Sobers unleashes a torrent of primo Homey bleating under the previous post:
Your calculations will work as long as you assume that everyone lives in a house their current income can afford the 80% mortgage on. Then income will be largely in proportion to house value and the amount they lose in LVT will be offset by the amount gained from tax cuts.
I made no such assumption, I used a middle-of-the-road case as an example to show they are - as you'd expect - modest winners if we had LVT instead of Employer's NIC, Council Tax, SDLT, IHT and the TV licence fee, and stated quite clearly that it's easy to think up categories of winners and losers.
However many people live in houses that they couldn't afford to buy on their current income, and not just the widows in mansions you always decry as a straw man.
I am perfectly aware of this; it is irrelevant. Many people couldn't afford to buy their current homes - I wouldn't get a mortgage any more (now over 50) - but most of the people in this category could afford to rent their current home - as I did for six years before the LL and I both got bored and he sold it to me. And LVT is actually based on rental values. I just use % of current selling price as an approximation.
I can think of several people in my own social circle and family who are not that wealthy, certainly not in income terms, well below the average income, and live in houses that they could not afford to buy today.
Anecdotal and repetition.
Mainly because they have either received small inheritances they have put into property...
Not hard work then? And that's incorrect and lazy use of the word 'property'.
... they bought houses cheaply many years ago when house prices in that area were relatively lower, or they bought their council house at a considerable discount...
Exactly, the Baby Boomers helped themselves while it was still government policy to keep rents and prices down, and then pulled up the ladder.
... or have paid off their mortgage and downsized their jobs to match their outgoings. So they are not 'rich' by any stretch of the imagination, yet they would be clobbered by an LVT.
Sobers' Boomers are pleading poverty, which is entirely self-inflicted, having 'down-sized their jobs' entirely voluntarily. They'll be the first to slag off the first lazy Millenial who says "I'd like to inherit some cash, buy a house at a discounted price and then work part-time'.
Why the use of the word "clobbered"? Why is it OK for younger people to be "clobbered" with VAT, NIC and rent?
Mainly because they have managed to build up some capital, which is located in their houses.
They clearly haven't "built up capital" by his own admission . They have ridden a government-sponsored house price bonanza and are now resting on their laurels. The actual 'capital' they own (the building) is largely unchanged. Rule of thumb: if the price of something varies inversely to interest rates, it's not real capital, it's a source of rent.
He sneaks in a diagonal comparison as well.
The fair comparison is: younger tenant on £25,000 a year is paying additional tax to fund the public services which benefit Sobers' semi-retired example, also on £25,000 a year, but living in a £500,000 home.
How the fuck is that 'fair'??
Thus they are exactly the one who will scupper any LVT - politically speaking its not a pure balance between winners and losers that determines which side wins, its how many winners actually side with the losers, because they feel its unfair whats happening to them.
Hence why tobacco taxes are politically fine, because the winners don't care a jot about smokers, they just think 'If you don't like the price of fags, don't buy them, and you won't pay the tax'.
If you don't like paying LVT, then downsize.
Whereas if significant numbers of ordinary people with below average incomes are hit by LVT, then many more people will vote against it, even though they might be winner themselves, because they consider it unfair on someone else
Again the word 'hit'. He glosses over the fact that he wants landowner subsidies to be paid by taxes which 'hit' somebody else.
Sobers is proposing continuing an unfair system on the grounds that is 'fair'. Well it's not; why should working tenants 'with below average incomes be hit with [VAT, NIC and rent]' to pay for landowner subsidies?
What the Homeys really want is socialism for land speculators; I don't like socialism and I don't like land speculators, sorry. Younger people just have to learn to be as selfish as the Homeys.
Tuesday, 4 June 2019
Killer Arguments Against LVT, Not (459)
My latest blogpost: Killer Arguments Against LVT, Not (459)Tweet this! Posted by Mark Wadsworth at 13:00
Labels: Home-Owner-Ism, KLN
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11 comments:
"The fair comparison is: younger tenant on £25,000 a year is paying additional tax to fund the public services which benefit Sobers' semi-retired example, also on £25,000 a year, but living in a £500,000 home."
See, you can't resist over egging the pudding can you? These are not people in 500k houses. They are people who have £200-300k houses, but couldn't afford to buy them at current prices. They probably still have mortgages to pay, only nothing like the value of the house now. They are not 'rich' by any standards. And all you can say to them is 'Hard cheese, move!'
If you can't see how that is going to go down with the average person in the street, then you're massively disconnected from how normal people think. Lots of people look forward to the day when their mortgage is paid off, and they can take life a bit easier, take a lower paid less stressful job, go part time, whatever. But still live in the house and area they have chosen to make their life in. If you think telling them 'Hey, you're either going to have to keep slaving away til you drop to pay the LVT on your house or sell up and move to somewhere entirely different (and cheaper and thus not so nice)' then you're mad. Its about as appetising as a bucket of cold sick to the vast majority of people.
S, if your straw man lives in a £200,000 to £300,000 home and is still working to pay a mortgage, then they'll end up paying the same or less tax. That was my previous worked example.
S, do you not recognise your own Double Think?
If you think you can get away with telling people in their twenties and thirties "Hey, you're either going to have to keep slaving away 'til you drop to pay the rent while saving up a deposit, then pay off a huge mortgage by the time you hit retirement age (which is steadily increasing), all the time paying a shed load of extra tax to subsidise the Homeys, or just stay living with your parents for ever" then you're mad.
@Mark
The way I see it the 'welfare state'/post war settlement was an insurance policy paid in the form of taxation by the middle/upper classes to stop the 'masses' from rising up and installing communism after WW2. The ability to 'better yourself'/own your own home/get a good education for your kids etc helped as well - basically Georgism lite as you call it.
You could argue, as your final para above suggests, that introducing LVT would have the same effect on 'the young' and would be the price of stopping them do something REALLY stupid.... like voting to stay in the EU or letting in Corbyn et al.
And, as we all know, LVT is the least worst form of tax there is - so if I have to pay tax, then I want to be as efficient as possible with the least damaging effect.
Oh and Loa's comment about the Govt not having so much control is a nice 'feature' rather than a bug.
"if your straw man lives in a £200,000 to £300,000 home and is still working to pay a mortgage, then they'll end up paying the same or less tax. That was my previous worked example."
They aren't straw men, they are real people I know. And they have small mortgages left, or indeed have paid them off. And have low incomes, because they don't need big ones. Your example assumes people have just bought their house and still have the majority of it to pay off, and thus have to have an income sufficient to do that, when in reality many people reach their late 40s and early 50s and have little mortgage left. But due to house price inflation may be sitting on a house they could never afford to buy now. And you want to throw them out of that house, by taxing it heavily, and make them go and live elsewhere, in a sh*tty part of town, because thats the only area they could afford the LVT out of their low income.
This is the reality of LVT, its not a 'tax on land' at all, its a tax on income, by the proxy of the house you live in. All LVT does is make everyone live in a house their income can afford the LVT on. And so everyone will pay roughly the same proportion of income in LVT as they do now in income tax. But huge numbers would have their lives uprooted by being forced to move from the house they may have lived in all their lives, as is the case of one example I'm thinking of - an old school friend who bought the council house she grew up in, and works as a checkout operator in a Co-Op. She's nowhere near retirement, but never could afford to buy her house now, she's minimum wage and her husband has a congenital heart problem, and can't work. But of course you view her has a 'Homey' who should be taxed into the nearest slum because she only earns a low wage but she has temerity to own her own house. Doesn't she know that only the rich should be allowed to own houses???
@Sobers - "(she) bought the council house she grew up in, and works as a checkout operator in a Co-Op. She's nowhere near retirement (...) and her husband has a congenital heart problem, and can't work." I am over 40, also nowhere near retirement, work really hard in IT, occasionally educating myself on new developments in the field, propping up myself with coffee, renting privately. (1) I think it is fair that a person who invests so much effort into one's work wants more from life than somebody doing - for whatever reason - unsophisticated work as a checkout operator. Sorry to be harsh to your friend, but that's true - if I was a checkout operator, I couldn't afford a roof over my head, and I when I invest my own time, off paid hours into IT, I expect returns. (2) Where would I be if I developed a medical condition so I could not work? Where would a person who actually is a checkout operator but less lucky than your friend be, if he or she or their spouse developed a medical conditon?
"an old school friend who bought the council house she grew up in, and works as a checkout operator in a Co-Op. She's nowhere near retirement, but never could afford to buy her house now, "
Yes, because she was able to buy it at a massive discount to its true value. I don't suppose you'd think it such a good idea that landlords should be forced to sell their property at as a discount, if those landlords were private landlords, so why is it a good idea for public ones.
In any case, all this talk of "not being able to afford to buy the house they own" is completely irrelevant. LVT is based on relative values. It doesn't matter if the house in question is worth £60,000 or £300,000, it's what it's worth relative to everyone else's house that matters. It's not as if your friends' houses have gone up to £300,000 while everyone else's have remained at the £60,000 they paid for them 30 years ago, is it?
Sh, first para, completely agreed.
The outcome of LVT would be surprisingly boring, everybody - young and old - goes to work as much as necessary if they want to have nice stuff and tries to get on in life and with each other. There'd be no wild swings from Socialism to Neoliberalism and back.
S: "They aren't straw men, they are real people I know."
And ten million over-taxed tenants aren't straw men either.
"a 'Homey' who should be taxed into the nearest slum because she only earns a low wage but she has temerity to own her own house."
So, socialism for land speculators, that's what you want.
Young people can do all the work and pay all the tax, and rent a flat in the nearest slum, while your check out girl lives an easy life, merely because she was lucky enough to come of age at a time when UK govt policy was to keep prices and rents down.
Who do you think should live in the nearest slum? Somebody has to live there.
PW, excellent, thanks for back-up.
B, also thanks for back-up. This mantra that "some people wouldn't be able to buy their own house" is very true but completely and utterly irrelevant to the topic in hand.
Fewer than half of adults are landowners, and a significant majority of those pay more in council tax than a land tax. Nonetheless, introducing LVT over time will deal with the small but vocal number who have won the housing lottery and expect to live a much higher standard of living than those paying for their public services.
Is it right that we live in a society that privileges one group to harm another without paying them compensation?
It's a straightforward question and choice.
M, I suppose we have to win the moral argument, and then the overtaxed and the tenants will just ignore the Homey bleating.
Surely people can be trained to understand that if the current value of the housing they own (to the extent they own any at all, minus mortgage) is less than a certain multiple (six, seven, ten, whatever) of their household's earned income, they are being ripped off, actually cheated and stolen from?
B - Sobers, who owns large tracts of land near an expanding town which he sells of piecemeal for development has decided this is very, very right indeed.
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