"desperately seeking a solution" left a comment on Break Even Point Fun:
I said: Strictly speaking, your take home pay would go up to [at least] £3,333 (depending on what line of business you are in).
DSS said: OK, I clearly don't understand how this works, because this statement stumped me. Surely I would be paying £20k in tax*, and still earning £40k? So, my take home pay would be £20k per annum?
Assuming this £40,000 is not liable to Employer's NIC (and the employer's business is VAT zero-rated), your headline salary might not increase much (in the short term), but there would be no PAYE, income tax etc etc, so your take home pay would be equal to your gross salary (by definition).
How you choose to spend that take home pay is an entirely separate topic. If living on your own in a nice big house (in the second to top decile by value) is your thing, then fine - but that is entirely voluntary personal consumption expenditure which adds nothing to GDP. There will be plenty of other people earning £40,000 who live in a much smaller house; or who share their house with others; or who rent privately etc, who will all be better off to a greater or lesser degree.
* The £20k is overstated. The flipside of LVT is universal benefits or Citizen's Income. I'd like to see at least £3k per adult per year, but for the sake of this discussion, let's pencil in £1k.
Inconvenient people
2 hours ago
4 comments:
At the end of the day its the crap planning system which artificially increases the value of your nice big house, if we changed planning to be a bit more lax on allowing land to be built on and changed regulations so that only decently proportioned properties are allowed then we'd be much better off as a nation. We need to teach the people to stop voting for the same old junk, the government actively keep us down...
Assuming this £40,000 is not liable to Employer's NIC (and the employer's business is VAT zero-rated), your headline salary might not increase much (in the short term), but there would be no PAYE, income tax etc etc, so your take home pay would be equal to your gross salary (by definition).
My head's spinning and you do this for a living?
SW, I know MW doesn't agree with me on this, but house prices are not subject to the law of supply and demand, they are subject to Ricardo's Law (of rents), which states that the rent a landowner can charge is directly proportionate to what his potential tenant will pay. That this applies to owner-occupier houses too is accounted for by the fact that, these days, most people buy houses with rented (i.e. borrowed) money. Thus it is low interest rates that cause house price inflation, not lack of supply.
SW, liberalising planning laws is A Good Thing in and of itself, but all the evidence shows that it has a surprisingly impact on house prices or rents, as B explains. In fact, liberalising planning laws would increase the total value of housing and hence total rents payable and hence total land values in the UK.
JH, yes, I do this for a living.
B, I do agree. The biggest factors on house prices/rents are direct or indirect subsidies (artificially low interest rates, subsidies and/or very low taxation).
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