatic about social care. But where is the money coming from? It seems to be regarded by politicians of every hue as political suicide to suggest that those who have the resources should be expected to use some/most/all they have to support themselves if they need such care in their later years. Many people (not all, by any means, I know) have a lot of wealth in the form of a house.

Absolutely, fair enough to take that.

> To play devil's advocate for a moment, why should inheritance tax not be set at or close to 100%? The money this would yield would go a long way towards paying for social care (I guess).

No, totally different argument.

Post edited at 00:13
 elsewhere 17 Jul 2020
In reply to bouldery bits:

> The government are just people.

> Why should people take all my family's stuff?

Should they take another family's stuff to pay to care for your family or should they leave your family to pay for care?

 thomasadixon 17 Jul 2020
In reply to baron:

Do an equity release (or sell the house), you get all the money.  Spend it, no one can take it then.  No free rides until you need one seems fair.

 baron 17 Jul 2020
In reply to The New NickB:

> Paying for the services that you use, some sort of taxpayer funded provision for all is socialism. I get the impression you are against such things!

I can forgo my usual free market ideology if it means people get a decent standard of care.

The present system certainly doesn’t always/often provide that.

 baron 17 Jul 2020
In reply to thomasadixon:

> Do an equity release (or sell the house), you get all the money.  Spend it, no one can take it then.  No free rides until you need one seems fair.

That’s called deprivation of assets.

My mother is too honest and too nervous to contemplate any such thing.

Unfortunately.

 thomasadixon 17 Jul 2020
In reply to baron:

Not if you cover your accommodation and care I thought...or is it still deprivation of assets if you spend it on a nicer care home?

 baron 17 Jul 2020
In reply to thomasadixon:

> Not if you cover your accommodation and care I thought...or is it still deprivation of assets if you spend it on a nicer care home?

Sorry, I thought you were suggesting selling the house and spending all the money on flash cars and booze!

 thomasadixon 17 Jul 2020
In reply to baron:

If you plan well...you just have to do it over a long enough period, right?

 baron 17 Jul 2020
In reply to thomasadixon:

> If you plan well...you just have to do it over a long enough period, right?

Indeed.

 Offwidth 17 Jul 2020
In reply to Rog Wilko:

I think you have got this backwards. The taxation system we have is not based on specific taxes to pay for specific issues. If we want a fairer system for social care (and I sincerely hope we do) then any costs have to come from general taxation. 

I think the structure has to change: health and social care desperately need better integration and there are cost savings from just doing this. We are running experiments in some UK cities in this direction that look promising. There are some cost increases as well as medical linked social care budgets are so stretched that assessments of medical needs get tougher by the year and people with clear medical needs are being highly unfairly denied funding for that, they have to pay for what should be state funded nursing care. My family have obtained medical funding for a relative but it took two years of effort from my partner and I as professionals with good knowledge of the system... I shudder to think how most  people can navigate this.

I think social care costs have to be capped as currently it's an incredibly unfair lottery what care costs will end up being. Successive governments have promised action but none did anything.

 Andy Gamisou 17 Jul 2020
In reply to Taylor's Landlord:

> I've no intention of using social care.  If I get to that kind of stage, I'm out.

You might not be in a position to take the out.  Whilst you're still physically and mentally able, you'll probably want to keep going.  To say otherwise is simply false bravado. 

Once you reach the point where  you really want to take this option, you will probably find you are no longer able to take the necessary actions alone, so would need willing help, which will probably be tricky.  And of course you might have a sudden stroke that incapacitates you.  Or creeping dementia that slowly mentally incapacitates you 

It really isn't as easy as you seem to think.

In reply to elsewhere:

> Should they take another family's stuff to pay to care for your family or should they leave your family to pay for care?

The key word was All.

In reply to Offwidth:

Part of the problem must be classification of illness. It's just so very trendy to share mental illness stuff for the young online, promoting folk to acknowledge it etc..

Then if you have a mental illness as a pensioner, it's suddenly not an illness and is just some form of additional old aged care folk must fund themselves. 

 wbo2 17 Jul 2020
In reply to bouldery bits:  If you compare Granny Potts with Granny Smith , who should get the better care ? Identical lives, jobs, but one bought a council house in the midlands, one bought a council house in Surrey and hit the jackpot and thus has a bigger pot of cash.  Pure luck means someone gets better care, or can buy a holiday home in the lake district, or her distant relatives suddenly get a lump cash injection

 AJM 17 Jul 2020
In reply to Rog Wilko:

It feels from the thread like there's two different questions:

- the first one is timing. Broadly speaking if we want to pay for social care we can pay at some other time or nearer to point of use - either you can pay general income taxes to raise the money during your working life or you can pay some form of wealth tax your assets once retired or dead.

- the second one is who pays. The principle that people who earn more pay more tax is fairly well established when it comes to income taxes but the evidence from the thread suggests far less so in this case where effectively it's it's functioning as a wealth tax. There's a lot of resistance to people handing over wealth to get the same service others get for free, more so than you usually see for income tax (I think). I don't know if this is because people see it differently or whether it's because people see it as a far steeper disparity than is the case for income tax.

I have a house and I have young children, since it seems to be relevant information. I don't have a strong emotional attachment to passing them on objects, so given the structural choice between paying through higher income taxes and paying wealth tax when I'm old I would probably prefer to have the money now. I don't think that necessarily leaves them with less - that extra income could be used in their formative years to set them up better for life (be that education, experiences, first house deposit, whatever) - it just means the benefit arrives spread over time when they're younger rather than getting an inheritance at some point (hopefully) in their middle age.

 neilh 17 Jul 2020
In reply to baron:

The present system does that as long as you have a house. People trying to be clever with trusts to protect the house are also part of the issue. Especially when they realise they need the house to pay for a quality standard of care.

1
 neilh 17 Jul 2020
In reply to Offwidth:

 Nicley sums up the position.

it is a realshame that Cameron did not grab the bull by the horn and run with that £100 k limit. 
 

The whole ongoing reform and integration of nhs/ social care might be an indirect benefit that comes out of Covid.

In reply to gezebo:

We can just use those nice caring East Europeans and Portuguese -like those who care for my mother in law.....................................oh no, we can't anymore for some reason!

1
 Offwidth 17 Jul 2020
In reply to summo:

This is not about dementia, where it is hard to justify nursing care under the current rules. It's about clear and obvious medical issues which take a long time and some determination to end up being covered fairly under the rules as medical based nursing care either fully under continuing health care or partly under funded nursing care. Those unaware of this could be losing their parents house to pay off social care costs that should be state paid nursing care costs.

https://www.nhs.uk/conditions/social-care-and-support-guide/money-work-and-benefits/nhs-continuing-healthcare/

https://www.nhs.uk/conditions/social-care-and-support-guide/money-work-and-benefits/nhs-funded-nursing-care/

Post edited at 11:01
 neilh 17 Jul 2020
In reply to earlsdonwhu:

A sad reflection of the current Covid unemployment market is that there will be people who can potentially can fill the gap  .   
 

Post edited at 11:30
 La benya 17 Jul 2020
In reply to Andy Gamisou:

Tell your loved ones loudly and often of your plans for end of life. Hope that one day the government/ voters will have the balls/ common decency to take into consideration your desire not to shit in a bag or have you arse wiped by a stranger or to forget everyone you've ever loved.  at least then you have a fighting chance of getting what you want when youre too old or senile to do it yourself.

You might even have a family member with the courage/ disregard for their own liberty to help you themselves.... but it really shouldn't be that way in a civilised society- we don't even let hamsters suffer like that!

In reply to Lord_ash2000:

> But to the OP, It's no so much the issue of paying for your own social care, it's paying for it when others don't have to. You save, pay down your mortgage, invest your money wisely through life rather than blow it all on sports cars and luxury holidays then towards the end the government comes in and takes it all away to pay for your care. Whereas the guy in the chair next to you blew all his cash and is getting a free ride now which you're subsidising by selling your house and denying your children their inheritance. 

I understand the comment, but I have some doubt as to how many people actually behave in that way. It's a bit like the big fuss people make about things like health tourism (is the that the right term?). It happens but how significant is it? I don't think many people think much in their working lives about adapting their financial behaviour because they are worried about how they'll pay for social care if it's needed. I know I didn't. A much more serious issue (to my way of thinking) is that a very high proportion of the population does not earn enough to buy a house or acquire enough capital to be able to pay any significant contribution to any social care they might need.

Perhaps taxation should pay for a basic level of social care with people having the means allowed to pay extra for a higher standard of accommodation. Mind you, political parties who suggest they're going to raise more by taxation don't always do well in general elections.

 SteveX 17 Jul 2020
In reply to Rog Wilko:

If you had a 100% inheritance tax, how would that work with family businesses, from say Booths supermarkets through farmers to the family with a one shop grocers.

Post edited at 15:18
 neilh 17 Jul 2020
In reply to Rog Wilko:

Your description  in the last paragraph is roughly what happens at the moment. 

the big political issue is that those with houses want the money to be passed on to their families. 

 bigbobbyking 17 Jul 2020
In reply to neilh:

> Your description  in the last paragraph is roughly what happens at the moment. 

Isn't the description what happens with health care. Everyone gets the standard NHS treatment. You can pay extra for private if you like.

My understanding is with social care if you have above some threshold of assets you HAVE to use them to pay for your care - there's no free option. Is that right? 

Post edited at 17:47
 timjones 17 Jul 2020
In reply to baron:

> That’s called deprivation of assets.

> My mother is too honest and too nervous to contemplate any such thing.

> Unfortunately.

Your mother is very wise, equity release can easily turn into a real mess. We just about managed to get my father in law out his agreement with a bit of dignity and a lot less money to live on.

 neilh 17 Jul 2020
In reply to bigbobbyking:

You get a Really base level care if your assets are below a certain threshold. Above that you choose what you want. It’s your choice. That is what the current taxation system pays for..

Clearly if you want a better level of base level social care funding,then taxation goes up..

The key is at the moment Is it’s your choice.People do not like the fact that they are going to have to put their hands in their pockets and pay for it......either way through tax or selling their house.

it’s not easy politically to address.

 neilh 17 Jul 2020
In reply to timjones:

Agreed..

In reply to bigbobbyking:

No. The fly in the ointment with all this is that if your condition is such that you need 'clinical care' then the NHS have to pay - even if you stay in the same care home.

A friend's Dad had full on dementia, so the NHS paid for the lot. Saved him £50k+. Nice!

1
In reply to SteveX:

I don't know Steve but fortunately I'm not the minister in charge.

 Philip 17 Jul 2020
In reply to Rog Wilko:

> I have never been able to understand why supporters of parties of the right (and some others) assert one day that everyone should pull themselves by their own boot-straps and the next day rage against the iniquity of inheritance tax.

You're right, the education system is a mess.

Thebasics being that the "right" is capitalism - that being the building of capital, what you own (and can pass on), whereas the left of socialism (in simple terms a bit of sharing). Once you grasp that then it's quite easy. The big trick of The Right is to convince more than 50% of people that they're in the top half and if they had to share they'd be worse off. Of course that's far from the reality, in fact it probably >90% of the population who'd be better off if the UK's total income was split equally.

I'm not in favour of 100% inheritance tax, it's a bit of a lottery when death occurs and the inheritance could do good (a start on the property ladder, help with debt issues) and the reason that couldn't have been realised earlier - fear of the state minium social care.

Perhaps a reverse pension where the value of what someone leaves is depleted by their social care costs, and the balance passed on. No inheritance no bill, but you could enjoy a better standard of social care without the uncertainty of liquidating assets like a house.

In reply to Philip:

I agree with the principle of wealth tax because the continuing concentration of wealth in the hands of a few has meant that there is less and less left for society and as a result most public services are on the brink of collapse now.

It's dodgy ground to use taxes ring fenced for just one purpose though. It means that only popular and high profile political issues will receive the funding that is needed and this is the type of thinking that got social care into the mess it is in in the first place.

Social care should come out of general taxation to fund a National Care Service, with any increase in spending covered by tax increases that protect 95% of earners. That's what Labour were going to do last time around anyway but whether it's still on the cards now Labour is running away from popular left wing ideas is anybody's guess.

https://labour.org.uk/press/labour-will-introduce-free-personal-care/

Post edited at 23:01
2
In reply to cumbria mammoth:

> Social care should come out of general taxation to fund a National Care Service, with any increase in spending covered by tax increases that protect 95% of earners.

Which would pay for a lick of paint and little else.

If you want to improve the nhs, social care, education, state services and so on, then every person and every business will need to pay may more. The notion that you can vastly improve everything by only taxing those who have the means to fly away from the UK tomorrow an idea best left in Corbyn's dead manifesto. 

The UK has one of the most complex tax systems in Europe which means it's full of holes to exploit. Simplify it, remove the holes and tax more income of all types at source, allowing less non taxable allowances.  

Post edited at 06:50
1
 NathanP 18 Jul 2020
In reply to cumbria mammoth:

Saying that everything we need will be paid for by the richest 5% and 95% needn't pay anything (at least not anything more) is superficially attractive but I'd argue there are some big problems with it.

It divides the population into those who benefit from the state and those evil, undeserving fat cats who pay for it - sooner or later, a lot of those paying decide there is nothing in it for them so they do everything they can to avoid paying, in extreme cases, leading to tax exiles taking their money and tax contribution elsewhere.

A lot of that 95% hope to one day be part of the 5% - over £77k. That leads them to vote for parties that don't demonise their aspirations and threaten to take away the rewards if they are successful.

Step changes at arbitrary points like this in the tax and benefit system create perverse disincentives to earn more for those just below the step, reducing tax take.

Personally, I'd like to see a basic citizen's income and a more graduated progressive income tax regime (with NI rolled in) and much less means testing. Everybody pays in, everybody benefits but the better off pay more in absolute terms and as a proportion of income.

In reply to NathanP:

> Personally, I'd like to see a basic citizen's income 

With a £12k zero rate threshold isn't that the same thing. It's a huge chunk of untaxed earnings for most folk. Arguably 50% of the average salary isn't taxed at all. 

 wbo2 18 Jul 2020
In reply to summo: a Universal Basic Income is obviously very different to a tax cutoff if you're not actually earning anything.

NathanP -  95% are already not covering their costs of health care,  benefits etc.  I believe only a few % pay enough tax to cover their costs

 BnB 18 Jul 2020
In reply to chris_r:

> The problem I see with inheritance tax is that the ultra-rich simply avoid it. They put land, property and other assets into "Trust" or offshore to be passed down, avoiding paying the tax. 

> At the moment I presume only the really wealthy take these steps, but if inheritance tax was set at 100% then even your average Joe would start to consider using these mechanisms.

The wealthy pass assets down through trusts, ie retaining effective control, so that their offspring don’t blow it all on coke or squander it on ill-conceived schemes. It certainly isn’t to avoid tax since IHT is payable in advance when you create the trust.

https://www.gov.uk/guidance/trusts-and-inheritance-tax#transfers-into-trust

As for moving your Scottish country estate to the Cayman Islands, good luck with that.

That said. I don’t favour the wholesale transfer of wealth between generations and can see an argument for a 100% rate of IHT above a sensible threshold.

In reply to wbo2:

Of course. I just don't think having a high zero rate threshold and universal income are either compatible or affordable. 

There hasn't been any successful trial of universal income, a Finnish trial found folk were happier, but it didn't improve their employment or state or personal finances, folk just like getting something for free!! 

2
 Offwidth 18 Jul 2020
In reply to Rob Exile Ward:

You can't get NHS payment for most needing care due to dementia, it will usually be for other conditions as per the links I included above. If you have medical needs and dementia its not a saving, it's a right as part of the NHS. Sadly accessing that right is increasingly complex, slow and difficult and pretty sobering as you realise what has happened to council care provision, social work support and district nurse support due to austerity.

Post edited at 09:17
In reply to summo:

> If you want to improve the nhs, social care, education, state services and so on, then every person and every business will need to pay may more. 

Because of high housing costs, low wages, precarious incomes etc etc there is a significant proportion of the population who can contribute nothing. You can't expect people - who are in work!!! - and who are dependent on food banks for example to take any sort of hit. Surely we've learnt something from Cameron's "all in this together" austerity regime?

In reply to BnB:

I understand that IHT has to be paid when a trust is first set up, but once it is then future generations don't pay however much the trust grows by. They call it 'bloodline planning', I think.

Post edited at 09:34
 BnB 18 Jul 2020
In reply to Rob Exile Ward:

> I understand that IHT has to be paid when a trust is first set up, but once it is then future generations don't pay however much the trust grows by. They call it 'bloodline planning', I think.

If you look at the link I posted, you’ll see that trusts are subject to a charge (currently 6% from memory) at each 10 year anniversary of their formation.

There’s also the (not minor) inconvenience that the money is literally locked away. Accessing the assets triggers a hefty exit charge, again see link.

All of which proves that trusts’ primary function is to manage access. The alleged tax benefits are, more often than not, illusory and even negative.

In reply to Rog Wilko:

> Because of high housing costs, low wages, precarious incomes etc etc there is a significant proportion of the population who can contribute nothing. You can't expect people - who are in work!!! - and who are dependent on food banks for example to take any sort of hit. Surely we've learnt something from Cameron's "all in this together" austerity regime?

So the answer is to build more, much more, not use expensive housing as an excuse for under funding state services. 

The big housing companies have had mps of all colours in their pocket for decades, build standards, especially green initiative and affordable house are lame, plus they just to sit on land delaying building. 

 NathanP 18 Jul 2020
In reply to wbo2:

Part of the reason I'd like to see a universal basic income rather than a large tax-free limit for those earning and base level benefits for those who aren't is efficiency - administering the benefits system is costly and eats up money that could either not be taken in the first place or given back out. It would also be more transparent and push back against the narrative that some undeserving people are getting a fortune in benefits whilst 'hard-working decent people' have to pay loads of tax and get nothing in return. (Apart from public services and living in a decent, safe and prosperous country that doesn't have half the population living on the street or in shanty towns, but that seems to get forgotten in Mail and Express editorials.)

I don't think the % not covering their costs in taxes is anything like as high as you think. Income tax is only part of the picture - VAT and duty are big elements too and everybody pays those at the same rate, regardless of their ability to afford them. People's tax contribution and needs / cost to the state also vary through life so the same person would be a net draw on state resources sometimes and a net contributor at other times. 

In reply to Rob Exile Ward:

> I understand that IHT has to be paid when a trust is first set up, but once it is then future generations don't pay however much the trust grows by. They call it 'bloodline planning', I think.

There is nothing to stop aversge how doing the same. I think many middle income folk in South East England would benefit if they did, as current property prices push many well into the inheritance tax bracket.

 Kid Spatula 18 Jul 2020
In reply to Rog Wilko:

Stop the whole Brexit debacle, use the money from the now non buggered economy to fund social care. 

Kick the Tories out and all should be good.

3
In reply to summo:

> Which would pay for a lick of paint and little else.

> If you want to improve the nhs, social care, education, state services and so on, then every person and every business will need to pay may more. The notion that you can vastly improve everything by only taxing those who have the means to fly away from the UK tomorrow an idea best left in Corbyn's dead manifesto. 

Let's not quibble about the detail, I'll just remind you it was a fully costed manifesto though.

> The UK has one of the most complex tax systems in Europe which means it's full of holes to exploit. Simplify it, remove the holes and tax more income of all types at source, allowing less non taxable allowances.  

Absolutely agree here. That's a big reason to support a wealth tax because it closes a lot of accounting tricks that can be used to hide income.

1
In reply to NathanP:

> Saying that everything we need will be paid for by the richest 5% and 95% needn't pay anything (at least not anything more) is superficially attractive but I'd argue there are some big problems with it.

> It divides the population into those who benefit from the state and those evil, undeserving fat cats who pay for it - sooner or later, a lot of those paying decide there is nothing in it for them so they do everything they can to avoid paying, in extreme cases, leading to tax exiles taking their money and tax contribution elsewhere.

> A lot of that 95% hope to one day be part of the 5% - over £77k. That leads them to vote for parties that don't demonise their aspirations and threaten to take away the rewards if they are successful.

> Step changes at arbitrary points like this in the tax and benefit system create perverse disincentives to earn more for those just below the step, reducing tax take.

> Personally, I'd like to see a basic citizen's income and a more graduated progressive income tax regime (with NI rolled in) and much less means testing. Everybody pays in, everybody benefits but the better off pay more in absolute terms and as a proportion of income.

It's just sensible economics, you can't raise  much revenue from people who don't have much income.

Why does it demonize the wealthy? I don't think people have seen the reduction in top rate of income tax as glorifying the wealthy. In 1979 it went from 83% to 60%. Its 40% now and Labour were only going to increase it to 45%.

People were persuaded it was a sensible policy when it was reduced so why can a moderate reversal not be a sensible policy in a different economic climate? 

1
 BnB 18 Jul 2020
In reply to cumbria mammoth:

> It's just sensible economics, you can't raise  much revenue from people who don't have much income.

And you can’t fund a nation from a relatively tiny pool of millionaires.

> Why does it demonize the wealthy? I don't think people have seen the reduction in top rate of income tax as glorifying the wealthy. In 1979 it went from 83% to 60%. Its 40% now and Labour were only going to increase it to 45%.

The top rate of income tax is 45% already and has been for a while.

In reply to cumbria mammoth:

> Let's not quibble about the detail, I'll just remind you it was a fully costed manifesto though.

Let's not quibble, it was built on costed magical growth that ignored much of Europe entering recession at the end of 2019 and covid. It wouldn't work now. 

> Absolutely agree here. That's a big reason to support a wealth tax because it closes a lot of accounting tricks that can be used to hide income.

Wealth tax. Yeah a few percent on the base rate? At a 1% increase someone on £20k would pay £100pa more, on £1m they'd pay £10k more income tax. 

You can call it a wealth tax if you want to draw in voters etc but in reality everyone needs to pay more and percentages are a perfect solution for proportional payments. 

Post edited at 19:18
In reply to BnB:

> The top rate of income tax is 45% already and has been for a while.

You're right, sorry, I'm annoyed with myself about that because I had a few spare minutes at dinner time and that was the figure in my head but I thought I'd better look it up to be sure which I did then I still wrote it out wrong in my post.

The top rate came down from 50% to 45% in 2012 so in 2019 Labour were going to return it to 50% where it had been as recently as 2012. Hardly unprecedented then.

> And you can’t fund a nation from a relatively tiny pool of millionaires.

It's the only way to fund the nation because that is where all the money is.

I've been crunching the numbers tonight which were from the ONS for 2018. It's hard to follow stats in a discussion so I've put the key points in bold.

5% of workers in the UK earn more than £86,000pa and on aggregate this group receive as much income as all of the bottom 50%. The average person in that top 5% would earn £121,000 and pay £35,500 income tax. Those 1.55million people are generating £55 billion in income tax and are well rewarded.

Half of workers in the UK earn less than £24,000pa. The average person in that group would earn £17,400 and pay £980 income tax. A large pool of 15.5million people are only generating £15 billion in income tax because they are not paid very much. 

The 25th percentile worker there is taking home £1370 per month and it's borderline whereas the 98th percentile worker there is taking home £7050 per month, under Labours proposal they would still be taking home £6850 per month. I'm sure £120,000 earners have their own stresses but financially it must be comfortable.

The point I hope I'm making is that there's no point in trying to generate tax revenue from most of the population because you're just causing hardship for very little return. If you target your taxes to where people will continue to live very comfortably it will generate significantly more revenue to fund the services that everyone relies on.

Post edited at 00:14
1
 BnB 19 Jul 2020
In reply to cumbria mammoth:

> You're right, sorry, I'm annoyed with myself about that because I had a few spare minutes at dinner time and that was the figure in my head but I thought I'd better look it up to be sure which I did then I still wrote it out wrong in my post.

> The top rate came down from 50% to 45% in 2012 so in 2019 Labour were going to return it to 50% where it had been as recently as 2012. Hardly unprecedented then.

> It's the only way to fund the nation because that is where all the money is.

> I've been crunching the numbers tonight which were from the ONS for 2018. It's hard to follow stats in a discussion so I've put the key points in bold.

> 5% of workers in the UK earn more than £86,000pa and on aggregate this group receive as much income as all of the bottom 50%. The average person in that top 5% would earn £121,000 and pay £35,500 income tax. Those 1.55million people are generating £55 billion in income tax and are well rewarded.

> Half of workers in the UK earn less than £24,000pa. The average person in that group would earn £17,400 and pay £980 income tax. A large pool of 15.5million people are only generating £15 billion in income tax because they are not paid very much. 

> The 25th percentile worker there is taking home £1370 per month and it's borderline whereas the 98th percentile worker there is taking home £7050 per month, under Labours proposal they would still be taking home £6850 per month. I'm sure £120,000 earners have their own stresses but financially it must be comfortable.

> The point I hope I'm making is that there's no point in trying to generate tax revenue from most of the population because you're just causing hardship for very little return. If you target your taxes to where people will continue to live very comfortably it will generate significantly more revenue to fund the services that everyone relies on.

The most revealing aspect of your analysis is the 70% of the population that it ignores. Your enthusiasm for punishing the comfortably off is clouding your exposition. No one is arguing for an increasing tax burden to fall on the weakest 25%. The average wage in the UK is c£30k but if we exclude the bottom quartile let’s assume for the purposes of argument it rises to £40k. So a 1% increase across the remaining three quarters of the cohort delivers the same benefit as a 5% increase on the top 5% alone. How many 5 percentage point rises do you think our highest earners will tolerate before you chase their taxes out of the UK? Plenty of jobs (and tax breaks) for bankers and software engineers worldwide.

Higher taxes look inevitable but they have to fall broadly and in a balanced manner to raise adequate revenues.

Post edited at 08:05
2
In reply to BnB:

>  How many 5 percentage point rises do you think our highest earners will tolerate before you chase their taxes out of the UK? Plenty of jobs (and tax breaks) for bankers and software engineers worldwide.

And lockdown has proven what many of us already knew, in that home working can be surprisingly efficient and is no longer taboo within many companies. That home could easily be anywhere with a decent connection. 

There is a problem with low wages in the UK, in part because it's just accepted that tax credits will top up a proportion of workers wages. Folk need to be prepared to pay more for low or unskilled services provided by the lowest paid, it's the only way Cumbria mammoth will be see the equal society they envisage. 

 Alyson30 19 Jul 2020
In reply to BnB:

> Plenty of jobs (and tax breaks) for bankers and software engineers worldwide.

Where would they go to pay less taxes ? No more EU FoM and US immigration effectively shut down.

The options are actually very limited at the moment.

If there was a time to tax the hell out of the richer categories it would be now.

(I wouldn’t have a problem with it if I agreed how the money is spent, which I definitely  don’t)

Post edited at 16:03
2
In reply to Rog Wilko:

Surely the only reasonable answer is to raise taxes across the board and nationalise a care system? I'd also raise funding by surgically removing the parasites off the NHS and closing tax loopholes that let the mega rich siphon off our GDP. 

1
 BnB 19 Jul 2020
In reply to Alyson30:

> Where would they go to pay less taxes ? No more EU FoM and US immigration effectively shut down.

> The options are actually very limited at the moment.

> If there was a time to tax the hell out of the richer categories it would be now.

> (I wouldn’t have a problem with it if I agreed how the money is spent, which I definitely  don’t)

The removal of FoM is really only a restriction for the 95%. The red carpet, including large tax breaks, is being rolled out in Paris, Frankfurt and other financial centres for bankers looking to leave London, while software engineers can name their price and work from a beach in Bali or in a Berlin start-up. A couple of examples:

Both France and Italy are offering 50% tax breaks to bankers.

Facebook, average wage $155k, has declared that all staff worldwide can work remotely from wherever they want.

It’s natural to want to tax the well-off and especially popular among all the other groups, surprise, surprise. But it’s a mistake to assume they aren’t mobile and motivated. After all, who likes to be picked on?

2
 BnB 19 Jul 2020
In reply to purplemonkeyelephant:

> Surely the only reasonable answer is to raise taxes across the board and nationalise a care system?

Yep, that makes sense to me

> I'd also raise funding by surgically removing the parasites off the NHS and closing tax loopholes that let the mega rich siphon off our GDP. 

I’m sure there could be improvements in procurement, but there are many examples of successful partnerships between private and public entities within the NHS. Are GPs parasites? Shouldn’t private hospitals provide a surge outlet?

UKC delights in shouting “tax loopholes!” while rarely being able to demonstrate any clarity on the matter. If you mean corporate avoidance, the diverted profits tax captures cross-border avoidance and the digital transactions tax captures Google, Amazon et al. If you’re talking individuals, HMRC has visibility of your offshore bank accounts and the only option today for the tax-averse is exile in Monaco/Branson island. But then you are no longer a UK resident and there’s no question of loopholes. What loopholes had you specifically in mind?

Post edited at 17:15
1
 Alyson30 19 Jul 2020
In reply to BnB:

> The removal of FoM is really only a restriction for the 95%.

You’ll find that to not be true and I personally know plenty of senior software engineers (100k+) who got rejected for visas in NZ and Canada.

The attractive destination are very hard to get to even for the high paying jobs.

Sure you can always go in poorer countries but these aren’t attractive destinations for most. There are also huge language and cultural barriers.

> Both France and Italy are offering 50% tax breaks to bankers.

That’s probably going to be a few individuals at best.

> Facebook, average wage $155k, has declared that all staff worldwide can work remotely from wherever they want.

Hey sure but they’ll have to pay taxes where they are.

> It’s natural to want to tax the well-off and especially popular among all the other groups, surprise, surprise. But it’s a mistake to assume they aren’t mobile and motivated. After all, who likes to be picked on

I completely agree I simply point out that unless you are maybe in the top 0.5% mobility is actually pretty reduced these days.
 

This isn’t the 1980s anymore the world has changed you can’t just go wherever you want anymore with just having some money or talent.

Basically if you were starting to tax those on 100k+ a 60% in the U.K.,  I doubt you’ll see massive movement. A trickle at best.

Post edited at 18:10
1
In reply to BnB:

> I’m sure there could be improvements in procurement, but there are many examples of successful partnerships between private and public entities within the NHS. Are GPs parasites? Shouldn’t private hospitals provide a surge outlet?

I'm talking management consultants, outsourced tech development, hospital takeovers, agency workers, PFI, private ambulances - the list goes on. The vultures circle the NHS and our government love it. Just look at the PPE scandal that is about to unfold - £108 million in PPE contracts to a pest control company with 16 staff/£18k in assets. £108 million in PPE contracts to a confectionary wholesaler. £133 million to a private lab for covid tests, who coincidentally pay a Tory MP £100k a year salary. All of this dished out without putting the contracts out to tender, and no FOI access to any of these companies. 

> What loopholes had you specifically in mind?

Having just researched current UK corporate tax law, it seems things have improved considerably in the last 5 years. I'll defer to other peoples greater knowledge on this. 

In reply to purplemonkeyelephant:

Every effing thing the 'NHS' gets involved with usually involves private companies with little oversight or accountability.

The farcical Test and Trace system has been implemented by 3rd parties, using dodgy 3rd party software, supported by management consultants providing 'motivation counselling.' There's a gravy train running and if you want to make a quick buck you better get yourself to the Elephant and Castle and get on it.

1
 BnB 19 Jul 2020
In reply to Alyson30:

> You’ll find that to not be true and I personally know plenty of senior software engineers (100k+) who got rejected for visas in NZ and Canada.

Both countries with national champions (Shopify, Xero) but relatively insignificant IT industries.

> The attractive destination are very hard to get to even for the high paying jobs.

Not my experience. But I’m only a founder of several IT companies and shareholder in more than 50. Did you know that a third of the US software industry is staffed by Asians? The CEO of Microsoft is Indian. The CEO of Google is Indian. I could list scores of others.

> Sure you can always go in poorer countries but these aren’t attractive destinations for most. There are also huge language and cultural barriers.

Berlin is trying to nab all of the UK’s IT start-ups. Is Germany a poorer country?

> That’s probably going to be a few individuals at best.

Are you kidding? 

> Hey sure but they’ll have to pay taxes where they are.

Of course. But should we be demonising our champions and deterring inbound talent?

> I completely agree I simply point out that unless you are maybe in the top 0.5% mobility is actually pretty reduced these days.

> This isn’t the 1980s anymore the world has changed you can’t just go wherever you want anymore with just having some money or talent.

I beg to differ. Along with data, human capital is the most valuable resource for corporations worldwide, not oil or gas. The world’s leading companies run on intellectual capital nowadays, not natural resources. As you say, this isn’t the 1980s any more ;-)

> Basically if you were starting to tax those on 100k+ a 60% in the U.K.,  I doubt you’ll see massive movement. A trickle at best.

You’d either see industrial scale tax avoidance or industries hollowed out. Take your pick.

Post edited at 18:31
2
 BnB 19 Jul 2020
In reply to purplemonkeyelephant:

> I'm talking management consultants, outsourced tech development, hospital takeovers, agency workers, PFI, private ambulances - the list goes on. The vultures circle the NHS and our government love it. Just look at the PPE scandal that is about to unfold - £108 million in PPE contracts to a pest control company with 16 staff/£18k in assets. £108 million in PPE contracts to a confectionary wholesaler. £133 million to a private lab for covid tests, who coincidentally pay a Tory MP £100k a year salary. All of this dished out without putting the contracts out to tender, and no FOI access to any of these companies. 

 

I agree the PPE situation is deplorable in several ways but you just can’t expect the NHS to keep up with the lightning fast development of digital health. It doesn’t have and never can nor will secure the brightest tech minds no matter how much money a government wishes to throw at it. It’s a monolithic public body not a hothouse of invention. That isn’t to say the NHS should outsource all tech roles. But when it built the world’s largest networked database of clinical research it still needed to contract with 150 external developers because the technology skills were not in house nor was the NHS an appropriate permanent home for their skills. Are those experts really parasites?

> > What loopholes had you specifically in mind?

> Having just researched current UK corporate tax law, it seems things have improved considerably in the last 5 years. I'll defer to other peoples greater knowledge on this. 

Thanks for the acknowledgment. A rare thing

2
 colinakmc 19 Jul 2020
In reply to Rog Wilko:

Recurrent theme on this thread of why should the feckless get for free....problem is people have vastly differing life chances and earning potential not least due to social class. Secondly, We have moved inexorably since Thatchers time from (progressive) direct taxation, towards ( much less progressive if not actively regressive ) indirect taxation so your low paid person has probably paid in a higher proportion of their earnings anyway. Thirdly, social care isn’t easy to separate out from healthcare when you start to look at life limiting and end of life health, e.g. dementia. 
And it’s set in stone that you should have healthcare free at the point of need, regardless of means. It’s a hallmark of a civilised society. 
There’s a quite separate argument about an appropriate level of inheritance tax irrespective of the use the proceeds are put to.
 

1
 Alyson30 19 Jul 2020
In reply to BnB:

> Both countries with national champions (Shopify, Xero) but relatively insignificant IT industries.

Which country has the biggest IT industry ?

Thats the US of course. Guess what, it’s now close to work immigration for all practical purposes.

> Not my experience. But I’m only a founder of several IT companies and shareholder in more than 50. Did you know that a third of the US software industry is staffed by Asians? The CEO of Microsoft is Indian. The CEO of Google is Indian. I could list scores of others.

Yes. I knew.

And that world is over. Look at all the Indians CEOs in the US, the majority of them came through immigration routes that don’t exist anymore.

In today’s world, work immigration in the US is effectively shut down, and work immigration to most English speaking countries is severely restricted.

The reality is that your typical British software engineer even well paid ones doesn’t have many places he/she can go easily to escape the crushing taxes.

> Berlin is trying to nab all of the UK’s IT start-ups. Is Germany a poorer country?

No, but Germany is doing exactly the opposite that many countries.

Did you know that the U.K. closed the entrepreneur visa ? Effectively for about a year there was no route for someone with cash to invest to come to the country to set up a business.
Now there is a replacement which is so impossible to use the uptake is barely in the double digits.

> Are you kidding? 

No. I doubt we will see very much uptake of these scheme. It’s a bit like the exceptional talent visas. It has only a marginal effect and concerns very few people. That’s not what’s going to move economies.

> Of course. But should we be demonising our champions and deterring inbound talent?

Of course but your point, if you remember, is that high rates of income tax would trigger an outflow of talent.

You would have told me that 5 years ago, I would have agreed - with the caveat that the effect would be slow and quite small.

Nowadays such outflows would be severely limited by restrictions of movement of workers. 

> I beg to differ. Along with data, human capital is the most valuable resource for corporations worldwide, not oil or gas. The world’s leading companies run on intellectual capital nowadays, not natural resources. As you say, this isn’t the 1980s any more ;-)

You are not differing here, you are saying something else.

We agree about human capital but the thing is, the movement of human capital, unlike the movement of commodities, is very restricted and not very elastic.

> You’d either see industrial scale tax avoidance or industries hollowed out. Take your pick

You know which country has a 60% higher tax rate ? Sweden. I don’t see droves of Swedish software engineer leaving the country. 
On the contrary Sweden is a premium destination for workers around the world.

So I just don’t buy this argument. It wasn’t really true yesterday and it even less true today.

There are many reasons that push people to go work to another country and tax is only very rarely the top one. Add to that that the movement of people is increasingly limited, and that argument is even weaker.

I think you basically need to recalibrate your compass.
The direction the world is taking is not one of global opportunities and movement but one of balkanised, close economies.

Post edited at 21:21
3
In reply to BnB:

> Are those experts really parasites?

I don't think all private experts and consultants are bad, but the NHS is being led into a state of private reliance. Private ambulances are a good example of this - you underfund national ambulances so there aren't enough, and then outsource a good chunk of your ambulance service to private companies who bid cheaply on the contract, the ambulances are sub-par and cost-cutting lead to deaths (this has happened), more underfunding of ambulances leads to more private contracts who are slowly putting the price up, eventually you're so reliant on private ambulances it would cost too much to train and buy thousands more when it would have been way cheaper long term to keep it all in-house, ultimately then the private ambulances will be able to charge what they want. 

The truth is our government has more respect for the private sector than the public sector and would rather bring in outsiders than invest in our own development infrastructure. We should be retaining talent, instead we just let private companies make big bucks off an intentional lack of modernisation. 

In reply to purplemonkeyelephant:

Absolutely. 

 BnB 19 Jul 2020
In reply to Alyson30:

I'm restricting myself to weekends only on UKC nowadays so we aren't going to get to finish our discussion. Nevertheless you make some good points but I don't think it's right to assume, for all that politics is moving towards protectionism, that the "elite workers" experience the world in the same way as the majority. I refer you back to the pan-European contest for UK banking talent that flies in the face of the removal of FoM. Nor assume that the US embargo on H1B visas will outlive the election campaign. It won't. Big tech is far too important to a USA locking itself into a technology cold war with an enemy better organised, more populous, more resolute and rapidly becoming better educated.

However, dishy Rishi isn't going to raise the highest rate of income tax to 60% because the data shows that it will reduce, not increase, the tax take. By way of example, France tried it in the aftermath of the GFC and it was a disastrous policy, soon withdrawn. Thanks for the discussion, I'm off to bed.

1
 Alyson30 20 Jul 2020
In reply to BnB:

> I'm restricting myself to weekends only on UKC nowadays so we aren't going to get to finish our discussion. Nevertheless you make some good points but I don't think it's right to assume, for all that politics is moving towards protectionism, that the "elite workers" experience the world in the same way as the majority. I refer you back to the pan-European contest for UK banking talent that flies in the face of the removal of FoM. Nor assume that the US embargo on H1B visas will outlive the election campaign. It won't.

 

The situation on h1b was already dismal before the embargo. I don’t believe that even if Trump doesn’t get re-elected this will change fundamentally the geo-political dynamic.

You talk about visas for banking talents but really that only a very small number of people are going to take advantage of this, and fewer will be eligible.

Sure if you are a world renowned scientist or banker you can probably fit in those special categories but this is really marginal and not very significant, it’s not what going to move the needle.

> However, dishy Rishi isn't going to raise the highest rate of income tax to 60% because the data shows that it will reduce, not increase, the tax take.

That is possible but outflow of workers is unlikely to be the cause. 
 

Post edited at 00:21
1
In reply to BnB:

> The most revealing aspect of your analysis is the 70% of the population that it ignores. Your enthusiasm for punishing the comfortably off is clouding your exposition. No one is arguing for an increasing tax burden to fall on the weakest 25%. The average wage in the UK is c£30k but if we exclude the bottom quartile let’s assume for the purposes of argument it rises to £40k. So a 1% increase across the remaining three quarters of the cohort delivers the same benefit as a 5% increase on the top 5% alone. How many 5 percentage point rises do you think our highest earners will tolerate before you chase their taxes out of the UK? Plenty of jobs (and tax breaks) for bankers and software engineers worldwide.

> Higher taxes look inevitable but they have to fall broadly and in a balanced manner to raise adequate revenues.

If you want to see it as a punishment or demonization then that's up to you but it's just straightforward economics.

  • If you are trying to raise revenue from income then you have to tax where the income is and the aggregate of income is massively concentrated with the high earners. The millions of lower earners simply don't earn enough between them to make a difference.
  • There is an economic multiplier in making sure that lower earners have enough money in their pocket to spend. Higher earners already have what they need and can save. Lower earners spend more of their income on things they need which drives demand and the economy, and generates further tax revenue. 

It's society that generates people's income and high earners need the favourable economic conditions to continue that made them high earners, which requires tax revenue. 

In reply to summo:

> And lockdown has proven what many of us already knew, in that home working can be surprisingly efficient and is no longer taboo within many companies. That home could easily be anywhere with a decent connection. 

> There is a problem with low wages in the UK, in part because it's just accepted that tax credits will top up a proportion of workers wages. Folk need to be prepared to pay more for low or unskilled services provided by the lowest paid, it's the only way Cumbria mammoth will be see the equal society they envisage. 

We often find ourselves on the opposite side of the argument but I absolutely agree with this as well. Better pay would be much preferable to a progressive tax regime. If the income distribution is more sensible then there would be no need to raise the top rate of income tax.

In reply to Alyson30:

> You know which country has a 60% higher tax rate ? Sweden. I don’t see droves of Swedish software engineer leaving the country. 

But not for any of the reasons you think. It's because they feel the benefit of their 60% (earnings over £50k ish). Live away from city honey pots and £150k will get you a big detached house, childcare capped at around £250month, decent 4g and fibre everywhere etc. The tax revenue isn't spent servicing debt or funding ideological vanity projects. 

Yeah there are loads software engineers in sweden, as much because IT is more embedded in Swedish society. Cash is dead, even pre covid it was near obsolete with lots of places cash free. Folk haven't gone door reading electric meters for over a decade, copper lines for telephones have been disappearing for 5 or 6 years, there is a big games and apps industry etc. Web platforms for just about everything imaginable Etc. They go to sweden not because of the tax rate, but because the tech work is there.

I know folk who work for ARM (cambridge) but live in southern sweden, others living in Stockholm (not cheap), my partner worked for AON (parent office next to London mayors) whilst living the forest. So it's not just Swedish company employees. 

All because they feel the benefits of their taxation, just slapping a tax on the rich in the UK isn't going to suddenly make everything else feel better and those proposing only taxing the rich are doing it out of hatred of them, not a desire to improve the UK for 100% of population. 

The reason higher rates function in Scandinavia is as much because everyone pays more tax, rich or poor, it's cultural even. Lots of kids summer jobs often run in 4 week blocks, because longer than that usually pushes them out of the zero into the 32% tax bracket (£1700 ish).  You never hear folk saying wealthy pensioners shouldn't have x or y, or rich parents shouldn't benefit from cheap child care, because primarily everyone is paying a lot of tax relatively, no one begrudges the other. 

Either way UK society is so different, they'd be baying for blood if taxes rose by even 1 or 2%, it's much better to just do a bit of doorstep clapping to improve things ;) 

 Alyson30 20 Jul 2020
In reply to summo:

> But not for any of the reasons you think. It's because they feel the benefit of their 60% (earnings over £50k ish).

This is exactly what I’ve said.

> Yeah there are loads software engineers in sweden, as much because IT is more embedded in Swedish society. Cash is dead, even pre covid it was near obsolete with lots of places cash free. Folk haven't gone door reading electric meters for over a decade, copper lines for telephones have been disappearing for 5 or 6 years, there is a big games and apps industry etc. Web platforms for just about everything imaginable Etc. They go to sweden not because of the tax rate, but because the tech work is there.

> I know folk who work for ARM (cambridge) but live in southern sweden, others living in Stockholm (not cheap), my partner worked for AON (parent office next to London mayors) whilst living the forest. So it's not just Swedish company employees. 

Which demonstrates that big international companies don’t have a problem with higher income tax rates as long as they can get the talents they need.

> All because they feel the benefits of their taxation

Exactly what I’ve said.

> just slapping a tax on the rich in the UK isn't going to suddenly make everything else feel better and those proposing only taxing the rich are doing it out of hatred of them, not a desire to improve the UK for 100% of population. 

Never said otherwise. It’s funny how you basically don’t read anything I say and immediately assume I had made a traditional left-wing argument.

It seems you enjoy so much your little ideological battle that even where there isn’t any enemy you make one up.

> Either way UK society is so different, they'd be baying for blood if taxes rose by even 1 or 2%, it's much better to just do a bit of doorstep clapping to improve things ;)

Maybe but I doubt that they’ll leave the country in droves to find better tax rate elesewhere. For starters the immigration doors are closed or very restricted in most English speaking places, and anyway it takes much more for people to move.

Just again, to repeat what I said above, I would be against higher tax rates in the U.K. because I fundamentally disagree how they are spent.

My only argument is that the familiar trope that is « if you increase the tax on the rich they’ll leave » doesn’t have that much meat on the bone.

A more likely effect is that people may work less or devise more complicated tax avoidance scheme.

Post edited at 09:21
2
 Alyson30 20 Jul 2020
In reply to summo:

> Either way UK society is so different, they'd be baying for blood if taxes rose by even 1 or 2%, it's much better to just do a bit of doorstep clapping to improve things ;)

Can’t agree more about the doorstep clapping. I find the hypocrisy of it vomit-inducing. The buzzword « cheap virtue-signalling » comes to mind. Or maybe I’m just a big cynic.

Post edited at 09:43
In reply to Alyson30:

I read and understood your argument. Whilst you might have different motivations and ideas for higher UK tax rates, all the MPs who propose it are driven by left wing hatred of the rich ideologies and it's implementation in the UK is exceedingly unlikely to create any Scandinavian contentment, only greater divide among UK society. 

There are no MPs who propose taxing the richest 5% suggesting those down the food chain should pay more too, they are just trying to buy votes by continuing the mantra that everything will improve and others will fund it. 

So you could pay 60% in the UK and get bugger all extra for it, or move abroad and pay 60% and get much more back in terms of disposable income, education, health and a better family life in general. 

2
 Alyson30 20 Jul 2020
In reply to summo:

> I read and understood your argument.

Good, so please don't attribute me political views I don't hold !

> all the MPs who propose it are driven by left wing hatred of the rich ideologies and it's implementation in the UK is exceedingly unlikely to create any Scandinavian contentment, only greater divide among UK society. 

I couldn't agree more that a Scandinavian model is unlikely in the UK. The main reason is cultural.

I could definitely see it developing in an independent or federalised Scotland though, for example.

> There are no MPs who propose taxing the richest 5% suggesting those down the food chain should pay more too, they are just trying to buy votes by continuing the mantra that everything will improve and others will fund it. 

> So you could pay 60% in the UK and get bugger all extra for it, or move abroad and pay 60% and get much more back in terms of disposable income, education, health and a better family life in general. 

Yes but my argument is that moving abroad is not easy at all, it isn't an option available to many, and it isn't getting any easier. So I don't see that as really a major factor.

Post edited at 10:26
1
In reply to summo:

> I read and understood your argument. Whilst you might have different motivations and ideas for higher UK tax rates, all the MPs who propose it are driven by left wing hatred of the rich ideologies and it's implementation in the UK is exceedingly unlikely to create any Scandinavian contentment, only greater divide among UK society. 

> There are no MPs who propose taxing the richest 5% suggesting those down the food chain should pay more too, they are just trying to buy votes by continuing the mantra that everything will improve and others will fund it. 

> So you could pay 60% in the UK and get bugger all extra for it, or move abroad and pay 60% and get much more back in terms of disposable income, education, health and a better family life in general. 

Why would you get nothing extra for it? We're talking about funding social care on this thread. I'm suggesting raising the top rate of income tax to 50% is preferable to making people sell their houses. People living comfortably would continue to live comfortably and social care would be taken care of, giving them a better family life in general. Where's there any hatred in that?

Why is there a double standard in using loaded terms like hatred, punishment, demonisation, etc? Have high earners felt loved, rewarded, and glorified, as the higher tax rate has dramatically reduced over the last 40 years?

If you put 1% onto someone on low pay that's punishment as it reduces their options. They have to find a saving from somewhere else to cover it. It might for instance mean that they can't get their car repaired so that would reduce options to find better work so it further weakens the wider economy. If you can raise the same revenue by just taxing people who are financially comfortable they don't have to make the same tough choices about spending and the wider economy prospers.

 Alyson30 20 Jul 2020
In reply to cumbria mammoth:

> Why would you get nothing extra for it?

Mostly because the government would spend it on stupid ideological projects such a Brexit, or spend it on keeping houses prices and the bullshit economy up.

Give me a competent system of government I can trust and that looks at the long term common interest and I'll happily pay up to 70%, even 80% taxes on anything above 100k.

You make a good point about income distribution trough. You are right that taxing more the less wealthy would be regressive.
However the problem is more fundamental than that.

If the state has to rely too much on the super rich for their tax take, then you give them a disproportionate influence on policy. Such a narrow tax base is also not very reliable.

It is much better IMO to have a large, self sufficient middle class that can be the main contributor to the state coffers.
Problem is it's not as easy as simply changing the tax rates.

Post edited at 11:02
1
In reply to cumbria mammoth:

1% on the base rate would mean that somebody earning £20k would be £6.50 a week worse off. 

But because those earning more would be contributing much more tax under the 1% rise, many services could be funded better. For example subsidised childcare, transport... or as you say social care. 

So whilst the low earner has ever so slightly less money at the start of each month, their monthly expenses are more significantly reduced. That in essence is the Scandinavian model, everyone pays, everyone benefits, but low to middle earners benefit the most. 

Ps. Everyone's tax has reduced massively in the UK in the last 40 years. Base rate tax has fallen and the zero rate allowance is 5 or 6 time higher. 

 Alyson30 20 Jul 2020
In reply to summo:

> Ps. Everyone's tax has reduced massively in the UK in the last 40 years. Base rate tax has fallen and the zero rate allowance is 5 or 6 time higher. 

Tax revenue as a share of GDP increased marginally over the last 40 years. I think we already mentioned to you in another thread.
Falls in income tax have been generally speaking offset by increase in VAT and NI.

1
 neilh 20 Jul 2020
In reply to cumbria mammoth:

The shortfall on social care spending is £ 20 billion( as per IFS and others)

So the real question you need to look at is how much tax reveneue is generated by whacking up the top rate of income tax.

Last number I had read was it generates £ 8 billion.

So you are still £12 billion short and social care is still poorly funded.

Therein lies the dilemma

And do not forget that £8 billion could also be used for other high priority services, it could go to the NHS.So why not spend that £8 billion in the NHS.

Not easy tax and spend decision.

 Alyson30 20 Jul 2020
In reply to neilh:

> Last number I had read was it generates £ 8 billion.

Simple mental arithmetic tells me that's impossible.
It has to be way, way more.

Update : I finally found some numbers.

The share of the income tax liability of higher rate and additional rate taxpayer in 2020 is 51%.
The total income tax liability is about 200bn.

Pretty easy to work out that they pay around 100bn, not 8bn.

Post edited at 13:09
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 neilh 20 Jul 2020
In reply to Alyson30:

I think we are talking at cross purposes. Back in 2010/2012 they whacked up the tax to 50% for high earners.So HMRC have a reasonable idea as to how much additional tax this generates.

At this time it was estimated that the new 50p rate on earnings above £150,000 would raise £2.5bn by 2011/12, and the withdrawal of the personal allowance from individuals with incomes above £100,000 would raise £1.4bn in the same year.At the time of the 2010 Budget these estimates were revised upward: to £3.1bn, and £1.47bn.

I have never read anywhere that the jump to 5p generated anything like the numbers you were talking about.If it did they would have been daft to reduce it back to 45p as they could have done with the cash.

It is one of the reasons why they knocked it back to 45p. Also they found  that those earning that sort of money simply took legal tax avoidance measures to do other things with it. One of the classic ways is just reducing your dividend earnings if you own a company and put the money back into the business.

 Ian W 20 Jul 2020
In reply to summo:

> 1% on the base rate would mean that somebody earning £20k would be £6.50 a week worse off. 

Nope, with the current personal allowance of £12.5k, a 1% rise in basic rate would cost a £20k earner £75 pa (£1.44 pw)

> But because those earning more would be contributing much more tax under the 1% rise, many services could be funded better. For example subsidised childcare, transport... or as you say social care. 

> So whilst the low earner has ever so slightly less money at the start of each month, their monthly expenses are more significantly reduced. That in essence is the Scandinavian model, everyone pays, everyone benefits, but low to middle earners benefit the most. 

> Ps. Everyone's tax has reduced massively in the UK in the last 40 years. Base rate tax has fallen and the zero rate allowance is 5 or 6 time higher.

Agree wholeheartedly with everything else. We don't pay enough tax. In fact, I think my numbers amplify your point; using UK median earnings of £29.6k, the additional tax paid with your 1% rise in basic rate would equate to £3.29 pw. Hardly going to cause destitution on £30k pa. And to get your £6.50 per week additional tax bill, you would have to be on £46.3k pa, which is again hardly going to cause you to go without..........

In reply to Ian W:

> Nope, with the current personal allowance of £12.5k, a 1% rise in basic rate would cost a £20k earner £75 pa (£1.44 pw)

Yes. I just counted it as 12k... got £80... which I split into months at 6.50ish.. but then said weeks!! 

Either way I can't see it happening, governments will just try to fudge it with umpteen mini taxes, which just make UK tax even more complex and likely easier to avoid. 

 Ian W 20 Jul 2020
In reply to summo:

> Yes. I just counted it as 12k... got £80... which I split into months at 6.50ish.. but then said weeks!! 

Bloody maths, eh!

> Either way I can't see it happening, governments will just try to fudge it with umpteen mini taxes, which just make UK tax even more complex and likely easier to avoid. 

Same here; my tuppeny worth - higher basic rates for those over (say) £25k, by 2% ish; then 25% over £35k, 30% over £40k, move the 40% band up to £60k and then 50% for £100k + much more graduated, everyone pays a bit more, everyone gets btter services. Corp tax needs to change to a Value Added / Gross Margin type tax so the offshoring of profits / huge "internal licensing fees" end.

 Alyson30 20 Jul 2020
In reply to neilh:

> I think we are talking at cross purposes. Back in 2010/2012 they whacked up the tax to 50% for high earners.So HMRC have a reasonable idea as to how much additional tax this generates.

I don’t disagree but I don’t think the main  point of higher rates of tax is to bring in more revenue in the short term.

The main effect it has is to flatten the income distribution. If your income above say, a 100k, is taxed 60,70,80% then it crushes the incentive of higher pay.

I think this may be good for several reasons. 

The first one is that it doesn’t allow people to enrich themselves too quickly. Therefore it focuses you on building long term wealth, instead of seeking fast returns that encourage irresponsible behaviour.

We have seen that for example in the financial sector. What incentive is there to behave responsibly if you can make more money you’ll ever need in one year ?

The second one is that higher compensation becomes less of an incentive above a certain level when you have to pay punitive tax on it. As such executive pay would effectively be much lower, which means more money available  to invest for the long term.

> I have never read anywhere that the jump to 5p generated anything like the numbers you were talking about

Ok, I think it is simply that you were talking about what a proposed increase in the higher rate would generate, however the way you phrased it read as  if you were talking about how much the higher rate generates overall.

So we were not talking about the same thing  but you can see it all reconciles.
 

> One of the classic ways is just reducing your dividend earnings if you own a company and put the money back into the business

Isn’t that something we should promote ?

As you can see my point is not that the rich don’t pay enough taxes (my own numbers show that they pay most of it).

My point is precisely that most of the taxes are generated by the right hand tail of the income distribution. So we just need to flatten that curve.

Higher taxes may be one way to do it.

I appreciate it is counterintuitive as I am saying that by taking more from the very rich you won’t generate much more tax income in the short term, but long term it changes the pay distribution which means you have a broader base to tax.
 

Or we can continue with the current situation which is that the top quartile of earners subsidise everybody else.

Personally I would prefer having a large, self-sufficient middle class that isn’t dependent on the state and can’t be bossed around.

Post edited at 14:35
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 neilh 20 Jul 2020
In reply to Alyson30

Executive pay is not entrepreneurs earnigns so to speak. You are looking at it from just one aspect.

It depends what you do with it.. You can just leave the money in the business and not do anything with it, you have no need to reinvest, it just sits there as a balance.

In which case nobody benefits apart from a companys customers/suppliers who think the credit rating on the company is now "rosy".

Its not an easy one. But I just do not consider that  increasing the tax rate on high earners  will bring in enough money to fill the social care funding gap.Far from it. There is not enough there to take..

Any way I will  leave you now., other things to do.Enjoy.

 ClimberEd 20 Jul 2020
In reply to Rog Wilko:

What about a more radical idea.

Fund people to look after their relatives at home, if their care permits (obviously not for v. ill people and the like).

So instead of the government paying out, say, 100k year/10 years, you get 150k from them to buy a bigger house and a small stipend to cover in home costs.

Obviously the exact details would need to be worked out, and the most ill would still need professional care, but too often care that used to be done by extended family is now done by the state. 

 Eric9Points 20 Jul 2020
In reply to baron:

Exactly.

The premise of this post is simply false. In reality if you have savings you pay for your care home. If you're lucky enough to avoid one then you can pass on what you saved for to others.

If I knew that when I died the state would take my house off me I'd take out reverse mortgage and blow the phuqing lot.

In reply to ClimberEd:

The government already have the Carers Allowance.

£269/month.

 Alyson30 20 Jul 2020
In reply to neilh:

> In reply to Alyson30

> Executive pay is not entrepreneurs earnigns so to speak. You are looking at it from just one aspect.

I don’t see why the distinction matters in any way for the purpose of this discussion.

> It depends what you do with it.. You can just leave the money in the business and not do anything with it, you have no need to reinvest, it just sits there as a balance.

> In which case nobody benefits apart from a companys customers/suppliers who think the credit rating on the company is now "rosy".

Are you really going to argue that having cash reserves in a business is useless ? 
Given the current situation, that’s quite a brave undertaking, good luck with that argument !

In a way, you are right, why bother with building cash reserves, better to fill your pockets when times are good, and when times are bad, for example a global pandemic, the taxpayer will bail you out with furlough schemes and whatnot.

> Its not an easy one. But I just do not consider that  increasing the tax rate on high earners  will bring in enough money to fill the social care funding gap.Far from it. There is not enough there to take..

Well that’s not true, if you increased to 60% or so that would broadly cover it.

Post edited at 18:53
1
 Alyson30 20 Jul 2020
In reply to ClimberEd:

> What about a more radical idea.

> Fund people to look after their relatives at home, if their care permits (obviously not for v. ill people and the like).

> So instead of the government paying out, say, 100k year/10 years, you get 150k from them to buy a bigger house and a small stipend to cover in home costs.

So basically someone with their parents alive would inherit a big house paid by the state, but someone without parents would get nothing.

I don’t see how that is fair. Unless the house goes to someone else when they die, in which case this is just a very expensive care home you’ve built.

Post edited at 18:49
 ClimberEd 20 Jul 2020
In reply to Alyson30:

Do you know what, I really don't care who inherits what. And that wasn't the purpose of what I was saying.

The idea is that people look after their relatives at a much lower cost to the government (and themselves) than sticking everyone in care homes. 

 ClimberEd 20 Jul 2020
In reply to purplemonkeyelephant:

> The government already have the Carers Allowance.

> £269/month.

That can go on top of funding a bigger house to give room for the relative.

 Alyson30 20 Jul 2020
In reply to ClimberEd:

> Do you know what, I really don't care who inherits what. And that wasn't the purpose of what I was saying.

I am simply pointing out the flaw in that suggestion.

> The idea is that people look after their relatives at a much lower cost to the government (and themselves) than sticking everyone in care homes.

True but a degree of fairness is also an important consideration.

I’ve got a better idea, why not help people build savings so that when they are old they can pay for themselves ?
That plus a safety net for the poorest who can’t.

Post edited at 23:01
 ClimberEd 21 Jul 2020
In reply to Alyson30:

>.

> I’ve got a better idea, why not help people build savings so that when they are old they can pay for themselves ?

> That plus a safety net for the poorest who can’t.

Because I am trying to avoid the money black hole that is a care home.  The price that has to be paid is utter insanity and there is no 'economic structure' that will be able to provide £5-10k a week per person for a significant period of time on a mass scale. 

Far, far better people live in bigger houses and look after relatives in an extended family structure. (yes, there will be exceptions, both in the level of care needed, and those who don't have family)

In reply to ClimberEd:

> Far, far better people live in bigger houses and look after relatives in an extended family structure. (yes, there will be exceptions, both in the level of care needed, and those who don't have family)

Part of the problem will be for the last 50 years new housing has comprised of 4 beds that are really 2 beds with 2 large cupboards. 

Otherwise I agree, 3 generation households can solve many problems.

 mullermn 21 Jul 2020
In reply to Alyson30:

> That plus a safety net for the poorest who can’t be bothered.

Takes us back to the point made some time ago. Save for yourself and spend it on care, or spend it on yourself and get care for free. 

1
 Alyson30 21 Jul 2020
In reply to ClimberEd:

> >.

> Because I am trying to avoid the money black hole that is a care home.  The price that has to be paid is utter insanity and there is no 'economic structure' that will be able to provide £5-10k a week per person for a significant period of time on a mass scale. 

 

Private, for profit care home charge around £700 a week. A high end luxury one charges around £2000 a week.

So I am not sure where you get those figures.

> Far, far better people live in bigger houses and look after relatives in an extended family structure. (yes, there will be exceptions, both in the level of care needed, and those who don't have family

And it sounds to me you just want a bigger house for free !

 ClimberEd 21 Jul 2020
In reply to summo:

> Part of the problem will be for the last 50 years new housing has comprised of 4 beds that are really 2 beds with 2 large cupboards. 

> Otherwise I agree, 3 generation households can solve many problems.

Don't get me started on that !! What constitutes a 'house' is an appalling reflection of  current standards of living.

(I think I meant per month, not per week, on my costings, but the gist is the same)

 Alyson30 21 Jul 2020
In reply to mullermn:

> > That plus a safety net for the poorest who can’t be bothered.

> Takes us back to the point made some time ago. Save for yourself and spend it on care, or spend it on yourself and get care for free. 

You can’t expect someone on minimum wage for most of their life to be able to save for their own care. I’m fine with helping people like that.

I’m not fine however with giving people who spent all their money on big mortgages to live in nice houses to be given a bigger house for free, when they already have an asset they could sell to pay for their own care.

Post edited at 07:56
2
 ClimberEd 21 Jul 2020
In reply to Alyson30:

> Private, for profit care home charge around £700 a week. A high end luxury one charges around £2000 a week.

> So I am not sure where you get those figures.

> And it sounds to me you just want a bigger house for free !

Yes, I meant per week. 

I don't want anything for free. My house is large enough to house three generations without much problem. I'm also in a position of being able to pay care home fees. 

So this isn't about me. 

It is about the increasing burden on the economics of the country of the cost of care for the elderly. (effected by the number of elderly, how long they are living and the cost of looking after someone).

Assuming some money has to be spent (a not unreasonable assumption), it less costly to enable families to live in larger houses and look after  relatives than pay for people to go into care homes. 

This is better than just taking the view that we better find more money from taxpayers to fund it because that's our only option.

It's not a difficult concept to grasp.

 ClimberEd 21 Jul 2020
In reply to Alyson30:

> You can’t expect someone on minimum wage for most of their life to be able to save for their own care. I’m fine with helping people like that.

> I’m not fine however with giving people who spent all their money on big mortgages to be given a bigger house for free.

I think you are missing the point here.

You can't expect anyone, other than the very wealthiest or most fortunate, to be able to save and pay for their own care. It is simply too much money.

 Alyson30 21 Jul 2020
In reply to ClimberEd:

> Yes, I meant per week. 

That doesn’t add up.

> It is about the increasing burden on the economics of the country of the cost of care for the elderly. (effected by the number of elderly, how long they are living and the cost of looking after someone).

> Assuming some money has to be spent (a not unreasonable assumption), it less costly to enable families to live in larger houses and look after  relatives than pay for people to go into care homes. 

It’s all very laudable but you’ll have to explain to me where you find all those large houses and who gets them.


> This is better than just taking the view that we better find more money from taxpayers to fund it because that's our only option.

Odd you say that because you are the one suggesting we take money from the taxpayer to buy people bigger houses, and I am the one who suggests we ask people to pay for their own care.

You also very quickly hit the problem that if people are at home taking care of their parents, they are not out there earning and paying taxes.

> It's not a difficult concept to grasp

Well actually it is pretty difficult to grasp as it is contradictory and the sums don’t add up.

Post edited at 08:16
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 girlymonkey 21 Jul 2020
In reply to ClimberEd:

> Far, far better people live in bigger houses and look after relatives in an extended family structure. (yes, there will be exceptions, both in the level of care needed, and those who don't have family)

That only works when no real care is required. If all the older family member needs is shopping done, meals cooked etc then that is fine. In reality, many need mobility aids and appropriately spacious accomodation for those aids to move around, many need adapted bathrooms, specialist beds to prevent bedsores and to prevent carers from injuring themselves looking after them. Caring for elderly well and giving them the appropriate dignity they deserve is often better done by professional carers who are skilled in it and have the appropriate tools at their disposal. I don't think this is the exception, I feel it's pretty common as the final few years approach

 Alyson30 21 Jul 2020
In reply to ClimberEd:

> I think you are missing the point here.

> You can't expect anyone, other than the very wealthiest or most fortunate, to be able to save and pay for their own care. It is simply too much money

The median house price is 250k. Most older pensioners  will have long paid off their mortgage.

I believe that + pension + whatever savings they have can cover cost of care for most people.

Then you have the poorer ones with no assets and very small pension, which of course, we can help through welfare.

1
 ClimberEd 21 Jul 2020
In reply to Alyson30:

You shouldn't have to sell your house and spend your savings so the final years of your life can be spent broke eeking out whatever dignity you have left in a care home. 

Especially if the state will pick up the slack for those can't/won't. 

That creates significantly misaligned incentives.

Other than for the very neediest, care homes should be avoided as they are so costly, and I am suggesting a way in which that can happen. 

 Alyson30 21 Jul 2020
In reply to ClimberEd:

> You shouldn't have to sell your house and spend your savings so the final years of your life can be spent broke eeking out whatever dignity you have left in a care home. 

So let me get this right, if you don’t save any money for later years, and put it all in a big mortgage, when you get to the end of your life the taxpayer picks up the tab so that you can keep your house, and even tops it up so that your family can get a bigger house.

I frankly don’t see why you wouldn’t have to sell your house, if you own one, at the end of your life to pay for your own care.

Post edited at 08:42
3
 ClimberEd 21 Jul 2020
In reply to Alyson30:

> So let me get this right, if you don’t save any money for later years, and put it all in a big mortgage, when you get to the end of your life the taxpayer picks up the tab so that you can keep your house, and even tops it up so that your family can get a bigger house.

> I frankly don’t see why you wouldn’t have to sell your house, if you own one, at the end of your life to pay for your own care.

I don't quite understand your obsession with a big mortgage. So we'll put that to one side.

These are my parameters:

I'm saying that it is absurd to expect anyone, other than the very wealthiest, to be able to save enough to pay for anything, other than a very short period in a care home. In fact it is not just absurd, it is simply not possible. 

No one should be forced to sell their home to pay for their care.

Care homes are far far too expensive and it is equally impossible for the government to fund multiple years for people in them. (the numbers simply do not add up)

So therefore:

A potential solution is to facilitate a much smaller payment from the government than they would pay to the care home, enabling the family to support and look after the elderly person.

Obviously, very obviously, this is a broad concept and there would be details to be worked out.

 Alyson30 21 Jul 2020
In reply to ClimberEd:

> I don't quite understand your obsession with a big mortgage. So we'll put that to one side.
> These are my parameters:

> I'm saying that it is absurd to expect anyone, other than the very wealthiest, to be able to save enough to pay for anything, other than a very short period in a care home. In fact it is not just absurd, it is simply not possible. 

 

I disagree that being self-sufficient during your life is absurd or unachievable.

> No one should be forced to sell their home to pay for their care.

Why ? Please explain to me why.

> Care homes are far far too expensive and it is equally impossible for the government to fund multiple years for people in them. (the numbers simply do not add up)

And that is exactly why people should be paying for it themselves.

> So therefore:

> A potential solution is to facilitate a much smaller payment from the government than they would pay to the care home, enabling the family to support and look after the elderly person.

I am not against helping people who dont have any assets to care for their families.
But the expectation is that you should be running down your assets first before you ask the taxpayer for help.

That seems perfectly reasonable to me, you build up assets during your life (a house, savings, pension etc etc) so that when you stop working you have something to draw from.

Post edited at 09:00
1
 ClimberEd 21 Jul 2020
In reply to Alyson30:

If you don't understand why no one should be forced to sell their home we are going to go round and round in circles without a very extended detailed discussion, which is not for a web forum.

So I think I'll leave it there. 

3
 neilh 21 Jul 2020
In reply to Alyson30:

Its dead money unless its used for something, and it illustraes its more complicated than you portray.

The principle issue in all this is whether such a tax rise even to 60% genetrates enough extra tax to pay for the additional social care funding required.

The tax rise to 50 p generated the numbers that I quoted. It is not difficult to work out what a 60% rise would mean.

And still there is a shortfall in the level of socail care funding.

And that money could also go to the NHS or others.

So let us not pretend that raising tax to 60% solves the problem. It helps.

You need to generate more tax from elsewhere.Pretending it is a zero sum game for other people other than those on high earnings is not realistic.

 neilh 21 Jul 2020
In reply to ClimberEd:

Define a " small" payment" and work out if that covers the shortfall in social care funding.

 Alyson30 21 Jul 2020
In reply to neilh:

> Its dead money unless its used for something, and it illustrates its more complicated than you portray.

It is dead money until you need it to weather adverse conditions, at which point it is the difference between survival and death.

> The principle issue in all this is whether such a tax rise even to 60% genetrates enough extra tax to pay for the additional social care funding required.

> The tax rise to 50 p generated the numbers that I quoted. It is not difficult to work out what a 60% rise would mean.

Yep, it would bring in about 10bn a year at least, about half of what you need !

> You need to generate more tax from elsewhere.Pretending it is a zero sum game for other people other than those on high earnings is not realistic.

I broadly agree, but it is wrong to say that increasing the tax rate would not bring much money.
Don't let ideology get in the way of simple sums.
 

Post edited at 09:31
1
 Alyson30 21 Jul 2020
In reply to ClimberEd:

> If you don't understand why no one should be forced to sell their home we are going to go round and round in circles without a very extended detailed discussion, which is not for a web forum.

We'll sorry no, I really don't understand why you shouldn't have to sell you assets at the end of your life to pay for your own care, and instead ask the taxpayer.
And it seems to me you are struggling to come up with an answer.


That's BTW what both my grandmothers have done. Both of them not rich at all and actually one of them from a very poor background.
For my own parent it's different as they don't have any assets - they'll need some sort of support from me and I have already planned for that. 

I'd rather have the taxpayer money going towards helping people with no assets and no family member to help them rather than going towards buying bigger home to people who already have one.

Post edited at 09:28
1
 Ian W 21 Jul 2020
In reply to ClimberEd:

> I don't quite understand your obsession with a big mortgage. So we'll put that to one side.

The mortgage thing is utterly spurious by the time you are facing this scenario.

> These are my parameters:

> I'm saying that it is absurd to expect anyone, other than the very wealthiest, to be able to save enough to pay for anything, other than a very short period in a care home. In fact it is not just absurd, it is simply not possible. 

that is simply bollocks. My parents were distinctly average in terms of income through their life into retirement. They saved significant amounts (well, it depends what you mean by significant!), but it seemed reasonably significant to me.......

> No one should be forced to sell their home to pay for their care.

by the time you need to go into a care home, or be cared for full time, you wont be living in your own home under the current normal scenario; however I get your alternative, with some major buts.....

> Care homes are far far too expensive and it is equally impossible for the government to fund multiple years for people in them. (the numbers simply do not add up)

Why are they "far far too expensive" - you'll have to define what and why here.....and why is it not possible for the government (taxpayer) to fund years in them when required

> So therefore:

> A potential solution is to facilitate a much smaller payment from the government than they would pay to the care home, enabling the family to support and look after the elderly person.

Excellent idea. What about the specialist medical help / medication many residents of care homes need? What about the specialist physical therapy care many elderly need? Who provides the 24/7 care and attention they need?

> Obviously, very obviously, this is a broad concept and there would be details to be worked out.

Unfortunately the details are much much bigger than you think. In the care home my mum spent 2.5 years in, the majority of residents needed care and supervision 24/7 (dementia), which would simply not be possible to give in a normal family environment. for example in the care home they have medically qualified specialists in attendance on shift 24/7. Whilst care homes are in a lot of cases far from perfect, providing even close to the level of care for the 36 residents of the dementia wing would be in my view impossible if they were spread around 36 private homes, being cared for by families.

 StuPoo2 21 Jul 2020
In reply to BnB:

My apologies if this has been said elsewhere in this thread and not really directed at you personally BnB - more generally at the idea of 100% IHT rate.

We must not get hung up on the policy itself and rather focus on the behaviors that the policy will drive (Labour has had this problem of late).  End of the day ... the policy doesn't matter. What matters is whether or not the behavior generated from the policies are what we want.

I support, in principle, a 100% rate on IHT for inequality reasons - i think inter-generational wealth is a key driver of inequality.

But ask yourself this:  Faced with the knowledge that any wealth, 100%, you accrue in your lifetime will transfer to the state (either early or late) no matter what when you pass ... what would you do?  What behaviors would that drive in the population?

The answer is obvious - it would drive behavior in people to avoid accruing wealth at all costs.  Why accrue wealth if you're just going to have to give it to the state away?  It makes no sense to accrue wealth in this situation - it would be pointless .. and that would soon become the message that got out.  Tax advisors would be in every workplace "oh .. you've got far too much money mate ... we need to do something with that".   They would spend it on their children's primary/secondary/tertiary education (further advancing inequality).  They would move it offshore/out of the reach of the tax man.  They would setup shell companies and buy property abroad.  No one would buy a house in the UK - everyone would rent (making landlords richer than they are).  People would keep 6 months emergency funds in case you loose your job but after that it would go on big holidays, fancy cars, anything ... so long as wealth wasn't being accrued that you would have to surrender to the state if you were to unfortunate to pass without first finding a way to dispose of it.

A 100% rate on IHT makes sense only in the current situation - where some people reach the end of their life with significant assets.  But if you actually introduced a 100% IHT rate ... soon enough no one would reach the end of their life with any significant assets and the tax would be pointless - it would raise nothing.  Policies drive behaviors and a 100% IHT rate would drive a behavior to dispose of assets - "use them or loose them".  

Doesn't matter that the policy might be ideologically correct - it would drive a set of behaviors that no one would want and that, IMO, would likely exasperate the current situation of how to fund care in later life.

 neilh 21 Jul 2020
In reply to Alyson30:

It brings in money , but nowhere near enough. No issues at all with that.

If people think that just raising the tax on high earners will solve the funding gap then they are deluding  themsleves.

Do let simple sums get in the way of a reality check.

 mullermn 21 Jul 2020
In reply to Alyson30:

>We'll sorry no, I really don't understand why you shouldn't have to sell you assets at the end of your life to pay for your own care, and instead ask the taxpayer.

Presumably you're in favour of privatised healthcare? What's special about end of life, why shouldn't you pay the whole way through?

> I frankly don’t see why you wouldn’t have to sell your house, if you own one, at the end of your life to pay for your own care.

You're missing the point. If you make this a flat out rule nobody WILL own a house at the end of their life. Why would you, when you can get shot of the asset early and party on the proceeds, then get free end of life care like all the people who couldn't be bothered to prepare for themselves?

2
 StuPoo2 21 Jul 2020
In reply to summo:

All excellent points and ring true with my experience in Sweden too.

The UK is in a tax vortex.  As services under perform/under deliver, people are loath to pay more tax on the basis that they believe that the services will not improve if they do so.  Instead, they vote for parties that advocate for less tax on the basis that they believe that money in their own pocket can better serve themselves/their family than the same money in the governments pocket would.  Sweden is in the exact opposite situation - people are willing to keep paying high rates of tax because its clear they're getting good value for money when they do.

This is, IMO, becoming more deeply ingrained. Over turning this idea in the UK, that the individual is better placed to know how best to spend his/her money for the betterment of his/her family than the government is, is going to be increasingly difficult as time goes on.

The fact that it is a idea/an ideology is what makes it so potent and difficult to change.

Post edited at 11:58
 Alyson30 21 Jul 2020
In reply to mullermn:

> >We'll sorry no, I really don't understand why you shouldn't have to sell you assets at the end of your life to pay for your own care, and instead ask the taxpayer.

> Presumably you're in favour of privatised healthcare? What's special about end of life, why shouldn't you pay the whole way through?

I don’t consider having a place to live that’s suitable for you when you are old « healthcare ».

It’s a reasonable expected expense for which one must try to plan for.

NHS treatment is a different subject.

> You're missing the point. If you make this a flat out rule nobody WILL own a house at the end of their life. Why would you, when you can get shot of the asset early and party on the proceeds, then get free end of life care like all the people who couldn't be bothered to prepare for themselves.

It’s a completely unreasonable assumption that people will do that.

Are you really suggesting that people in their late retirement will sell their house, live in a hotel and spend several hundreds thousands of pounds on champagne and hookers, until they have nothing left and can get the state to take care of them ?

In any case if you intentionally decrease your overall assets in order to reduce the amount you contribute towards the cost of care service, that will be pretty obvious in a financial assessment. 
 

It’s called deprivation of assets and that’s already illegal in the Care Act.

May I point out that what you apparently consider unreasonable is already in place. If you need old age care from your council they will ask you to contribute to it depending on your assets, it often means selling or releasing equity out of your home.

And if you try to sell and donate the money to your heirs before this will be flagged pretty easily.

BTW whether you like it or not selling or releasing equity out of your home in old age will become more and more the norm.

The simple reason is that we have an increasingly ageing population with increasingly shit pensions.

Post edited at 13:01
1
 Alyson30 21 Jul 2020
In reply to neilh:

> It brings in money , but nowhere near enough. No issues at all with that.

Well a 60% higher rate would bring more than half of what’s needed, a 70% would cover it. Plenty of other taxes you could leverage too.

> If people think that just raising the tax on high earners will solve the funding gap then they are deluding  themsleves.

> Do let simple sums get in the way of a reality check.

And if you do the simple sums you’ll find out that you can easily plug the gap or most of it with much higher taxes on high earners. 
 

I am not saying it’s a good idea (I spent my time arguing that it isn’t)  just that it is perfectly possible.

Post edited at 13:34
1
 Ian W 21 Jul 2020
In reply to ClimberEd:

> What about a more radical idea.

> Fund people to look after their relatives at home, if their care permits (obviously not for v. ill people and the like).

> So instead of the government paying out, say, 100k year/10 years, you get 150k from them to buy a bigger house and a small stipend to cover in home costs.

How the hell is that going to work in London? nothing to do with the numbers, except that the houses just dont exist.......

In reply to StuPoo2:

> The fact that it is a idea/an ideology is what makes it so potent and difficult to change.

Add to the fact that even if any government reversed the low tax and under funding of services policy, it's likely to take decades not years before everyone feels the benefit from it because it has been heading down it's current path for so long. A government that put up taxes for everyone would certainly be voted out 5 years later. 

 Alyson30 21 Jul 2020
In reply to summo:

> Add to the fact that even if any government reversed the low tax and under funding of services policy, it's likely to take decades not years before everyone feels the benefit from it because it has been heading down it's current path for so long. A government that put up taxes for everyone would certainly be voted out 5 years later. 

Not if the government built trust through consistency and competence.

Unfortunately the current one is constantly lying, rolling back promises, and completely incompetent, so there is no trust.

As such the only thing they have left to win elections is demagoguery.

Post edited at 15:10
1
In reply to Alyson30:

> Well a 60% higher rate would bring more than half of what’s needed, a 70% would cover it. Plenty of other taxes you could leverage too.

Problem is how will you also fund education, hospitals, council services, infrastructure etc to an adequate level? The reality is if services are to improve everyone needs to pay more, there is no escape from it. 

 Alyson30 21 Jul 2020
In reply to summo:

> Problem is how will you also fund education, hospitals, council services, infrastructure etc to an adequate level? The reality is if services are to improve everyone needs to pay more, there is no escape from it. 

Ok but the thread was about social care. We’re not going to improve everything in one go for sure.

At the end if the day the best way to raise more taxes is to raise incomes, not to raise the tax rates.

Post edited at 15:13
In reply to Alyson30:

> Unfortunately the current one is constantly lying, rolling back promises, and completely incompetent.

I'd argue any government. The last the leader of the opposition couldn't even be trusted to say how many seats were vacant on a train. There were MPs of all parties guilty of expenses fraud etc. Etc. 

In reply to Alyson30:

> Ok but the thread was about social care. We’re not going to improve everything in one go for sure.

But aren't they linked? You need good health, education, services to create and keep your higher earners in the first place. A healthy society will potentially cost less in social care too. The uks diabetes and obesity time bomb isn't shrinking. 

 Alyson30 21 Jul 2020
In reply to summo:

> I'd argue any government. The last the leader of the opposition couldn't even be trusted to say how many seats were vacant on a train. There were MPs of all parties guilty of expenses fraud etc. Etc. 

Nah I disagree it isn’t even remotely comparable.

We had some scandals and reprehensible behaviour, but that isn’t the same as the full-on demagoguery, cheating, lying, and perversion if the democratic process as we have now, which clearly breaks with a very long British tradition of somewhat pragmatic - though usually not very competent - government.

Post edited at 15:21
1
 Alyson30 21 Jul 2020
In reply to summo:

> But aren't they linked? You need good health, education, services to create and keep your higher earners in the first place. A healthy society will potentially cost less in social care too. The uks diabetes and obesity time bomb isn't shrinking. 

Sure thing but the question was could we plug the social care funding gap with higher taxes on the rich. The answer is yes. 

1
In reply to Alyson30:

Labour had their Peterborough mp suspended for lying in court. Let's not pretend only the Tories lie. 

You can't treat taxes in isolation. It's easy to say put 10% on vat and fund the nhs properly too etc.. but tax and services need to look at collectively. 

 Siward 21 Jul 2020
In reply to Alyson30:

You've no doubt heard of the Laffer curve?

And I think you are wrong to suggest that youngsters, just embarking on their working lives, wouldn't avoid accumulating wealth in the form of property or elsewhere if they knew it was forfeit when they got old. 

 Alyson30 21 Jul 2020
In reply to Siward:

> You've no doubt heard of the Laffer curve?

Yep, mostly econometric bullshit, but if you believe in that stuff, most interpretation of the Laffer curve put the maximising revenue rate of income tax at 70%.

Which is higher than the range suggested,

> And I think you are wrong to suggest that youngsters, just embarking on their working lives, wouldn't avoid accumulating wealth in the form of property or elsewhere if they knew it was forfeit when they got old.

It’s not “forfeit” when you get old, on the contrary, the whole point of accumulating wealth during your working life is to have some capital you can draw from when you stop working and keep a comfortable life.

It’s really a nonsense suggestion, why do people put money in pension pots ? If you don’t you’ll still get a state pension and all sorts of welfare and help. Yep people still put money in their pension pots.

Moreover, it is ALREADY the current situation ! If you ask your local council to put you in a care home permanently, they will ask you to contribute to the cost of it depending on your means.

If you’ve got assets such as a house then you would be expected to pay full fee (unless you have a spouse living in the house, for example), and probably sell the house unless you have cash at hand.

Besides, that’s exactly what I am doing myself, I am accumulating wealth expecting to run it down when I’m old, my grandparents did the same, and pretty much everybody I know is doing the same, so the behaviour you describe, besides being irrational, doesn’t seem to match up with the reality.

Post edited at 17:27
1
 ClimberEd 21 Jul 2020
In reply to Alyson30:

Your pension should be equity, from which you live off the income, without drawing down the asset.

You really aren't that clued up about the assets/investing/equity/income/tax dynamic are you. You don't save money to be forced to spend it, you don't pay off your mortgage only to sell your house for the cash. 

As I said, I stepped away, I've been working all day, but what I have just said seems to be my main observation from everything said since. 

1
In reply to ClimberEd:

'Your pension should be equity'

Well for most people on company employer pension schemes patently it isn't.

My 'pension' is certainly in the form of equity, but I'm going to be pretty pragmatic about how I access it. I'd like the kids to have some but if we have to sell the family home to partly pay for end of life care in a home that's OK too. If I end up next to someone who hasn't had to pay then I really hope I don't get stressed. Diff'rent folks, diff'rent strokes.

 Alyson30 21 Jul 2020
In reply to ClimberEd:

> Your pension should be equity, from which you live off the income, without drawing down the asset.

People will use their pension pot to buy an annuity, take regular amounts whilst leaving the rest invested, or simply cash out, or a mix of the above. 

In any case they will be drawing down.
I don’t know anyone who builds a pension pot for decades to only draw the investment income... Not sure what exactly would be the point of dying in poverty with most of your capital untouched.

> You really aren't that clued up about the assets/investing/equity/income/tax dynamic are you.

I have worked with three of the biggest banks in the U.K. and two of the biggest pension funds. But OK I know nothing.

> You don't save money to be forced to spend it, you don't pay off your mortgage only to sell your house for the cash. 


You seem to live in la-la-land

That’s is exactly what many people do. Buy a house, pay off the mortgage, and when they are old, don’t have kids around, they sell the house to downsize or go to a care home, and use the spare cash for whatever else they might need. 

What is the problem with that exactly ?

It seems to me you’re just a bit in denial and expect the taxpayer to pay for your round the clock care whilst your sitting on an empty house !
Unbelievable.

I can tell you already, this isn’t going to happen anyway with the current rules, as the value of your house will be taken into account in the mean testing.
 

Post edited at 21:26
1
In reply to Alyson30:

''It seems to me you’re just a bit in denial and expect the taxpayer to pay for your round the clock care whilst your sitting on an empty house !'

Ii have to say I don't quite understand the indignation about having to sell a house you no longer live in or need. However emotionally attached kids claim to be about their 'childhood homes' , most seem to sell them off pdq when the folks finally shuffle off.

 Alyson30 21 Jul 2020
In reply to Rob Exile Ward:

I am not sure he has realised that it is already the case that if you have a house you isn your local council will consider you have the means to pay for your own care and probably ask you to pay for it in full.

 ClimberEd 21 Jul 2020
In reply to Alyson30:

> People will use their pension pot to buy an annuity, take regular amounts whilst leaving the rest invested, or simply cash out, or a mix of the above. 

> In any case they will be drawing down.

> I don’t know anyone who builds a pension pot for decades to only draw the investment income... Not sure what exactly would be the point of dying in poverty with most of your capital untouched.

> I have worked with three of the biggest banks in the U.K. and two of the biggest pension funds. But OK I know nothing.

> You seem to live in la-la-land

> That’s is exactly what many people do. Buy a house, pay off the mortgage, and when they are old, don’t have kids around, they sell the house to downsize or go to a care home, and use the spare cash for whatever else they might need. 

> What is the problem with that exactly ?

> It seems to me you’re just a bit in denial and expect the taxpayer to pay for your round the clock care whilst your sitting on an empty house !

> Unbelievable.

> I can tell you already, this isn’t going to happen anyway with the current rules, as the value of your house will be taken into account in the mean testing.

Now I really am confused, or more accurately you are confused. So, to make clear.

1. I have no expectation of the tax payer funding my round the clock care. I will pay for it myself and I won't have to sell a house to do so

2. I don't expect to die in poverty. I do expect to draw investment income only, and I expect to pass the capital on to my children. 

My discussion has been about the 'general person' and not in any way directed at my personal circumstances which you seem fixated on 

1
 Alyson30 21 Jul 2020
In reply to ClimberEd:

> Now I really am confused, or more accurately you are confused. So, to make clear.

> 1. I have no expectation of the tax payer funding my round the clock care. I will pay for it myself and I won't have to sell a house to do so

> 2. I don't expect to die in poverty. I do expect to draw investment income only, and I expect to pass the capital on to my children. 

> My discussion has been about the 'general person' and not in any way directed at my personal circumstances which you seem fixated on 

And that’s all very good, if you are in the lucky situation of having good streams of income in retirement then of course you don’t need to sell anything, and if you can even afford to leave your pension pot intact to your children, you are extremely fortunate.

But if you don’t - which would apply to the “general person - it makes perfect sense to use the assets you have to provide for yourself, instead of leaving an inheritance.

Post edited at 22:22
In reply to neilh:

> The shortfall on social care spending is £ 20 billion( as per IFS and others)

> So the real question you need to look at is how much tax reveneue is generated by whacking up the top rate of income tax.

> Last number I had read was it generates £ 8 billion.

> So you are still £12 billion short and social care is still poorly funded.

> Therein lies the dilemma

> And do not forget that £8 billion could also be used for other high priority services, it could go to the NHS.So why not spend that £8 billion in the NHS.

> Not easy tax and spend decision.

Labour costed the extra spending for their National Care Service to be £10.8 billion. It is to be funded out of £82.9 billion worth of revenue raising measures of which changes to income tax bands were estimated to yield £5.4 billion after behavorial response was factored in. Changes to capital gains tax and corporation tax were estimated to bring in more revenue than income tax. I don't think all social care is free for everybody in the proposal but it more than doubles eligibility for improved state funded care provision and makes sure that nobody has to face catastrophic care costs in old age.

https://labour.org.uk/wp-content/uploads/2019/11/Funding-Real-Change-1.pdf

In reply to summo:

> 1% on the base rate would mean that somebody earning £20k would be £6.50 a week worse off. 

> But because those earning more would be contributing much more tax under the 1% rise, many services could be funded better. For example subsidised childcare, transport... or as you say social care. 

> So whilst the low earner has ever so slightly less money at the start of each month, their monthly expenses are more significantly reduced. That in essence is the Scandinavian model, everyone pays, everyone benefits, but low to middle earners benefit the most. 

> Ps. Everyone's tax has reduced massively in the UK in the last 40 years. Base rate tax has fallen and the zero rate allowance is 5 or 6 time higher. 

That slightly less money in the pockets of earners at the lower end of the income scale is money that would have been spent in the economy and in the aggregate it is a meaningful amount. It might even be a meaningful amount to some of the individuals at that end of the scale. At the higher end of the income scale, although it is a greater amount, it is an amount that would most likely have been sunk into savings and taken out of the economy. It is more useful in the pockets of the lower earners.

The wage share of UK GDP is so pitiful and even that is so skewed towards the higher earners that there is very little point in taxing lower earners at all for the amount of revenue it can raise. You and Alyson30 are absolutely correct to point out that low pay is the real problem in the UK. 

In reply to cumbria mammoth:

> That slightly less money in the pockets of earners at the lower end of the income scale is money that would have been spent in the economy and in the aggregate it is a meaningful amount. It might even be a meaningful amount to some of the individuals at that end of the scale. At the higher end of the income scale, although it is a greater amount, it is an amount that would most likely have been sunk into savings and taken out of the economy. It is more useful in the pockets of the lower earners.

But the money from higher base rates do end up being spent in the economy, it's spent on paying state workers better, providing better services, better infra structure. 

The UK policy of low tax just means folk have more pocket money to piss up the wall, shop on Amazon or abroad which does nothing to fund or improve services. 

> The wage share of UK GDP is so pitiful and even that is so skewed towards the higher earners that there is very little point in taxing lower earners at all for the amount of revenue it can raise. You and Alyson30 are absolutely correct to point out that low pay is the real problem in the UK. 

The reason you raise taxes across the board is simply for fairness, for an equal society. Less them and us, it avoids the evil rich or feckless low earners mantra etc. 

There are measures like subsidising childcare, public transport, all school meals etc which would disproportionately benefit lower younger earners; so if they pay a few percent more tax overall they are still vastly better off.

Ps. I did the maths wrong I quoted months not weeks. So a 1% rise would cost a £20k worker £1.44 a week. You can do the maths for what a millionaire would pay. 

If you look at any higher taxed country in Europe they all still tax their low earners, but they are also still considered by most to be more equal societies. It's about how you spend the money that counts. 

Post edited at 06:34
 Moondancer 22 Jul 2020
In reply to StuPoo2:

> No one would buy a house in the UK - everyone would rent (making landlords richer than they are). 

Given the choice between A) raising a family in an (often badly maintained) property, where you can't even put a picture on the wall without your landlord's permission, where you can't have a family pet, where you can be asked to find somewhere else to live within a couple of months, where rents keep rising despite mortgage rates being at an all-time low, and where you are going to have to keep paying rent until you either die or move into a care home or B) have the safety and security of your own home which will probably be paid off at the time you retire, you really think most people would choose A? As a childfree person with quite a few childfree friends I think the idea that everyone would just piss their money up the wall if they can't pass it on to their kids has very little grounding in reality.

1
In reply to ClimberEd:

'My discussion has been about the 'general person' and not in any way directed at my personal circumstances which you seem fixated on '

It really isn't, your circumstances are highly unusual if your pension is going to primarily consist of a pension pot for you to do with as you wish. No public sector employee, of member of a Company pension scheme, has that sort of arrangement.

In reply to Moondancer:

> I think the idea that everyone would just piss their money up the wall if they can't pass it on to their kids has very little grounding in reality.

The current high personal debt, near zero emergency or long term savings would suggest that's exactly what many folk will do. It's not just the UK though, it's arguably human nature for a fair percentage of the population. 

It won't be deliberate, it'll just happen. New £30-40k car, treat the kids, a world cruise... and before you know it they are a £100k down. 

 DancingOnRock 22 Jul 2020
In reply to Rog Wilko:

I have a simple solution for this. If you go into care and have a property then you rent it out to pay for your care. You don’t lose your house and the inheritance goes to your grandchildren to help them buy their own property - but only to spend on property. 
 

The issue isn’t that people have saved for years to get £100ks, it’s that they’re been diligently ensuring they can pay their mortgage. If you bought a house in London in 1968 for £5k it would now be worth close on £1m. The issue is and always has been property inflation over 25-50 years. So now we have people aged 30 who can’t get on the property ladder without a decent leg-up from the ‘bank of mum and dad’. And so the inflation continues. It was fuelled in the last few decades by ridiculously low interest rates and at one point very small deposits.
 

Take mortgages away from banks and have a government based mortgage. Everyone pays the same rate on the same conditions. A rate and conditions set to minimise run away housing inflation. The repayments go directly to funding social care and social housing. 

Post edited at 10:26
 Alyson30 22 Jul 2020
In reply to DancingOnRock:

> Take mortgages away from banks and have a government based mortgage. Everyone pays the same rate on the same conditions.

If you do that the government would pretty much  be taking control of the lending rates, a territory normally reserved to the “independent” Bank of England.

I am not sure people would trust a government based mortgage either, I certainly wouldn’t ! This would be a monster.

Another mechanism which I think would be better could be to get the banks to collect a marginal rate of tax on top of what the bank charges for mortgages.

Politically this may be hard but if we are going into a world of negative rate anyway the consumer might not notice too much !

Post edited at 11:31
 DancingOnRock 22 Jul 2020
In reply to Alyson30:

Well give it to the B of E instead then. We would only be looking at domestic property mortgages. Or maybe just tighten the controls on the banks. 
 

Either way, wealth isn’t something some usually suddenly obtains. For most of us it’s built up over decades and taxing someone again for making good decisions, when you’ve already taxed them isn’t moral. Unless you introduce some kind of capital gains tax on houses. 
 

The problem is property prices are excluded from inflation figures and property inflation is the reason for a lot of the inequality in society. This doesn’t mean it’s not fair, just that it’s unequal. It’s perfectly fair for a 50 year old to have more than a 30 year old. 

Post edited at 11:36
 neilh 22 Jul 2020
In reply to DancingOnRock:

Some people do that.

But the issue is that the rental income does not always cover the costs. If you get £1500 a month rental , that  will cover about 1 week and a bit in a care home.

So you still need the income from another source,

So your proposal whilst simple does not stack up with the cost of care.

Post edited at 11:56
1
In reply to DancingOnRock:

> Take mortgages away from banks and have a government based mortgage. Everyone pays the same rate on the same conditions. A rate and conditions set to minimise run away housing inflation. 

A state run banking institution that decides interest rates based on the economics at that time, that idea might catch on. 

In reply to neilh:

I don't quite understand why care homes have to be *so* expensive. Lots of hotels can provide perfectly OK full board for £50 - £75 per night, and that's including a changeover every morning.  For the majority of residents wouldn't that be all they need, a bit like they used to get in Fawlty Towers? 

As care needs increased, even if you had a full time additional carer that would 'only' be an additional £100 per day, and I don't think many care homes provide 1:1 care.

 ClimberEd 22 Jul 2020
In reply to Rob Exile Ward:

Company pension schemes are almost extinct. I acknowledge that a public sector employee simply gets an income payment (and a very generous one at that.)

But that aside, please don't tell me what I am, or am not discussing.

My comments have been aimed at a general discourse on paying for social care. NOT, how I am going to pay for social care, or my situation, or anything to do with me. 

I think this country faces significant challenges (to put a slightly positive spin on it, huge problems to not) with the changing socioeconomic demographic. Solving it will be painful and require some initiative. Essentially we have too many older people living too long, and not enough people of working age. One way to do this is to make people far more responsible for their relatives. It's not an entire solution for many, obvious, reasons, but would go a long way towards it. 

In reply to ClimberEd:

I think you're being a bit touchy there, I can't see that I was telling you what you are discussing.

Patently there ARE significant challenges with changing demographics but it may not be quite as bleak as you make out. First, it is end of life care that really racks up the costs, not simply age. Me and most of my friends are in our mid 60s and barely costing the NHS anything.  With a bit of luck we'll only truly start becoming a burden when the Grim Reaper finally makes his approach.

Secondly we don't need so many people as we did, on the contrary we have a problem of unemployment. Increased productivity and automation means that a large number of traditional jobs have and will continue to disappear. It doesn't mean that miners will become care workers overnight, but we shouldn't need the same proportion of workers to retired that we used to.

 neilh 22 Jul 2020
In reply to Rob Exile Ward:

So you do not want to pay carers a decent wage? Lol. You sound as though you want to pay them a minimum wage.

Hotel rooms are not big enough in most cases compared with modern residential nursing homes, so there is no comparison.And each room will now be suitable for every form of disability.

24 hour nursing care is not cheap.And nor should it be......it is nursing care 24/7 after all.

The costs clearly drop off if you are residential only( like a hotel)

You sound like my sister who thought it should be a few hundred pounds.

But covering the costs from rental income on a property does not stack up.

And finally you may not want to be in a home charging £1000 a week compared with one at £1200 or more for example.

God knows what the prices are in London.

 Alyson30 22 Jul 2020
In reply to DancingOnRock:

> Well give it to the B of E instead then. We would only be looking at domestic property mortgages. Or maybe just tighten the controls on the banks. 

 

That’s already what they do, the BoE sets the rate .

In what way would you want to control the bank ? Right now they just charge wafer thin margins for mortgages.

You could ask them to increase their margins, which would mean more profit for the bank.

Not exactly what you are trying to achieve. Hence my idea to charge a tax rate on to of the customer rate, collected by bank.

But like I says, probably unpopular, as people will be paying a tax to take a loan.

> Either way, wealth isn’t something some usually suddenly obtains. For most of us it’s built up over decades and taxing someone again for making good decisions, when you’ve already taxed them isn’t moral. Unless you introduce some kind of capital gains tax on houses. 

 

Well yes but that’s effectively what you would do anyway by having a government run bank that charges higher rate. You’d be creating artificially higher mortgage prices, the proceeds of which would in the government coffers, it would basically be a form of taxation.

> The problem is property prices are excluded from inflation figures and property inflation is the reason for a lot of the inequality in society. This doesn’t mean it’s not fair, just that it’s unequal. It’s perfectly fair for a 50 year old to have more than a 30 year old.

You are correct however what is not fair is for a 30 year old to have to give up the possibility of accumulating wealth just to prevent the wealth of the 50 year old from disappearing naturally.

That is pretty much exactly what the current by economic environment does. QE and low rates keep the value of pension funds and houses up, despite the fact that the economy is completely crashed. Who pays for that ? First time buyers, and savers.

1
In reply to neilh:

I paid Mum and Dad's care home costs a few years ago, and most of the time they didn't need much care - and their rooms certainly weren't any larger than your average premier inn.  I'm not sure how much extra disabled facilities are if they are designed in from the beginning 

I'm just intrigued, that's all. I wonder how much care homes - typically occupying large old houses that need constant maintenance and adaptation - wouldn't be better replaced by purpose built facilities?

 DancingOnRock 22 Jul 2020
In reply to Alyson30:

The issue was banks were lending at 3x salaries. Now they do an affordability test. That’s basically what’s pulled up the ladder. 

This is due to a few factors, not least the banks have to protect themselves a lot more rigidly now. 

The inequality is due to wages.

 Alyson30 22 Jul 2020
In reply to DancingOnRock:

> The issue was banks were lending at 3x salaries. Now they do an affordability test. That’s basically what’s pulled up the ladder. 

> This is due to a few factors, not least the banks have to protect themselves a lot more rigidly now. 

> The inequality is due to wages

I agree it’s a big component with wages still lower than they were pre-2008.

That’s no pay rise in 12 years !

However there is still a fundamental problem which is that the economic environment means that if you are taking on debt you are rewarded, and if you are saving you are punished.

 Ian W 22 Jul 2020
In reply to DancingOnRock:

> I have a simple solution for this. If you go into care and have a property then you rent it out to pay for your care. You don’t lose your house and the inheritance goes to your grandchildren to help them buy their own property - but only to spend on property. 

whwn my mum went into a care home, the rental value of the house was approx £1k per month gross. The care home cost £3k per month (5 yrs ago). how would you suggest we pay the other £2k.......

> The issue isn’t that people have saved for years to get £100ks, it’s that they’re been diligently ensuring they can pay their mortgage. If you bought a house in London in 1968 for £5k it would now be worth close on £1m. The issue is and always has been property inflation over 25-50 years. So now we have people aged 30 who can’t get on the property ladder without a decent leg-up from the ‘bank of mum and dad’. And so the inflation continues. It was fuelled in the last few decades by ridiculously low interest rates and at one point very small deposits.

> Take mortgages away from banks and have a government based mortgage. Everyone pays the same rate on the same conditions. A rate and conditions set to minimise run away housing inflation. The repayments go directly to funding social care and social housing. 

Are you seriously suggesting nationalising the housing market??????? How would you suggest limits are put on house prices?

 chris_r 22 Jul 2020
In reply to DancingOnRock:

So my Dad gets ill and needs nursing care, so my mum also gets turfed out of their home so it can be rented out to pay for his care?

I'm not sure that milking the next generation of home buyers to pay for care of the older generation (who are collectively sitting on large amounts of capital in their houses) is the fairest way to pay for social care. However we find the extra funding that is so badly needed, it needs to be fair across the generations and demographic groups.

 Offwidth 22 Jul 2020
In reply to Rob Exile Ward:

Frankly I'm flabbergasted you could say that. Just read up on why the costs are what they are. Council funding levels don't even allow break-even in some places.

For starters, for 1:1 cover, staffing costs would need to be the equivalent of 5 full time staff on minimum wage (plus on-costs) per person in care... assuming one carer covers 40 hours of an 168 hour week.... and requiring cover for taking leave and bank holidays etc; thats on ZHCs with no one ever being paid sick pay.

Post edited at 13:55
In reply to summo:

> But the money from higher base rates do end up being spent in the economy, it's spent on paying state workers better, providing better services, better infra structure. 

> The UK policy of low tax just means folk have more pocket money to piss up the wall, shop on Amazon or abroad which does nothing to fund or improve services. 

> The reason you raise taxes across the board is simply for fairness, for an equal society. Less them and us, it avoids the evil rich or feckless low earners mantra etc. 

> There are measures like subsidising childcare, public transport, all school meals etc which would disproportionately benefit lower younger earners; so if they pay a few percent more tax overall they are still vastly better off.

> Ps. I did the maths wrong I quoted months not weeks. So a 1% rise would cost a £20k worker £1.44 a week. You can do the maths for what a millionaire would pay. 

> If you look at any higher taxed country in Europe they all still tax their low earners, but they are also still considered by most to be more equal societies. It's about how you spend the money that counts. 

I'm not sure if you have picked up on my argument about the marginal prospensity to consume. This is where each extra pound that someone has is less likely to be spent and more likely to be saved. This means that the same amount of money does more work in the economy when it is in the pockets of less wealthy people. In the context of how to maximise revenue you need to target your taxes towards the higher end of the income scale.

It seems like there's a consensus developing here that the UK is a low wage economy and that hurts not just the low paid workers, but also the ability of the UK government to raise revenue and deliver the services that everyone wants, rich and poor alike.

Resolve that and I would agree with the arguments put forward by a few on this thread for flatter income tax rates.

I agree with the idea that everyone who can should pay in something in order to reinforce the social contract (just as the wealthy are also eligible to receive some welfare for the same reason). What I disagree with though is anything that would flatten the rates of income tax in the context of an already regressive UK tax regime. When NI, and council tax are included low earners already pay a larger percentage of their income as tax than high earners do.

In reply to Offwidth:

You may be flabbergasted, I'm still intrigued. A lot of care home residents do not need or receive 1:1, 24 hr care. They just don't. So why does it cost, say, £200 a day if a hotel chain can do it for £50?

1
 Alyson30 22 Jul 2020
In reply to Rob Exile Ward:

> You may be flabbergasted, I'm still intrigued. A lot of care home residents do not need or receive 1:1, 24 hr care. They just don't. So why does it cost, say, £200 a day if a hotel chain can do it for £50?

Typical care home is on average £600 a week, £800 a week if it’s a nursing home with more advanced round the clock care.

200 a day seems a bit much.

 Alyson30 22 Jul 2020
In reply to chris_r:

> So my Dad gets ill and needs nursing care, so my mum also gets turfed out of their home so it can be rented out to pay for his care?

No, she doesn’t if she uses the house.

That is already in the rules of mean testing, your home won’t be included in your financial assessment if your spouse lives in the home.


 

 DancingOnRock 22 Jul 2020
In reply to Alyson30:

You’re not rewarded for nothing. You’re taking on risk. Ask anyone right now if they feel like they’re being rewarded. Lots of people are facing redundancies with no way to pay mortgages. If there’s a house price crash, there will be a lot of homeless people looking for cheap rental accommodation and a lot of first time buyers with a load of cash saved up. 

 DancingOnRock 22 Jul 2020
In reply to Alyson30:

Quite.

But even if you only get £1000 a month for rental and have to find £100k from equity release. That’s £12k a year you’re not losing and potentially in a buoyant market the house is also appreciating at the same time. 

 Offwidth 22 Jul 2020
In reply to Rob Exile Ward:

You were the one who raised 1:1.

If you're seriously intriqued look it up. The numbers are obviously big if you include all staff, full building costs averaged over a year, equipment costs, consumables, rates, insurance, utility bills etc.

 Ian W 22 Jul 2020
In reply to DancingOnRock:

> Quite.

> But even if you only get £1000 a month for rental and have to find £100k from equity release. That’s £12k a year you’re not losing and potentially in a buoyant market the house is also appreciating at the same time. 

Hang on, one post up you are describing a house price crash and many redundancies etc. Make your mind up!

 Ian W 22 Jul 2020
In reply to Rob Exile Ward:

> You may be flabbergasted, I'm still intrigued. A lot of care home residents do not need or receive 1:1, 24 hr care. They just don't. So why does it cost, say, £200 a day if a hotel chain can do it for £50?

Because the hotel receptionist and maintenance man aren't trained to dispense drugs and put together and administer care plans, for one, and don't have to dress the hotel residents and make sure they are clean and presentable for the day, nor to ensure they stay that way, for another.

 neilh 22 Jul 2020
In reply to Rob Exile Ward:

Your out of date. Those type of homes are being closed down slowly as they are just no longer suitable for residential nursing and nursing  care.You need wide corridors, big rooms with disabled facilities and so on.

The days of care homes in Victorian houses are gone. Just not right.I bet in 5 years time they will be consigned to the bin apart from a few.

Thank goodness, they are for the most part not suitable for carers to provide good nursing.

 neilh 22 Jul 2020
In reply to Alyson30:

I think you might be shocked if you looked round a few care homes and compared pricing. And you need to budget for  5-10% increase a year, especially with some of the pay rises the staff are getting to attract carers.

 Offwidth 22 Jul 2020
In reply to Ian W:

Staffing levels are way lower in a cheap hotel as are equipment requirements. The insurance situation is also completely different. Typical council payments are of the order of £30,000 a year (£600 a week) so that is less than £100 a day in any case but that is pretty much cost in some areas (ie potentially in some cases making a loss). Those paying for themselves pay more as the homes can charge more.

https://www.ageuk.org.uk/information-advice/care/paying-for-care/paying-for-a-care-home/

 Alyson30 22 Jul 2020
 Alyson30 22 Jul 2020
In reply to DancingOnRock:

> You’re not rewarded for nothing. You’re taking on risk.

You are not taking a risk if the system constantly bails you out.

Can't pay your mortgage ? No problem, have a mortgage payment holiday.
Economy totally crashed ? Don't worry we'll get the central banks to pump trillions to keep your pension fund up. And we keep rates low so that your real estate artificially keeps it value.

Who pays ? Savers and taxpayers, the people who are doing the right thing by working and saving away so that they can fend for themselves when things go bad. 

You just have to look at the statistics: wages are still bellow levels of 12 years ago. Assets prices tell a different story.

Since 2008 we've created an economic system that favours the owners and the borrowers, and screws the workers and the savers, and it's only getting worse. It's a runaway train at this point.

Post edited at 17:20
1
 Ian W 22 Jul 2020
In reply to Offwidth:

> Staffing levels are way lower in a cheap hotel as are equipment requirements. The insurance situation is also completely different. Typical council payments are of the order of £30,000 a year (£600 a week) so that is less than £100 a day in any case but that is pretty much cost in some areas (ie potentially in some cases making a loss). Those paying for themselves pay more as the homes can charge more.


Indeed - remember that case a couple of years back where an owner of a couple of care homes closed a couple of them and refused to take on any non-private clients. I dont blame him for a second, as his alternative was offering a crap service, or going bust..........

 neilh 22 Jul 2020
In reply to Alyson30:

Have you actually visited homes and done the coatings. As I say in for a shock. 

 Alyson30 22 Jul 2020
In reply to neilh:

> Have you actually visited homes and done the coatings. As I say in for a shock. 

No, but if we are going to talk about the cost of care homes taking the average weekly price is a good starting point.

 StuPoo2 22 Jul 2020
In reply to Moondancer:

Take your point that I took it to the extreme. 

A morally right policy or a morally wrong policy ... a policy will drive behaviors in the population - that's what policies do.  You can pick the policy all you like - but you don't get to pick the behaviors that the policy will drive in the population.  A 100% IHT rate .. would drive a behavior to dispose of assets - IHT at its current rate today already drives this behavior in the population - fact (see below).  Policies drive behaviors ... and in this case they drive behaviors to preserve wealth rather than to hand it over to the state.

Example ... married, 2 kids, jointly own a property worth 500k, jointly own assets = 725k.  Total = 1.25M

Part #1:  IHT "People who are married or registered civil partners do not have to pay any Inheritance Tax on money or property left to them by their spouse."  What behavior does that drive?  Easy - 2 part. #1 - it incentives marriage, for tax purposes, and #2 vast majority of married couples will leave everything to their spouses tax free in their will.  That is policy driving behavior.

Part #2:  You've now passed, and left all your earthly assets tax free (including your share of the house) to your spouse.  Your spouse is getting his/her affairs in order and intends to leave all the remaining assets to his/her to the kids in the event of his/her death.  Spouse goes along to speak to the tax planners.  Two things are applicable.  #1 - Your 325k IHT nil-rate band passed over to your partner meaning that he/she now has a 650k nil-rate band.  That means that he/she can leave 650k of assets free of IHT (not including the house) to the kids.  #2 - Your 175k residence nil-rate band also passed over to your partner meaning that he/she now has 350k against the house that can be left to the kids without having to pay IHT on it.   Tax planner do their maths - net worth is 1.25 million (250k above the IHT threshold for a widow) of which 500k is the house.  House: 500k - 350k residence nil-rate band = 150k that needs IHT paid on the house.  150k * 0.4 = 60k IHT due on the house (As house appreciates ... IHT bill will increase).  Assets = 1.25 million - 500k of the house = 725k - this is 100k greater than the nil-rate band (650k) meaning IHT will be applicable on that 100k too.  100k * 0.4 = 40k.  Total, as it stands, IHT liability = 60k (house) + 40k (assets) = 100k on an widows estate of 1.25M in the year 2020/21.

(Yeek .. hope I have my sums right in all of that)

What do you think the tax planner say to your spouse at this point?  ANS #1 - "you might want to consider down sizing the house to something < 500k" and ANS #2 - "you need to give away 100k in assets - give it away now or the state will take it away when you pass".

That is how the conversation goes once you're in IHT territory.  That is the behavior the current IHT policy drives.  It drives people to dispose of their assets and avoid paying IHT.  There is an entire industry build around it. 

Given the choice between giving away your wealth now to places of your choosing or giving it to the state in IHT when you pass - what would you choose?  

(Can give any amount to charity in your will and it will not be considered as part of your estate for IHT purposes.  You can give 3k every year to every child tax free.  You can give wedding gifts for children and grandchildren tax free.  You can buy a life insurance policy for 100k with the beneficiary being your children. etc etc)

Post edited at 20:49
 DancingOnRock 22 Jul 2020
In reply to Alyson30:

You only get a mortgage payment holiday under exceptional circumstances and mine certainly would only be for 3 months and that’s after several years. 
 

The government have asked the banks to give people holidays at the moment due to Coronavirus. It doesn’t last forever and if you’ve taken one it’ll just extend your period. I have a feeling you’ll accrue extra interest. That’s not a normal state of affairs. Without it we risk mass homelessness. 
 

As far as I know, if you’re paying a mortgage, you’re extremely likely to be paying a huge amount of tax. I am. 
 

It’s been a runaway train since 1996. You don’t just remove the tracks, you apply the brakes gently. 60% of households are home owners. It’s not some special minority of rich people. 
 

I’ve had some pretty healthy payrises in the last 12 years. If I was still earning the same as I was 3 years ago, I’d have moved jobs. 

Post edited at 22:00
1
 Alyson30 22 Jul 2020
In reply to DancingOnRock:

> It’s been a runaway train since 1996. You don’t just remove the tracks, you apply the brakes gently. 60% of households are home owners. It’s not some special minority of rich people. 

That isn’t the point, the point is that it is broken to permanently transfer wealth from savers to borrowers just to keep the system alive.
It is encouraging the wrong behaviour and destroying the economy.

Right now we are not removing the track not applying the brakes, we are shoving coal in the engine faster than ever before.

Very soon we will get to the point where you will be paid to take on debt, and charged to save. 

Post edited at 00:01
1
 Alyson30 22 Jul 2020
In reply to DancingOnRock:

> I’ve had some pretty healthy payrises in the last 12 years. If I was still earning the same as I was 3 years ago, I’d have moved jobs. 

Because most people’s pay will increase over their lifetimes doesn’t mean wages have overall increased. They haven’t.

 DancingOnRock 23 Jul 2020
In reply to Alyson30:

It’s not the wrong behaviour. ‘Saving‘ is a bad behaviour when it comes to the economy. The economy depends on money moving. Money is no longer a scarce resource based on gold that weathy people have sitting in banks. It’s a tool to enable the easy transfer of goods and services. If it’s sitting in a bank it’s no use to anyone, other than to cushion you from a lack of income. The only reasons for saving for a deposit are to show you are able to manage your money and have had excess funds for a period of time, and to limit the exposure of the bank. If they have you a 100% mortgage (Or even 110%) and you defaulted, the bank is left holding a property that it can’t sell quickly for the money it’s paid out. The more uncertainty in the economy the bigger the deposit they’lol asking for. 
 

You’re not transferring savings to borrowers. Whatever that means. 
 

We aren’t shovelling in coal long term. This is for a few months to keep the engine running. Think of it as if we are quickly running out of coal. Suddenly run out of coal, slowly put the brakes on or remove the tracks at high speed. What’s the best thing to do at the moment. (Hint, we are going uphill)

Post edited at 10:31
 neilh 23 Jul 2020
In reply to Alyson30:

I looked at those numbers and burst out laughing.Let us say you had assets in a house of say £200k ( not unreasonable) and you needed to move into a care home. You and your family start to visit a few care homes in your area, you would probably find 1 maybe 2 where they charged those prices.You would pretty quickly figure out the quality of care in respect of the general environment and ignore those " average " weekly price guides.

It is unfortunate but until you are actually involved in hunting out care homes you really have no concept of how difficult it is to match these guides with what goes on in your area and the level of  care you get.

Those guides are probably what the govt think it should be, rather than what it actually is. They will be used by local authorities as part of a drive to control care costs.In other words for those without a house assets its basically what the govt/local authority will pay.

Its complicated and not easy to grasp when you are not involved directly.If you are it becomes a 24/7 strain when you have or had ( like me), parents in care.Its so frustratingly complex at times.

1
 DancingOnRock 23 Jul 2020
In reply to Alyson30:

> Because most people’s pay will increase over their lifetimes doesn’t mean wages have overall increased. They haven’t.

And that’s why wealth is rightly unequal. Over your lifetime you will accrue more wealth. Most of us had to start at the bottom and live with parents for many years. 

 Alyson30 23 Jul 2020
In reply to DancingOnRock:

> And that’s why wealth is rightly unequal. Over your lifetime you will accrue more wealth. Most of us had to start at the bottom and live with parents for many years. 

When people talk about wealth inequality obviously they look within cohorts or within groups. We don’t measure it on the aggregate,

Nobody is really interested in knowing that your wealth is lower at 1 year old than at 60. So no that’s not what causes “wealth inequality” in the commonly accepted sense of the term.

1
 Alyson30 23 Jul 2020
In reply to neilh:

> I looked at those numbers and burst out laughing.Let us say you had assets in a house of say £200k ( not unreasonable) and you needed to move into a care home. You and your family start to visit a few care homes in your area, you would probably find 1 maybe 2 where they charged those prices.

Both of my grandmother are in care home, very nice ones in fact, and they both pay about 600 per week, that’s before they get all the subsidies which basically cut the actual cost by 2/3.

> Those guides are probably what the govt think it should be, rather than what it actually is. They will be used by local authorities as part of a drive to control care costs.In other words for those without a house assets its basically what the govt/local authority will pay.

These are average actuals. Other sources give the same numbers.

I don’t see any evidence to suggest this is not representative.

I don’t doubt that this can be difficult / complex but say you had assets of 200k + state pension + private pension, you can already cover most if not all the costs.

Of course you won’t leave any inheritance behind but in my opinion if we believe in meritocracy then that’s a pretty good thing.

Post edited at 13:06
1
 DancingOnRock 23 Jul 2020
In reply to Alyson30:

No one should even be concerned with wealth inequality between two 60 year olds. 
 

You can’t look at wealth differences and try to equalise them via taxation etc, without a full understanding of why they exist.

 Alyson30 23 Jul 2020
In reply to DancingOnRock:

> No one should even be concerned with wealth inequality between two 60 year olds. 


I frankly fail to see what the hell you are on about or how it is even connected to what we were discussion.

> You can’t look at wealth differences and try to equalise them via taxation etc, without a full understanding of why they exist.

I’m not sure why you bring this up about inequality when I haven’t mentionned anything about it.

Seems to me your are trying to make this about political ideology and that you are attributing certain political views to me by default. You’re really going after windmills here.

We can talk about wealth inequality if you want but first of all you’d have to read a bit more about it and understand what it even means and how it’s measured.
 

Post edited at 13:15
1
 neilh 23 Jul 2020
In reply to Alyson30:

Agreed.

The exisiting system does work for those who have houses as assets ( once people get the idea that inheritance reduces if you pay for good care).

It does not work for those who have marginal assets or where the family does not recognise that the house needs to go to their parents care as they want the inheritance or to those who stay in care homes for 15 plus odd years ( very unusual).

It also means that those with assets often subsidise the care for those without or on nhs continuing care ( a flaw in the system, there agian that is just like tax anyway). More importantly it does not work for those who have no family they are left to swim in a bureacractic mess on their own.

 DancingOnRock 23 Jul 2020
In reply to Alyson30:

>I frankly fail to see what the hell you are on about or how it is even connected to what we were discussion.

 

We were discussing funding of Social Care. As per the thread title. The point of means testing people and using property to fund their care and whittling away inheritances. 
 

In the grand scheme of things it’s not taxation, it’s taking private wealth and putting it into the hands of people who own care homes and operate at great profit. 

 Alyson30 23 Jul 2020
In reply to DancingOnRock:

> >I frankly fail to see what the hell you are on about or how it is even connected to what we were discussion.

> We were discussing funding of Social Care. As per the thread title. The point of means testing people and using property to fund their care and whittling away inheritances. 

 

> In the grand scheme of things it’s not taxation, it’s taking private wealth and putting it into the hands of people who own care homes and operate at great profit. 

I say this is simply individuals taking responsibility for the funding of their own care, or part of it, if they are able to.

I don’t see any problem with that.

Maybe you would prefer a fully state-run  system paid through taxes. That could work too, with higher taxes.

But I find it quite odd to paint paying for your own care out of your accumulated assets as a form of theft !

Post edited at 14:26
 ClimberEd 23 Jul 2020
In reply to Alyson30:

> I say this is simply individuals taking responsibility for the funding of their own care, or part of it, if they are able to.

> I find it quite odd to paint paying for your own care out of your accumulated assets as a form of theft !

It amounts to theft if those who don't have assets get their care paid for.

(I am aware there may be a difference in the standard provided).

If end of life care was provided in a humane manner for all (i.e. to a reasonable standard), why would anyone make provision to pay for it. And if they had provision to pay for it why wouldn't they give that provision to their children, or to a charity of their choice, or even blow it on good food drugs and hookers (exhibit 1. Les Grande Bouffe). 

1
 Alyson30 23 Jul 2020
In reply to ClimberEd:

> It amounts to theft if those who don't have assets get their care paid for.

That is completely nonsensical. It’s like saying your money is being stolen when you buy food in the shop because you could get the same for free in a food bank. 

 

> (I am aware there may be a difference in the standard provided).

> If end of life care was provided in a humane manner for all (i.e. to a reasonable standard), why would anyone make provision to pay for it.

One of the reason may be that people are generally speaking not complete idiots and understand that a welfare system can only exist if it is limited to those who need it, most people don’t like taking charity, and most people like the independence of being able to make their own choices.

Post edited at 14:46
 ClimberEd 23 Jul 2020
In reply to Alyson30:

> That is completely nonsensical. It’s like saying your money is being stolen when you buy food in the shop because you could get the same for free in a food bank. 

Not really.

If you own a house, have no cash,  and are starving, the food bank will give you money.

Are you getting the vibe that peoples homes should be untouchable yet?!?! 

1
 DancingOnRock 23 Jul 2020
In reply to ClimberEd:

I’m not going that far. I don’t see care homes should be means tested. However, I am happy that there are better care homes if you want and are able to top up. 
 

What I object to is that two people could be receiving exactly the same, with one being paid for by the taxpayer, while the other is being asset stripped. care homes should be funded by the tax we all pay, not from savings of people who’ve already paid loads of tax (or not in some cases). 
 

It’s a delicate balance but we aren’t taking about £100-200 a week here. We are taking thousands. If the people weren’t in care homes and didn’t have houses they’d be in council houses or have their rent paid.

That’s another area where the price of rent is determined by the house prices and councils seem to be having to practically write blank cheques to private landlords. 

 ClimberEd 23 Jul 2020
In reply to DancingOnRock:

>

> It’s a delicate balance but we aren’t taking about £100-200 a week here. We are taking thousands.

Yes, that is my real issue, the sheer amount of money.  

 Alyson30 23 Jul 2020
In reply to ClimberEd:

> Not really.

> If you own a house, have no cash,  and are starving, the food bank will give you money.

They will do so because they operate on the assumption that people who go to them genuinely need help.

> Are you getting the vibe that peoples homes should be untouchable yet?!?! 

What is this nonsense, why should it be untouchable exactly ?

It is not and shouldn’t be !

1
 ClimberEd 23 Jul 2020
In reply to Alyson30:

I think you really really miss the point that no one wants to work hard all their lives, sacrifice and save, build assets (for most people their houses), have some sense of achievement, something to pass on after they die.

Only to have it all taken away in their last few years because they are too incapacitated to look after themselves.

If you just don't get, don't see, don't have the understanding, to realise that; then any conversation with you is pointless. 

1
 Alyson30 23 Jul 2020
In reply to ClimberEd:

> I think you really really miss the point that no one wants to work hard all their lives, sacrifice and save, build assets (for most people their houses), have some sense of achievement, something to pass on after they die.

Well that wrong because that’s exactly what I would do, what everybody in my family did, and the sense of achievement I get comes from the fact that I am self-sufficient.

You are also living in la-la-land because this is what the system expects you to do, accumulate assets during your life, run them down in old age, and if you're fortunate to have leftovers then you've got something to pass on.

We certainly have very different views of what a sense of achievement is. I don't see how sucking the taxpayer dry so that your kids can get a house for free is anything to be proud about.

Post edited at 16:49
2
In reply to ClimberEd:

You'll have to count me in too, it's probably a bit more real for me - I saw both my folks spend quite a lot of their assets, the biggest issue with that was reassuring them that they didn't need to worry, that was what the money was for. Me and my siblings were middle aged by then, and we're perfectly well established, we didn't need an inheritance; quite a lot of my mates are in exactly the same position.

As for my kids... Well, if they don't get left so much because my end of life comfort was a bit expensive, hopefully they too won't hold it against me.

1
 freeflyer 23 Jul 2020
In reply to neilh:

> I looked at those numbers and burst out laughing.

In the south-east, where my mum was, those numbers are 20%-50% below the going rate for a care home, which indeed makes them laughable.

You might get costs something like that if you were prepared to organise carers to visit regularly at your relative's home, however you then get to shoulder all the responsibilities of care - falls, panics, GP and hospital visits etc etc, that the care home would deal with.

 Alyson30 23 Jul 2020
In reply to freeflyer:

> In the south-east, where my mum was, those numbers are 20%-50% below the going rate for a care home, which indeed makes them laughable.

No, it just makes them an average, not surprisingly deviation of +50% from the average isn't to be unexpected in the more expensive parts of the country.
What it makes laughable are the figures of 10K a week that were being peddled.

Post edited at 16:56
 ClimberEd 23 Jul 2020
In reply to Alyson30:

> No, it just makes them an average, not surprisingly deviation of +50% from the average isn't to be unexpected in the more expensive parts of the country.

> What it makes laughable are the figures of 10K a week that were being peddled.

You can't focus on something I have corrected. I've already stated it's 10k a month. 

(and that is correct, as I have seen quotes for homes in the area I live)

 Alyson30 23 Jul 2020
In reply to ClimberEd:

> You can't focus on something I have corrected. I've already stated it's 10k a month. 

> (and that is correct, as I have seen quotes for homes in the area I live)

Well if you go to the Hilton you can go as high as you want. That's not the point.
We are trying to get a decent idea of the typical cost.

 StuPoo2 23 Jul 2020
In reply to Alyson30:

> I don't see how sucking the taxpayer dry so that your kids can get a house for free is anything to be proud about.

You and Ed appear to be arguing different points.  

Isn't the point that ClimberEd is making (and my apologies .. I've not been able to follow your long back and forth) that he's already been taxed once and that having paid into the system his whole life - he shouldn't be asked to pay in again, in the untimely event of his death, only because he made the choice to save?  

You appear to making the case for a form of double taxation - tax on earnings and a wealth tax effected in the event of your death.

Evidence for the effectiveness of wealth taxes is very limited.  They have a great habit of driving wealth out of the countries that enact them.  In europe wealth taxes have declined massively in the last 30 years as a result.

https://www.npr.org/sections/money/2019/02/26/698057356/if-a-wealth-tax-is-such-a-good-idea-why-did-europe-kill-theirs

"France's wealth tax contributed to the exodus of an estimated 42,000 millionaires between 2000 and 2012, among other problems. Only last year, French president Emmanuel Macron killed it."

https://www.france24.com/en/20150808-france-wealthy-flee-high-taxes-les-echos-figures?utm_source=npr_newsletter&utm_medium=email&utm_content=20190226&utm_campaign=money&utm_term=nprnews

"The Swedish wealth tax also prompted large outflows of capital and the expatriation of well-known business people, such as the founder of Ikea, Ingvar Kamprad. Henrekson and Du Rietz conclude, “The magnitude of these outflows was a major motivation for the repeal of the wealth tax in 2007.”"

https://www.nationalreview.com/2019/03/elizabeth-warren-wealth-tax-european-nations/

(Belgium now has a wealth tax of its own ... the money is moving out of Belgium now too!)

Surely the answer to the social care problem is to increase the scope of National Insurance to cover social care too?  Same as NHS - free at the point of care and no bill in the post.  35 years full contribution to NI = state pension + social care paid for in full and the state has no right to any of your belongings. 

Social care - something you might or might not need - sounds literally like exactly the type of thing that nationalized insurance was designed for.  NI is, in its very design, is redistributive - the high earners pay much more NI, the lowest earners may pay none - but you all get the same thing out the other side of irrespective - satisfactory end-of-life-care.

Wealth taxes make sense on paper - the left love the idea of it - they might even win votes in circles that haven't done their reading.  But all the evidence point to them failing and eventually being repealed when they've driven enough capital away.   

We need to build the pot to pay for social care on earnings, and that means higher NI contributions, not try to claw it back later with a wealth tax.  

 ClimberEd 23 Jul 2020
In reply to StuPoo2:

That is indeed pretty much my point. Thks

1
 Alyson30 23 Jul 2020
In reply to StuPoo2:

> You and Ed appear to be arguing different points.  

> Isn't the point that ClimberEd is making (and my apologies .. I've not been able to follow your long back and forth) that he's already been taxed once and that having paid into the system his whole life - he shouldn't be asked to pay in again, in the untimely event of his death, only because he made the choice to save?  

You are not paying "again" you are just paying once for a service that you are buying, which is a pretty normal thing to do.

You say about those who "save" but really he is talking about those who bought a house. Why, exactly, someome wwhoi lived modestly and saved cash away shoudl be expected to pay for their own care, whilst someone who splurged on a house and has no cash should not pay anything ?

That doesn't make any sense. To the extent of the possible people can pay for their own needs, and if they can't then there is a welfare system that will provide a basic safety net. 

> You appear to making the case for a form of double taxation - tax on earnings and a wealth tax effected in the event of your death.

Not all all. I don't consider paying for own care and tending to your own need from your own financial resources "taxation". That's really nonsense.

Post edited at 18:56
 Alyson30 23 Jul 2020
In reply to ClimberEd:

And it doesn't' make any sense  at all. Since when not using the welfare system when you don't need to is "double taxation" ? People have gone insane.

Post edited at 18:53
2
 Alyson30 23 Jul 2020
In reply to StuPoo2:

> You appear to making the case for a form of double taxation - tax on earnings and a wealth tax effected in the event of your death.

No, I've not put forward the idea of any wealth tax whatsoever. Please read my post.

> Evidence for the effectiveness of wealth taxes is very limited.  They have a great habit of driving wealth out of the countries that enact them.  In europe wealth taxes have declined massively in the last 30 years as a result.

You're going on a long tirade about wealth tax but I haven't put forward the idea of wealth tax anywhere. 
My point is very simple, when you get to the end of your life their are costs and if you want to live in a decent care home then it makes perfect sense to sell the house you are not going to live in anymore to fund it.

I really don't see what is so outrageous about the idea of doing that or how it can be labelled a "wealth tax".

Post edited at 23:44
1
 StuPoo2 24 Jul 2020
In reply to Alyson30:

Tax:  "a compulsory financial charge or some other type of levy imposed upon a taxpayer (an individual or legal entity) by a governmental organization in order to fund government spending and various public expenditures.[2] A failure to pay, along with evasion of or resistance to taxation, is punishable by law."

https://en.wikipedia.org/wiki/Tax

Wealth Tax:  "A wealth tax (also called a capital tax or equity tax) is a tax on an entity's holdings of assets. This includes the total value of personal assets, including cash, bank deposits, real estate, assets in insurance and pension plans, ownership of unincorporated businesses, financial securities, and personal trusts"

https://en.wikipedia.org/wiki/Wealth_tax

The current system isn't optional.  It is enforced by the state.  You can go to jail for deprivation of assets.  It is levied on wealth.  Lock stock 110% wealth tax.

You may not understand or agree that you are making the case for a wealth tax - but you are.  

A more successful approach to approach to achieve the same goal (pay for social care) is to increase taxes on income, say, via NI.  NI is redistributive - the wealthy pay, those on low incomes do not.  Wealth Taxes do not do what the left think they will do.  They drive capital out of the country/they drive tax evasion/they drive asset shielding (the process of putting your assets out of reach of the state).  That is behavior wealth taxes drive in the population.

1
 Alyson30 24 Jul 2020
In reply to StuPoo2:

> Tax:  "a compulsory financial charge or some other type of levy imposed upon a taxpayer (an individual or legal entity) by a governmental organization in order to fund government spending and various public expenditures.[2] A failure to pay, along with evasion of or resistance to taxation, is punishable by law."

> Wealth Tax:  "A wealth tax (also called a capital tax or equity tax) is a tax on an entity's holdings of assets. This includes the total value of personal assets, including cash, bank deposits, real estate, assets in insurance and pension plans, ownership of unincorporated businesses, financial securities, and personal trusts"

> The current system isn't optional.  It is enforced by the state.  You can go to jail for deprivation of assets.  It is levied on wealth.  Lock stock 110% wealth tax.

What ? No ! it is compeltely optional nobody is forcing you to go to a care home. "Deprivation of assets" just means that  decreasing you assets for the purpose of cheating the means test is illegal, not that anybody is taking you assets by force.

> You may not understand or agree that you are making the case for a wealth tax - but you are.  

No I am definitely not ! And the situation with the means test for social care VERY CLEARLY doesn't meet your own definition of a wealth tax, or of a tax at all.

A tax is, as per you definition, a COMPULSORY charge. There is nothing compulsory about social care. 
The state will not give it to you for free if you have significant assets, that's a means test, not a tax.


 

> A more successful approach to approach to achieve the same goal (pay for social care) is to increase taxes on income, say, via NI.  NI is redistributive - the wealthy pay, those on low incomes do not.

I think a more successful approach is for people to pay to look after themselves from their own funds whenever possible. And no, doing so is not "being taxed", it's just called being self sufficient.

> Wealth Taxes do not do what the left think they will do.  They drive capital out of the country/they drive tax evasion/they drive asset shielding (the process of putting your assets out of reach of the state).  That is behavior wealth taxes drive in the population.

And here we go an other ideological left/right argument....  I am not making any argument  for or against any wealth that isn't the point.


I'll point out however that most of the wealth in this country is locked in real estate and I don't see how you put real estate out of the reach of the state. You can't move it offshore, you can't hide it either.

Post edited at 09:30
 Offwidth 24 Jul 2020
In reply to Alyson30:

I can see articles like this becoming more common. I'd be OK with house value growth above inflation being subject to capital gains. It's an investment gain.

https://www.theguardian.com/business/nils-pratley-on-finance/2020/jul/24/heres-an-idea-that-could-earn-the-government-400bn-in-25-years

 DancingOnRock 24 Jul 2020
In reply to Alyson30:

>What ? No ! it is compeltely optional nobody is forcing you to go to a care home.

 

I think they probably are if you can no longer look after yourself and are either a danger to yourself and possibly others. 
 

I don’t know what the difference between a care home, a nursing home or even sheltered housing is. 
 

If we agree all old people deserve the same standard of care then we need to decide whether we punish people for having houses and doing well or not. Because that’s what it looks like. Everyone gets the same level of care, but if you’re poor you get it for free and if you’re rich, you pay for it until you’re poor. That’s quite perverse. We don’t do it with normal care. Imagine being in an accident and anyone driving a cheap car gets treated but anyone in an expensive car has to pay for their treatment. 
 

Old people shouldn’t be paying for their care, it should be coming from the young people. After all, the young people should be caring for their elders as they were cared for by them when they were young. 

 Alyson30 24 Jul 2020
In reply to DancingOnRock:

> >What ? No ! it is compeltely optional nobody is forcing you to go to a care home.

> I think they probably are if you can no longer look after yourself and are either a danger to yourself and possibly others. 

Eating food is also an essential need, it doesn't mean that buying food with your own money is a form of taxation just because some people sadly have to resort to food banks.


> I don’t know what the difference between a care home, a nursing home or even sheltered housing is. 

> If we agree all old people deserve the same standard of care then we need to decide whether we punish people for having houses and doing well or not. Because that’s what it looks like.

"punished" ? What ? It's not being punished to take care of yourself if you can . This is getting mad !

> Everyone gets the same level of care, but if you’re poor you get it for free and if you’re rich, you pay for it until you’re poor. That’s quite perverse.

Why is that perverse ? I really don't get it.
If I was to lose my income I would rely on my accumulated wealth for food and shelter and other living expenses until it runs out.
That's the main reason I build up savings and assets, to be able to handle the ups and down of life without having to ask for charity or rely on welfare.

Why exactly should it be different for something completely predictable like old age ?

Post edited at 16:59
1
 DancingOnRock 24 Jul 2020
In reply to Alyson30:

>"punished" ? What ? It's not being punished to take care of yourself if you can . This is getting mad !

 

Most of us plan to look after ourselves in old age. We buy houses and pay into a pension. 

What we don’t plan for is being incapable of looking after ourselves and paying someone else huge sums of money to do it for us. It’s not a gamble we should take Individually, it should be an insurance with costs bourn across society at large. We are talking about thousands of pounds. Many die before they retire and many live practically forever and die suddenly in their sleep, or die after a very short illness.

We look after relatively young people who have abused their bodies all their lives and no one blinks an eyelid  

Food banks only provide food and they only provide basic necessities. You still have to collect it and cook it. If you want beer and fags, you have to top it up yourself. No one is saying you can’t top up social care to get a higher service, what should happen though is that certain funds are ring fenced. 

If I’m unemployed but have savings, should those savings pay my mortgage or should they pay my food? Food banks are not a long term solution. Most people use them once or twice because they have temporary cash issues. They’re not soup kitchens with the same people turning up week after week. 
 

If you’re unemployed long term, you sell your house and move into something smaller, but it’s a temporary solution. You’re not expecting that to continue forever. 
 

Post edited at 21:34
In reply to DancingOnRock:

As ever, I have no idea what the f*ck you are on about 

 Alyson30 24 Jul 2020
In reply to DancingOnRock:

> >"punished" ? What ? It's not being punished to take care of yourself if you can . This is getting mad !

> Most of us plan to look after ourselves in old age. We buy houses and pay into a pension. 

> What we don’t plan for is being incapable of looking after ourselves and paying someone else huge sums of money to do it for us. It’s not a gamble we should take Individually, it should be an insurance with costs bourn across society at large. We are talking about thousands of pounds. Many die before they retire and many live practically forever and die suddenly in their sleep, or die after a very short illness.

I honestly I have no f*cking idea of what you are on about.

> If I’m unemployed but have savings, should those savings pay my mortgage or should they pay my food? 

They should pay both, if you don’t have enough financial security to repay a loan and pay for living expenses for a reasonable amount of time (at the very least a year) in case if unemployment then you probably shouldn’t have taken on any debt in the first place.

Better yet, just never take on any debt, ever, it’s completely unnecessary. If you can’t afford something don’t buy it. Easy.

> If you’re unemployed long term, you sell your house and move into something smaller, but it’s a temporary solution. You’re not expecting that to continue forever.

I have no idea what point you are making

Post edited at 23:19
 BnB 25 Jul 2020
In reply to Alyson30:

> I agree it’s a big component with wages still lower than they were pre-2008.

> That’s no pay rise in 12 years !

> However there is still a fundamental problem which is that the economic environment means that if you are taking on debt you are rewarded, and if you are saving you are punished.

I completely agree that increasing wages is desirable but the mechanism is to improve skills via education. If you simply mandate higher wages, companies will increase automation. This has been the response since the industrial revolution started.

By the way, banging on about no wage rise since 2008 is a case of cherry-picking your statistical base. Of course real wages will be shown to shrink in the grinding decade of GFC recovery if your baseline is the crescendo of a debt-fuelled bubble. Use a longer period and the upward curve re-establishes itself. In fact wages were rising faster than in 2008 only a few months ago - before Covid hit.

https://www.theguardian.com/money/2019/aug/13/uk-wages-rise-at-fastest-rate-for-a-decade-despite-brexit-risks

 BnB 25 Jul 2020
In reply to Offwidth:

> I can see articles like this becoming more common. I'd be OK with house value growth above inflation being subject to capital gains. It's an investment gain.

I can see how the idea has appeal. I pay CGT on my other investments, so why not on my unearned gains on my residence.
 

But there’s a massive practical drawback. It would devastate mobility. If I sell my house to move nearer to a new job on the other side of town, I can’t move to a house of comparable size and value because a sizeable proportion of the increase in value of my current home is forfeit as part of the transaction. Each time I move, I have to move down the housing ladder into a lower price band unless I get tax relief on the corresponding increase in value of the new property over the same period.

 Offwidth 25 Jul 2020
In reply to BnB:

Capital gains on rises above an inflation measure are hardly a sizable portion. Unless you think stamp duty is currently devastating mobility. There are plenty of clever things that could be done with different rates on different house sale values so the main mobility is unaffected. A capital gains approach is fairer than stamp duty as you pay that irrespective of making a loss on what is a housing investment as well as a home.

You're also assuming the measure won't dampen the housing market making moves more affordable. I think the UK housing market is a slow growth bubble that needs deflating.

 Alyson30 25 Jul 2020
In reply to BnB:

> I completely agree that increasing wages is desirable but the mechanism is to improve skills via education.

Nobody argued otherwise however I’d say it’s productivity and innovation that counts, even if education of course plays a part towards that (a lot smaller than we think IMO).

> If you simply mandate higher wages, companies will increase automation.

Nobody is arguing for mandating higher wages.

> By the way, banging on about no wage rise since 2008 is a case of cherry-picking your statistical base. Of course real wages will be shown to shrink in the grinding decade of GFC recovery if your baseline is the crescendo of a debt-fuelled bubble. Use a longer period and the upward curve re-establishes itself. In fact wages were rising faster than in 2008 only a few months ago - before Covid hit.

it seems to me you are doing the cherry picking. The fall in real wages experienced since the GFC in the UK is unprecedented and by far the longest since the 1980s. 
 

Real wages of the typical UK worker have fallen by almost 5% since 2008, with a modest bounce back from 2014. Compared with the trend of 2% annual growth of real wages from 1980 to the early 2000s, this represents around a 20% shortfall.

As for the bounce back that had started in 2014, it was eroded by two factors: higher price inflation as a consequence of the depreciation of sterling following the brexit vite, and second, nominal wage growth becoming stuck at a 2% pre-crisis norm.

Moreover, your claim that they were inflated due to a bubble pre-2008 is simply wrong, as the trend was pretty much linear since the 1980s and they had already started to flatten prior GFC. There was a price bubble but certainly no wage bubble.

Yes very nice, it was starting to rise again, but as you can see, still below 2008 level hence my comment. And we can probably expect further falls at this point.

Post edited at 14:08
1
 Alyson30 25 Jul 2020
In reply to BnB:

> I can see how the idea has appeal. I pay CGT on my other investments, so why not on my unearned gains on my residence.

> But there’s a massive practical drawback. It would devastate mobility. If I sell my house to move nearer to a new job on the other side of town, I can’t move to a house of comparable size and value because a sizeable proportion of the increase in value of my current home is forfeit as part of the transaction. Each time I move, I have to move down the housing ladder into a lower price band unless I get tax relief on the corresponding increase in value of the new property over the same period.

Essentially what he is prescribing is no different that the stamp duty expect you pay at a different point in the process.

Just like stamp duty it would do absolutely nothing to fix a dysfunctional market. It would just raise some cash for the exchequer.

Post edited at 13:57
 BnB 25 Jul 2020
In reply to Alyson30:

> Essentially what he is prescribing is no different that the stamp duty expect you pay at a different point in the process.

> Just like stamp duty it would do absolutely nothing to fix a dysfunctional market. It would just raise some cash for the exchequer.

Nonsense. Millions are sitting on gains that, in the south-east, amount to hundreds of thousands, even millions!  What’s 28% of a cool million?
Of course it’s unearned gains and I think it should be taxed in some way (it is, usually to IHT) but such an axe over the prospect of moving home will shatter mobility (physical not social).

 Alyson30 25 Jul 2020
In reply to BnB:

> Nonsense. Millions are sitting on gains that, in the south-east, amount to hundreds of thousands, even millions!  What’s 28% of a cool million?

Again, nobody said otherwise, but nobody said anything about 28% either.

> Of course it’s unearned gains and I think it should be taxed in some way (it is, usually to IHT) but such an axe over the prospect of moving home will shatter mobility (physical not social)

Frankly I doubt that this would make much difference, just like stamp duty isn’t preventing people from moving around. If it could help stop the « property ladder » nonsense in which people spend their entire life in debt addicted to low interest rates, I would be up for it but there is a fat chance of that happening.

Post edited at 20:12
 BnB 25 Jul 2020
In reply to Alyson30:

If it was too small to make a difference, how would it help the exchequer?

 Ian W 25 Jul 2020
In reply to DancingOnRock:

> >"punished" ? What ? It's not being punished to take care of yourself if you can . This is getting mad !

> Most of us plan to look after ourselves in old age. We buy houses and pay into a pension. 

> What we don’t plan for is being incapable of looking after ourselves and paying someone else huge sums of money to do it for us. It’s not a gamble we should take Individually, it should be an insurance with costs bourn across society at large. We are talking about thousands of pounds. Many die before they retire and many live practically forever and die suddenly in their sleep, or die after a very short illness.

This and the previous paragaph are contradictory. Given so many people end up in care, it is something that people absolutely should (and indeed do) plan for. I certainly have.

> We look after relatively young people who have abused their bodies all their lives and no one blinks an eyelid  

> Food banks only provide food and they only provide basic necessities. You still have to collect it and cook it. If you want beer and fags, you have to top it up yourself. No one is saying you can’t top up social care to get a higher service, what should happen though is that certain funds are ring fenced. 

> If I’m unemployed but have savings, should those savings pay my mortgage or should they pay my food? Food banks are not a long term solution. Most people use them once or twice because they have temporary cash issues. They’re not soup kitchens with the same people turning up week after week. 

You clearly have no idea about food banks, how they operate and who uses them. Food bank users are very often very regular users, and it isnt limited to those with mortgages.

> If you’re unemployed long term, you sell your house and move into something smaller, but it’s a temporary solution. You’re not expecting that to continue forever. 

I sympathise with Alyson. Just think about the logistics / timing required to sell a house, and buy a cheaper one, and how the mortgage lending market works. Hint - if you are unemployed, mortgage lenders will be less than welcoming, so unless you have very significant equity in the house you are selling, you cant downsize unless you can make a cash purchase........

 Ian W 25 Jul 2020
In reply to DancingOnRock:

> >What ? No ! it is compeltely optional nobody is forcing you to go to a care home.

> I don’t know what the difference between a care home, a nursing home or even sheltered housing is. 

I've isolated these two sentences, which distil quite well why you need to butt out of this discussion with as much grace as you can still muster. Otherwise its actually getting quite embarrassing.

 Alyson30 26 Jul 2020
In reply to BnB:

> If it was too small to make a difference, how would it help the exchequer?

It’s an extra tax, it raises some money. Like I said what he is suggesting is just a slightly different version of stamp duty.

 SteveX 26 Jul 2020
In reply to Rog Wilko:

Well it looks like Boris is giving it a go, which is more than can be said of,

  • May
  • Cameron
  • Brown
  • Blair
  • Major
  • Thatcher

Over-40s in UK to pay more tax under plans to fix social care crisis

https://www.theguardian.com/society/2020/jul/26/uk-ministers-looking-at-plans-to-raise-taxes-for-over-40s-to-pay-for-social-care?CMP=Share_AndroidApp_Copy_to_clipboard

Post edited at 19:47
 Offwidth 27 Jul 2020
In reply to SteveX:

They all said they had plans. The problem has been in implementing them.

 neilh 27 Jul 2020
In reply to SteveX:

May got pilloried for her sensible proposals on social care( stuffed by an ignorant electorate on the issue).She was the only one who had the balls to put it to the electrorate.The others all pushed it back knowing how difficult it was.

I can see that Boris's plan does not really address the issues. Are you going to be allowed to opt out if you own a house?What about chosing the provider you want. A tax rise from somebody who was preaching no tax rises..how is that going to go down.

Fraught with issues even for Johnson.

 StuPoo2 27 Jul 2020
In reply to Alyson30:

Some of the things you are saying are patently false Alyson30.  

> What ? No ! it is completely optional nobody is forcing you to go to a care home.

Once POA is granted, it is normal for an agent to have powers to determine where a principle lives.  Fact.  

> "Deprivation of assets" just means that  decreasing you assets for the purpose of cheating the means test is illegal, not that anybody is taking you assets by force.

The resolution process for deprivation of assets follows the normal process for Local authority recovery of debts.  The go to solution is a differed payment agreement.  Failing that the next port of call is the county court which can result in having a legal charge placed on your property, which ensures they (the local authority) receive the outstanding funds when it is sold.  Hence ... you can be forced to pay.  Fact.

> A tax is, as per you definition, a COMPULSORY charge. There is nothing compulsory about social care. 

Once in care you can't opt out of paying without the local authority taking you to the county court and placing a charge on your property.  It isn't exactly optional .. is it?????

> I think a more successful approach is for people to pay to look after themselves from their own funds whenever possible. And no, doing so is not "being taxed", it's just called being self sufficient.

Please explain how an increase on NI to pay for social care would not constitute "people to pay to look after themselves from their own funds whenever possible" - your words.  It would be people paying, out of their own funds, when they earn .... exactly the same test you are applying .. except they would be paying only once when the earn, rather than having their assets taken from them, by the state, after they've paid tax on their earnings that they used to purchase that asset in the first place.

> And here we go an other ideological left/right argument....  I am not making any argument  for or against any wealth that isn't the point.

You are appearing ideological because even when it is pointed out to you that A) it is a tax, B) that it is a wealth tax, C) that wealth taxes don't work and are on their way out in almost every EU country, D) that it will and does result in driving capital out of the country, tax evasion and asset shielding, D) that it isn't optional and that the state routinely has to place charges on elderly peoples property etc etc etc .. that you continue to insist that it is the only possible solution to the problem and that any other solution is nonsense. You are appearing ideological.

Ideological:  "of, relating to, or based on ideology"

Ideology:  "the integrated assertions, theories and aims that constitute a sociopolitical program"

https://www.merriam-webster.com/dictionary/ideological

> I'll point out however that most of the wealth in this country is locked in real estate and I don't see how you put real estate out of the reach of the state. You can't move it offshore, you can't hide it either.

That is exactly what a trust does!!!!!!!!!!!!!!!!  Once you move your property into a trust you no longer own it - it is no longer yours ... and for the purposes of social care, as long as you didn't place your property in trust with the intention of avoiding care costs ... it is a 100% legal thing to do that puts the trust beyond the reach of the local authority for your care costs.

 Alyson30 27 Jul 2020
In reply to StuPoo2:

> Some of the things you are saying are patently false Alyson30.  

> Once POA is granted, it is normal for an agent to have powers to determine where a principle lives.  Fact.  

A fairly marginal situation which BTW changes absolutely nothing to the argument. You are deliberately  focusing on a legally complex situation to muddle the argument. But the general principle is that the one with POA is supposed to act in the best interest of the person, and there are all sorts of legal mechanism to prevent abuse.

This really is a red-herring.

> The resolution process for deprivation of assets follows the normal process for Local authority recovery of debts.  The go to solution is a differed payment agreement.  Failing that the next port of call is the county court which can result in having a legal charge placed on your property, which ensures they (the local authority) receive the outstanding funds when it is sold.  Hence ... you can be forced to pay.  Fact.

> Once in care you can't opt out of paying without the local authority taking you to the county court and placing a charge on your property.  It isn't exactly optional .. is it?????

If you buy any type of service or goods and don't pay for it eventually you can get dragged in courts and your assets can eventually be seized.

I don't see the problem.

> Please explain how an increase on NI to pay for social care would not constitute "people to pay to look after themselves from their own funds whenever possible" - your words. 

You seem to think that what you pay in national insurance is a pot of money set aside, or some form of mutualised fund. That is not the case at all.
NI is exactly the same as income tax.

> You are appearing ideological because even when it is pointed out to you that A) it is a tax, B) that it is a wealth tax, C) that wealth taxes don't work and are on their way out in almost every EU country, D) that it will and does result in driving capital out of the country, tax evasion and asset shielding, D) that it isn't optional and that the state routinely has to place charges on elderly peoples property etc etc etc .. that you continue to insist that it is the only possible solution to the problem and that any other solution is nonsense. You are appearing ideological.

It is VERY CLEARLY not a tax, even more clearly not a wealth tax. Paying for a service that you need isn't being taxed, to frame is as such is so absurd that one can only conclude such an argument can only be the product of intellectual dishonesty.

As for C & D they are ideological claims not backed by any sort of solid evidence. 
I personally don't have much of an opinion on whether wealth tax would work or not, I think it would mostly depends on implementation detail.

> That is exactly what a trust does!!!!!!!!!!!!!!!!  Once you move your property into a trust you no longer own it - it is no longer yours ... and for the purposes of social care, as long as you didn't place your property in trust with the intention of avoiding care costs ... it is a 100% legal thing to do that puts the trust beyond the reach of the local authority for your care costs.

And the reality is that is pretty easy for the state to plug those holes in the law if they want to. Moreover you are focusing on marginal and exceptional situations which is frankly disingenuous.

YES in any welfare / benefit system there are always people who will find ways to cheat the means test. 
Weirdly enough you argument is that because people cheat the welfare system we should make it universally free.

It's the equivalent of saying that because a small minority of people who go to food bank could actually afford to buy their own food we should make food free for everybody.

It's absurd.
But even if you were to assume it isn't, you argument is self-defeating, as the only way you are going to give free old age care to everybody is by taxing a lot more, which is what you were against in the first place.

Post edited at 11:45
2
 StuPoo2 27 Jul 2020
In reply to Alyson30:

You say one thing, it is pointed out as false, you decide that is no longer relevant/red-herring, you say another thing, and then the loop starts all over again.

> A fairly marginal situation which BTW changes absolutely nothing to the argument. You are deliberately  focusing on a legally complex situation to muddle the argument. But the general principle is that the one with POA is supposed to act in the best interest of the person, and there are all sorts of legal mechanism to prevent abuse.  This really is a red-herring.

You said "nobody is forcing you to go to a care home.".  When pointed out that is a false statement ... you declared it a red-herring.

> If you buy any type of service or goods and don't pay for it eventually you can get dragged in courts and your assets can eventually be seized.  I don't see the problem.

You said ""Deprivation of assets" just means that  decreasing you assets for the purpose of cheating the means test is illegal, not that anybody is taking you assets by force.".  When pointed out that is a false statement ... you declare "I don't see the problem".

> You seem to think that what you pay in national insurance is a pot of money set aside, or some form of mutuality fund. That is not the case at all.  NI is exactly the same as income tax.

Can you link back to where I said that please?   (What on earth is a "mutuality fund")

> As for C & D they are ideological claims not backed by any sort of solid evidence. 

You replied to my post on this .. full of evidence.

My post:  https://www.ukclimbing.com/forums/off_belay/social_care_-_how_to_pay_for_it-722174?v=1#x9256294

Your reply:  https://www.ukclimbing.com/forums/off_belay/social_care_-_how_to_pay_for_it-722174?v=1#x9256327

Wealth taxes don't work ... that's why so few countries use them anymore.   

> And the reality is that is pretty easy for the state to plug those holes in the law if they want to. Moreover you are focusing on marginal and exceptional situations which is frankly disingenuous.

Everyone thinks on paper that it is easy just to whack a tax on wealth and solve the problems of the day.  It requires no thought or research to say that sentence.  The only problem is that annoying little issue that when you do ... people evade it.  The richest relocate.  Assets disappear into trusts.  Dedicated Law firms (front page of google "avoid paying social care costs") set up to help people minimize their liabilities.  If it was easy .. every country in Europe would be doing it ... there is a reason they are not.

> YES in any welfare / benefit system there are always people who will find ways to cheat the means test. Weirdly enough you argument is that because people cheat the welfare system we should make it universally free.

No it isn't .. read what I am typing.  I am not saying make it free.  I am saying widen the tax base to pay for it, by raising NI contributions for example, so that like the NHS it is free at the point of use rather than confiscating assets paid for after being taxed once already!  

The NHS isn't free - we've all paid for it already.  The same should be done to solve the social care problem.

> But even if you were to assume it isn't, you argument is self-defeating, as the only way you are going to give free old age care to everybody is by taxing a lot more, which is what you were against in the first place.

That is the exact opposite of what I've said.  Read my posts on this thread "raise NI contributions".  I've said it over and over again.  Widen the tax base to pay for it, NI contributions are already redistributive by design, free at the point of use like the NHS, avoid wealth taxes because they don't work <insert evidence on why wealth taxes don't work>.  

 DancingOnRock 27 Jul 2020
In reply to StuPoo2:

>No it isn't .. read what I am typing.  I am not saying make it free.  I am saying widen the tax base to pay for it, by raising NI contributions for example, so that like the NHS it is free at the point of use rather than confiscating assets paid for after being taxed once already!  

>The NHS isn't free - we've all paid for it already.  The same should be done to solve the social care problem.

Exactly. If we decide care should be free at the point of delivery this is how we approach it. We would need to test ‘need’ though, because there would technically be nothing to stop someone selling up and moving into ‘care’ for an easy life. And I would predict a number of ‘care’ homes would set themselves up providing very low levels of care, a bar and late night entertainment for the residents. 😂

Post edited at 13:45
 Alyson30 27 Jul 2020
In reply to StuPoo2:

> You say one thing, it is pointed out as false, you decide that is no longer relevant/red-herring, you say another thing, and then the loop starts all over again.

> You said "nobody is forcing you to go to a care home.".  When pointed out that is a false statement ... you declared it a red-herring.

So disingenuous. Of course that someone who is physically incapable of making their own decision will have someone appointed to make them for them.

This has no bearing whatsoever on your claim that we are forced to go into the care system.

Your argument is akin to saying it is false that we don’t generally have a choice on what we eat, and therefore buying food is a form of « wealth tax », just because someone in a coma will be fed by someone else.

> You said ""Deprivation of assets" just means that  decreasing you assets for the purpose of cheating the means test is illegal, not that anybody is taking you assets by force.".  When pointed out that is a false statement ... you declare "I don't see the problem".

No, what happened is that you desperately attempted to prove this was false with a very obvious syllogism, which I have exposed.

> Can you link back to where I said that please?   (What on earth is a "mutuality fund")

Autocorrect. Very obviously I meant mutual funds.

> You replied to my post on this .. full of evidence.

> Wealth taxes don't work ... that's why so few countries use them anymore.   

> Everyone thinks on paper that it is easy just to whack a tax on wealth and solve the problems of the day.  It requires no thought or research to say that sentence.  The only problem is that annoying little issue that when you do ... people evade it.  The richest relocate.  Assets disappear into trusts.  Dedicated Law firms (front page of google "avoid paying social care costs") set up to help people minimize their liabilities.  If it was easy .. every country in Europe would be doing it ... there is a reason they are not.

All very poorly informed and overly simplistic arguments irrelevant to the discussion since nobody is arguing for any wealth tax.

> No it isn't .. read what I am typing.  I am not saying make it free.  I am saying widen the tax base to pay for it, by raising NI contributions for example, so that like the NHS it is free at the point of use rather than confiscating assets paid for after being taxed once already!  

Again, no assets are being « confiscated » they are simply included in the evaluation of your means. If you have signifiant assets then you have to pay for your own care.

It is called « means testing ».

That is perfectly reasonable for any welfare system to do that, most welfare systems in the world do it, and it does not amount to a « double tax »

> The NHS isn't free - we've all paid for it already.  The same should be done to solve the social care problem.

Can you explain to us how making social care free for all will fix the funding problem ?
 

> That is the exact opposite of what I've said.  Read my posts on this thread "raise NI contributions".  I've said it over and over again.  Widen the tax base to pay for it, NI contributions are already redistributive by design, free at the point of use like the NHS, avoid wealth taxes because they don't work . 


Seems to me you just want to increase taxes massively so that you hopefully get stuff for free.

Post edited at 14:16
 wbo2 27 Jul 2020
In reply to Alyson:  I'll argue for a weath tax .  Norway has one , and given the benefits to society I don't mind paying  

 Alyson30 27 Jul 2020
In reply to wbo2:

> I'll argue for a weath tax .  Norway has one , and given the benefits to society I don't mind paying  

Like it said I don’t have any ideological preconception on the issue, if some form of it works then good let’s do that, if not then we don’t do it.

My point is simply that relying on your own assets to pay for your own needs isn’t a “wealth tax“. It is so bleeding obvious really.

2
 Alyson30 27 Jul 2020
In reply to DancingOnRock:

> >The NHS isn't free - we've all paid for it already.  The same should be done to solve the social care problem.

> Exactly. If we decide care should be free at the point of delivery this is how we approach it.

 

Absolutely but old age care isn’t free at the point of delivery.
If you want to make it so then taxes would have to go up massively.

Pushing your argument to its absurd conclusion, we should all pay 100% tax and everything will be provided for us by the state.

Post edited at 14:27
2
 StuPoo2 27 Jul 2020
In reply to Alyson30:

> This has no bearing whatsoever on your claim that we are forced to go into the care system.

Go back and read the posts Alyson30.  "Once POA is granted, it is normal for an agent to have powers to determine where a principle lives

Where does that say that we are all forced into care?  

> No, what happened is that you desperately attempted to prove this was false with a very obvious syllogism, which I have exposed.

Your own words on assets ""not that anybody is taking your assets by force.".  Truth - ".. county court ... can result in having a legal charge placed on your property, which ensures they (the local authority) receive the outstanding funds when it is sold.  Hence ... you can be forced to pay."

Where is the syllogism in that?  It is a fact that in the UK the local authority can place a legal charge on your property to recoup their costs of your social care when your property is sold.  

>> The NHS isn't free - we've all paid for it already.  The same should be done to solve the social care problem.

> Can you explain to us how making social care free for all will fix the funding problem ?

The NHS isn't free Alyson30.  It is free at the point of use.  We've all already paid for it in our taxes.

>> That is the exact opposite of what I've said.  Read my posts on this thread "raise NI contributions".  I've said it over and over again.  Widen the tax base to pay for it, NI contributions are already redistributive by design, free at the point of use like the NHS, avoid wealth taxes because they don't work . 

> Seems to me you just want to increase taxes massively so that you hopefully get stuff for free.

That is correct.  The state leaves assets alone that were bought with funds paid for after paying tax first time round (State took its cut on income, individual bought asset with income remaining - asset now belongs to the individual .. state cannot have another cut of those assets).  Instead - if the state needs more funds, raise taxes on income, which is a redistributive process in its own right (the rich already make up the vast majority of the income tax base in the UK [1] - tax them harder on income), so that people don't need to pay for their health or social care needs at point of use.  

It isn't free social care.  It is exactly the same model as the NHS ... its social care you've already paid your whole life for in your taxes, except ... nobody's house gets taken off them that they bought with funds that were already taxed by the state.

Why do it this way?  Because, even though you describe it as "very poorly informed and overly simplistic arguments", taxes on income are more effective at raising tax $$ for the state than taxes on wealth and is the reason why nearly all wealth taxes are now gone in the EU.  When you tax wealth .. you tend to drive wealth away or out of the reach of the tax.  [2][3][4]  

[1] https://www.theguardian.com/business/2019/nov/13/richest-britain-income-tax-revenues-institute-fiscal-studies

[2] https://www.npr.org/sections/money/2019/02/26/698057356/if-a-wealth-tax-is-such-a-good-idea-why-did-europe-kill-theirs 

[3] https://www.france24.com/en/20150808-france-wealthy-flee-high-taxes-les-echos-figures?utm_source=npr_newsletter&utm_medium=email&utm_content=20190226&utm_campaign=money&utm_term=nprnews 

[4] https://www.nationalreview.com/2019/03/elizabeth-warren-wealth-tax-european-nations/ 

 DancingOnRock 27 Jul 2020
In reply to Alyson30:

> Absolutely but old age care isn’t free at the point of delivery.

It should be. Not everyone needs it. Just like the NHS. I very rarely use it.

> If you want to make it so then taxes would have to go up massively.

No they wouldn’t. 

 Alyson30 27 Jul 2020
In reply to DancingOnRock:

> It should be. Not everyone needs it. Just like the NHS. I very rarely use it.

Everybody needs food. Everybody needs a roof over their head. Everybody needs clothes. Should that be free too ?

> No they wouldn’t. 

Yes, it most definitely would.

We have already established that to merely fix the funding gap taxes (not even talking about a free at point of use system, which would be way more expensive) taxes should be raised to about 70%.

1
 Alyson30 27 Jul 2020
In reply to StuPoo2:

> > This has no bearing whatsoever on your claim that we are forced to go into the care system.

> Go back and read the posts Alyson30.  "Once POA is granted, it is normal for an agent to have powers to determine where a principle lives" 

> Where does that say that we are all forced into care?  

 

Go question, and when you answer that you’ll understand why it’s a red-herring.

> > No, what happened is that you desperately attempted to prove this was false with a very obvious syllogism, which I have exposed.

> Your own words on assets ""not that anybody is taking your assets by force.".  Truth - ".. county court ... can result in having a legal charge placed on your property, which ensures they (the local authority) receive the outstanding funds when it is sold.  Hence ... you can be forced to pay."

> Where is the syllogism in that?  It is a fact that in the UK the local authority can place a legal charge on your property to recoup their costs of your social care when your property is sold.  

If you don’t pay your debt then any of your assets can be up for grab eventually.

That’s shouldn’t be surprising. 

When will you be done with the sophistries, I wonder ?


> >> The NHS isn't free - we've all paid for it already.  The same should be done to solve the social care problem.

> The NHS isn't free Alyson30.  It is free at the point of use.  We've all already paid for it in our taxes.

You are staying the obvious instead of answering the question. How does making social care free at the point of use solve the funding problem ?

> >> That is the exact opposite of what I've said.  Read my posts on this thread "raise NI contributions".  I've said it over and over again.  Widen the tax base to pay for it, NI contributions are already redistributive by design, free at the point of use like the NHS, avoid wealth taxes because they don't work . 

> That is correct.  The state leaves assets alone that were bought with funds paid for after paying tax first time round

I repeat for the 10th time, nobody is saying that the state should take your home to fund the system nor should do any wealth tax, and that’s not how the current system works, at all.

You are so desperate to frame what is a perfectly banal and sensible means test as a « wealth tax » that your arguments are looking more and more desperate and evasive.

Post edited at 17:22
 StuPoo2 27 Jul 2020
In reply to Alyson30:

> We have already established that to merely fix the funding gap taxes (not even talking about a free at point of use system, which would be way more expensive) taxes should be raised to about 70%.

Please post a link to any reliable source that backs this statement up.

 Alyson30 27 Jul 2020
In reply to StuPoo2:

> Please post a link to any reliable source that backs this statement up.

You can read my conversation with neilh. We worked out the financial using ONS data which I believe is linked.

Basically increasing income tax to 70% would bring at best around 30bn, making the very optimistic assumption that the tax base doesn’t diminish as a result.

That is about the size of the current funding gap ONLY.

You need to stop the magical thinking.
You are not going to fund decent quality old age care for everyone without crushing tax rises.

Post edited at 17:34
 StuPoo2 27 Jul 2020
In reply to Alyson30:

Guardian is running an exclusive right now .. 

https://www.theguardian.com/society/2020/jul/26/uk-ministers-looking-at-plans-to-raise-taxes-for-over-40s-to-pay-for-social-care

"Under the plan over-40s would have to pay more in tax or national insurance, or be compelled to insure themselves against hefty bills for care when they are older. The money raised would then be used to pay for the help that frail elderly people need with washing, dressing and other activities if still at home, or to cover their stay in a care home."

"The system that officials are considering is a modified version of how Japan and Germany fund social care. Both are widely admired for having created a sustainable way of financing social care to deal with the rising needs an ageing population brings."

"In Japan everyone starts contributing once they reach 40. In Germany everyone pays something towards that cost from the time they start working, and pensioners contribute too. Currently 1.5% of every person’s salary, and a further 1.5% from employers or pension funds, are ring fenced to pay for care in later life."

"Older people in Germany who have had their needs assessed can use the money to pay carers to help them with personal tasks at home, or for care home fees or even to give to relatives and friends for helping to look after them."

"Adopting a similar approach would let Johnson say he has ended the situation whereby some pensioners deemed too wealthy to qualify for local council-funded care have to sell their homes to pay care home costs, which can exceed £1,400 a week."

Perhaps you might want to write to the government to express your displeasure that people will continue to keep their homes in the new model.

1
 StuPoo2 27 Jul 2020
In reply to Alyson30:

I went through your conversation with neilh .. there is no links & no links to ons.gov.uk either.

Could you share the ONS data so that I can look at it too please.

Thanks.

 Alyson30 27 Jul 2020
In reply to StuPoo2:

> Guardian is running an exclusive right now .. 

> "Under the plan over-40s would have to pay more in tax or national insurance, or be compelled to insure themselves against hefty bills for care when they are older. The money raised would then be used to pay for the help that frail elderly people need with washing, dressing and other activities if still at home, or to cover their stay in a care home."

> "The system that officials are considering is a modified version of how Japan and Germany fund social care. Both are widely admired for having created a sustainable way of financing social care to deal with the rising needs an ageing population brings."

> "In Japan everyone starts contributing once they reach 40. In Germany everyone pays something towards that cost from the time they start working, and pensioners contribute too. Currently 1.5% of every person’s salary, and a further 1.5% from employers or pension funds, are ring fenced to pay for care in later life."

> "Older people in Germany who have had their needs assessed can use the money to pay carers to help them with personal tasks at home, or for care home fees or even to give to relatives and friends for helping to look after them."

> "Adopting a similar approach would let Johnson say he has ended the situation whereby some pensioners deemed too wealthy to qualify for local council-funded care have to sell their homes to pay care home costs, which can exceed £1,400 a week."

> Perhaps you might want to write to the government to express your displeasure that people will continue to keep their homes in the new model.

I would agree with a voluntary insurance type system. Exactly what I was suggesting earlier.

I frankly don’t see the f*cking problem with selling a home you don’t live in anymore to fund your end of life needs, both my grandmothers did that all by themselves.

But if you don’t want to do that that is fine by me, as long as you pay for your own care yourself.

Basically what I want is for people to have the freedom to chose how they fund their own end of life care. Maybe you don’t want any, maybe you want to use your home, maybe you want to pay into an insurance type pot.

All good with me.

 Alyson30 27 Jul 2020
In reply to StuPoo2:

Here you go.

https://www.gov.uk/government/statistics/income-tax-liabilities-statistics-tax-year-2017-to-2018-to-tax-year-2020-to-2021

The gist of it is, income tax bring about 200bn, half of it is paid by higher rate tax payer.

In order to fund ONLY the funding gap (a fraction of what would be needed for a free at point of use system) you’d need 30bn.

Hopefully that’s enough for you to realise your idea of a fully taxpayer-funded social care system is total cuckoo land territory without massive tax rise.

All that for the sake of preserving inheritances, possibly the least meritocratic way to obtain wealth after winning the lottery. Seems insane to me.

Post edited at 18:05
2
 DancingOnRock 27 Jul 2020
In reply to Alyson30:

85% of social care is provided by for profit companies. 

 Alyson30 27 Jul 2020
In reply to DancingOnRock:

> 85% of social care is provided by for profit companies. 

So ? What is your point exactly ? It doesn’t change the equation much, private or public someone has to pay for it.

Post edited at 19:02
2
 DancingOnRock 27 Jul 2020
In reply to Alyson30:

I’m just not happy with people profiting from people who can’t look after themselves. 

 StuPoo2 27 Jul 2020
In reply to Alyson30:

You'll need to help me with this.

  1. Where did you get a 30bn funding gap number come from?  Local Government says its 4bn in England [1].  The health foundation 2bn in England [2].  fullfact.org 600m [3].
  2. Why were you proposing to pay for this via Income tax alone?  Income tax makes up only ~30% of the UK government tax take.  If you only take it through income tax ..  you're leaving 70% of existing taxable sources on the table inc. national insurance that makes up the next largest amount ~19%.  [4]  

[1] https://www.local.gov.uk/lga-responds-social-care-funding-gap-inquiry-launched-mps

[2]  https://www.health.org.uk/publications/the-social-care-funding-gap-implications-for-local-health-care-reform

[3]  https://fullfact.org/health/adult-social-care-spending-gap/

[4] https://en.wikipedia.org/wiki/Taxation_in_the_United_Kingdom#Overview

Post edited at 19:40
 StuPoo2 27 Jul 2020
In reply to Alyson30:

> I would agree with a voluntary insurance type system. Exactly what I was suggesting earlier.

They aren't making the case for a voluntary system.  Neither Income tax, NI or "be compelled to insure themselves" are voluntary.  Everyone would have to pay in .. everyone would be eligible to take out.

> I frankly don’t see the f*cking problem with selling a home you don’t live in anymore to fund your end of life needs.

I don't think anyone will ever stop you selling your home.  The problem isn't the selling of your home if you want to use it for your care costs.  The problem is the state compelling you to sell your home when you don't want to use it.  

Under the new proposals coming forward .. that part of the current system so disliked, the state coming after your assets that you bought after paying tax to the state in the first place, would be removed and instead everyone would contribute throughout their working lives, as they do today via income tax, NI, VAT etc (and possibly new sources if the insist upon employers contributing too), to a shared pool of money that will pay for the states social care network.  Accessible to all .. but those that want to self fund by selling a house or go private are most welcome to. 

(Point taken in advance, they will run it like a ponzi scheme with current contributions being used to fund current expense.  They would do well to reform that bit while they're at it .. but I suspect that would leave them with a large gap between implementation and the money coming online.  28 years between age 40 and pension age?)

 Alyson30 27 Jul 2020
In reply to StuPoo2:

This was the figure put forward  by neilh. I see that it comes from an analysis by king’s fund:

https://www.hymans.co.uk/media-centre/press-releases/15-billion-per-year-could-be-raised-by-an-over-40s-social-care-tax/

You are right, income tax isn’t everything, but you were the one saying that NI and income tax was the way to go. Back-pedallingI see.

Which taxes are you going to create then ? Or which one are going to increase ? By how much ? Who is going to pay them ? Please tell us.

And remember, once you’ve found your 30bn, that only plugs the gap, it doesn’t even begin to pay for your free at the point of use system.

Post edited at 20:10
 elsewhere 27 Jul 2020
In reply to StuPoo2:

A Ponzi scheme is fundamentally fraudulent by claiming investment returns that are not investment returns.

Taxation is not a Ponzi scheme because everybody knows it relies on "current contributions being used to fund current expense". When everybody knows it is not fraud.

Post edited at 20:17
 Alyson30 27 Jul 2020
In reply to StuPoo2:

> They aren't making the case for a voluntary system.  Neither Income tax, NI or "be compelled to insure themselves" are voluntary.  Everyone would have to pay in .. everyone would be eligible to take out.

Well it seems to me they are just basically raising income tax and pretend it goes towards your own care. It wont.

> I don't think anyone will ever stop you selling your home.  The problem isn't the selling of your home if you want to use it for your care costs.  The problem is the state compelling you to sell your home when you don't want to use it.  

 

Again, the state isn’t forcing people to sell their home, they are simply asking you to participate towards the costs of your own care if you are able to afford it.


Which is IMO perfectly reasonable but you seem to have gone completely bananas and are now telling us this is some form of extortionate wealth tax.

You know that the more you peddle this total nonsense the more ridiculous you sound.

And if you think Boris’ proposal will do anything to change the current system, you’re wrong. It won’t raise nearly enough money to cover the funding gap let alone make the system free for everybody.

Post edited at 20:18
1
 Alyson30 27 Jul 2020
In reply to elsewhere:

> Taxation is not a Ponzi scheme because everybody knows it relies on "current contributions being used to fund current expense".

I don’t think Stu actually understands that.

1
 StuPoo2 27 Jul 2020
In reply to Alyson30:

> This was the figure put forward  by neilh. I see that it comes from an analysis by king’s fund:

Help me out ... is this the kingsfund publication to which you refer?  "a funding gap of £1.5 billion in 2020/21 and £6 billion by 2030/31" ... or there is a different kingsfund publication you were looking at?

https://www.kingsfund.org.uk/publications/fork-road-social-care-funding-reform

This source above, that suggests the following:

"adding 1p to all rates of National Insurance (NI) by 2030/31 would raise enough to fund introducing the cap and floor model. Combined with the (problematic) option of means-testing winter fuel payments, this could be enough to introduce free personal care. Alternatively, adding 2p to all rates of income tax, or 3p to VAT, would be enough to improve access and quality close to the levels observed in 2009/10.  A rise in general taxation could be delivered through a hypothecated tax for social care. "

Its really difficult to understand how you got to your 70% income tax conclusion when you won't post any links to your sources.


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