Dr Aaron Advani

speaker

49 appearances 1 recordings 1 series first heard Oct 2024 last heard Oct 2024

Dr Aaron Advani’s voice in public audio — every appearance, attributed to the second.

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More or Less · Do US crime statistics miss out the most violent cities? · 23 Oct 2024 podcast

But we don't do that.

You can also hang on to it if you're older and you think, actually, I don't need to sell this asset now.

You can hang on to it until you die.

And when it gets passed on to your heirs, the capital gains tax is wiped out.

And so those kinds of behaviours are really important and mean that we think that actually, if you increase the rate, there's quite a big, you know, in the jargon we call the behavioural response.

There are four big things that you'd want to change.

The first is the tax rate itself.

currently that tax rate is much lower as we described than income tax rates.

And that creates one problem for growth, which is that people want to set up as individual businesses, not because they really want a fast growing business, but just because they get a lower tax rate for work they would otherwise be doing.

So you'd want to equalize that.

Alongside that, you want to recognize the fact that actually people are making real investments and putting real cash in in some cases.

And so in those cases, you want to give them an allowance to account for the fact that that cost of investment is actually a cost of borrowing to them.

So you'd want an investment allowance alongside that.

The third thing is that there's a gap that currently happens, a leak from capital gains tax that happens because you can hang on to an asset until you die.

And by doing that, the gain is completely wiped out.

There's no tax.

And that also affects your investment incentives as well.

So it has negative growth impacts.

So you'd want to get rid of that and remove what's called death uplift.

You'd tax capital gains, not at the point that somebody dies, but just at the point that the person who inherits the asset sells.

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