Skip to main content

Should Singapore adopt a wealth tax

There was a piece in Todayonline by former AO, and current academic, Donald Low, which suggests that it may be time for Singapore to consider implementing a wealth tax.

As I understand it, wealth tax may include taxes on capital gains, dividend income, and/or inheritance.

Such a wealth tax, if applied, would surely adversely affect a significant fraction of the FIRE community, many of whom rely on dividend income as the primary pillar of their FIRE plan.

I must say I do not quite understand the rationale for such a tax. The primary goal of such a tax appears to be purely borne of a desire for contrived wealth redistribution, which unduly punishes the owners of capital.

It is as if the word "capital" itself has acquired a dirty, unsavory connotation, which people associate with "sloth", and "undeserving".  People tend to forget how owners of capital came to be in the first place.

Barring a healthy inheritance, I would argue that most members of the FIRE community came into substantial amounts of capital through a combination of:

hard work (to increase earned income),
thrift (to reduce expenses),
prudence (to increase savings) and
meticulous planning (to craft an investment portfolio).

To penalize one for possessing these attributes seems self-evidently absurd.

Furthermore, their source of accumulated capital is primarily from active earned income, which is already subject to income tax.  Indeed, the individual looking to achieve FIRE is often a high income earner, which means he/she already pays a disproportionately high amount of income tax relative to the average taxpayer.  Therefore, to even imply that it is "unfair" that capital is not taxed requires a feat of mental gymnastics and a blatant disregard of reality. 

Additionally, persons who derive income from capital in retirement are also the demographic least likely to require Government aid, whether in the form of GST vouchers, CHAS subsidies or CPF top-ups.  If anything, we should be encouraging more Singaporeans to delay gratification and accumulate capital, to lessen the burden on future taxpayers  (i.e., your kids and grandkids).

In the words of a particularly cringey  NTUC Income video ad, the best gift for your child is your own retirement plan.  Indeed, we should be incentivising behavior that promotes self-reliance and financial independence in old age.  A wealth tax achieves the exact opposite.

Not to mention, our Government is clearly not in need of revenue, having declared years and years of surpluses without including land sales revenue. Incidentally, it is interesting to note that the G is able to continually operate with surpluses because of the NIRC - income derived from capital held by Temasek/GIC.  Let's not make capital a dirty word.

















Comments

  1. Adopting a wealth tax is not all a good idea. I agree to what you have said it here - To penalize one for possessing these attributes seems self-evidently absurd. Very true!!

    ReplyDelete
  2. Donald Low who is based in Hong Kong should spend his time writing about how the HK Government has turned a blind eye to the plight of the HK People, and let the poor live in cage houses or small apartments not fit to fit mickey mice into. I now pity the HK people, and Donald Low should focus his attention there - or does he only write about problems in countries he does not reside in?

    ReplyDelete
  3. Super blog! It's informative & knowledgeable regarding income tax
    income tax singapore





    ReplyDelete
  4. Thank you for making this astounding article, informative and knowledgeable!! We have so much to learn from this. Anyway, If you are interested and looking for
    blind singaporeyou may visit our website. You can also check our available services to offer. Thank you and More power!!

    ReplyDelete
  5. This comment has been removed by a blog administrator.

    ReplyDelete

Post a Comment

Popular posts from this blog

Smoke, mirrors, bungalows and mistresses

People care way too much about a couple of colleagues fucking each other. The only people who should care this much are the aggrieved spouses and the family members who were hurt and embarrassed.  If you are not one of them, then shut the fuck up already. Who cares? The fact that they fucked or are still fucking doesn't affect you in the least bit. So quit the vomit-inducing moralizing.  But do you know what is detrimental to you, the hardworking taxpayer slogging 10-14 hours a day to make ends meet? 1)      That the Government apparently provides a special class of rental properties, one in which only a TINY TINY group of people may afford, in particular, those who can comfortably pay >20k a month in rent. Suffice to say, a real tiny and privileged bunch including people like, say, K Shanmugam and Vivian Balakrishnan. 2)      That the Government is happy to willy-nilly spend close to half a million tax dollars to make these properties "habitable".  Imagine renting out

As a Dividend Investor - I am having fun staying poor

Recently, there was a self-styled "master" who went around dissing dividend investing, saying things like REITS will chibaboom (his words not mine). Ironically, the master also invested into "growth stocks" like BABA and notably SE before its recent implosion.  Masterstrokes indeed. Dividend/income investors have borne the brunt of "have fun staying poor" taunts since the dawn of time.  Previously from the crypto bros and then from the growth investors. This is nothing new.  Every growth investor likes to talk about Tesla. But where are the ARK ETF investors? Where are the NIO bulls? Where are the BABA fanatics? Even a broken clock is right twice a day.   Good luck to those who retired on a portfolio of "growth stocks", hoping to spend 4% annually on an expected annualized portfolio growth rate of 10%.  Without dividends, one would have no choice but to liquidate part of the portfolio for meeting expenditures.  The damage done might never be reco

Is it finally the end of the tunnel for REITs

General Mood Market is expecting interest rates to hold after US CPI data came out on 14 November and pointed to softening prices across the board. Oil has also retreated nearly 20% since its recent peak in Sep 2023.  Are we finally reaching the end of the tunnel for battered REIT assets?  My gut tells me that we are at early stages of recovery although we may possibly still see a couple more rate hikes in 2024.  Nonetheless, barring further escalation of global military conflicts and an unmitigated collapse of the Chinese housing market, both of which seem unlikely but can never be completely ruled out, we may start to see a gradual recovery in DPU for REITs (as rental reversions go up but interest expenses stay constant or go down).    What I did in 2023 (Not to be construed as recommendations or investment advice.) Throughout 2023, I have continued to load up on REITs which (i feel) have:      i. Good sponsors (Capland, Frasers, Maple family)      ii. Comparatively lower gearing (be