Wednesday, 25 June 2014

Could the Homeys please decide what their story is and stick to it?

From the reader's letters in yesterday's Evening Standard (24 June, page 57):

We have 12,000 homes worth over £2 million in Kensington and Chelsea, 7,000 of which have been in the same ownership since 1999.

The owners include families, retired people and others on fixed incomes who would be driven out by a mansion tax.

Cllr Emma Dent Coad, Kensington and Chelsea Labour group leader.

The 7,000 is probably overstated, but so what anyway? Families don't need to live in the poshest bits of central London, they can cash in their multi-million pound tax-free windfall gains and buy somewhere absolutely lovely a bit further out; if the parents work in central London (to the extent they still need to) they can bloody well commute in like hundreds of thousands of the rest of us. Ed Balls has finally realised that he can defuse the Poor Widow argument by offering the "defer the tax until death or sale" option. And WTF does 'on fixed incomes' mean? Welfare claimants?

Now for the equal and opposite and equally invalid argument:

There is no need to go further and make [council tax or mansion tax] progressive. Most of those who occupy the valuable homes are already paying the lion's share of income tax - not to mention stamp duty when they buy.

Andy Thompson, Worcester Park.

The mansion tax would not be 'progressive' relative to council tax, it would still be slightly regressive. All Ed Balls suggested was extending the ATED to all homes, and the ATED charge is between 0.3% and 0.7% of the value of £2 million-plus homes; Council Tax on the cheapest homes in the UK is between 1% and 2%.

Income tax on the other hand is hyper-progressive, the rate for higher earners is twice than for lower earners (National Insurance is regressive and largely evens this out, actually). Stamp duty is hyper-progressive as well. So the letter can be taken as an argument against such stupid taxes and not against mansion tax, which is a very sensible one.

But which parallel universe are we to imagine exists?

The one in which most K & C owner-occupiers are on low incomes; or the one in which most are on high incomes?

The one in which the mansion tax is unfair because it falls on people who already pay a lot of tax; or the one in which the mansion tax is unfair because it falls on people who paid little in stamp duty and pay little or nothing in income tax?

The one in which low income people are 'driven out' of the fashionable areas or the one in which higher earners are 'driven out'? Are these idiots seriously suggesting that everybody will be driven out? Quite clearly, the mansion tax benefits higher earners who now have to pay a little bit less to move in to the fashionable areas and pay a fairer share in tax for that privilege.

(In the medium and long term, higher earners will displace and replace the lower earners anyway, with or without Mansion Tax. All the Mansion Tax will do is speed up that process a bit.)


ThomasBHall said...

The story is fixed, tax on land and property must be opposed in all and every way possible. We can call it whatever suits the moment, a tax on ambition, a tax on wealth, a tax on those that can afford it least, or a tax on those already paying the most. Whatever, we remain absolutely consistent in our opposition to it.

Mark Wadsworth said...

TBH, yes of course. It is a tax on single lonely pensioners, a tax on large families, a tax on low earners, a tax on savers, a tax on borrowers, a tax on banks, a tax on business (cont. page 94).

Mark Wadsworth said...

.. and of course it is also a tax on landlords, but also on tenants, and on farmers, property developers, homeowners, on retailers and hence on shoppers, they might as well have a tax on fresh air (cont. page madness).