Balance: Jeremy Corbyn's tax return

Fretwired

quarky said:

No, I am not talking about high-rate tax payers, but people with (say) £50m+ of assets, either in their names, or the names of their owned companies. I am sure they can afford to pay a little more tax, and I would hope that if aliens visited, they would be fairly quick to point out the ridiculousness of it given the bigger picture.

It doesn't mean they have lots of cash though .. how do you tax someone who is worth £50 million because he owns a company? He may take a modest salary .. the company will pay corporation tax, VAT and NI and will employ people.

Taxing assets only works if people are cash rich.

digitalscream

quarky said:

No, I am not talking about high-rate tax payers, but people with (say) £50m+ of assets, either in their names, or the names of their owned companies. I am sure they can afford to pay a little more tax, and I would hope that if aliens visited, they would be fairly quick to point out the ridiculousness of it given the bigger picture.

As noted - they already shoulder an incredibly disproportionate amount of the tax bill. How much would you propose to increase their tax liability, relative to the amount that would make them sod off somewhere else? You have to remember that the people you're talking about have lots of options in terms of uprooting themselves than the rest of us do.

It's reasonably likely that, in doing so, the country stands to lose a hell of a lot more than it could possibly gain from such an endeavour. And that's only from a personal financial perspective; what about all the companies they own and invest in? The knock-on effect on their employees could be catastrophic.

quarky

Fretwired said:

It doesn't mean they have lots of cash though .. how do you tax someone who is worth £50 million because he owns a company? He may take a modest salary .. the company will pay corporation tax, VAT and NI and will employ people.

Taxing assets only works if people are cash rich.

The problem with only taxing people if they are cash rich is that they just get rid of (or hide) their cash.

digitalscream said:

It's reasonably likely that, in doing so, the country stands to lose a hell of a lot more than it could possibly gain from such an endeavour.

Well, it can't happen in one country, it would need to be an agreement across most/all to be effective.

digitalscream

quarky said:

digitalscream said:

It's reasonably likely that, in doing so, the country stands to lose a hell of a lot more than it could possibly gain from such an endeavour.

Well, it can't happen in one country, it would need to be an agreement across most/all to be effective.

That would involve harmonising tax bands and income levels across all countries, across the entire world.

I think we'll file it under "fairy tales"

Seriously, that's not even close to being possible without a single world currency, which is itself unlikely to happen within our lifetimes (or, indeed, our great-grandchildrens' lifetimes).

Even if that could be done, all it would take is for one country to say, "Nah, we like rich people, so we don't want to tax them as much" and they'd instantly become the richest, most prosperous nation on earth, and thus control most of the world's money supply while all the other countries wonder why they can't afford for their citizens to eat any more.

Sambostar

CabbageCat said:

If I were an alien looking at this system I think I would question why attitude of the bottomies towards the toppies is one of hostility when gratitude would seem to be most logical.

In an ideal world that is true, but in reality the working bottomies are busting their balls and backs for peanuts, they don't get to live to 93 nor do they get to take early retirement and usually end the last of their days in constant pain living in the damp unable to afford to heat the place. The local Surgery can't even attract a GP for £90k.  The sheer amount of complicit and flamboyant greed these days and guilt free acceptance of a parallel low wage economy when people cannot afford even the basics is staggering. 

Of course if you wanted to have all kids have an equal chance you would ban inheritances and send them all to the same school but thsat will never happen because it's communism.

Fretwired

quarky said:

Fretwired said:

It doesn't mean they have lots of cash though .. how do you tax someone who is worth £50 million because he owns a company? He may take a modest salary .. the company will pay corporation tax, VAT and NI and will employ people.

Taxing assets only works if people are cash rich.

The problem with only taxing people if they are cash rich is that they just get rid of (or hide) their cash.

@quarky So how would you do it.

Man owns company worth £50 million - pays himself £100K and takes a small dividend (all tax legally paid)

His company makes a profit and pays corporation tax, VAT and NI. His employees pay tax so overall the guy is providing tax and employment so isn't a parasite.

What are you going to tax and how?

capo4th

What gets me is that people just expect things to land in their lap be it money education or lifestyle.

Life is mostly about the choices you make some you win some you lose. 

Too many people in this country expect a free ride.

scrumhalf

Before you start arguing about who and what gets taxed you have to decide what you want the tax system to do.

If you want to maximise tax yields to pay for certain things then you take one approach. If you want to attempt some sort of wealth distribution you take another approach.

Either way, you will alienate a lot of people.

capo4th

i would like to minimise the tax revenue that is wasted on Jonny Foreigner.

Chalky

My parents were the equivalent of today's minimum wage workers and my Dad worked 7 days per week for many years. I started working in my mid-teens and have worked for every penny. I now earn a few times the average wage and pay a chunk of tax every year.

Am I a bad person? Would I be a morally better person if I worked less, earned less, paid less tax, and had less money?

Cos some make it sound like the answer is yes.

quarky

digitalscream said:

I think we'll file it under "fairy tales"

Yes, I agree, but we have talked about aliens in this thread too

Fretwired said:

quarky said:

Fretwired said:

It doesn't mean they have lots of cash though .. how do you tax someone who is worth £50 million because he owns a company? He may take a modest salary .. the company will pay corporation tax, VAT and NI and will employ people.

Taxing assets only works if people are cash rich.

The problem with only taxing people if they are cash rich is that they just get rid of (or hide) their cash.

@quarky So how would you do it.

Man owns company worth £50 million - pays himself £100K and takes a small dividend (all tax legally paid)

His company makes a profit and pays corporation tax, VAT and NI. His employees pay tax so overall the guy is providing tax and employment so isn't a parasite.

What are you going to tax and how?

Firstly, I don't know. I am no expert, but if if someone can create a £50m company in a few years, I have no doubt they could find it. How about a 1% tax on the increase in the value of his assets during 12 months? So lets say his company is worth £50m. Most investments generate a return of 6% over the past hundred years or so, especially at that size, so, he should be expecting his asset base to be increasing by £3m/year. Lets say, he pays 30% in various taxes, so he is left with just over £2.1m. An additional 1% tax on his net asset increase (so his investment returns 5%, plus 1% for the tax man) means that he receives net about £1.6m, and a further £500,000 is payable in tax.

That would make a massive difference to tax receipts while allowing Mr £50m to still get a very good return on his investment (5% rather than 6%). Of course it is possible that his company is not growing that fast, in which case the numbers will be lower, but people with money generally don't keep their money without being very smart and taking good advise, which allows them to get good returns.

Fretwired

quarky said:

digitalscream said:

I think we'll file it under "fairy tales"

Yes, I agree, but we have talked about aliens in this thread too

Fretwired said:

quarky said:

Fretwired said:

It doesn't mean they have lots of cash though .. how do you tax someone who is worth £50 million because he owns a company? He may take a modest salary .. the company will pay corporation tax, VAT and NI and will employ people.

Taxing assets only works if people are cash rich.

The problem with only taxing people if they are cash rich is that they just get rid of (or hide) their cash.

@quarky So how would you do it.

Man owns company worth £50 million - pays himself £100K and takes a small dividend (all tax legally paid)

His company makes a profit and pays corporation tax, VAT and NI. His employees pay tax so overall the guy is providing tax and employment so isn't a parasite.

What are you going to tax and how?

Firstly, I don't know. I am no expert, but if if someone can create a £50m company in a few years, I have no doubt they could find it. How about a 1% tax on the increase in the value of his assets during 12 months? So lets say his company is worth £50m. Most investments generate a return of 6% over the past hundred years or so, especially at that size, so, he should be expecting his asset base to be increasing by £3m/year. Lets say, he pays 30% in various taxes, so he is left with just over £2.1m. An additional 1% tax on his net asset increase (so his investment returns 5%, plus 1% for the tax man) means that he receives net about £1.6m, and a further £500,000 is payable in tax.

That would make a massive difference to tax receipts while allowing Mr £50m to still get a very good return on his investment (5% rather than 6%). Of course it is possible that his company is not growing that fast, in which case the numbers will be lower, but people with money generally don't keep their money without being very smart and taking good advise, which allows them to get good returns.

In my example the owner takes a salary and dividends and pays tax on them. His company has a value but unless he starts selling his shares he can't release any cash. Owning a £50 million company is a red herring (in reality no one person would own such a venture) - at some point it might be sold at which point the owners will pay loads of tax. I know people with businesses worth £5+ million - they live in decent houses, but not mansions, and drive nice cars (mostly company cars on which they pay tax) but they're not cash rich in the sense of having the odd million in the bank. They probably have a decent salary on which they pay tax, take dividends as they are tax effective and have a decent company pension.

How about I come round and value your guitar collection and then tax you 10% on it? You own assets but my tax computation won't take into whether you can pay it.

quarky

Fretwired said:

In my example the owner takes a salary and dividends and pays tax on them. His company has a value but unless he starts selling his shares he can't release any cash. Owning a £50 million company is a red herring (in reality no one person would own such a venture) - at some point it might be sold at which point the owners will pay loads of tax. I know people with businesses worth £5+ million - they live in decent houses, but not mansions, and drive nice cars (mostly company cars on which they pay tax) but they're not cash rich in the sense of having the odd million in the bank. They probably have a decent salary on which they pay tax, take dividends as they are tax effective and have a decent company pension.

How about I come round and value your guitar collection and then tax you 10% on it? You own assets but my tax computation won't take into whether you can pay it.

Well, it is hypothetical, but assets tend to generate a return, otherwise the smart investor moves his money elsewhere. As I explained, the tax is on that growth. If there is no growth of capital, there is no tax to pay. And it isn't about a 50m company, it is about 50m in assets, regardless of where/what they are. And we are talking an order of magnitude difference between 50m and 5m. By the same token, I know plenty of people with assets of 500k, and they live nothing like those on 5m.

The point is, if you only tax on cash, people will move/hide cash. Human nature and I don't blame anyone for that.

It wouldn't a tax on 10% of my guitar estate, it would be a tax on 1% on the return on all my assets (as outlined in my earlier post). I would be fine with that if the government introduced that as a policy. Obviously I think it should be on wealth over a certain amount (£5m is a good start, and historically tax was targeted at the rich), but if someone considered my rich, as long as we all pay our share, fine. It would be worth it for the good of the economy I think. My shares did bugger all last year so it would probably wipe out most of the profit on that, but there would be the increase in value on my house, and for most other years, there would be a profit on the shares.

digitalscream

quarky said:

Fretwired said:

In my example the owner takes a salary and dividends and pays tax on them. His company has a value but unless he starts selling his shares he can't release any cash. Owning a £50 million company is a red herring (in reality no one person would own such a venture) - at some point it might be sold at which point the owners will pay loads of tax. I know people with businesses worth £5+ million - they live in decent houses, but not mansions, and drive nice cars (mostly company cars on which they pay tax) but they're not cash rich in the sense of having the odd million in the bank. They probably have a decent salary on which they pay tax, take dividends as they are tax effective and have a decent company pension.

How about I come round and value your guitar collection and then tax you 10% on it? You own assets but my tax computation won't take into whether you can pay it.

Well, it is hypothetical, but assets tend to generate a return, otherwise the smart investor moves his money elsewhere. As I explained, the tax is on that growth. If there is no growth of capital, there is no tax to pay. And it isn't about a 50m company, it is about 50m in assets, regardless of where/what they are. And we are talking an order of magnitude difference between 50m and 5m. By the same token, I know plenty of people with assets of 500k, and they live nothing like those on 5m.

The point is, if you only tax on cash, people will move/hide cash. Human nature and I don't blame anyone for that.

It wouldn't a tax on 10% of my guitar estate, it would be a tax on 1% on the return on all my assets (as outlined in my earlier post). I would be fine with that if the government introduced that as a policy. Obviously I think it should be on wealth over a certain amount (£5m is a good start, and historically tax was targeted at the rich), but if someone considered my rich, as long as we all pay our share, fine. It would be worth it for the good of the economy I think. My shares did bugger all last year so it would probably wipe out most of the profit on that, but there would be the increase in value on my house, and for most other years, there would be a profit on the shares.

Taxing people based on the increasing value of their assets is completely nonsensical.

Consider the case of somebody who owns a house worth £300k. They can just about keep their heads above water, so have no savings and thus no cash. A couple of years go by in a housing boom, and their house is now worth £400k - so their tax goes up, despite having no extra money to pay it. Tax pushes them into debt.

Similarly in your example - company worth £50m, owner gets taxed on that £50m despite doing the "morally right" thing and only taking a modest salary and dividend from it totalling around £100k. His tax bill is five times his salary, so he has to give himself a massive pay rise just to pay it (plus the income tax on the increase, of course), so ends up paying himself almost £1m for the year just to pay the tax man.

Of course, he's now a fat cat, and gets pilloried for his massively indulgent self-raise, despite the fact that, in terms of his personal finances, he's no better off than he was before (and his company is significantly worse off).

Man decides it's not really worth it, moves all of his manufacturing to China and goes to live in France where people are a lot more sensible about the whole tax thing, the weather's nicer, the food's better and the houses are cheaper. 

His employees are out of work, HMRC have lost all the tax on that £50m company and the income from his £100k salary (as well as all his employees' income tax and the benefit bill now they're all out of work). He can still sell to his customers in the UK with almost no additional hassle though, 'cos we're still in the EU, so the business continues with even lower overheads and he makes even more money.

That seems...rather silly.

quarky

digitalscream said:

Taxing people based on the increasing value of their assets is completely nonsensical.

Consider the case of somebody who owns a house worth £300k. They can just about keep their heads above water, so have no savings and thus no cash. A couple of years go by in a housing boom, and their house is now worth £400k - so their tax goes up, despite having no extra money to pay it. Tax pushes them into debt.

I don't think that is correct. As I said, I would apply it to people with 5m+, but going with your example, lets say the £300k house goes up even 10% in a year, that is an increase of £30,000, and a tax liability of £3,000 (still only the 1% of the increase), leaving £27k profit for the owner. How much does a house worth £300k generate in rent? £18k? Why is that not enough to cover the £3k?

Similarly in your example - company worth £50m, owner gets taxed on that £50m despite doing the "morally right" thing and only taking a modest salary and dividend from it totalling around £100k. His tax bill is five times his salary, so he has to give himself a massive pay rise just to pay it (plus the income tax on the increase, of course), so ends up paying himself almost £1m for the year just to pay the tax man.

Of course, he's now a fat cat, and gets pilloried for his massively indulgent self-raise, despite the fact that, in terms of his personal finances, he's no better off than he was before (and his company is significantly worse off).

No, because he doesn't need to hide his wealth away inside a company. Again, like the house, the £50m should generate a return. If the company hasn't gone up in value, it was a poor investment so nothing to pay on that. If the company has gone up in value, then that increase in value comes in either fixtures, stock, investments, cash, whatever. A fraction of that can easily be converted to cash.

Man decides it's not really worth it, moves all of his manufacturing to China and goes to live in France where people are a lot more sensible about the whole tax thing, the weather's nicer, the food's better and the houses are cheaper. 

I work for a French company, I don't buy that for a second But yes, I understand your point, but people do work in France despite higher taxes. People do run companies in France despite higher taxes.

His employees are out of work, HMRC have lost all the tax on that £50m company and the income from his £100k salary (as well as all his employees' income tax and the benefit bill now they're all out of work). He can still sell to his customers in the UK with almost no additional hassle though, 'cos we're still in the EU, so the business continues with even lower overheads and he makes even more money.

That seems...rather silly.

Only because I am not sure you understood it.

quarky

Don't forget that you are highlighting a very peculiar set of circumstances, as has been said various times above. A more realistic scenario (as I alluded to) is that someone owns part of a company and the ROI to him is generated via dividends or whatever. Even for someone with a BTL, the increase in his wealth is not just the capital, but the rent during that time.

Just like you, me, or Warren Buffet.

digitalscream

quarky said:

digitalscream said:

Taxing people based on the increasing value of their assets is completely nonsensical.

Consider the case of somebody who owns a house worth £300k. They can just about keep their heads above water, so have no savings and thus no cash. A couple of years go by in a housing boom, and their house is now worth £400k - so their tax goes up, despite having no extra money to pay it. Tax pushes them into debt.

I don't think that is correct. As I said, I would apply it to people with 5m+, but going with your example, lets say the £300k house goes up even 10% in a year, that is an increase of £30,000, and a tax liability of £3,000 (still only the 1% of the increase), leaving £27k profit for the owner. How much does a house worth £300k generate in rent? £18k? Why is that not enough to cover the £3k?

They're living in the house. It's not generating cash for them - they're still earning their salaries and paying the mortgage, so they have an increased tax burden despite having no extra cash coming in. Where does that money come from? Do they have to constantly remortgage their house in order to pay the tax?

quarky said:

Similarly in your example - company worth £50m, owner gets taxed on that £50m despite doing the "morally right" thing and only taking a modest salary and dividend from it totalling around £100k. His tax bill is five times his salary, so he has to give himself a massive pay rise just to pay it (plus the income tax on the increase, of course), so ends up paying himself almost £1m for the year just to pay the tax man.

Of course, he's now a fat cat, and gets pilloried for his massively indulgent self-raise, despite the fact that, in terms of his personal finances, he's no better off than he was before (and his company is significantly worse off).

No, because he doesn't need to hide his wealth away inside a company. Again, like the house, the £50m should generate a return. If the company hasn't gone up in value, it was a poor investment so nothing to pay on that. If the company has gone up in value, then that increase in value comes in either fixtures, stock, investments, cash, whatever. A fraction of that can easily be converted to cash.

He's not hiding his wealth - for the good of the company, and because people bitch and moan about CEOs with big salaries, he only takes a £100k salary. That's all the money he has, that's the return he gets personally. The company has cash, but he can't legally just take money from it whenever he pleases.

Even if, as is often the case, he gets the notional return in stock - that's still not money he can pay the tax man with. It's an asset, not cash.

So...what you're proposing is that he has to sell his assets - the shares - in order to pay the tax on something he's already paid the tax on by way of owning the company in the first place. Do you see the madness of that? He has to sell the thing he owns in order to pay the tax he owes by owning that thing in the first place...despite having done the "morally right" thing of not raping his company for his own benefit.

In fact, if sodding off abroad isn't on the cards, he'd actually be better off scragging every bit of cash he can from the company. His tax burden wouldn't be any bigger, but at least he can live like a king.

That's why taxing people on things they own is ridiculous.

quarky

digitalscream said:

quarky said:

I don't think that is correct. As I said, I would apply it to people with 5m+, but going with your example, lets say the £300k house goes up even 10% in a year, that is an increase of £30,000, and a tax liability of £3,000 (still only the 1% of the increase), leaving £27k profit for the owner. How much does a house worth £300k generate in rent? £18k? Why is that not enough to cover the £3k?

They're living in the house. It's not generating cash for them - they're still earning their salaries and paying the mortgage, so they have an increased tax burden despite having no extra cash coming in. Where does that money come from? Do they have to constantly remortgage their house in order to pay the tax?

OK, two things. If they are living in it, it is generating wealth. If they didn't own it, they would be paying the rent, so it is generating cash, which is equal to what they would be paying in rent. You could say that they cancel each other out, but that is considering the net result, not the economics. Secondly, if they are mortgaged to the hilt, they don't own it, they only own the equity. So if they own 10%, the tax on the 10% increase is £300, not £3000. I struggle to think that someone could or would buy a £300k house and struggle to find £300, and if they have invested so badly, the rest of us shouldn't be carrying that risk for them.

quarky said:

Similarly in your example - company worth £50m, owner gets taxed on that £50m despite doing the "morally right" thing and only taking a modest salary and dividend from it totalling around £100k. His tax bill is five times his salary, so he has to give himself a massive pay rise just to pay it (plus the income tax on the increase, of course), so ends up paying himself almost £1m for the year just to pay the tax man.

Of course, he's now a fat cat, and gets pilloried for his massively indulgent self-raise, despite the fact that, in terms of his personal finances, he's no better off than he was before (and his company is significantly worse off).

No, because he doesn't need to hide his wealth away inside a company. Again, like the house, the £50m should generate a return. If the company hasn't gone up in value, it was a poor investment so nothing to pay on that. If the company has gone up in value, then that increase in value comes in either fixtures, stock, investments, cash, whatever. A fraction of that can easily be converted to cash.

He's not hiding his wealth - for the good of the company, and because people bitch and moan about CEOs with big salaries, he only takes a £100k salary. That's all the money he has, that's the return he gets personally. The company has cash, but he can't legally just take money from it whenever he pleases.

Even if, as is often the case, he gets the notional return in stock - that's still not money he can pay the tax man with. It's an asset, not cash.

So...what you're proposing is that he has to sell his assets - the shares - in order to pay the tax on something he's already paid the tax on by way of owning the company in the first place. Do you see the madness of that? He has to sell the thing he owns in order to pay the tax he owes by owning that thing in the first place.

That's why taxing people on things they own is ridiculous.

But he is not just CEO, he is the owner. His role at the company isn't the issue. He owns an asset of 5m, and that generates a return. He should have to pay a tax on some of that return on investment. If he owns the company, he can give as a dividend or whatever.

Again, it isn't really ridiculous, but you are attempting to build a false dilemma without really understanding it I think (with all respect ). Or perhaps I am not explaining quite as well as I should. As I said in this (or another thread), it isn't my idea, it is Pikettys, and I happen to think it is a good one, and not as unworkable as you indiciate.

It took 50+ years of arguing before people would accept income tax too.

digitalscream

quarky said:

digitalscream said:

quarky said:

I don't think that is correct. As I said, I would apply it to people with 5m+, but going with your example, lets say the £300k house goes up even 10% in a year, that is an increase of £30,000, and a tax liability of £3,000 (still only the 1% of the increase), leaving £27k profit for the owner. How much does a house worth £300k generate in rent? £18k? Why is that not enough to cover the £3k?

They're living in the house. It's not generating cash for them - they're still earning their salaries and paying the mortgage, so they have an increased tax burden despite having no extra cash coming in. Where does that money come from? Do they have to constantly remortgage their house in order to pay the tax?

OK, two things. If they are living in it, it is generating wealth. If they didn't own it, they would be paying the rent, so it is generating cash, which is equal to what they would be paying in rent. You could say that they cancel each other out, but that is considering the net result, not the economics. Secondly, if they are mortgaged to the hilt, they don't own it, they only own the equity. So if they own 10%, the tax on the 10% increase is £300, not £3000. I struggle to think that someone could or would buy a £300k house and struggle to find £300, and if they have invested so badly, the rest of us shouldn't be carrying that risk for them.

How on earth is living in a house generating wealth? We already know that house price increases are basically a fake bubble - there isn't any money in it at all until it's sold and turned into cash (which you then pay tax on). If you don't do that, then no extra wealth has ever been generated, but you seem to expect that tax be paid on it anyway.

Also, when you buy a house with a mortgage, you are the owner; the bank doesn't own the house, regardless of how inconvenient it is for your argument. The bank can take the house if you don't pay them, but they never have ownership of the house until that point.

Honestly, it's getting late and I can't really be arsed, but safe to say four things:

1 - I understand what you're saying just fine.

2 - The concept of paying tax because you own something isn't just mad because of the examples we've had here; it's mad because you end up paying more in tax on something that you own long-term than you ever could by buying it in the first place.

3 - As soon as you decide to make special rules to take even more from a certain demographic of people, those people will disappear. Especially when they're the ones with the most means to do so.

4 - Taxing based on assets is the ultimate "special rule", because it goes against the entire foundation of the tax system.

tabbycat

digitalscream said:

How on earth is living in a house generating wealth? We already know that house price increases are basically a fake bubble - there isn't any money in it at all until it's sold and turned into cash (which you then pay tax on). If you don't do that, then no extra wealth has ever been generated, but you seem to expect that tax be paid on it anyway.

Also, when you buy a house with a mortgage, you are the owner; the bank doesn't own the house, regardless of how inconvenient it is for your argument. The bank can take the house if you don't pay them, but they never have ownership of the house until that point.

Honestly, it's getting late and I can't really be arsed, but safe to say four things:

1 - I understand what you're saying just fine.

2 - The concept of paying tax because you own something isn't just mad because of the examples we've had here; it's mad because you end up paying more in tax on something that you own long-term than you ever could by buying it in the first place.

3 - As soon as you decide to make special rules to take even more from a certain demographic of people, those people will disappear. Especially when they're the ones with the most means to do so.

4 - Taxing based on assets is the ultimate "special rule", because it goes against the entire foundation of the tax system.

re: How on earth is living in a house generating wealth?

example:

two 21 year olds leave uni and start work.

the first has access to a cash lump sum (gift, inheritance, trust fund, etc) which enables them to put a deposit down on a house and begin paying off a mortgage.

alternatively they may have the opportunity to move back home and live rent free, which enables them to quickly save a deposit as they are relieved of their greatest weekly outgoing.

the second has no access to a cash lump sum, or opportunity to live rent free, and enters into the rented sector. they try to save a deposit but, as house price growth and rent increases dramatically outstrip wage growth, the deposit required increases and the amount the person is able to save towards a deposit decreases.

the mortgage and rent payments start out about the same, but soon rent payments start to rise relative to the mortgage payments as they stay pegged to inflation, while the mortgage payments, in relative terms, do not rise but decrease in real relative terms.

after 25 years the first student receives 25 years worth of accommodation plus a house, often (uk) worth many times the original price they paid for it.

after 25 years the second student receives 25 years worth of accommodation only.

how on earth is living in a house not generating wealth?

each year a mortgage-payer is paying off their mortgage they are effectively ‘earning’ 4% (1 year of 25 years) of the market value of that house, plus the full value 100% of any increase in value between starting and paying off the mortgage. this is often many times more than the 4%. compare house price values of 25 years ago to now.

re: 3 - As soon as you decide to make special rules to take even more from a certain demographic of people, those people will disappear. Especially when they're the ones with the most means to do so.

if they have benefitted handsomely, and continue to benefit, from that society in terms of health, education, employment opportunity, welfare system, stable social structure, legal system, infrastructure, etc, are yet feel no obligation to put something back in the pot (appropriate to their means) to support those who come after them, they are effectively parasites and welcome to leave. they should even be encouraged to do so.

the sooner the better.

two possible futures: choose one.