Friday, 15 February 2013

Meanwhile, on Planet Home-Owner-Ist...

From today's Evening Standard Letters page:

If Miliband has any sense, there is no way he will actually implement a mansion tax that would alienate an important element of middle-class Labour support. In the London property market, the likely £2 million threshold is hardly a fortune(1): perhaps buying a two-bedroom flat in a leafy, but not super-prime, inner London area,(2) and there are plenty of properties in this bracket that were bought for relatively little years ago.(3)

A mansion tax would have a profound effect on the dynamics of the market: a lot of people would sell up(4) and court cases would be certain as others try to revalue their property.(5) Foreign investors(6) have already been hit by the Coalition’s clumsy levy of 15 per cent stamp duty in the last Budget,(6) and a mansion tax would only magnify their problems; why are we trying so hard to repel them?(7) A far more plausible, consumer-friendly approach is to bring in a range of higher council tax bands above Band G.(8)

Trevor Abrahmsohn, Glentree Estates.(9)

Who or what is "an important element of middle-class Labour support" Does he mean multi-mansion owning Tony Blair? If I were Cameron and Clegg, I'd introduce Mansion Tax (or even better Land Value Tax) just to spite Tony Blair and Chris Huhne.

1) Do these people not listen to themselves sometimes? Do they not think about how their outpourings of Homey bile "resonate" with the ordinary sort of reader? According to the Homeys, £2 million... is hardly a fortune"?? That sounds like a life-changing sum of money to me and probably to most people reading this.

2) That's an outright lie. Even in the most expensive part of super-prime London, i.e. Mayfair, there are plenty of two-bedroom flats available for rather less than £2 million.

3) Poor Widow Bogey. He does not specify how many is "plenty" or what "relatively little" is or how many "years ago", but so what? It might be true that there are a few thousand current owners of £2m-plus homes who bought them thirty or forty years ago for £10,000 or £100,000 or whatever. They've massive windfall gains on which they have not paid a single penny in tax. They didn't even pay off the original mortgage out of "taxed income", they paid off half of it out of the rent they were saving by owning not renting and inflation paid off the other half.

4) Great - and others would buy. The people who spend £2 million on a two-bedroom flat are not the sort of people to be bothered by a few thousand quid a year "Mansion Tax", it comes off the price anyway.

5) Fine, let them go to Court (strictly speaking, a Tribunal but this man knows shit about fuck, he doesn't do "facts") and argue that their home is only worth £1.5 million. Maybe it is only worth £1.5 million, in which case we introduce a mini-Mansion Tax for homes worth between £1 million and £2 million.

6) Nobody invests in land values. They are just there.

6) Agreed, SDLT is a tax on transactions and a very bad tax. The 4%, 5% and 15% rates are shameful. Now, notwithstanding that the SDLT paid probably "came off the price", as a gesture of goodwill there's nothing to stop the government giving people credit for any SDLT paid; if you paid 5% SDLT, you are exempted from Mansion Tax for the first five years from the time you bought it; if you paid 15%, you are exempt for the first fifteen years (or whatever).

7) A Mansion Tax would attract rich foreigners to London; for every whining Poor Widow who moves out, a wealthy oligarch or kleptocrat and his or her partner and family move in. They aren't keen to pay £2 million for a flat; they are keen to live in London; the Mansion Tax would be small change to them and selling prices would fall accordingly anyway (it acts like a higher interest rate). Subsequent purchasers would not give a toss. And every £1 that these people spend in the UK reduces our woeful trade deficit by £1. What's not to like?

8) This is how stupid the man is. The highest Council Tax band is H, not G (in Wales, they go up to I).

9) To cap it all, the man works for a firm of estate agents. If they knew what was good for them, they'd be rubbing their hands with glee at the thought of a Mansion Tax.


Bayard said...

"Who or what is "an important element of middle-class Labour support"?"

I think he's referring to himself.

He's a Homey idiot, but I agree with him insofar as the Mansion Tax is an idiotic tax, pure Politics of Envy, much better, as he says, to put council tax bands up to Z or ZZ or whatever it takes to make the whole scale have some sort of proportion. People might even like having band up to ZZ so they can whine about all the council tax they have to pay, whilst really boasting about what an expensive house they've got. BTW, to quote Paddy Ashdown, ideas are not responsible for the people that believe in them.

Mark Wadsworth said...

B: "People might even like having band up to ZZ so they can whine about all the council tax they have to pay, whilst really boasting about what an expensive house they've got. "

Exactly. I once posted something to that end, but after five minutes of searching, I cannot track it down. And the bonus is that they can boast indirectly about how much they earn (because if they didn't earn that much, they wouldn't be able to afford the tax).

DBC Reed said...

Chris Huhne was supporting LVT when it was really out in the wlderness.(You were at the big IEA dust-up I remember.)
I don't think you are giving enough significance to Ed Milli's Bedford speech which has, in my view, something of the breakthrough about it.You need to read the full text, up on the NET from the New Statesman.He is on to the (basic Marxist) fact that people don't have the wages to buy the goods and services they produce: he goes on about the Bedford brick makers no longer being able to buy houses.Seeing as he is interested in taxing property,this gives us an entree IMO.

Mark Wadsworth said...

DBC, I'll believe it when I see it. Funny how Burnham, Milliband Sr and now Milliband Jr all had a Damascene conversion to the delights of LVT the minute they lost the election.

Lola said...

I would agree with DBCR. Millitwats speech and 'policy' are tacit admissions that income tax is bad and land tax is good. Ed is probably too dense to see that, but that is what it is.

DBC Reed said...

@MW Was not aware that Millisnr latched on to LVT.When was this then?

Mark Wadsworth said...

L, yup.

DBC, like I said, shortly after Labour lost the last election, Miliband Snr burbled briefly about Mansion Tax

DBC Reed said...

My mistake :by Miliband Snr I thought you meant Ralph.
You're being a bit harsh.They all latched onto property taxes trying to win the election for Labour leadership (2010).David M =Mansion Tax;Diane Abbott= "wealth" tax; Andy Burnham = LVT. Of course the winner was Ed who had n't then mentioned any of these taxes as far as I remember.
We can't say the continued denigration of income taxes etc has n't had some effect.
"Say not the trouble naught availeth"( or carry on regardless,we can do no other etc.)

Kj said...

DBC: Unfortunately, the denigration of income taxes has been to the benefit of even worse stealth taxes...

Mark Wadsworth said...

DBC, I'll believe it when I see it.

Kj, fair play to Ed Balls (of Labour) he often says that VAT is too high and should be reduced.

DBC Reed said...

Rather than intro stealth taxes,the instinct of the present British government is to cut services, following the sound economic doctrine: when in a depression, reduce demand.