In the comments to an article entitled "Homeowners explore ways to avoid looming mansion tax in UK", KLNs abound. In particular, one Geoffrey Gardiner writes:
Property taxation in the UK is on the occupier, not the owner, as the default rate is lower than if. like the Americans, one taxes ownership. Is it intended that the mansion tax should be on owners not occupiers? That requires a completely new tax department. If it is on ownership are joint tenants or tenants in common (such as husband and wife) to be taxed relative to the value of their shares? What if the property is long leasehold? Is the tax to shared between the lessee and the reversioner? Is a mortgage to be deductible?
None of these points have been mentioned by Miliband, presumably because his knowledge of property law is zero.
As pointed out in the article, the tax lowers the value of the property as the tax is effectively rent. All property taxes are in truth a way of nationalising without paying compensation (1). An annual tax of £3,000 should lower the value by around £100,000 in present circumstances. (2)
One can tax by reference to a property value, but the tax has to come out of income or some cash flow, such as from a sale, for no power on Earth can convert a house into food, heat, lighting or clothes for old age pensioners. The state is mainly by taxation appropriating part of the income (GDP) of the nation and the tax on property, despite its name. falls on the income of the tax payer. If he does not have the income he has to sell to someone who is capitalising income, that is saving.(3) The mansion tax will precipitate many sales as owners decide to trade down.(4) That will raise prices at the lower, aggravating the problems of first time buyers.(5) There is a limit on property taxes, the net annual saving of the personal sector (4).
1) in which case income tax is nationalisation of labour
2) so making the property more affordable. That's good, isn't it?
3) Poor widow bogey
4) Your evidence for that is?
5) Yeah, right, how many first time buyers are in the "just under £2M" market? Human shield.
He's probably right about Miliband, though.
Saturday, 24 January 2015
In the comments to an article entitled "Homeowners explore ways to avoid looming mansion tax in UK", KLNs abound. In particular, one Geoffrey Gardiner writes:
Friday, 23 January 2015
Emailed in by MBK.
The first bit is boilerplate Homey:
Labour’s proposal for a mansion tax, under which all properties above a market value of £2 million would be subject to a levy, is a third way in taxation...
The real purpose is political. This is not a tax on property so much as a tax on the southeast of England. Of the 95,000 homes in the UK that would qualify, 95 per cent of them are in London and the southeast. The whole of Britain north of, and including, Birmingham would pay little more than 2 per cent of the total.
This is taxation as pure political calculation.
But then he lets loose with this, it's hard to disagree:
Not that I wish to discredit the notion of an impost on property. On the contrary, the case for taxing property more heavily than we do in Britain is persuasive.
Unlike income, property is hard to hide and a levy upon it correspondingly difficult to evade. It would generate a lot of money from foreign owners who are contributing little to the exchequer. Revenues would usually rise with prosperity and if the volatility of the housing cycle were flattened a little by heavier taxation, then so much the better.
The case is intellectual as well as practical. The state takes £700 billion a year in taxation and that sum should ideally be collected according to a principle that is widely agreed to be fair. Income, which is directly earned, should be taxed lightly and a party by the name of Labour ought to be the most vocal proponents of low income tax.
The bonanza of house price inflation, though, is not income that I have genuinely earned. It is a reward that, in JS Mill’s arresting image, falls into my mouth as I sleep. There is a case for returning to the principle that informed Lloyd George’s “people’s budget” of 1909. This is an argument that, with enough time, can be joined and won.
Taxation in Britain has no such philosophical order... Only 5 per cent of the tax take comes from land and buildings.
The beauty of the green and pleasant land as a taxable asset is that it retains its value because there is a fixed supply of 60 million acres and the maker has stopped making it. The windfall gains from land are often the result of public infrastructure development, which should be taxed. A levy of 1 per cent on the land would yield £50 billion. Once the deficit had been cleared, income tax could be cut by a third or corporation tax abolished.
A truly radical Labour party would have been making this case for years... The place to begin in policy terms is not a crude, cliff-edge mansion tax but a revaluation of the council tax that is still, absurdly, calculated on 1991 prices.
As to the wailing about Mansion Tax or SDLT or LVT or anything else being "a tax on London", well that's because they are taxes on land values and land values are highest in London, or on various beaches along the south coast. You might as well say that income tax is a tax on London because people have the highest wages there.
Savill's did a breakdown this month; the total value of all UK housing is currently £5,750 billion (which includes a very low estimated market value for social housing units of £72,000 each).
Housing in greater London is one-quarter of the total, and the South East is another one-fifth, so between them, you'd expect about half of taxes on land and buildings to be raised from London and the South East.
Those two areas generate 'not enough' in Council Tax but 'too much' in SDLT (people in those areas also probably pay or generate 'too much' income tax but 'not enough' in VAT, to be honest). If you treat the £1 or £2 billion Mansion Tax as Council Tax Bands I to M it nudges their share to roughly 45% or a half, or whatever, so big deal.
It's nice to see the 1% = £50 billion calculation mentioned, I helped launch that one.
I watched the last episode of Maps: Plunder, Power and Possession yesterday, and another short list sprang to mind:
Continents whose names don't start and end with the letter "A"
Or for an even shorter list:
Continents whose names don't start and end with the same letter.
From the BBC
Singer James Blunt has clashed with Labour politician Chris Bryant about diversity in the arts after the MP said the singer was part of a public school educated elite "dominating" culture.
The singer, who was educated at Harrow, said the politician was a narrow-minded "classist gimp" who was motivated by the "politics of jealousy".
Politicians, he said, should celebrate success wherever it came from.
First of all, I think Chris Bryant is talking nonsense when he says that a public school educated elite is "dominating" culture. Even looking narrowly at the top of the charts, 8 of the top 10 albums were made by people who went to comprehensive schools (Coldplay and Pink Floyd are the exceptions). Citing Benedict Cumberbatch and Eddie Redmayne as Oscar nominees ignores the fact that the Oscars only pick British films featuring posh people and that neither film bothered the Top 20 grossing films last year, which starred people like Martin Freeman (comp), the Inbetweeners (mostly comp), Gary Oldman (comp), Hugh Bonneville (private), James McAvoy (comp), Sir Ian McKellen (comp), Sir Patrick Stewart (comp) and Andrew Garfield (private).
Outside of that, there's so much else that people can choose to see. In terms of music, TV and film, we have enormous choice. I watched an Indonesian martial arts film at my local multiplex that was the 136th highest grossing film last year. It's not like there's a tiny number of choices for me (and honestly, historical biopics rarely appeal, posh boys or otherwise).
There is clearly a bias towards private school educated. But I've not seen much evidence of doors being opened for people due to those connections (unlike say, politics).
It may just be that the posh kids can stick it out for longer before getting a real job. Acting isn't really a very sensible career path to follow. It might look rich on the surface, but that's only because we see the winners and not the losers. In most cases, people trying to be successful are burning through money and most never make it. So, posh people doing more of it is a good thing. Maybe they get lucky and get a role and we get some entertainment. But if they don't get the role, they destroy the family fortune, which is also fine.
Thursday, 22 January 2015
As I said two months ago:
We see the same thing happening with Ebola, there's a nasty outbreak every decade or two, then it all quietens down again.
From the BBC, today:
There has been a "turning point" in the Ebola crisis, with cases falling in the three affected countries, World Health Organization officials say.
Just eight cases were detected in Liberia in the last week down from a peak of 500-a-week in September. Guinea and Sierra Leone have also seen falls.
The WHO said the figures were the "most promising" since the outbreak started.
From the BBC:
A car crashed into a house in Sheffield, damaging the property but injuring no one.
Salma Zahid, who was in the house, said: "I heard such a big crash. It was like an earthquake."
An interesting simile; if I could be bothered, I'd track down a first hand account of an earthquake where somebody says "It felt like a car had hit the building".
Wednesday, 21 January 2015
Last week, City AM carried the usual blah blah saying that high house prices are the result of a lack of supply:
The UK, and particularly London, is in the midst of what should be seen as a housing crisis. According to LSE professor Paul Cheshire, new build houses are about 40 per cent bigger in the Netherlands and 38 per cent bigger in Germany than they are in England. And yet housing goes for 45 per cent less per square metre in the Netherlands and, in Germany, prices did not rise throughout the entire 1971 to 2002 period.
A new paper from the Adam Smith Institute lays the blame at the door of the Green Belt. Despite the fact that 90 per cent of the UK is undeveloped, with half of the remainder gardens, Britain is hamstrung by rules hindering development in the places where people most want to live – around successful cities, particularly in the South East.
A reader's letter a couple of days ago referred to an "iron law of economics: if you increase the supply of something, the price goes down".
It's kindergarten Faux Lib economics though. An article in the same paper a couple of days ago looked at actual hard facts. Always start with facts and work backwards to the conclusion. Or establish that there isn't a conclusion, they are just random facts:
London’s population is forecast to hit its highest-ever level this year, surpassing its pre-war peak of approximately 8.6m. Yet it remains one of the least densely populated major cities in the world, according to research by LSE Cities, based at the London School of Economics...
By Burdett’s calculations, London is 30 per cent bigger than it was when its population last peaked in 1939. Even if London’s population density grew, it would bring with it a raft of benefits. If everything is nearby, cars are used less, for example.
LSE Cities’ research finds that holding family income and size constant, petrol consumption per family per year declines by 106 gallons (401 litres) as the number of residents per square mile doubles.
A higher population density can also facilitate a more diverse range of businesses and services than lesser ones can – such as hospitals, airports, theatres, and museums.
So that is the reason why housing in London is so expensive.
It has five time the population of other conurbations in the UK, as well as having most airports and relatively easy rail or car travel to the continent. So there is "a more diverse range of businesses and services etc".
So, glossing over the debate whether we should build outwards at a low density or increase density in the middle (they have much the same effect), what happens if we build more housing in London?
1. People who are currently 'priced out' will move there.
2. So the supply of housing goes up, but the number of people and hence demand for housing goes up pro rata and the effect cancels out.
3. There will be an even more diverse range of businesses and services.
4. So the cost of renting housing and commercial premises will go up even more.
If this were all not true, then the highest house prices would be in the Scottish Highlands and Islands and houses in London would cost tuppence ha'penny.
Whether this is all A Good Thing or A Bad Thing, and if so, what we ought to do about it (liberalise construction and introduce Land Value Tax, please!), or whether it is all irrelevant is an entirely separate debate.
@ Jim in the comments, strictly speaking, the best kind of LVT is based on "site premium" (as explained on KAALVTN) i.e. that part of the total rental value of a home or office or anything else which relates purely to the location.
But most people are unfamiliar with this concept, and simply taking a small percentage of current house prices is a good enough approximation, i.e. for most homes, the site-only rental value is around 3.5% of its current selling price.
It is not a straight line, unfortunately, it's clearly zero % at the very bottom (homes selling for £50,000 and under), rising to about 4% in the upper middle (homes selling for £400,000 - £600,000), then falling again to 2% or lower for multi-million pound homes at the very top. But hey.
The results to last week's Enquête Amusant were as follows:
Je suis Charlie - 50%
Je ne suis pas Charlie - 33%
Qui est Charlie? - 17%
So, the Swiss managed to keep the exchange rate for one CHF down to EUR 0.80 for over two years (see article at the time e.g. here), but in the end it was getting too risky/potentially expensive.
Apparently the Swiss national bank ended up with a pile of other currencies equivalent to one year's GDP. Seeing as these currencies can now only be sold for one-fifth less than what they paid for them (in CHF terms), there's going to be some explaining to do.
So that's what we learn time and again, in the long run, currency pegs will be abandoned and exchange rates cannot be manipulated; unless two countries which are economically similar and geographically close together, in which case their currencies would move in line anyway.
The question of everybody's lips now is: How long will it be until the Danish crack and allow their currency to rise relative to the Euro?
(For clarity, Denmark was in the same position as Switzerland, its politicians have decided to depress the value of their currency against the Euro to make it easier for exporters and cheaper for tourists (even though the place is still pretty expensive). They can keep the exchange rate down by printing as much money as the ECB is printing and swapping one for the other.)
So that's this week's Fun Online Poll. Vote here or use the widget in the sidebar.
From the Guardian
It may seem misjudged to herald the disappearance of the Page 3 girl as a victory when pornography is probably more easily available than at any time in history. Yet this is a fight that will be won skirmish by skirmish, and the fight against Page 3 has been more than a skirmish. It matters because this is not some small elitist publication but Britain’s biggest-selling newspaper. It matters because it was made to matter through the efforts of brave and resolute women like Clare Short and Harriet Harman, campaigning unflinchingly through 40 long years of sneering and jeering to make people see why it is an outrage in a society that purports to believe in equality between the sexes. It matters because – even when it is subsitituted, as the Sun intends, with more images of airbrushed beauty – it is a reminder to girls worrying about the gap between their own body and some version of perfection that there is an alternative view. It matters because it means that it is now generally recognised that pictures objectifying women – even when she is a willing partner in the objectification – are demeaning and damaging to wider society.
To anyone who thought that this was really just about public displays, think again. This is, to the campaigners, the first step on a road to further censorship and interference. As it happens, I don't think No Page 3 actually won anything. Naked breasts just stopped being any sort of big deal when you can click a button to see them.
But for a supposedly liberal paper to write that paragraph is particularly insidious. Even if you choose to get naked for money, you shouldn't have a right to, because of how it damages others. How is that any different to the way that some Christians talk about how homosexuality damages society, even if two people do it in private?
And what are they saying about women here? That women will be damaged by looking at other women topless? No-one says that this effect occurs on men looking at handsome muscle men, so what's the Guardian suggesting about women? It seems to me that they're saying that women aren't equal to men. Bit sexist, isn't it?
Tuesday, 20 January 2015
From The Evening bloody Standard:
Celebrity chef Gordon Ramsay suffered a courtroom nightmare today after a judge ruled he must personally pay the £640,000 rent on a London pub arranged by his father-in-law allegedly using a ghost writer machine.
Ramsay is personally liable for the whole fucking bill because of a deal signed when that twat Christopher Hutcheson ran the millionaire chef’s business empire into the sodding ground.