Friday, 4 July 2014

Killer Arguments Against LVT, Not (328)

This one is copper-bottomed, iron clad, gold plated, tipped with depleted uranium and will be mentioned in despatches (or dispatches) and probably have an aircraft carrier named after it, from yesterday's Evening Standard (4 July 2014, page 54):

Comments like Joan Kennedy's regarding the "super-rich" being the only ones objecting to the mansion tax are totally wide of the mark (Weds).

My husband and I live in a terraced house that is creeping towards the £2 million mark and might well reach it by the time of the next election.

So seriously do we take this threat from Labour that we have, regrettably, already identified the employee in our small business who would have to be made redundant in order for us to remain a going concern.

Get it, Joanna?

Jayne Gould.


Bayard said...

That's like Carole Malone having a go at Vince Cable for suggesting that the maximum income multiplier the banks should be allowed for a mortgage be 3.5 times. "How could anyone afford a house at today's prices if they did that?, she raged.
You are at a loss where to start.

Ben Jamin' said...

Awww, that's so cute.

So,they are not really a business but a charity.

And if you ask them to pay for the privileges they get from the State, they'll just have to stop being such lovely people.

I hope you feel guilty, evil land taxers.

Physiocrat said...

There are terraced houses and terraced houses. Many London terrace houses are palatial, are over 2500 square feet in floor area and stand on plots 22 feet wide and 120 feet deep.

Can anyone can find an ordinary London terrace house ie 1200 square feet or less, with an asking price of more than £1.5 million?

Mark Wadsworth said...

B, that's excellent as well.

Bj, no I don't feel guilty in the slightest, sorry.

Ph, I don't know. All I know is that asking prices are crazy.

Physiocrat said...

The subject came up on the Guardian web site where this was claimed. I couldn't find anything that dear in SW1 or SW3. There may be something in SE1 or SW2, also opposite Parliament within the Division Bell range. There are some "ordinary" terrace houses just on the north side of Waterloo East Station which escaped slum clearance. The Fournier Street area of Spitalfields is pricey, but they are early Georgian town mansions, there is also the Columbia Road area. That is surrounded by council house territory.

Terraced just means that there are attached buildings on either side. The houses in Carlton House Terrace, for example, which would certainly count as urban mansions.

Mark Wadsworth said...

Ph, yes, in the middle of London, more or less everything is 'terraced' so that in itself is no indicator or the size or value of the building.

Steven_L said...

So faced with the choice of spending less, moving, sacking a duty manager (I presume she's not talking about sweeping the floor) or taking in a lodger, she'll go back to work.

Isn't getting idle welfare spongers back to work supposed to be a good thing?

Mark Wadsworth said...

SL, there are two classes of welfare sponger:

1. People who don't work and who live in council housing.

2. Land welfare spongers who get given money for free from everybody else. These people are an exalted class. This is the dream, to buy a 'property portfolio' and retire on the rental income.

It's the same as the difference between "single mother" and "divorced housewife".

Hwfa Morgan said...

Mark, when people start ranting on about "single mothers on benefits" I point out that they are being a bit harsh towards a poor widow who's just lost her husband.

Anonymous said...

@Physiocrat. 120' deep is massive but 2500 sq ft is hardly palatial.
50' deep by 25' wide is 2500 sq ft, assuming it's a two story house.

Kj said...

In other words, their poor employee would be screwed if their house in spain came in a bit more over budget as well. In fact their house is a business expense, and their employee does not create any extra income for their business. Welcome to the upside-down world of homeownerism.

Mark Wadsworth said...

HM yes, but is the Poor Widow a homeowner or not?

PC, average UK house is 800 - 1,000 square foot. 2,500 is pretty generous.

Kj: "their employee does not create any extra income for their business"

That puzzled me. Either they are a charity and paying an employee who makes no money for them (as BJ said), or else Jayne would have to go back to work (as SL said).

But don't worry, Jayne does not exist. All these letters are written by people working for the propaganda departments of banks and landowners.

Physiocrat said...

Really big London houses eg Bedford Square, will have about 22 feet frontage and be about 30 feet deep ie two rooms. That is 600 square feet per floor. Say four storeys plus basement and attic, that could add up to over 3000 sq feet. Some of these houses are on long plots. Those are genuine town mansions.

Ordinary two story houses, which were unusual in London before about 1870, are typically 16 feet wide, 25 feet deep and have a two storey extension about 10 feet wide and 12 feet long. The extension is invariably a mezzanine level, thus one goes down stairs from the entrance hall for the lower floor and the upper floor room is on a half-landing. That is an efficient use of the land. Houses with wider frontages and no extensions began to be usual after 1920.

Mark Wadsworth said...

Phys, perfect, you have just described the typical east London terraced house built between 1870 and 1910 or thereabouts.

The house I lived in 1998 - 2008 was exactly that big, only a bit bigger, there are infinite variations on the basic model.

But multiplying those numbers up gets us to 1,000 sq ft or thereabouts (the one I lived in was more like 1,250 and was a decent size for a family of four or five.

Mark Wadsworth said...

ps, I vaguely remember being in a friend's late Victorian terraced house in Roundhay, Leeds, which had exactly the same basic layout. It is the best and most efficient use of land, space etc.

Hwfa Morgan said...

"HM yes, but is the Poor Widow a homeowner or not?"

I think, for the purposes of this discussion, that she is a tenant in receipt of housing benefit.

Mark Wadsworth said...

HM, tough call.

I suppose it depends on whether her husband was working before he died and how he died.

If he wasn't working and died in a pub fight or infection following a botched tattoo job, then she's chav scum.

If he had a sensible job and was beaten to death by crack-addled Islamic football supporters on a drunken rampage, or died of some disease which his GP did not notice or where the NHS refused to pay for treatment, then she is a Poor Widow.

[Of course, if the couple had a mortgage, then she is an "aspirational homeowner", and the subsidies she gets are not "housing benefit" they are payments to "enable her to build up capital and take a stake in society" and so on.]

Physiocrat said...

How about the 96 year old widow whose hubby was shot down in an air raid over DĂĽsseldorf in 1943? Doesn't she deserve a bit of consideration?

Mark Wadsworth said...

Ph, is the one whose pension was raided by Gordon Brown, is active in the local community and whose grandchildren need to inherit £2 million to help them onto the property ladder? She only paid 2'6 for her home back in the 1940s and it's not her fault if the value has rocketed.

Physiocrat said...

That's the old girl. Tough bird. The Jerries were terrified of people like her, it's one reason why Hitler put off his invasion plans.

Mark Wadsworth said...

Ph, exactly. Hitler wanted to come over here and concrete over the English countryside, that's what her generation was fighting to defend. And if you land value taxers have your way, that's exactly what will happen.

(I'm not joking, this was once advanced as a Killer Argument Against LVT).

Dinero said...

In a round about way Jayne makes a point that is valid within the context of the politics of employment focused supply side economic analysis.

Physiocrat said...

Which shows that employment focused supply side economic analysis is looking at the economic process from the wrong end. Workers are a cause of production. Wages are a share of the production, that share which goes to labour (including the employer's own labour). Part of what is classed as "profits" consists of wages.

Mark Wadsworth said...

Din, I do not understand what you mean.

Phys, exactly, spot on.

Strictly speaking, wages are not a "cost" (unless a business is forced by law to employ unproductive workers). The profits of the business are the gross profits which is shared between employer and employees.

People are too thick to understand this - so i give examples of a partnership promoting an employee to become a partner, or a person running his business through a limited company and paying himself a salary. They still don't get it, but hey.

mombers said...

If their employee has a negative marginal profitability, sure they can save money by firing them so that they can afford their housing services levy aka mansion tax. But surely they should be much more concerned about the enormous rises in other taxes like VAT, income tax, etc.? If their place pops over £2m, they'll face a tiny bill that will grow by say 5% a year, whereas VAT, income tax and NI rises have been much bigger and will keep getting bigger.

Dinero said...

You are looking at it from a profit aimed micro economic basis.

Contemporary macro economic politics is different.

The letter is aimed at a politition whos economics has employment as the goal.

And in that context it makes sense.

There is not much sense in her coming out of retirement and putting her emploey on the dole.

The Accounts of the governemt do not benefit from that.

The media conversation between corperations and governent is "tax me less and I will employ more peoopel"
There is no reason in that context to ridicule her because she is not running corpoertion but is running a small buisiness.

Mark Wadsworth said...

Din, thanks for explanation.

From the letter, there is no reason to assume that Jayne sees employment as a goal (or else she would be back at work herself, assuming SL's take on it is correct). The letter is addressed to politicians who see high house prices as pretty much the only goal.

Their solution to unemployment is 'slash benefits'. That way there is more money for Help To Buy and bank bail outs, important stuff like that.

Mark Wadsworth said...

M, no no no, taxes like PAYE or VAT are grubby little taxes on workers and business, that;s not real wealth is it, which they create, so if the government helps itself to half, then no harm done.

It's a tax on the entirely unearned benefits of land ownership which is damaging to the economy. Because only land is real wealth.

Clearly, when it comes to taxes on land, all of a sudden the Homeys wail that "land is not real wealth as it doesn't generate income" thus completely contradicting themselves, but that is their job and that is what they do.

Physiocrat said...

Land is not wealth. Land value tax is a tax on the actual or imputed revenue stream that accrues to the owner of land ie its rental value. Perhaps this needs to be said more clearly. LVT is a tax on real income, that part of income which is not earned but derives from the presence and activities of the community.

It is also a revenue stream which has to be maintained by the continuing provision of infrastructure by the community. Without the Thames Barrier, for example, which is now being used several times a year, London would quickly revert to worthless swamp, the first thing to happen being the flooding of the London Underground which would put the whole of the capital out of action.

Mark Wadsworth said...

Phys, "If it is real income, then show me the money! You just want to tax my hard earned wealth which I bought out of already taxed income. Squeeze the rich, that's a you socialists can do, it didn't work in the 1970s and it won't work today!"

Physiocrat said...

Funny and the socialists argue that it is an extreme right wing view of maybe a right winge.

Bayard said...

"You just want to tax my hard earned wealth which I bought out of already taxed income"

Of course there's no other tax that you pay from your already taxed income, is there, except fuel duty, road tax, VAT, inheritance tax, alcohol duty, tobacco duty etc etc?