As part of ShareSoc’s work, we lobby and represent individual investors, we submit responses to Government consultations and when required we campaign for change. For example, we responded to consultations on and blogged about stamp duty, inheritance tax and capital gains tax.
A recent article in the Mail highlighted concerns about a possible wealth tax and we are formulating ShareSoc’s position. Please contact us if you wish to join in this debate.
The Sunday Times reported on 10 April the debate in the US about a wealth tax, noting “Conceptionally there can be little objection to taxing on unrealised capital gains, as the current system provides the very wealthy with a sort of tax loophole: they typically borrow against those gains and use the cash as they would any other income” and of course loans are not subject to income tax.
The fundamental problem as ShareSoc see it with a wealth tax is that history teaches us that it does not work. The politicians tend to allow carve outs for some types of assets and then it gets horribly complex and does not achieve its goals. This article explains what went wrong in France and elsewhere, https://www.businessinsider.com/what-happened-when-the-wealth-tax-was-implemented-in-europe-2019-10?r=US&IR=T
In general, ShareSoc believes that one of the keys to successful decision making is “second level thinking”, which Howard Marks describes in detail in his book “The Most Important Thing”. This requires you to think hard about how changes will affect behaviour and create consequences over the longer term, so as to better understand the impact of decisions which seem, at first glance, simple. Many of the proposals we see from all sides of the political spectrum are in our view superficial and likely to cause greater problems in the medium term than the immediate issue they seek to address.
Here are some of our consultation responses and blogs on these issues.
https://www.sharesoc.org/blog/taxation/capital-gains-tax-review-is-it-simplification-or-is-there-a-hidden-agenda/ a blog by Roger Lawson May 2021
https://www.sharesoc.org/blog/taxation/capital-gains-tax-reform-surely-long-overdue/ a blog by Roger Lawson July 2020
https://www.sharesoc.org/consultation/stamp-duty-review-sharesoc-uksa-submit-joint-response-to-hmrc/
https://www.sharesoc.org/blog/taxation/inheritance-tax-review/ a blog by Roger Lawson June 2018 with a comment from Cliff Weight
Cliff Weight, Director, ShareSoc
Taxing unrealised gains is very dangerous as it means that people would face demands for tax cash when they have not realised any cash gains. Totally iniquitous. Otherwise a general wealth tax has many other problems associated with it such as the difficulty in identifying actual wealth – for example a lot of wealth can be held in property or in assets such as unlisted shares, gold, jewellery, and antiques that are very difficult to value as they are not readily marketable like listed shares. It is of course already iniquitous that capital gains are taxed on values increased by general inflation rather than being indexed linked!