Home—Blog—The real motive behind a mansion tax
Feb 19, 2013, 02:49
Posted byMerryn Somerset Webb
Comments (84)
Right. The mansion tax. Here we go again. You can read my previous blogs on this here. But a few points to add today.
The problem with our property market is not that people living in expensive houses are too rich and that this isn’t fair. It is that our property market is artificially supported by a host of government policies designed first to keep our banks’ bad debts on hold while they have a go at rebuilding their balance sheets, and second to allow every billionaire in the world to hedge their global bets by holding empty London properties for nothing but the cost of a cut-rate council tax.
Our house prices, as Hugo Rifkind points out in The Times today, are “a disease”. They infect everything, preventing people from starting their lives properly, constantly widening the gap between rich and poor, prompting huge welfare payouts in housing benefits and the like, and making us all commute for hours to get to work (I am writing this on my frequent four-hour train ride from Scotland to London).
We’ve always had this problem to a degree, but the credit-driven property bubble in the run up to 2008 drove it to new heights – heights from which our politicians are terrified to let it fall. A mansion tax will make no difference to any of this – “however much you tax a house worth £2m, your kids’ primary school teacher still isn’t getting a garden”, says Rifkind.
A government that devoted its energies to something other than preventing house prices falling in nominal terms (cutting the size of the state perhaps…) might.
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Regular readers will know that I have no particular problem with a property location tax. In fact, in isolation, I think it would be a wonderful thing. If we were dumping other taxes (such as the hideously distortionary income-tax system, for example) to put in place what is effectively a location tax (most people with houses over £2m have paid not for bricks and mortar but for the location of those bricks and mortar).
And if we were doing that because a location tax is efficient and fair, the mansion tax idea would be all well and good. But that isn’t the plan.
Instead, our idiot politicians want to put their mansion tax in on top of all our other wealth taxes (think capital gains tax, stamp duty and inheritance tax (IHT) for starters), and they want to do it, not to improve efficiency, but to show their voters that they hate 'rich' people more than all the other parties.
If you aren’t convinced that this is all about the battle to hit the rich, read this New Statesman blog which makes it clear that the whole idea is to produce a great unfairness “against this generation of the rich.” Pathetic really, isn’t it?
It seems to me – and you must be as bored of hearing it as I am of repeating it – that failing a total overhaul of our entire tax system to take account of the fact that income taxes are bad and location taxes are better, we should just recognise that windfall property gains are undertaxed by putting a capital gains tax on primary properties and be done with it. The (excellent) arguments for this are discussed here: Two steps towards solving the housing 'crisis'.
Published in Blog More articles by Merryn Somerset Webb
By Matthew Lynn, May 23, 2013
By Merryn Somerset Webb, May 21, 2013
By Matthew Lynn, May 17, 2013
May 16, 2013
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(19 February 2013, 03:54PM) Complain about this comment
Indeed. It's fairly clear that the politicians have the rough general sortof idea, that a tax on supernormal house price inflation makes sense from an economic and "fairness" point of view, but they have honed in on completely the wrong policy.As Healey discovered in the 70s when considering a Mansion Tax he couldn't get the sums to work (too complex and expensive to adminster).It really is somewhat depressing that the coalition isn't more radical on its taxation policies. Now surely is a good time to consider merging NI & income tax, getting rid of IHT & imposing CGT on first properties (with inflation adjustment) etc etc.
(19 February 2013, 03:56PM) Complain about this comment
"(I am writing this on my frequent four-hour train ride from Scotland to London)"Is this really the fault of high house prices ?
(19 February 2013, 04:01PM) Complain about this comment
The best property tax would be a based on number of houses you own. With very high tax for BTL essentially, BTL investors would sell (a tax high enough would force them) - that money get reinvested into the stock market/other 'productive' investments.House prices drop as there is an increase in the number of properties. People better off as they don't hold so much of their net worth in property. And easier for people to buy houses. Economy is run to support nominal real estate prices.But this is the UK, can't see any government going for it...
(19 February 2013, 04:18PM) Complain about this comment
The thing that concerns me is the trend towards making the public more accepting of taxes on anyone with any assets. The LibDems were apparently talking of a Net Wealth Tax going way beyond just the value of your house to include second homes, paintings etc. Although quickly withdrawn by them, have no fear such proposals will come back on the table within the next few years when the **** hits the fan of the UK economy. Then, there will much greater support and they'll be passed 'in the public interest' when UK Gov starts to get really desperate.There will be a whole load of similar taxes on anyone who foolishly decided save (and not just binge themselves on debt). Pensions are an interesting one too. In the space of 5 years or so, we've gone from no limit on pension pots to £1.8m, £1.5m, £1.25m. If one follows this trend, it will be nearly £0.5m by 2020 (assuming pensions aren't just nationalised by then).I for one am not going to save a penny more in a pension now.
(19 February 2013, 05:21PM) Complain about this comment
What is completely lacking from the "the rich need to pay their fair share of tax" type of argument that is so common with our Labour/Lib Dem friends is that they NEVER say when they'll stop applying this principle.I have the feeling they won't be happy, and hence won't stop, until everybody has the same after-tax income. Even then those that save will have more wealth than those who p*ss their money away down the pub.All these achieves is to demolish ambition and to drive people into the arms of tax accountants to find ways to avoid tax (hopefully legally, but if that fails...)As to property prices, the answer is obvious - a massive build program, but that won't work because of NIMBY-ism and the fact that banks mortgage books will show a massive decrease, hence affecting their profitability
(19 February 2013, 06:13PM) Complain about this comment
#5 Clive. "The outstanding faults of the society we live in are its failure to provide for full employment and its arbitrary and inequitable distribution of wealth and income". J M Keynes 1936.77 years later these are still the most important issues facing us.If you think the only way to evoke ambition to to insulate a clique of billionaires you know as much about socio-economics as the Banks do about customer service.
(19 February 2013, 06:40PM) Complain about this comment
BorisEven if we distributed all the wealth evenly today, give it 10 years (maximum) and we'd have people who'd peed their money away down the pub. Taking off the rich (not me unfortunately) solves nothing. Political parties simply play to the masses with their "who'd like me to tax that group over there (you're not in that group) ?".As to insulating billionaires - sure, that's the way Lib Dems and Labour will make the initial point, but that's simply to get the idea accepted and it would be by a huge amount of the population. Once they'd got the principle accepted, you'd see the barrriers drop. £2m mansion tax would soon be a tax on all houses. Other wealth taxes would come in."Fine" some people might say, but it wouldn't give jobs to those who don't want to work, neither would the distribution last.Imo, it's simply envy. I don't have it, shame others do.
(19 February 2013, 06:46PM) Complain about this comment
@Michael LThe downside of your proposal is the collapse in the rental market.Sure, we might all agree that owning your own property is a good thing. However what if you've just left university and want to work in Ipswich for a year before moving to Manchester for a couple of years and then onto that big promotion in London. Where are you going to live without a decent supply of rental properties ? Buy somewhere every time you decide to move ?
(19 February 2013, 06:53PM) Complain about this comment
PeteRegarding pensions you are sounding identical to those in £5m houses (all unearned property inflation) complaining they don't have a spare £20k to pay a mansion tax. (Well they do, it's just they'd rather not).How many people do you think are affected by a £1.25m pension pot limit ? A small percentage of the population (if not of MW readers).And why should tax relief for pension pots be unlimited ?£1.25m pension pot. Plus 40 years of your annual £10k ISA tax free. And no capital gains on your property which you then downsize taking all (unearned) gains tax free. So you aren't go to save because you don't get tax relief ?Really ? You only do stuff if the government subsidises you ?
(19 February 2013, 07:00PM) Complain about this comment
@CliveWhat's the problem with wealth taxes (and a Mansion Tax eventually hitting all properties, say) if they are combined with lower income taxes. As the current Mansion Tax proposal is combined with the intro of a 10p tax band.All that is happening is the existing tax take is being rebalanced to be more economically efficiently and support productive enterprise and tax less productive things.Surely work/entrepreneurialism (low tax), (unearned) wealth (medium tax) and bad things/fags/pollution (high tax) is a good general principle ?You just seem to fear change.
(19 February 2013, 07:23PM) Complain about this comment
MerrynIv just read for the first time "Two steps towards solving the housing 'crisis"You just lost my vote, cos it only makes it sound like your in it for yourself
(19 February 2013, 08:00PM) Complain about this comment
3Michael L, 5Clive: You'd think that building more houses would bring the price down, supply and demand etc, but no. You only have to look at the UK in the '70s, or Ireland and Spain before the crash, where unprecedented rises in house building were accomapanied by unprecedented rises in house prices. What drives house prices is the cost of borrowing money, i.e. interest rates. What will bring prices down, without a single house being built, is interest rates going up.
(20 February 2013, 11:38AM) Complain about this comment
William the Conquerer was on the right lines in having the Domesday Book prepared. If we knew everybody's TOTAL wealth a tax would be sensible. Failing that how about a tax on land value?
(20 February 2013, 11:40AM) Complain about this comment
Put simply, artificially high house prices are strangling the UK economy. They are a result of our unbalanced, stagnant economy that is completely dependent on zombie banks, debt and consumerism. People should realize how serious this is and demand that the politicians take proper action. The UK is rapidly slipping down the list of major economies. No wonder there is no growth and there will not be any growth until this is sorted out with radical surgery!
(20 February 2013, 11:43AM) Complain about this comment
A mansion tax will be popular with those who would prefer to live off other people's capital instead of within their own income.It is yet another way to prevent capital from passing down the generations. Each generation will be required to create its own capital from scratch, with little incentive to do it. The final result will be to impoverish the entire nation.
(20 February 2013, 12:13PM) Complain about this comment
To quote Abraham Lincoln as true now as in the 19th Century:You cannot help the poor by destroying the rich. You cannot strengthen the weak by weakening the strong.You cannot bring about prosperity by discouraging thrift.You cannot lift the wage earner up by pulling the wage payer down.You cannot further the brotherhood of man by inciting class hatred.You cannot build character and courage by taking away people's initiative and independence.You cannot help people permanently by doing for them, what they could and should do for themselves.
(20 February 2013, 12:17PM) Complain about this comment
So. people who would like a fairer distribution of wealth, are merely suffering from "envy"? What rubbish! I do not envy any toffs with their blinkered, superior attitude towards their fellow man. As long as there is a group of people hanging on to their assets and priveleges like Scrooge denying his employee a Christmas, there will never be a healthy economy. They should remember that their riches are nothing to do with "hard work" (try toiling down a mine for 10 hours a day), but that they are rich only because someone else is poor. Clever and talented poor people are deliberately kept in their place, in favour of idiots from Eton (see the current government!), to the detriment of the whole of society. Shame on the lot of you!
(20 February 2013, 12:40PM) Complain about this comment
@18. VambooWell said.
(20 February 2013, 12:41PM) Complain about this comment
4caster"It is yet another way to prevent capital from passing down the generations."But this is economically useless capital if it is just maintained in bricks and mortar in a desirable post code.The capital isn't being invested in new productive enterprise. It's just supporting a generation of trustafarian types.
(20 February 2013, 01:01PM) Complain about this comment
Interesting debate above from both sides of the fence! What is killing our country is its greatest claim to fame - democracy! Politicians by definition appeal to the lowest (and therefore most prevalent) common denominator. Radical change is IMPOSSIBLE because whoever suggests it will be swiftly voted out and turkeys do not vote for Christmas! Our biggest drain on resource is the holy cow of the Welfare State and every party outbids the other to get elected or stay in power. Most taxes and borrowings are raised to pay for that!! Sort that and most of the country's financial problems will pale into insignificance. Everything else is tinkering at the edges which does nothing but put off the day of reckoning for a little while longer.
(20 February 2013, 01:54PM) Complain about this comment
I don't think mansion tax is even about collecting more money. The article does imply this; its about declaring to the world that the UK politicians are doing something for the poor.Its not going to bring in any money anyway. Any rich person worth anything has his assets offshore.We need to tax fairly. LVT is perfect in this regard.We need to introduce legislation that addresses the ability for IT based businesses to trade in markets where they don't exist physically. The fact that they trade in the UK, but are taxed in Netherland Antilles for example, is destabilising everything.
(20 February 2013, 02:50PM) Complain about this comment
Spot on Phil H. When the **** does get around to hitting the fan a coalition of all the parties will have to sort the mess out and stay in power as a coalition for a defined period say 10 years. The public should also be made aware on a weekly basis what the UK's national debt is together with the interest being paid on it. A full page in the Sun may help. The country is akin to the last days of the Roman empire. Cheap immigrant labour carrying out the poorly paid / unpleasant jobs whilst an indigenous work force sits on its backside.
(20 February 2013, 03:00PM) Complain about this comment
Some good points following your article, but sadly also a lot of extreme language which is sad. As usual in British politics there is total confusion between money and class, and money and education. Until we leave this behind we are going nowhere. Modern democracy should tend to reward merit and personal abilities. This can never happen in Britain until the schools start producing students who know their abilities and limitations through formal teaching and rigorous testing. We will start to achieve as a country when we play to win and not to fear failure. When failure comes we have to be able to deal with it individually and collectively.To the extreme writer I would say,stop blaming each other and play the game in front of you - to win.
(20 February 2013, 03:20PM) Complain about this comment
With comments like "economically useless capital " (Shinsei1967), I can see a wealth tax leading to situations like this:Mr Saver and Mr Spender have the same job, earn the same salary, pay the same income tax for (say) 10 years. Mr Saver uses every opportunity to spend his money, sometimes at home (OK, benefits UK businesses, tax, jobs etc. etc, a "good" thing), but often abroad on his many holidays. Has a small home.Mr Spender tries not to waste his money, but saves it (building society, pays tax), buys a better home. Government driven inflation makes his house worth more. Even without that, he has more savings than Mr Saver.So, wealth tax says essentially "Mr Spender, you MUST be a consumer, or we'll take your money and spend it on government programmes (and we know how wasteful they are)". To me, supporters are wealth taxes and the like are simply people looking for others to pay for society so them don't have to, absolutely nothing to do with "fairness".
(20 February 2013, 03:59PM) Complain about this comment
It's not Mr Spender or Mr Saver that's the problem Clive, it's Mr Fairness.Spare us from those preaching fairness Lord, for they know not what it is.
(20 February 2013, 04:10PM) Complain about this comment
@25. CliveTo me opponents of wealth taxes are mostly the wealthy; the same people who benefit from a playing-field rigged to profit them at the expense of most of the rest. Corrupt playing-fields have nothing to do with fairness, everything to do with greed.No wonder there's so much demoralisation.
(20 February 2013, 04:14PM) Complain about this comment
@26. Romford DaveIt's not Mr Fairness, it's Mr Greedy that's the problem!
(20 February 2013, 04:20PM) Complain about this comment
@ Critic Al Rick (27)"To me opponents of wealth taxes are mostly the wealthy"I can't answer to the "mostly" part, but I'm an opponent and I'm by no means "wealthy" (not even in the top income tax band). I just have a problem with people always looking for somebody else to pay their way for them.Most people are "wealthy" to somebody (below them in the wealth scale)
(20 February 2013, 04:56PM) Complain about this comment
@29. CliveI also have a problem with people always looking for somebody else to pay their way for them.But who created that problem - I would say largely the same lot we have to thank for the corrupted playing-field; the lot that benefitted by their acts of treachery in aiding the rich and by their acts of repentence and/or bribery by pandering to the worst hit victims of their treachery. I'd be an opponent if the playing-field were level.
(20 February 2013, 05:04PM) Complain about this comment
#21 SteveUK. Which bit makes me a "nutter"? is it the desire to aim for full employment or a more equitable distribution of wealth and income? Clive has deliberately misinterpreted my plea as meaning Communism or everyone having the same, but I have not said this. The current situation where 7,000 people own 60% of the land and 24% of all wealth is too far the wrong way,but you suggest only a nutter would seek to rectify this. That makes you cruel,foolish and I suppose very ill informed.#17 Vambo . I agree.
(20 February 2013, 05:07PM) Complain about this comment
But it's not those that gain the most from the corrupted playing-field that are made to subsidise the hardest hit victims of that corruption - it's the squeezed middle.The playing-field is so corrupted that those that gain the most can legitimately avoid taxation. Such is the plight of a civilisation in it's death throes.
(20 February 2013, 05:22PM) Complain about this comment
You know where you are with greed Rick, fairness is insidious.It can start with something as simple as those of the Jewish faith, then end with the Pastor.
(20 February 2013, 05:30PM) Complain about this comment
@ Boris #32"Clive has deliberately misinterpreted my plea as meaning Communism or everyone having the same, but I have not said this"I agree you never said that, and I never misinterpreted your plea as communism.It was me who raised the point in #7, "Even if we distributed all the wealth evenly today, give it 10 years (maximum) and we'd have people who'd peed their money away down the pub"My claim is that even if we went to the ultimate exreme - sharing things out - it wouldn't last very long at all.
(20 February 2013, 05:46PM) Complain about this comment
#35 Is that a reason not to seek a more equal sharing? That is always the argument of the entrenched right. Some might misuse it so let's not try it? I disagree with you totally. the economy needs demand and giving more spending power to those in need makes perfect sense.
(20 February 2013, 05:49PM) Complain about this comment
Fair is fair Dave, fair is free from discrimination, dishonesty, etc; is impartial, just, etcWhat you are describing as fair is corruption.I suppose it depends upon who is charged with interpreting what is fair. A Mansion Tax would in all probability be deemed unfair by the owner or potential owner of a so-called mansion; whereas a playing-field warped in his/her favour would, in all probability, be deemed fair. Pure Greed!!
(20 February 2013, 06:44PM) Complain about this comment
"The current situation where 7,000 people own 60% of the land"Well, yes, but only because a handful of toffs and rich foreigners own 200,000 acre parcels of almost worthless Scottish moorland.In terms of land VALUE rather than AREA it is pretty widely distributed amongst the population as a whole. Which is why 70% of the population own their own house and land it stands on.Pick up a copy of Country Life. You can buy 1,000 acres of Sutherland for less than a studio flat in Ipswich.
(20 February 2013, 07:46PM) Complain about this comment
I like mansions, and I suspect you all do as well. The people who live in them only see the inside, whereas we passers by enjoy the beautiful outsides. Long live the rich, they create the high culture the hoi-polloi aspire to, but who then rage to destroy through the politics of envy. We should preferably be taxing terraced houses and council estate houses, which are little more than hovels, and are unfit for members of a great nation to dwell in. They depress the national sense of well being. Tax them out of existence!Instead of taxing and destroying our heritage we should create an economic system which aims to enable everyone to live in a mansion quality home, say within fifty to a hundred years. How to do that? Grant unlimited planning permissions for mansions, refuse all applications for anything inferior. Zero council tax and zero location tax for mansions, and exponentially increasing taxes for smaller and smaller properties. The end of rabbit hutch culture!!
(20 February 2013, 07:56PM) Complain about this comment
TAX is the route cause of our nations problems. The Tax take gets bigger and bigger so we all need higher wages to maintain our standard of living. This makes the country less competitive in the world, leading to higher unemployment and therefore higher taxation. a viscous circle! Lower taxation would lead to greater employment. I was one that studied hard at school, managed to get a good job and could employ a cleaner. i can't afford to employ the cleaner anymore... my taxes went up to 60% (i am just in the very bottom of this tax band)she has joined the dole queue so her unemployment benefit is paid by others working.Why should the wealth be taken from the rich...if they were clever enough to accumulate in the first place they should keep most of it! And they would probably employ people to help them.The only greedy people are the government and the bank execs. , but they are probably in bed together!
(20 February 2013, 08:53PM) Complain about this comment
The real problem is the government has not allowed the housing market to crash. Here in the US, market forces have been allowed to work and it's now possible to pick up million dollar homes for less than two hundred thousand dollars. In addition, growth and the economy is recovering as well as the construction industry. If the UK housing market was working properly we would not be talking about a mansion tax.
(20 February 2013, 09:04PM) Complain about this comment
"So. people who would like a fairer distribution of wealth, are merely suffering from "envy"?"By and large, yes. People who talk about a "fairer distribution of wealth" usually mean "he's got more than me, that's not fair, take some of what he's got and give it to me". That's envy, that's what the tenth commandment says is wrong. In any case, the Mansion Tax, where the government takes from the not-so rich and doesn't give to the poor, is nothing to do with a "fair distribution of wealth".
(20 February 2013, 09:50PM) Complain about this comment
Merryn,After reading "Getting rid of comments"I feel impelled to justify my last comment (11). In " Two steps towards solving the housing 'crisis" you believe people should be charged Capital gains tax on the sale of primary homes. I know I will never move into a new home unless it was built by myself, so I always look for a home/project to move me and my family forward. I dont believe I should be taxed for my hard out of work hours . I never wanted to see house prices increase as they did and anyone who jumped on the band wagon to try and reep the rewards should fall with a almighty bang.As for "The real motive behind a mansion tax" what's the point when house price are going to fall by at least 30% anyway?
(20 February 2013, 10:47PM) Complain about this comment
Beware of Cleggs bearing gifts!Can't afford the mansion tax - pay it when you dieAsset rich, cash poor - pay it when you dieWon't be long till you can't afford to live - can't afford to dieNow that's fairness, maybe the ultimate in fairness, religious too when you consider the dust to dust, coming into the world with nothing guff.
(20 February 2013, 11:07PM) Complain about this comment
@ Boris #36"Is that a reason not to seek a more equal sharing ?"Problem with those on the Left (not referring to you specifically here) is they never know when to stop taking. That's why they must be resisted when they try to invent new ways of taxing money off people."the economy needs demand and giving more spending power to those in need makes perfect sense."I agree about the demand side, but not the way to go about it. As a compromise, give me half of your savings - clearly you're not helping the economy by saving (unproductive capital I think somebody called it) - and I promise to spend it. Happy now ? That's what the wealth tax is.
(21 February 2013, 12:07AM) Complain about this comment
Like most taxes, they initially promise to only tax the rich, but gradually expand their scope until they affect practically everyone. Look up the history of income tax if you don't believe me.As it happens, an annual Land Value Tax is much more fair than income tax; when it comes to land, 'you really didn't build that' (unless you reclaimed land from the sea), whereas earned profit in a free market is actually an indication of the value you've have brought to the lives of your customers.Government should be funded by charging for exclusive access to natural resources, which of course is what land ownership/use is.
(21 February 2013, 07:19AM) Complain about this comment
Jim C"Like most taxes, they initially promise to only tax the rich, but gradually expand their scope until they affect practically everyone."UK tax take as a percentage of GDP has been remarkably stable at 35-38% for the last 50 years.The overall tax burden does not drift ever upwards. Some taxes goes up (VAT & excise duties) other taxes come down (income tax). But overall the burden remains pretty constant.And the Mansion Tax is really just an extension of Council Tax. which everyone already pays anyway.
(21 February 2013, 11:12AM) Complain about this comment
Far better to get rid of all the council tax exclusions first - Make it payable on ALL properties by EVERYONE. That should shake the market up and bring more empty properties and second homes onto the market.After that, I recommend a big tax on finance writers with second homes in Scotland that complain about the four hour train ride.
(21 February 2013, 12:04PM) Complain about this comment
So according to the New Statesman blog : http://www.newstatesman.com/economics-blog/2013/02/how-mansion-tax-will-work-and-who-it-will-hitThe mansion tax will be charged annually (see penultimate Para.).If this was to have an immediate effect of depressing house prices, what would be the on-going valuation basis as applied by HMRC and how would they cope with such an onerous task? They might be able to justify a levy on properties that had already exchanged at some point for more than £2m. However, for properties purchased decades ago for much lower sums, how would they cope with the practical basis of valuation? Many of these properties, near of just over the threshold would probably not realise their valuations in sales taking place after the tax was introduced.Could the seller claim back their tax in such circumstances by proving by appeal process that the HMRC got the valuation wrong? It could end up being an expensive mess for everyone concerned.
(21 February 2013, 12:20PM) Complain about this comment
#37 Shinsei. Ever looked at the Grosvenor estate in Kensington?#38. Jay. Ridiculous. You would punish the poor for living in ugly small homes. #39 dave. You mean "root" cause. You cannot, simply cannot believe that the 1% are rich becuase they are clever. Also, it has been proven timea nd again that the economy grows more and unemployment falls when taxes rise. I know you wish it were otherwise but fact is fact.#40 Alec .No You can buy a $200,000 house for $200,000.#44 Clive. I practice what I preach. I have no savings.
(21 February 2013, 12:27PM) Complain about this comment
"UK tax take as a percentage of GDP has been remarkably stable at 35-38% for the last 50 years"I doubt that will provide any comfort for the 300,000 or so people suddenly becoming higher rate tax payers without actually having earned anymore than they did previously.Who would have thought that we'd have 5 million or so "higher" earners lording it up (title courtesy of HMRC) in this green and pleasant land so soon after our Gordon had his own Khartoum moment and lost his head in allowing us to bail out the bankers..We'll all be higher earners in no time at all at this rate. Dragged down by a new fairer kind of socialism, where we're all equally worse off until eventually there is nothing to be worse off about.Tax creeps, cut spending, it's easy if you try.
(21 February 2013, 12:43PM) Complain about this comment
#50 Romford. You miss the obvious point. We are all much richer than years ago,so it stands to reason that more will pay higher rate taxes. Keynes told us in 1930 that we would be six times richer by 2030 and we are in fact well above that rate of enrichment already, on course to prove Keynes wrong by being 7 times richer than 100 years ago.SAs Brazil develops do you think its people will gripe as they fall into paying taxes. No. They will see the money is to be used for their wider benefit.Civilisation has a price.Only the uncivilised baulk at paying it.
(21 February 2013, 12:59PM) Complain about this comment
I agree with Merryn's analysis of the delusional catastrophe that is the UK Housing Market. But I do not support her proposed cure, CGT on Primary or Sole Residence. There are two obvious problems. Firstly, why should someone who wants to move, for a sensible, legitimate reason, not simply to make a profit, have to pay a huge chunk of CGT, if doing so would prevent him or her buying a property of similar value? We are already fleeced by the government for the privilege of buying a house, (its called stamp duty), and fleeced again by greedy, grasping estate agents and lawyers. If you add CGT to all this, people will simply not move unless they absolutely have to - i.e. they drastically downsize, or die which leads us to the second problem CGT on Primary Property will not work.
(21 February 2013, 01:00PM) Complain about this comment
Confronted by the prospect of yet another wealth grab by the government, people will stay put, stubbornly digging their heels in, refusing to budge from houses they often can't afford to maintain or heat. What good will that do an already sclerotic economy and a constipated housing market? Please think again, Merryn. If you like, I will write you an article outlining some fairer proposals
(21 February 2013, 01:18PM) Complain about this comment
Boris, the obvious point is how can someone be richer if they're earning the same amount of GB pounds, even if we ignore the insidious effects of inflation. The joylessness of the Brazilian tax regime is irrelevent to the effects fiscal drag in the UK in the context of my posting. And I've certainly never advocated no tax, to suggest so is nonsense.
(21 February 2013, 03:08PM) Complain about this comment
#54 Romford. Average UK salary is now £28,700. Ask anyone earning that if they wish thety paidhigher rate taxers and you'll get a resounding yes. Of course they do as it would mean they earned £43,500, at least 50% more. At a salary of £50,000 and paying 8% to a pension the eaxtra tax demanded by the higher rate is just £10 a week. Hardly life threatening and it comes from folk who can afford £10 a week. ..........at £500,000pa that is another matter. I fear you co-opt the merely well off to defend the objections of the rich.
(21 February 2013, 04:25PM) Complain about this comment
"we should just recognise that windfall property gains are undertaxed by putting a capital gains tax on primary properties and be done with it"If you think you'll have any luck getting someone to pay millions of pounds in CGT on a very expensive house, just look at stamp duty. Anyone buying one of the 100,000 odd London houses held in offshore companies would have to be feeling particularly charitable to pay stamp duty - it's perfectly legal to just buy the company.
(21 February 2013, 04:34PM) Complain about this comment
Boris, only in your surreal socialist world of jealousy, insecurity and conspiracy can it be considered justification for higher taxes that we'd all like to earn more. Utter nonesense.
(21 February 2013, 04:53PM) Complain about this comment
#57 JT. What? You don't think the poor wish they were higher rate taxpayers. Oh no JT, most hope to never progress and are overjoyed at earning so little the state only demands 20% from them. And for the umpteenth time I am not a socialist , however much it upsets you Tories. What irks me most is despite their education at the so called best schools most of the twerps running this country haven't the first clue what to do for the best.
(21 February 2013, 05:18PM) Complain about this comment
Asking someone if they want to be paid more is the party trick of politicians, adept at promising something for nothing.There's no such thing as something for nothing, there never has been, nor will there ever likely to be.Only fools believe such tripe.Would you now have us condem the £50k wage earner for paying into a pension, hoping to be able to take care of themselves in old age? Is their no limit to how desperate you are to drag everyone down under this banner of fairness?Disparaging the £10 a week they pay, on top of the £170 a week tax and £82 a week NI contribution the subject of your fairness attack hands over every week, misses out on how unfair it all is. You only see £10 They don't see £262Every week, week in week out.You co-opt the merely well off in a thinly disguised attack on those who happen to be rich without even realising.The middle class always get squeezed, just as they will in this latest attack on the rich.
(21 February 2013, 08:38PM) Complain about this comment
~59 But Romford it is simply part of a progressive tax system. The more you earn the slightly higher amount you pay as a proportion of earnings. He with the broadest shoulder bears most burden and it is patently perfectly fair to everyone except the Mr Magoos inhabiting Toryland.On £30,000pa Tax and Nics total 23%. On £40,000pa it is 24.8% and on £50,000 is 28.3%. Is the little increase in the percentage taken from the person earning 66% more such a sleight on his dignity and sense of self worth, or is it just a function of asking those who can afford it to pay a tiny bit more? Interestingly even at £500,000pa the take is only 44.8%.
(21 February 2013, 10:18PM) Complain about this comment
53Marty. It is interesting to speculate what the effect of CGT would be on the housing market. I suspect it would mean that house prices become much more stable, meaning that there would seldom be much of a gain to pay tax on. Plus there would probably be some sort of taper releif, so that the longer you owned a property, the less tax you paid on your capital gain. One thing is for certain, the market would not remain unaffected, so to look at the effects of having CGT in the current market isn't valid, because if there was CGT, the market wouldn't be like it is now. Another point, most people who have a "sensible, legitimate reason" for moving are expecting to pay a different amount for their next house, either because their new house is bigger or smaller or because it is a more or less expensive location.
(22 February 2013, 07:47AM) Complain about this comment
MombersYou can no longer avoid stamp duty on house purchases by buying through an offshore company.You used to be able to but the government changed the law last year. And HMRC are chasing up the people who have used this wheeze over the last few years.If you want "privacy" you can buy through a company but in this case stamp duty rises to 15% (rather than the 7% for £2m+ properties).
(22 February 2013, 11:09AM) Complain about this comment
Some of the comments on this page vindicate my decision to leave the UK permanently. The class resentment that is seething under the surface is a peculiar British characteristic that is without parellel in the known universe. And it really poisons everything - policy, politics, voters, politicians etc. I am so glad to have got out. In Asia, life is good.
(22 February 2013, 11:22AM) Complain about this comment
Boris # 58Read my post again - I said very clearly that just about everyone would like to earn more. The point is that this prevailing state of mind is not a justification for higher taxes. Like most socialists your arguments are pure self-interest, dressed up in emotive class-focused rhetoric intended to turn people against one another. You should join the Labour front bench.Boris #60 It's amazing how confidently those who won't be paying a tax can spout off about how it will be no hardship for those who will. You really are an ignoramous.
(22 February 2013, 06:59PM) Complain about this comment
JT, the best taxes are, and always will be, the ones that someone else pays.
(23 February 2013, 10:24AM) Complain about this comment
Please leave buy to let alone with less then five percent grosses yield and absconding tenants leaving unpaid rent for four/five months.Buy to let landlords will soon realise that there is not much fun in renting as there is very little capital appericiation.Also there is benifit cuts and tenants receiving benefit rent to the landlord.
(23 February 2013, 11:07AM) Complain about this comment
#64 JT. How very rude. Does it make someone ignorant simply because they disagree with you? Or perhaps you identify so closely with the "twerps" that it rattled your cage? It is folk like you that keep me going. A very steep uphill battle against the cloth eared.
(23 February 2013, 12:58PM) Complain about this comment
the real problem with all these taxes that are aimed at the rich is that eventually you frighten off the rich, who are of course free to live where ever they like, and then you are left with a country full of poor people. When was the last time a poor person started a business or did anything else to create employment or help the economy. It's not the people living off benefits and the public tit that will help this country and it's economy. Switzerland or even better Monaco are ample proof of this. Their tax systems are of course aimed at attracting the rich, and despite the fact that neither of them have much in the way of agriculture or manufacturing, their economies are looking a lot healthier than britain's, and they don't have a lot of poverty either. Stop paying people to do nothing and they might think about working to make money!!!
(23 February 2013, 01:25PM) Complain about this comment
I can remember seeing my Dads tax return in the 1940's and top of the list was Schedule A taxes which was a tax on our house which quite unusually in those days he owned( bought for £900 in 1942) Perhaps thats where Labour/ Lib Dems want things to be. Start with a 'Mansion tax but end up with a new Schedule A type tax on all privatly owned properties. Be carefull what you wish for.
(23 February 2013, 01:27PM) Complain about this comment
60, Boris a mere observation for you. The "slightly higher amount you pay as a proportion of earnings" does not result in paying "a tiny bit more" but a substantial amount more. Using your figure the additional tax burden of someone on 50,000 rather than 40,000 is 1,750 (28.3%-24.8%x50,000) or 17.5% extra on the additional 10,000 made. A simpler tax system starting from scratch is needed.
(23 February 2013, 01:34PM) Complain about this comment
Britain is the only country in the developed world that exempts Non Residents from Tax on Capital Gains arising from the sale of properties in the country.As pointed out in the article, most of the properties in Central London are sold and bought by Non Residents. They benefit from rising prices without the payment of any capital gains Tax
(23 February 2013, 01:52PM) Complain about this comment
Lots of strong opinoions here! Good debate, but keep it polite.We have left UK permanently for reasons explained in comments from others above. Many will follow.BTL properties are sometimes the owners' pension fund - as in our case. If you think that it is a bed of roses, try to get rid of a tenant who does not pay the rent and trashes the place - the legislation is too far biased towards the ne'er do wells! If you get rid of BTL, where will the people live? They are generally towards the NINA end of the market, and look where that has got us!As for a Mansion Tax, well, much better to tax non EU investors who wish to hide their millions in cash in UK property as a safe haven - and tax them penally: UK property for UK people!Osborne et al - are you listening?
(23 February 2013, 06:52PM) Complain about this comment
#70 Realist. Your Dad must have been up to something.Sch A taxed income derived from property in the form of rent. Did he have a tenant?#71 Don. I don't get your point. Are you saying someone earning £1,000 a week can't afford to pay an extra £34? Or are you one of those flat tax tea party oddballs?#72 Andy . Good point.#69philo. You actually said the UK should be like Monaco. What? Reduce our population to 40.000, our land area to 3 sq miles and become a tax haven. We have already done that in the City of London, it's just there are 64 million more mouths to feed.
(24 February 2013, 10:49AM) Complain about this comment
We don't need a mansion tax - we need to change Council Tax - scrap the banding, include all other property taxes within it, and eventually scrap and add in other taxes like VAT and eventually Income Tax - then you will have just the one tax, LVT, which is based on location - it would be the fairest and most efficient form of tax and impossible for the likes of Starbucks to avoid... If you can't afford it when you retire you simply pay it from your estate when you die - as Inheritance tax would also have been scrapped. LVT is one of the reasons why I am considering voting Green in the next general election...
(24 February 2013, 03:17PM) Complain about this comment
I dont see the difficulty in adding some higher bands to the current Council Tax.The current bands A-H peak at properties valued at Band H £250001-£500,000 in 1991.It cant be too difficult to revisit those houses in Band H and assess there current worth.Property inflation over the last 20 years is probably 300%.This leave scope for the following bandsBand I £500,001-£1,000,000Band J £1M - £2MBandK £2m - 3.5MBandL £3.5- £5.5MBand M £5.5M-£8MBand N £8M- £11MBand O £11M- £14.5MBand P £14M-£18MBand Q >£18MCouncil Tax is typically charged at 0.5% per annum of current values.This should provide a guide to Council Treasurers of how much additional revenue could be raised easily from those British National and Foreign owners with a nice problem to have. This isnt a Mansion Tax it is purely a Council Tax reform
(24 February 2013, 07:17PM) Complain about this comment
#75Greg and #76 allywag are correct . The politicians always plead it is too complicated to reform Council Tax to introduce higher bands, why? But then they moot a whole new layer of taxation with it's own labyrinthine rules.I assume the latter as that is always what happens,partly to allow the rich a number of loopholes and partly to allow the nearly rich lawyers and accountants a field day seeking to circumvent it.By the way Allywag, not sure where you get a 300% HP rise. Since 1992 HP's are up only 193%. For a price to treble it needs to rise by 200%.....that is the maths. Over the years I have come to realise many folk on MW have only a tenuous grasp of both maths and economics, so try not to fall into that group.
(24 February 2013, 07:21PM) Complain about this comment
#76 Allywag. Just a thought, but based on the 193% price rise any house now worth over £1,500,000 would have been over £500,000 in 1992, so a single band for properties above £1.5 million ad another at about £5 million should suffice and keep the complication to a minimum.
(26 February 2013, 09:02PM) Complain about this comment
Yes I just bet all you stockbrokers would love a tax on BTL properties to drive people back to the stock market. The main reason millions of people have invested in BTL properties is because all you stock brokers have buggered up our pension schemes leaving us with no option but to invest in bricks and mortar. A tax on BTL would be a tax on pensioners. The main reason that the stock market has been dead for over a decade is because the city of London is run by crooks, and everyone now knows it.
(28 February 2013, 03:35PM) Complain about this comment
Hi Boris. I don't take issue with all have you have to say on this thread, far from it. I do observe, however, that your take on the broadest shoulders paying ever more tax opinion is shouted from the sidelines with your part-time public sector job and prospective whopping state pension. Yes, we know - how very smart of you with your brilliant decision making. Perhaps though in the interest of fairness, you should consider going full-time and bumping up your tax contribution if you are feeling so altruistic, or perhaps surrender a massive chunk of your fantasy land state pension pot which the rest of us are going to be billed for. Champagne opiniated freeloading from where I'm standing.
(28 February 2013, 03:36PM) Complain about this comment
(Opinionated).
(02 March 2013, 02:11PM) Complain about this comment
Merryn's comment, that "windfall property gains are undertaxed" is a bit of a show stopper. I could give numerous examples but one that shows how difficult to do this fairly it would be is: The house where the vendors bred dogs - in the house. When a carpet was completely unrecognisable as such they would simply lay another one over the top. The couple that bought this got a real bargain because any normal person needed a face mask just to get in the door. A weekend of disgusting work cleaning it out, followed by decorating and new carpets and they had added 15% to its value. Like spotting an unloved share really. Should good ideas and a sharp eye be taxed?
(03 March 2013, 06:59PM) Complain about this comment
#80 Christopher. How very rude and blinkered of you. I merely remind people they need to man up, stand by their own decisions and stop griping. Like I do. I could work longer if I chose to. I choose not to. I have made a concious decision to make do with less and to work less, and have a better life for it. I don't consider myself smart for so doing, it is just what suits me and a shame it doesn't suit more people .You need to read Enough byJohn Naish and more importantly Tom Hodgkinson's books How to be Free and How to be Idle.Best is the enemy of good. 5 day weeks are the enemy of full employment.
(01 May 2013, 05:44PM) Complain about this comment
Clive,Taxjustice.org claims wealthy cooporations and individuals have stashed $21,000,000,000 (twenty-one BILLION!!!!!!) U.S. in various oversaes tax shelters.Meanwhile,Detroit,Flint,Stockton,Calif.,and other U.S. cities are on the verge of bankruptcty,Yankee schools are crimnially under-funded(also because of your bloated war budget,which blosters your dying empire),your infrastructure is crumbling,your health care is such that poor,Third World Cuba's infant mortality rate is LOWER than that of history's richest nation's.Throw in your "prison-industrial complex," stocked by crooked,racist judges and persecutors-of poor,non-violent,often mentally ill black men-over-seen by fat,dumb white lumnpen proletariat guards and funded by even dumber white "Re-Thuglican" voters and you have a nation in almost terminal decline.That is,unless these wealthy looters' ill-gotten plunder is found and taxed to about 90% as occurred on wealth over $6 million U.S. until the Kennedy adminstration.
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