[Nodrog]

A wealth tax is probably the worst idea for a taxation scheme possible because people with a medium-large amount of assets will generally have the bulk of them in non-liquid form which makes paying the tax impossible unless they have a high sustainable (and increasing) level of income.

I mean lets say someone buys (or inherits!) a house valued at £1million. If you want to set wealth tax at 10% or so then hes going to be paying £100,000 a year for the rest of his life, which makes further earning, retirement or even taking a short term paycut, impossible.

Or what about the average person saving for retirement? If he makes £30000 a year or so, then when his savings exceed £100000 or so then hes going to be paying so much in tax relative to his income that he wont be able to live.

There is no fundamental connection between wealth (what youre being taxed on) and income (what youre using to pay the tax), so a wealth tax is completely unworkable. It would also mean theres no incentive whatsoever in having savings if you were to set the rate at more than 1-2% above inflation since you'd actually be losing money.



Also your basic income idea is surely just a method of inflating the currency, you could do it more directly and avoid the distribution costs of actualy giving out £5000 to everyone. It would be amusing watching the economy crash as soon as you announced you were implementing it though as all foreign investors dumped their currency holdings overnight.


edit: Regarding free-riding on publically created goods, we already have capital gains tax so youre attacking a problem which doesnt really exist anyway (except that your idea is far worse than CGT since if my house increased in value by £50000 over maybe 3 years and my salary didnt increase, I would presumably have to find £5000 a year out of nowhere in order to pay the increased wealth tax or sell the house, whereas CGT would only tax the liquid profit when/if I sold it).

it is designed to favour the intelligent from poor/lower-middle-class backgrounds

Actually no, it favours people who are going to remain poor their whole life. Someone who is intelligent/hardworking from a lower-middle-class background and has reasonable educational opportunities can most likely find a job where they are earning enough to be worse off under your system (or under any heavily progressive system really). Yeah, they might be better off for the first 5-10 years out of uni while they have very little assets, but as soon as they buy a house and have some savings theyll end up getting hammered. Plus if theyre unlucky enough to inherit anything non-liquid before they have the income required to pay the maintenance tax youre imposing, theyre probably screwed.

You cant have it both ways - if you have social mobility then those intelligent-but-lower-class people are eventually going to be earning enough to be hampered by a progressive system.

edit: Its also going to be easier for the really rich to tax dodge, since I would imagine that its simpler and less risky to hide overseas assets than it is to hide income.