Thursday, 6 November 2014

Not a lot of people raise their house prices

From the Daily Mail:

Sir Michael Caine was among a string of stars who left the country in the Seventies to escape the punitive 83 per cent income tax rate.

Although the actor is now happily ensconced back in Britain on his Surrey estate, Ed Miliband’s proposed mansion tax has got him worried again.

‘This is a preposterous and silly tax, and I’m very unhappy about it,’ he tells me. ‘I’ve also got a two-bedroom flat in Chelsea Harbour and, due to its value, that’s now a mansion as well.

So, sell it, then. You don't need to live in London, you can live anywhere in the UK with your job.

‘The tax will be based on current property values, but what if there’s a property slump and it goes down? Will I get my money back?’

If I have a good year at work, followed by a crappy year, do I get my income tax back?

Caine and his wife, Shakira, own a Chelsea Harbour penthouse and Keston Lodge, a Tesco-style country mansion in Leatherhead surrounded by 20 acres, which he bought for £1 million in 1999.

Right, so live near Leatherhead. Perfectly nice place to live, and if it was £1m in 1999, it's probably a whisker under £2m now.

‘I feel sorry for all the older people who’ve worked hard all their lives and their London suburban house falls into this category,’ adds Sir Michael, 81, speaking at his artist chum Adam Bricusse’s Kaleido preview party at the Lights of Soho gallery.

Who did nothing to end up with £2m houses.

Caine, the son of a fish porter and a charlady, is worth £50 million after appearing in more than 80 films.

So, why's he bothered about the frankly paltry amount of tax that his £2m house will cost? Few grand a year, he makes a lot more than that for 5 minutes on screen as the elderly sage in all of Christopher Nolan's films.

It does have to be asked, though: How much would his house price fall if he blew the bloody doors off?


Mark Wadsworth said...

It's actually an observable fact that some people move from one country to another in response to high tax rates on annual earned income, or taxes on wealth generally.

Never and nowhere has it been observed that people move abroad in response to taxes on land values. (and even if they do, there will be other rich people willing to buy their houses off them for the new reduced price).

The whole Swiss non-dom 'lump sum' taxation system is based on multimillionaires being willing to pay approx. 5% of what their main residence is worth each year in exchange for getting a zero tax rate on annual income.

Ben Jamin' said...

@ MW

And they are still paying 8% VAT and a few other bits and bobs presumably?

Lump sum taxes fixed to land titles not individuals are definitely the way forward.

All the efficiency of a Poll Tax, but non-coercive and directly linked to benefits received.

Fair, simple, flat and efficient. What's not to like?

Graeme said...

the article makes it sound as if he is living in a converted Tesco store. Can that be right?

Mark Wadsworth said...

BJ, good idea. Let's forget about Land Value Tax and start campaigning for a Progressive Poll Tax instead.

mombers said...

Even if the twat does up sticks, he'll leave 3 houses for others to use in a more efficient way.

mombers said...

"The Oscar winner ended his self-imposed tax exile in America when Margaret Thatcher came to power as he found her tax policies much more favourable."
Would love to see what his mansion tax was in America. Can't imagine he was living in below average value place (the average US property tax is higher than the top council tax bill)

The Stigler said...


Caine's gone from being part of the wealth-creating class to the rent-seeking class, I think - from being against income taxes (when he was earning lots of income) to being pro income taxes (now he isn't).

mombers said...

Well put Mr Stigler! Do as I say, not as I do.