UK Budget- The Axe Falls

[rory_20_uk]

Doing a degree used not to be required by all. Now since they've become so devalued, it's almost obligatory - else one runs the risk of being the only candidate without one even if it's of limited value and caused a large amount of debt. Of course, being erudite enough to explain this to potential employers would certainly help.

So, you worked and others didn't. Students are over 18 - i.e. adults, responsible for their own lives and decisions. They can marry, vote and are doing a degree. I'd hope that they'd also be able to keep a budget or is this too advanced for degree level?

[Philippus Flavius Homovallumus]

There are the normal bank debts, since the Student loan doesn't even cover accomendation + Food bills, etc. I was working part-time, so I was able to get through without going into other debt, but other people did. I remember them doing so during my first year and thinking "What the heck?"

Work more drink less, people who go heinously overdrawn get no sympathy from me, as someone who did an MA entirely off his own back, and is saving to start a PhD.

Life is hard, but letting yourself get into dept in the first place just makes it harder.

[Furunculus]

this deficit is also being used as an excuse to reduce the size of government, a philosophy which the majority in this country do not support (hence the need for an excuse, with no mandate from the people).

nope......................... still seeing nothing that would support the contention that people do not believe government is bloated and are happy with it the size it is:

http://www.telegraph.co.uk/news/news...e-Osborne.html

[Beskar]

Work more drink less, people who go heinously overdrawn get no sympathy from me, as someone who did an MA entirely off his own back, and is saving to start a PhD.

Life is hard, but letting yourself get into dept in the first place just makes it harder.

Did the same myself. My poor bank account.

[Slyspy]

Of course not all unis and areas are equal. There will not be enough seasonal jobs available to our bloated uni population. However, I fear this may be a tangent from the purpose of this thread.

[Furunculus]

took me three years to pay off my MSc.

[Philippus Flavius Homovallumus]

took me three years to pay off my MSc.

I was fortunate enough just to make myself poor doing my MA, but I can't even find a way to get into dept for my PhD. There is litterally no facility to offset the cost, even of fees, while you are studying, and all this while undergraduates urinate their grants and loans up walls every day of the week!

I'm really quite frustrated over that.

On topic, reform of the university system not only needs to prevent it haemoraging money, it also needs to account for the spirralling cost of PG degrees.

[Seamus Fermanagh]

Choices, choices.....

VAT taxes tax the consumer/user of a particular good or service.
Advantages: relatively "invisible" as prices are usually listed VAT-inclusive, generates income across the economic spectrum on an equitable basis.
Disadvantages: can be viewed as regressive in character as since the funds that MUST be expended for basic subsistence -- and thereby taxed -- represent a higher proportion of the available resources of less wealthy persons.
Thoughts: Prima Facie, that suggests that increasing the VAT percentage will create a reduction in the demand for goods and services, notably for those goods/services which are not necessities. With demand dropping and supply remaining constant, this suggests further that prices for some luxury goods/services would drop -- thereby hurting the income streams of those providers.

"Flat" Income Taxes: In this approach all income (usually above a set "floor" amount) is taxed at an equal percentage rate.
Advantages: Encourages wealth accumulation and efforts to improve income stream, taps into most of the economic spectrum.
Disadvantages: Any earner in income ranges just above the "floor" amount will be paying tax money that "cuts" into the ability to spend on goods and services to a greater extent than those at higher income brackets. This can be viewed as regressive. Doesn't tap into "old money" that is not defineable as income in some fashion.
Thoughts: This one has a better doability factor in many political/economic systems. The potential for growth encouragement can be preserved while regression can be minimized through carefully setting the "floor" amount. The old money issue remains a concern.

Wealth Tax: Involves the periodic recalculation of an individual's total wealth -- income, property, etc., the establishment of a "safe" wealth level not subject to taxation -- and then the taxation of the remainder using some scale. Scale choices could include some form of "progressive" scale, taking a higher and higher percentage above that "safe point," a flat percentage above that point, or complete confiscation of the "extra" wealth.
Advantages: Functions as a direct means of wealth transfer to level out economic differences within a society -- which never quite happens with the other systems.
Disadvantages: Runs a real risk of "wealth flight" and serious efforts at tax evasion. Can create a "numbing" of capital investment etc.
Thoughts: No society currently practices this as an ongoing means of revenue generation. Tends to be more of a temporary act during revolutionary change periods.

Obviously, other taxes and combinations exist, but these characterize the "major" options. Thoughts? Especially vis-a-vis the UK.

[Centurion1]

Thank god the cost of my university is covered. In return for giving everything to my country.

Good deal for me since I was planning on it anyway

[Furunculus]

Choices, choices.....

VAT taxes tax the consumer/user of a particular good or service.
Advantages: relatively "invisible" as prices are usually listed VAT-inclusive, generates income across the economic spectrum on an equitable basis.
Disadvantages: can be viewed as regressive in character as since the funds that MUST be expended for basic subsistence -- and thereby taxed -- represent a higher proportion of the available resources of less .

VAT in the UK reallt isn't that regressive, as many items such as food and children's clothes are zero rated.

http://www.hmrc.gov.uk/vat/forms-rat...s-services.htm

[Philippus Flavius Homovallumus]

Wealth Tax: Involves the periodic recalculation of an individual's total wealth -- income, property, etc., the establishment of a "safe" wealth level not subject to taxation -- and then the taxation of the remainder using some scale. Scale choices could include some form of "progressive" scale, taking a higher and higher percentage above that "safe point," a flat percentage above that point, or complete confiscation of the "extra" wealth.
Advantages: Functions as a direct means of wealth transfer to level out economic differences within a society -- which never quite happens with the other systems.
Disadvantages: Runs a real risk of "wealth flight" and serious efforts at tax evasion. Can create a "numbing" of capital investment etc.
Thoughts: No society currently practices this as an ongoing means of revenue generation. Tends to be more of a temporary act during revolutionary change periods.

Obviously, other taxes and combinations exist, but these characterize the "major" options. Thoughts? Especially vis-a-vis the UK.

Actually, most of Europe practices this, using a sliding scale where greater wealth is taxed at a greater rate.

[Myrddraal]

In a sense, inheritance tax is some form of wealth tax, which strikes when your wealth is to be passed on.

Personally, I think that wealth taxes are terribly unfair compared to taxes on income, since they could result in people paying to the government more than they earn. People who live in an area in which house prices have risen dramatically would be taxed on their wealth, which they may not be able to afford resulting in them having to sell up. In comparison to income taxes this seems horribly unfair to me.

[Beskar]

In a sense, inheritance tax is some form of wealth tax, which strikes when your wealth is to be passed on.

Personally, I think that wealth taxes are terribly unfair compared to taxes on income, since they could result in people paying to the government more than they earn. People who live in an area in which house prices have risen dramatically would be taxed on their wealth, which they may not be able to afford resulting in them having to sell up. In comparison to income taxes this seems horribly unfair to me.

Not really, as inheritance tax only affects the top 5% or so of the country.



edit: Also good news PVC, that friend has now got a job (after 8 months or so) on the employment scheme which will no longer exist because of the new budget.

[drone]

Not really, as inheritance tax only affects the top 5% or so of the country.

I think you would be surprised. A lot of family farms get lost from inheritence tax, when property values nearby go up. The appraised value of the land pushes them over the estate tax limit, even if the family is just getting by as is. They are left with no choice but to sell the land to developers to pay the tax.

[Philippus Flavius Homovallumus]

Inherritence tax is an evil thing, all those left-leaners should remember that it was first devised by Kings to gather as much wealth and power to the throne as possible, modern incarnations do the same; just to the "state".

Inherritence is not an economic activity, it should be a purely family matter which the state shouls not intrude upon.

[Furunculus]

especially given that most people who get hit by inheritence tax now are being taxed on money that has already been taxed.

[Seamus Fermanagh]

especially given that most people who get hit by inheritence tax now are being taxed on money that has already been taxed.

I believe that the classic counter to that is that:

You, not your "heirs" have a personal ownership/have earned those monies and been taxed on same. The state is taxing the "income" the inheritance represents to your heirs.

Others go further, arguing that the accumulation of wealth across multiple generations is directly counterproductive to a healthy society in that it leads to an entrenched elite who can be expected to pursue their own advantage at the expense of those less privileged. This sub-set believes that, upon death, all wealth (or at least most of it) should escheat to the state. The would-have-been heirs will still retain some advantages (likely had better schooling, healthcare when under their parent's care etc.) but will have to "make their own way" as does everyone else -- thereby avoiding the creation of a permanent elite based on wealth.


I more or less loathe this form of taxation myself.

[Furunculus]

I believe that the classic counter to that is that:

You, not your "heirs" have a personal ownership/have earned those monies and been taxed on same. The state is taxing the "income" the inheritance represents to your heirs.

Others go further, arguing that the accumulation of wealth across multiple generations is directly counterproductive to a healthy society in that it leads to an entrenched elite who can be expected to pursue their own advantage at the expense of those less privileged. This sub-set believes that, upon death, all wealth (or at least most of it) should escheat to the state. The would-have-been heirs will still retain some advantages (likely had better schooling, healthcare when under their parent's care etc.) but will have to "make their own way" as does everyone else -- thereby avoiding the creation of a permanent elite based on wealth.


I more or less loathe this form of taxation myself.

i don't have any truck with either of those arguments.

the money has already been taxed, and i reject any notion that what i have is an impediement to someone else experiencing a harmonious society. people who worry too much about what other people have, and whose solution to this angst is to find a mechanism to remove it from them, are deeply flawed individuals who would make everyones life better if spent their energy enjoying their own instead.

i too loath this on principle, and i don't come from a wealthy family, or expect to see any sizable inheritence.

[drone]

The best known way of redistributing inherited wealth is to wait a few generations. If a family's wealth can survive 3 or 4 generational transitions, they are doing something right and shouldn't be punished.

[Myrddraal]

You misunderstand me Beskar, the two points were completely separate. I wan't trying to imply that a lot of people are affected by inheritance tax.

My first point was that inheritance tax is some form of wealth tax. I'm addressing people saying "we don't really do wealth tax in the UK". Of course there's also council tax.

The second point was about wealth taxes in general, and how I find them to be unfair compared to income or consumption based taxes.

[Myrddraal]

the money has already been taxed

All money has been taxed at some point. The money you pay income tax on has already been taxed in the form of corporation tax, and VAT before that, and income tax before that etc etc. Money is often taxed when it changes hands, so the idea that 'the money has already been taxed' isn't very meaningful.

[Slyspy]

The multiple tax problem is one of the criticisms levelled at VAT. Especially for pensioners who were taxed on their income, are taxed on their pension and are continually taxed on their spending.

[gaelic cowboy]

I think you would be surprised. A lot of family farms get lost from inheritence tax, when property values nearby go up. The appraised value of the land pushes them over the estate tax limit, even if the family is just getting by as is. They are left with no choice but to sell the land to developers to pay the tax.

Thats not true a farm of land in US will be exempt up to 2million dollars, with an average price per acre of 1000 dollars thats 2000 acre. If we consider machinery, sheds an the family house as included you could still end up with a 1000 acres, thats a fair size farm thats is exempt from tax even for America.

And at the minute I believe the rate is being changed and could go as high as 5 million but don't quote me on that.

Far as I can see the Death Tax is a myth expounded by the very rich to cod ordinary people into thinking they might lose the farm.

[Philippus Flavius Homovallumus]

Thats not true a farm of land in US will be exempt up to 2million dollars, with an average price per acre of 1000 dollars thats 2000 acre. If we consider machinery, sheds an the family house as included you could still end up with a 1000 acres, thats a fair size farm thats is exempt from tax even for America.

And at the minute I believe the rate is being changed and could go as high as 5 million but don't quote me on that.

Far as I can see the Death Tax is a myth expounded by the very rich to cod ordinary people into thinking they might lose the farm.

Still happens in the UK though, so the principle is bad. In my view, if a tax needs multiple exemptions to work you just need a new kind of tax.

[Seamus Fermanagh]

Thats not true a farm of land in US will be exempt up to 2million dollars, with an average price per acre of 1000 dollars thats 2000 acre. If we consider machinery, sheds an the family house as included you could still end up with a 1000 acres, thats a fair size farm thats is exempt from tax even for America.

And at the minute I believe the rate is being changed and could go as high as 5 million but don't quote me on that.

Far as I can see the Death Tax is a myth expounded by the very rich to cod ordinary people into thinking they might lose the farm.

For the most part, the only land you can purchase at $1k/acre is undeveloped land. Land that has been developed/farmed is much more expensive. A single large combine can cost $150k or more by itself. The problem Drone points to is still very real, despite the laws attempting to minimize the loss of family farms. The key issue isn't that the inheritance tax forces the sale of the farm directly, but that farmers rarely have the liquidity needed to handle the payment of the tax without sale of land or heavy equipment. Further, to sell part but not all of the property requires county permission to "break up the lot" etc. The answer is life insurance in an amount sufficient to offset the projected inheritance tax -- but most people don't have the life insurance they need, farmers included.

[Beskar]

But Farms can be turned into Family firms, can't they?

So hypothetically, they can be exempt as they are a buisness which just gets passed down the family.

[gaelic cowboy]

I have done a bit more checking an that 1000 mark is prob including undeveloped and developed as an average so yes prob closer to 3000 average per acre. According to your own USDA my earlier assertion using two million is incorrect and it's actually 3.5 million dollars exempt.

Sorry for the mistake gentlemen

However farm size in America as elsewhere is being squeezed into the small niche end or the large scale factory style farm this tends to skew an average size family farm to the smaller end in a list. The real average size of a working farm and thats not including the smaller less productive farms is prob round 2000 to 2500 acres, not exactly small is it.

Land prices range naturally so we could be talking 4000-4500 an acre in Iowa while in Virginia it is quite similar prob due to greater potential for urban development.

The average income is around 70,000 to 80000 dollars but that is including the smaller farms I don't have a break down on that one, passing on a farm of that size will never reach the limit in a 100 years


A combine would not be valued at a factory price in an inheritance situation cos it will have depreciated massively, and anyway it would be a business asset and likely come under different rules.

The real people who lose out here are very large scale factory style farms that are run more like a wall street company than old Granpa Joe's cattle ranch and even still thats a small amount of farms.

Trust me the estate tax is a non issue but it makes good copy on telly especially in the major farming states. This really only became an issue because of the property boom, land went for silly money but that as we all know is gone now.

[gaelic cowboy]

But Farms can be turned into Family firms, can't they?

So hypothetically, they can be exempt as they are a buisness which just gets passed down the family.

The machinery is counted as an business asset in UK but the land is the farm plus the shed and maybe family house too for UK.

Thats cos the farmer could use the machinery to earn off farm income ie bale hay or silage for the nearby farms. As a result machinery is counted as a business asset which is a sensible way to do it really. If he does not earn off farm income via contracting he can still use the machinery to mitigate his tax through investment and depreciation of said equipment etc etc.

[Beskar]

Conservatives cut Bobbies on the Beat
http://news.bbc.co.uk/1/hi/uk/10442823.stm


So much for that age old campaign of them always wanting more.

[Furunculus]

All money has been taxed at some point. The money you pay income tax on has already been taxed in the form of corporation tax, and VAT before that, and income tax before that etc etc. Money is often taxed when it changes hands, so the idea that 'the money has already been taxed' isn't very meaningful.

it is when it is my money, or my families money. there is nothing good about inheritence tax.