Sunday, 23 November 2014

Now, bear with me on this...

From Janet Daley in the DT here

"Then, on top of that, those who have worked and strived hard enough to haul themselves out of poverty are taxed, by a Conservative Chancellor, as if they were officially “rich” in order to pay for it all. Not to be outdone, Labour threatens a “mansion tax”, which would have devastating, life‑changing consequences for many people who are certainly not rich but simply have the misfortune to have lived in a house that has increased in value wildly due to forces that are completely outside of their control. Where is the “fairness” – in any recognisable meaning of the word – in any of this?"

Now, all of us LVT Jihadists on here would likely take issue with this sentiment, as regards house prices.  But, working as I do at the coal face of personal finance, I am increasingly meeting people who are not at all happy with the massive house price (aka land price) increases since the 1980's, but really going stratospheric from 1997. They can see full well that not only are such increases bad for their children but they also freely admit that they have not 'earned' this wealth and by implication that that is a Bad Thing. They instinctively know that not 'earning' wealth is not good. They know that if they move up they are no better off as they will have to pay more for what they are buying in direct proportion to what they are selling.  BTW this includes many PWIM, who would be happy to see lower prices for their grandchildren even if it meant lower prices for themselves. I have carried out a straw poll and most would be happy with LVT (assuming it dealt with silly house prices) as long as it replaced pretty well all other taxes.  When you add in the Citizens Income idea to square the circle they really start to go for it.

Clearly there are exceptions, those that are cashing out, usually to downsize and retire and - I'll give you one guess as to the other exception - yes, you go it, BtL 'investors'.

In the former case I reckon most would still be happy, as long as what they were buying also reduced in proportion, which it would.

So the real problem is with BtL 'investors'.  And just why should anyone worry about them?

I reckon that properly 'marketed' the LVT/CI argument is easily winable.


Mark Wadsworth said...

Good work!

L fairfax said...

Although of course the mansion tax is based on the value of the house not the land it uses so is not a brilliant idea. You could for example have 2 houses worth £1.8 million. One has a basement extension and now it is worth £2 million and is a "mansion".

BTW I like LVT but this this is not LVT.

Antisthenes said...

The BtL markets I suspect in most cases would be happy with a flattish market as they are probably mostly interest in their return on capital(income not capital gain is their major concern). It also allows them to build up their portfolio of lettable properties more quickly. Land and property speculators would probably be put out of business but not necessarily so as prices in the long term would still rise at about or slightly more than inflation. Buffet did not make his billions from short term speculation but by holding for the long term.

Furor Teutonicus said...

XX they also freely admit that they have not 'earned' this wealth and by implication that that is a Bad Thing. They instinctively know that not 'earning' wealth is not good. XX

Bloody rubbish. Are these people imbiciles, or what?

It is the BEST way of earning wealth!

Lola said...

FT. Ha ha. Irony. I hope?

Lola said...
This comment has been removed by the author.
Furor Teutonicus said...


If I can make a profit, I could not give a toss who I step on to do it.

DBC Reed said...

@L Yeah but the rise in house prices has not been outside the control of the poor old property rich. They have voted consistently for a party that will bash wages, cut benefits and keep up house prices. They also voted to stay in the EU.This kind of voter is not going to admit they've been totally and nastily wrong all their lives.Not when they're kept in line by scum newspapers which simper 'When average house prices reach £1million we'll all be millionaires Hooway!'.
I suspect when they all give such low approval ratings for Labour's handling of the economy they mean 'you can't trust our inflated house price with them'
And now the fuckers are voting for a single issue be-nasty-to-foreigners party.

Dinero said...

L Fairfax - agreed

also- The mansion tax simply doesn't make sense. Pro LVT supporters might imagine it to be some kind of LVT but that is not what it is sold as , and I see no evidence that it is invisioned to be any such thing, as Ed miiliband has said many times in iterviews broadcasts, and the HOP that "people with £2M houses can afford to pay a little more tax" This is illogical beccuase they generally have £2 mortgages , are not living the Life of Riley in a mansion , but in fact working hard in London in a terrace, and the actual truly rich living a truly rich lifestyle in a true mansion in the country will NOT be asked to pay it. Its not being promoted as a pragmatic way of treating land economics , it is being sold on the social justice theme. And it simply doesn't make sense.

Lola said...

Thank you all for your comments.

@A. The vast majority of the BtL speculators from 1997 ish all want capital gain. Most, at best, have just been breaking even on a yield basis, many actually making cash flow losses. They have been busily engaged in egging on land value increases in order to give them the wherewithal to perpetually remortgage to buy more houses in a self-perpetuating spiral. And as we have all endlessly observed on here, all hugely subsidised by everyone else – and especially at the expense of FTB.
@ DBCR. Well, admittedly they voted for Thatcher but they also voted for New Labour. But that was then. This is now. My straw polling (which is, by the nature of what I do, a bit self-selecting) indicates very strongly that many people – mostly ‘producers’ or ex-‘producers’ are not now at all enamoured with massive house price inflation. As regards the Rise of UKIP, this is a separate but related issue. AFAIAC people want a Party of Liberty, only owing to the dire (and mostly lefty) education system they have not been equipped with the intellectual tools to know that this is what want. But what is clear, following Thatcher, voters have been voting Not Socialism (New Labour not being ‘socialist’). I mean, why would you consciously vote for an economic and political philosophy of moral and economic bankruptcy?
@LF and D. Agreed Mansion Tax is stupid. But then what do you expect? It is proposed by Milliband, Balls and Cable. Actually, I think Cable does understand it but just cannot dig himself out from under political deceit to be honest about it. And the phrase ‘social justice’ is, IMHO, one of the most evil bits of Newspeak we are currently subject to. Here is Hayek (F A not Salma) on it
And for light relief here is Salma:-

Lola said...

@FT. Well, good oh for markets and competition then. But in principle agreed. Although you are ignoring how many people want to square this circle, since in the round they and theirs are not ' making a profit'. That's what's making them think that persistent house price/land value rises aren't actually 'profit', in the sense that these rises do not represent true 'added value'.

Bayard said...

A, what you say sounds more like the old, pre-BtL landlords, who didn't like land price inflation because it pushed yields down.

D, I am convinced that the Mansion Tax is deliberately bad so as to discredit the whole idea of taxes on land, see also the Alternative Vote and voting reform. It is obvious to anyone with half a brain that a better idea would be to extend the Council Tax bands up to band Z.