Monday, 16 September 2013

Is this Pryce woman really an economist?

From the Daily Mail

But from the economist’s point of view, it is a tax that is set at an arbitrary level with no economic justification for that level or the rate imposed except to raise a certain amount of money.(1)

It can therefore impact negatively on markets and distort their proper functioning.(2)

It creates uncertainty and has an even more serious flaw – it is an inefficient tax.

A widow who bought a house decades ago which has risen in value(3), or a young professional family with children, may both occupy houses in a particular, fashionable part of a city. But they do not have the disposable income to pay a tax which may vary from home to home in the same street.(4)

I don’t take issue with sensible moves by the Government to introduce a stamp duty(5) of 15 per cent for residential properties of £2 million or more which have been bought through a company rather than directly by an individual. In last year’s Budget, we saw an increase in stamp duty for properties above £2 million from five per cent to seven per cent. All well and good.

(1) Nearly all tax rates and levels are to some extent arbitrary. A mansion tax of £2m seems a pretty good way to test the water and see what happens with LVT. Do lots of big houses become empty in London, or do Arab Sheiks and Russian Oligarchs just hand over a few notes rather than buying a new centre forward?

(2) The housing market is already distorted by government improving railway lines, building new roads or rubbish tips. One could argue that LVT is a correction to those distortions.

(3) The Cuddly Toy!

(4) So, move, then. If I was lucky enough that someone offered me double the value of my home, I'd bite their hand off because I don't need to be where I am. I'd rather take the money and move somewhere cheaper. This is one thing that's forgotten about the poor widows: they just got lucky. They didn't improve the value of the valuable homes that they're in. They were the people who owned housing in London before various governments over the past 20 years poured money into it. Dumping a load of tax on them is a small correction to the 20 years of living well off the rest of the country for that time.

(5) eh? stamp duty? sensible? She might want to check the snout she was given inside.

9 comments:

Bayard said...

Economists! what do they know about anything in the real world?

Ian Hills said...

Nice to know that two victims of the Murdoch press have been successfully rehabilitated after their (admittedly somewhat shortened) stints in hell.

Wonder if hubby's new green job involves "lobbying" his old ministerial cronies? If ever the press needed censoring, it is now.

Mark Wadsworth said...

Good work.

In answer to the question, no she is clearly not an economist, she is an embittered ex-wife who will do anything to trash her ex-husband's party.

Mark Wadsworth said...

Actually, you missed off a bullet point, this particular bit of twattish drivel:

"It is an inefficient tax"

No it's not. Worst case, Poor Widow trades down and another "young professional couple" can move in.

Nobody loses their job, the removals people and decorators make a few bob, the YPF has a shorter journey to work and the Poor Widow has freed up a few hundred thousand pounds to see her through, so she's better off as well, without having lost much (she might even save on the old heating bills).

Ben Jamin' said...

She is just your typical brainwashed neo-classical economist.

Here utterances about the MT being inefficient are scarcely believable.

MT falls on land values=no cost of production=no deadweight costs=100% efficient.

Not only that it reduces the capitalised value of land, which being a monopoly does produce deadweight costs, distort markets, push up prices for consumers.

So it's even more efficient (if that's possible;)).

Point being, Mail readers will believe the MT isn't just an envious, spiteful tax. It's economically damaging too.

My only solace is she's an ugly bitch, so I pity her a little.

Mark Wadsworth said...

BJ, her only slightly valid point is that the threshold is arbitrary. It would be far better to set a threshold of about £50,000, being the rebuild cost of a basic house or nice flat and tax everything above that.

By the way, on Planet Homey, the be-all and end-all of government economic policy is to drive up land prices by whatever means,

So in their eyes, a policy which would push down land prices is destructive and inefficient etc.

Lola said...

MW. She is also a liar. Nuff sed.

DBC Reed said...

You are missing the point that Chris Huhne is a land taxer ,which is one reason I sympathise with him quite apart from his doing time for a crime that every young couple I know has committed. He was just unlucky to get hit by a very vengeful wife in league with the so humbled press.
Ms Pryce is attacking one of CH's distinctive policies.A pity cum disaster that he has been pushed out of politics just at the moment when his old land tax ally in the cabinet, Uncle Vince, needs support in the Lib Dem/Chancer party. He only just missed out on the leadership to the very nasty Clegg.

Mark Wadsworth said...

DBC, I'm happy to give Caroline Lucas, Dave Wetzel, Fred H, Vince Cable, George Monbiot, even Polly Toynbee my full support on the LVT front, regardless of other political differences.

But Huhne is and always was the worst spokesman for LVT you can imagine, he did the movement more harm than good.