Hey there! Sign in to join this conversationNew here? Join for free
x Turn on thread page Beta

The problem with Ed's mansion tax watch

    • Thread Starter
    Offline

    14
    ReputationRep:
    So Ed Milliband plans to tax everyone who owns a property over £2million. Judging by estimates of how many of these properties exist in the UK and how much Ed reckons he can make per year, this will be an average of around £12000 a year.

    I disagree with the principle, see here if interested:

    Spoiler:
    Show
    Work hard in school, do well; work hard to get into a good uni, work hard in uni, do well again; work hard to get a good job, do well again; work hard in your job, get promoted make money and eventually - decades of hard work later - you finally make it. But if Labour is in charge you get punished for your ambition - your income tax rate goes up, you get taxed for finally being able to afford a great house in a great place, etc. You've paid more than your fair share via income tax, national insurance, council tax, capital gains taxes and god knows what else, but it's not enough. Ed needs your money because there are people who have never given a damn about anything, never tried, never worked hard, never had ambition - and Ed needs to reward these people with money.


    But immediately I see a practical problem. Already the issue in the Southeast is that foreign buyers buy property as an investment and a safe place to put their wealth. So when they have to pay £12000 a year, and their investment stops looking so good, what will they do? Will they pay the tax?

    Of course not. They'll just sell their £2million London flat and buy multiple lower-valued London flats. So now the number of foreign-owned London properties which sit empty all year actually doubles or triples. And people hoping to buy a flat find that the low- or mid- range flats are soaring in value even more than before because every property baron is trading in his chips for smaller denominations. So that tiny slither of unlikely hope of buying a place in the Southeast gets even tinier.

    Of course that's not all - every Labour initiative has numerous terrible effects.

    A lot of people have their pension money tied up in property development companies and property itself without even knowing it. If your money is invested in a £2.5 million house in London - bad luck, because no one wants to buy a house that costs you thousands extra in tax each year, so its value will fall. If your money is tied up in a luxury property development company that builds high-value properties - bad luck again.
    Offline

    11
    ReputationRep:
    How much is it going to cost to send an army of bureaucrats around assessing the value of every house in the UK then? What happens when people sue insisting their house is actually only worth £1,999,999? As you said, terrible initiative, driven by the politics of envy rather than any meaningful attempt to redistribute wealth or raise money.
    Offline

    14
    ReputationRep:
    Labour is becoming more and more about bringing down the few instead of pushing everyone in the country up relative to the world.
    Offline

    2
    ReputationRep:
    This tax is stupid and everyone hit by it should refuse to pay.
    Offline

    5
    ReputationRep:
    The mansion tax would be a god given opportunity for estate valuers and solicitors representing those who can afford to challenge the valuation of their property. An alternative would be for any properties on the area to be subject to a local tax levied at a rate fixed by the local authority directly related to the volume they occupy (at say £4/m3, an average terraced home would pay about £750 p.a., an average detached about £1,500 p.a.). Bigger houses get bigger bills. No need for an army of bureaucrats either Google have provided us with a handy way to sit in the council office and arrive at a nominal volume, this could be verified later on site if necessary.
    Online

    21
    ReputationRep:
    (Original post by paddyman4)
    So Ed Milliband plans to tax everyone who owns a property over £2million. Judging by estimates of how many of these properties exist in the UK and how much Ed reckons he can make per year, this will be an average of around £12000 a year.

    I disagree with the principle, see here if interested:

    Spoiler:
    Show
    Work hard in school, do well; work hard to get into a good uni, work hard in uni, do well again; work hard to get a good job, do well again; work hard in your job, get promoted make money and eventually - decades of hard work later - you finally make it. But if Labour is in charge you get punished for your ambition - your income tax rate goes up, you get taxed for finally being able to afford a great house in a great place, etc. You've paid more than your fair share via income tax, national insurance, council tax, capital gains taxes and god knows what else, but it's not enough. Ed needs your money because there are people who have never given a damn about anything, never tried, never worked hard, never had ambition - and Ed needs to reward these people with money.


    But immediately I see a practical problem. Already the issue in the Southeast is that foreign buyers buy property as an investment and a safe place to put their wealth. So when they have to pay £12000 a year, and their investment stops looking so good, what will they do? Will they pay the tax?

    Of course not. They'll just sell their £2million London flat and buy multiple lower-valued London flats. So now the number of foreign-owned London properties which sit empty all year actually doubles or triples. And people hoping to buy a flat find that the low- or mid- range flats are soaring in value even more than before because every property baron is trading in his chips for smaller denominations. So that tiny slither of unlikely hope of buying a place in the Southeast gets even tinier.

    Of course that's not all - every Labour initiative has numerous terrible effects.

    A lot of people have their pension money tied up in property development companies and property itself without even knowing it. If your money is invested in a £2.5 million house in London - bad luck, because no one wants to buy a house that costs you thousands extra in tax each year, so its value will fall. If your money is tied up in a luxury property development company that builds high-value properties - bad luck again.
    Administering the mansion tax would not be that difficult. It really is a review of the properties in the top band of Council Tax. No property will have increased so much in 20 years to be in the mansion tax bracket and not be in the top Council Tax bracket.

    Foreign investors are buying top end properties as residences, largely not as investments. They are boltholes in a troubled world.

    The intention is not that the mansion tax will be a flat payment hence the suggestion that the Queen will have £1M per year to pay on Sandringham and Balmoral.

    The real problem with the mansion tax is that wealth does not correlate to disposable income.

    In part that is because of the way house price inflation has run away in certain parts of the country, particularly London so that you have people who are very asset rich but income poor.

    The other problem is the Titian problem. Real stately homes are loss makers for the most part relying on the goodwill of old families to sink money into them. Since the last tax crisis in the 1970s the government has treated them with kid gloves, because if the owners think the game is not worth the candle any more they sell up and the government is left buying the art treasures to prevent them going abroad under export licence. This represents a huge threat to the tax take of a mansion tax because the potential cost here is unrelated to the size of the tax received.
    Offline

    2
    ReputationRep:
    The mansion tax, like all tax, is theft and immoral. Simple.
    Offline

    18
    ReputationRep:
    This the canary wharf scum bag club or something?
    Offline

    14
    ReputationRep:
    (Original post by illegaltobepoor)
    This the canary wharf scum bag club or something?
    Just out of interest, when not trying to create class war/making stupid ranting threads who do you support politically?


    Posted from TSR Mobile
    Offline

    18
    ReputationRep:
    (Original post by Cryptographic)
    Just out of interest, when not trying to create class war/making stupid ranting threads who do you support politically?


    Posted from TSR Mobile
    Does it matter?
    Offline

    14
    ReputationRep:
    (Original post by illegaltobepoor)
    Does it matter?
    Just interested, you seem to be way to far left even for the TUSC.
    Offline

    18
    ReputationRep:
    (Original post by Cryptographic)
    Just interested, you seem to be way to far left even for the TUSC.
    Not really. I just won't let you Tories get away with turning the UK into a Corporatist nation.
    Offline

    14
    ReputationRep:
    (Original post by illegaltobepoor)
    Not really. I just won't let you Tories get away with turning the UK into a Corporatist nation.
    The Conservatives are at the moment a little to bit much for the rich, they should shift to the aspirational stuff.
    Offline

    16
    ReputationRep:
    (Original post by illegaltobepoor)
    Not really. I just won't let you Tories get away with turning the UK into a Corporatist nation.
    You have almost no say in what they do. So you are effectively powerless, thankfully.
    Offline

    16
    ReputationRep:
    (Original post by illegaltobepoor)
    This the canary wharf scum bag club or something?
    Haha, hating on the rich, how original.
    Offline

    18
    ReputationRep:
    (Original post by EatAndRevise)
    You have almost no say in what they do. So you are effectively powerless, thankfully.
    I actually have a lot of power at my disposal ...... but for the moment I'll let you in on something.

    We have our own visual performance art band forming to make songs about the tories in a protest way .... like pussy riot.
    Offline

    16
    ReputationRep:
    (Original post by illegaltobepoor)
    I actually have a lot of power at my disposal ...... but for the moment I'll let you in on something.

    We have our own visual performance art band forming to make songs about the tories in a protest way .... like pussy riot.
    That is not power. That is a group of hooligans forming a musical group.

    What did/are you study(ing) at university?
    Offline

    10
    ReputationRep:
    (Original post by paddyman4)
    So Ed Milliband plans to tax everyone who owns a property over £2million. Judging by estimates of how many of these properties exist in the UK and how much Ed reckons he can make per year, this will be an average of around £12000 a year.

    I disagree with the principle, see here if interested:

    Spoiler:
    Show
    Work hard in school, do well; work hard to get into a good uni, work hard in uni, do well again; work hard to get a good job, do well again; work hard in your job, get promoted make money and eventually - decades of hard work later - you finally make it. But if Labour is in charge you get punished for your ambition - your income tax rate goes up, you get taxed for finally being able to afford a great house in a great place, etc. You've paid more than your fair share via income tax, national insurance, council tax, capital gains taxes and god knows what else, but it's not enough. Ed needs your money because there are people who have never given a damn about anything, never tried, never worked hard, never had ambition - and Ed needs to reward these people with money.


    But immediately I see a practical problem. Already the issue in the Southeast is that foreign buyers buy property as an investment and a safe place to put their wealth. So when they have to pay £12000 a year, and their investment stops looking so good, what will they do? Will they pay the tax?

    Of course not. They'll just sell their £2million London flat and buy multiple lower-valued London flats. So now the number of foreign-owned London properties which sit empty all year actually doubles or triples. And people hoping to buy a flat find that the low- or mid- range flats are soaring in value even more than before because every property baron is trading in his chips for smaller denominations. So that tiny slither of unlikely hope of buying a place in the Southeast gets even tinier.

    Of course that's not all - every Labour initiative has numerous terrible effects.

    A lot of people have their pension money tied up in property development companies and property itself without even knowing it. If your money is invested in a £2.5 million house in London - bad luck, because no one wants to buy a house that costs you thousands extra in tax each year, so its value will fall. If your money is tied up in a luxury property development company that builds high-value properties - bad luck again.
    in which case, of course, the government gets more money via stamp duty and more money gets pumped into the economy rather than building up through assets. OF course the sheer cost f buying, maintaining and paying Council tax on numerous properties makes it extremely unlikely anyone would undertake this scheme.

    The planned home building spree would also comfortably negate the issue you raise.

    As for the other comment about the amount of people needed to value all the houses - that already happens for Council tax. What the Mansion tax is, is essentially a new top rate of Council tax which negates the need to carry out a full revaluation of Council tax.

    Its a great policy and one which I look forward to seeing Labour bring in when they're in government.
    • Thread Starter
    Offline

    14
    ReputationRep:
    (Original post by WharfedaleTiger)
    in which case, of course, the government gets more money via stamp duty and more money gets pumped into the economy rather than building up through assets. OF course the sheer cost f buying, maintaining and paying Council tax on numerous properties makes it extremely unlikely anyone would undertake this scheme.

    The planned home building spree would also comfortably negate the issue you raise.

    As for the other comment about the amount of people needed to value all the houses - that already happens for Council tax. What the Mansion tax is, is essentially a new top rate of Council tax which negates the need to carry out a full revaluation of Council tax.

    Its a great policy and one which I look forward to seeing Labour bring in when they're in government.
    1. No one values your house for council tax currently. Your council tax band is based on what your house was worth in 1991. it is based on values from the early 90s. The government cannot know how much your property is worth right now unless it sends someone to value it or it has been sold very recently.

    You can actually argue against your council tax band and say your house is worth less to get it put into a lower band - I know someone who has done this. If someone says 'my house is worth less than £2 million' it is very difficult to dispute this as house value is completely subjective.

    2. The government does not get more money from stamp duty if rich people trade in one big house for two smaller ones. Those two smaller ones were on the market anyway, they were going to sell anyway. They will get more stamp duty when this policy pushes prices up though.

    3. There will not be a home building spree. Every government promises this but no government can achieve this. Fact is, desirable places are already full and there is no point building loads of houses in some new garden city where no one wants to live because it is far from any jobs. If there was demand for more houses in an area where land exists to build houses, private companies would be building there already.
    Online

    21
    ReputationRep:
    (Original post by paddyman4)
    3. There will not be a home building spree. Every government promises this but no government can achieve this. Fact is, desirable places are already full and there is no point building loads of houses in some new garden city where no one wants to live because it is far from any jobs. If there was demand for more houses in an area where land exists to build houses, private companies would be building there already.
    There will not be a home building spree but that is because our planning system and our local tax system are massively out of line. There is no incentive for property owners to wish more properties to be built, so they oppose them. If more properties are built, the property owners' way of life is adversely affected. Moreover the increased supply of properties may reduce the scarcity value of the already existing dwellings.

    There is no downside to opposing development for most people because most individuals gain little from development. In particular it has little impact on their property taxes.

    Compare this with say, the United States where communities compete to attract prisons and other similar unpopular neighbours to an area. They do this because big businesses with lots of employment reduce the property tax burdens on the existing residents.

    In Britain large parts of the old industrial north, lost their tax base through industrial closures. Because those areas could not support a lot of local taxes the cost of those services passed to national general taxation and the rates of local property taxes were severely constrained.

    One cannot expect Jarrow and other places where businesses and residents do not want to be, to bear the whole cost of local services, but in those parts of the country where developers want to develop but the population opposes development, frankly the government should be turning round and saying that the locals should be bearing the entire cost of local services through local taxation if in their own local interest they are holding back economic development for the nation as a whole.
 
 
 
Poll
Do you agree with the proposed ban on plastic straws and cotton buds?
Useful resources

Groups associated with this forum:

View associated groups

The Student Room, Get Revising and Marked by Teachers are trading names of The Student Room Group Ltd.

Register Number: 04666380 (England and Wales), VAT No. 806 8067 22 Registered Office: International House, Queens Road, Brighton, BN1 3XE

Write a reply...
Reply
Hide
Reputation gems: You get these gems as you gain rep from other members for making good contributions and giving helpful advice.