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Bit of politics

August 30, 2012

I had two immediate reactions to Nick Clegg’s “wealth tax” proposals. First of all, the obvious “politics of envy” jibes from the Tory benches were really annoying in the current climate: yes, let’s freeze salaries, raid pensions, screw the disabled and sell off the playing fields, but heaven forbid we should be “envious” of our betters!

“But we also have to be careful as a country we don’t drive away the wealth creators and the businesses that are going to lead our economic recovery.”

says George Osborne. Funny how the “wealth creators” need to be motivated by giving them money and the ordinary person by taking it away. And how is that “trickle down economics” working out for the States, hmmm?

But I’m afraid as a former tax professional my first thought was “that won’t work”. A wealth tax? Define “wealth”. Are the Queen’s diamonds “wealth”? What if they were in a safety deposit box in a Swiss bank?

The costs of calculating, collecting and enforcing a “wealth” tax are likely to outweigh the benefits, particularly if it’s only to be a one-off levy.

But I’ll tell you what would work. A one off levy on land. You know where it is, you know (or can calculate) what it’s worth, and, with a firm deadline that says someone – and we’re not going to argue with you about who, so you can set up as many offshore trusts as you like – has to pay the tax by Land Tax Day or else the land itself is forfeit – simple to administer.

I’d like to see the cost benefit analysis for it. Anyone want to have a go at drafting the impact assessment???

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