Monday, 29 September 2014

Killer Arguments Against LVT, Not (338)

From Get Surrey:

Labour's plans to introduce a 'mansion tax' will not just affect the rich but in time "sweep up" middle income families, according to a Conservative MP in Surrey.

Dominic Raab made the claim following shadow chancellor Ed Balls' announcement this week that the party wants to slap an annual levy on properties worth more than £2m...

The MP for Esher and Walton said:

"Elmbridge and wider Surrey are full of people who have saved up for a nest egg, but may not have a particularly high income. It’s bad enough they are being targeted again by Labour and the Lib Dems.

"Worse still, the reality is that over time the net will widen, as it has with stamp duty, to sweep up many middle income families who have grafted hard for years only to be hit by another punitive tax on savers.”


Woah! Proper scientists try to control all factors but one and then compare like with like.

Owner-occupiers up North or in Wales work, or have worked, just as hard as people in London and the south east, and they have paid just as much tax on their earnings (i.e. too much).

The one big difference is that Baby Boomers up North and in Wales have seen the value of their homes increase by "only" £100,000 since they bought them, but plenty of people in London and the south east have seen the value of their homes go up by £1 million.

So however that difference in 'wealth' arose, it is not down the those affected by the Mansion Tax having worked harder to "save for a nest egg", is it? So logic says that the Mansion Tax is not a tax on hard work or thrift or savings. You save money by spending less than you earn; that land value gain was not the result of people down South spending less.

And more recent purchasers in London and the south east clearly do have very high incomes, or else they wouldn't be able to afford to buy. End of.

7 comments:

paulc156 said...

Jonathan Portes has a good article over on CiF on merits and otherwise of Mansion Tax but asks for a wider ranging tax on property values [not exactly LVT] replacing stamp duty and council tax.

Ben Jamin' said...
This comment has been removed by the author.
mombers said...

And in other news, higher rate tax on earned income to become the norm for many, many, many more people than £2m home owners...
That said, mansion tax is flawed - should be integrated with council tax really to avoid duplicated collection systems.

The Stigler said...

mombers,

The mansion tax is at least, a start. It's crude, failing to distinguish between a high value home in London and a large country estate near Trowbridge (where the state has done little to improve the value and most of the value is in the bricks) but there are very few of those estates.

And I don't think LVT is perfect. Burford would attract bigger LVT than many parts of Oxford, despite the fact that the state spent far more on Oxford than Burford (Burford is expensive today precisely because it missed out on early to mid 20th Century development and so is rather pretty).

Mark Wadsworth said...

PC, thanks, good article.

M, yes, if we had Council Tax up to Band Z or Band ZZ, then there'd be no call for Mansion Tax on top.

TS, but Burford has still benefitted from planning restrictions and there must be some spill over from Oxford. An equally pretty village a few miles from Sellafield would not be worth as much.

Mike said...

I guess land values don't so much reflect how much public money has been spent, as show where it has been spent well.

If land value is high in Burford, despite low state spending, then whatever they are doing (or not doing) there must be working.

Mark Wadsworth said...

M, land values reflect hundreds of different things, all of which are to do with how society organises itself.

Even the land value of the most "natural and unspoiled" areas of the country is down to the fact that we have collectively decided to leave it that way, even if the only government spending/action involved was enforcing zoning and anti-pollution laws.