Tuesday 17 January 2012

Killer Arguments Against LVT, Not (190)

From The Soaraway Sun:

NICK Clegg is turning into the new Ed Balls.

The Lib Dem leader's rabid tax plans would go down a treat with Labour. Clegg hates anyone doing well for themselves (1).

His latest idea: Savage taxes on large houses (2), destroying the property market which depends entirely on buyers trading up. (3)

High tax is crippling this country.(4) When will someone talk about taxes coming DOWN? (5)


1) The Sun don't mention that the Lib Dems have offered the Tories a deal - scrap the 50p tax rate and have a Mansion Tax instead. Broadly speaking, the two would raise a similar small amount of money from the top one per cent. By and large, the economic contribution made by the top one per cent of earners is greater than the economic contribution of the owners of the top one per cent of houses by value, end of.

Note how The Sun moves seamlessly from saying that all taxes are as bad as each other (they are not) to implying that some taxes on land values are worse than taxes on incomes (they are better). So actually, Clegg is trying to make it easier for people to do well for themselves, isn't he? The operative words being "doing" and "for themselves", not "collecting rents" and "from others". Under his proposal, the top one per cent of earners would have more money to spend, and mansions would be cheaper.

2) The Mansion Tax is not "savage". Income taxes which take away half our earned income are "savage". These are the taxes which were imposed by vested interests who "hate anyone doing well for themselves". And compared to Council Tax, the Mansion Tax is next-to-nothing.

3) This is the most bizarre claim of all. The point of [the] housing [market] is to provide people with, er, housing. The number of transactions is in itself irrelevant and it is simply impossible for everybody to trade up anyway; for every household trading up, there has to be one trading down. If I'm wrong on the first point, and the point of the housing market is for there to be as many transactions as possible, then Land Value Tax is the ideal tax.

4) No. It's the rent seeking classes - be they quangocrats, corporatists or Home-Owner-Ists who are "crippling this country", and it is those groups who are imposing high taxes on incomes. High taxes on incomes are an effect, not a cause.

5) The Lib Dems did, they talked about scrapping the 50p rate (see above). And I'm not aware that the £20 billion per annum increase in VAT and National Insurance Contributions (which completely dwarf the putative receipts from the 50p tax or a Mansion Tax) were in the Lib Dem manifesto, that was stuff which Labour had decided on behind the scenes and the Tories just implemented.

9 comments:

Anonymous said...

...and If mansions get cheaper, it'll compress the rest of the market, which means the terrible news that, housing costs for everyone are less (i know awful)!

Everyone knows you're only richer if you're paying lots of interest to banks and the bank let you borrow even more.

Debt is wealth
rent-seeking is earning.
freedom is slavery.

AC1

Mark Wadsworth said...

AC1, the Mansion Tax will affect a few dwellings in the poshest parts of London, the prices of which bear little or no relation to anything anywhere else. But good slogans though :-)

Anonymous said...

A little bit of compression should affect everywhere.
Although perhaps people having more money from the 50p cut in tax * a government that loves rent seeking might have more effect on lowering house affordability.

AC1

Anonymous said...

Of interest, if a so called mansion is owned by an offshore company who pays the tax?
Is the idea that the tax must be paid, like rates, by the owner?

Mark Wadsworth said...

AC1, you've lost me.

Anon 20.33. The owner of course. In real life, we have Business Rates on commercial premises, and they always get paid. We have council tax, and that gets collected. We also have something called the "Non residents landlord scheme" that manages to collect a good chunk of the income tax due on rental income. If the Mansion Tax were payable by the registered freehold owner as per HM Land Registry on a "use it or lose it" basis, then collection rates would be 100.00%.

Whether it's the occupier or the owner who hands over the cheque is neither here nor there.

Bayard said...

Was that a piece by John Littledick? It certainly sounds like his style.

Mark Wadsworth said...

B, I don't know. But I guess he is an Über-Home-Owner-Ist.

Anonymous said...

MW,
Basically because of the states various location subsidies, the cut in taxation from the removal of the 50p band will probably mean more cash chasing property "investment".

AC1

Mark Wadsworth said...

AC1, aha yes, but my assumption was that the 50p tax rate raises (say) £1 billion and that the Mansion Tax would also raise (say) £1 billion, let's compare like with like and stick to principles.

So yes, the £1 billion income tax cut would see people's income rise by £1.5 billion, and as you say, it might even be well be that mansion prices go up slightly, so that's win-win, isn't it?