#1
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Any economists out there?
Capital Gains Tax (CGT) in the UK costs more to collect than the revenues raised, are there any good reasons to levy such a tax that I am either not considering or are beyond my comprehension?
Just interested really. Regards Mack |
#2
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Re: Any economists out there?
[ QUOTE ]
Capital Gains Tax (CGT) in the UK costs more to collect than the revenues raised, are there any good reasons to levy such a tax that I am either not considering or are beyond my comprehension? Just interested really. Regards Mack [/ QUOTE ] No. Taxes generally cause an economic loss. Taxes for police protection and a few other things are positive though because the gain from police protection outweighs the alternative of familys defending their property. But to have a tax actually collect less than the cost to collect the tax is insane. Let me make sure i'm reading it correctly. Lets say the UK charges a tax on capital gains that amounts to $500 million dollars. It costs more than $500 million dollars to pay the people to assess and collect the $500 million? |
#3
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Re: Any economists out there?
You are reading it correctly. I was wondering if there was any logic to it at all.
Mack |
#4
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Re: Any economists out there?
The upper classes in the UK long ago strangled free enterprise. They made economics about keeping people poor rather than making people rich. It worked. The UK degenerated from a once entrepenuer driven economy into a system of social welfare where you stayed in the economic caste you were born into.
The capital gains tax looks like a relic designed to discourage free enterprise. If you had a growing business in the UK, you would probably be inhibited by the rate they collected. If you already had a significant ownership in the economy there, you wouldn't have to worry, because it's not really growing anyway. Just one man's perception based on my travels. I could be completely wrong. Feel free to correct me if I am. X |
#5
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Re: Any economists out there?
If it is true that it costs more to collect the tax than it takes in then the possible arguement for it is a redistributive/equality one and that is shaky at best as you are not getting any extra revenue to share out. I can't believe that a country would have such a tax on the books where are you getting the idea that it costs more to collect?
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#6
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Re: Any economists out there?
[ QUOTE ]
The upper classes in the UK long ago strangled free enterprise. They made economics about keeping people poor rather than making people rich. It worked. The UK degenerated from a once entrepenuer driven economy into a system of social welfare where you stayed in the economic caste you were born into. The capital gains tax looks like a relic designed to discourage free enterprise. If you had a growing business in the UK, you would probably be inhibited by the rate they collected. If you already had a significant ownership in the economy there, you wouldn't have to worry, because it's not really growing anyway. Just one man's perception based on my travels. I could be completely wrong. Feel free to correct me if I am. X [/ QUOTE ] I agree. Economists need to start running for office. Macro/Micro Economics should be taught to every person in the world. Politicians are ruining economies with their taxes that people think will help even though they don't know anything about economics. |
#7
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Re: Any economists out there?
This is what CGT does in laymans term, the exact details are slightly different but you will understand slightly better maybe if I say this anyway.
The difference between the sale and purchase price of an asset is calculated, then an allowance similar to inflation on the purchase price from the time of purchase to the time of sale is deducted from this gain, this is taxed at a rate dependent on the amount of other income you have made during the assessable year. The tax applies to paintings, antiques, some whiskey barrels, shares in a company etc. It doesn't apply to short life assets such as wine, or cars. The tax is levied in the year the asset is disposed of. In relation to business assets, such as plant or buildings, full relief is available if the proceeds of sale are reinvested in a new asset. The tax just makes no sense at all to me, maybe the fact that it is there makes people act differently, and if it was abandoned as a tax people would act differently, such that it would make sense for the tax to exist again. Blah I just don't know. Mack |
#8
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Re: Any economists out there?
[ QUOTE ]
Capital Gains Tax (CGT) in the UK costs more to collect than the revenues raised [/ QUOTE ] According to who? Is this just a blip this year/last few years or a trend? |
#9
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Re: Any economists out there?
UK tax laws are very strange, Inheritance Tax (until the recent property boom) was another tax that was only levied on the estates of less than 1% of the population. IHT planning is just about the most complicated tax work on earth, accountants get millions every year because the legislation is insanely complicated and anti avoidance cases are constantly changing the landscape. We also pay 0.5% stamp duty everytime we buy shares from the stock market. Maybe we are just weird, the Americans refused to put up with it, we take all the [censored] our lot can throw at us.
Mack |
#10
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Re: Any economists out there?
First, we have to realize that there is no such thing as a "Capital Gain", it's a concept that exists only in tax law. If you have an Income Tax, especially if you have a progressive Income Tax, it's necessary to invent the concept of Capital Gains. If there was no gains tax, people could structure their affairs (transactions) in such a way that they had no Income. It's also necessary to invent a Gift Tax for the same reason.
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