Mansion tax - lib dems or Vince Cable at least

[Marmora Man]

Rental income from council houses goes straight to central government and a proportion is given back to councils, so in actual fact council tenants are subsidising the population at large, not the other way around.

Also if something is not taxed when it should be, then that is a subsidy. Just as the zero tax status of private schools is a subsidy.

Fuzzy logic LD. The payment from central government to local government of a portion of rental income is, in theory at least, meant to "subsidise" the maintenance of the properties not the cost of general local government services.

Who decides "what should be taxed"? I could equally argue that parents sending their children to private schools are subsidising the state education system by paying their taxes but not taking up their "entitlement".

A perpetual search for absolute utopian fairness and the hounding of the few genuinely wealthy is bound to fail.

Let reality intrude for a moment. Wealth is what the Duke of Westminster enjoys - parents using private schools or owners of what the Lib Dems call "mansions" are, on the whole, not truly wealthy. They may be well paid professionals - lawyers, doctors even bankers but they must keep working working to maintain the cash flow. If they stop their "wealth", declines rapidly.

[LadyDeliah]

The portion of council rents kept by central government is the subsidy MM.

[LadyDeliah]

The working class were created when they were kicked off common land that was enclosed and stolen by the elite. The elite still own land that was stolen in this way.

I want it to be redistributed into common ownership again to be utilised by anyone who wishes to live off the land in a sustainable way. Ditto the spoils of empire and the slave trade.

Historic acts of theft should not continue to offer societal advantage to the present day elite.

[Loz]

I feel a Monty Python quote coming on...

DENNIS: Oh king, eh, very nice. An' how'd you get that, eh? By

exploitin' the workers -- by 'angin' on to outdated imperialist dogma

which perpetuates the economic an' social differences in our society!

If there's ever going to be any progress--

WOMAN: Dennis, there's some lovely filth down here. Oh -- how d'you do?

ARTHUR: How do you do, good lady. I am Arthur, King of the Britons.

Who's castle is that?

WOMAN: King of the who?

ARTHUR: The Britons.

WOMAN: Who are the Britons?

ARTHUR: Well, we all are. we're all Britons and I am your king.

WOMAN: I didn't know we had a king. I thought we were an autonomous

collective.

DENNIS: You're fooling yourself. We're living in a dictatorship.

A self-perpetuating autocracy in which the working classes--

WOMAN: Oh there you go, bringing class into it again.

[Senor Chevalier]

Loz wrote:

But, assuming you mean the Lib Dems ?1m mansion tax (rather than general assets), why should someone who purchased a house in London for 900K in 2009 that rises to ?1.1m be taxed, yet someone in Cambridge who bought for ?300k in 1995 and rises to ?900k not be taxed? Why tax some 'good luck' and not other? And where does 'good luck' start and smart purchasing cease?

SC: Agreed you could go after all capital gains if you like inc the folk in Cambridge. I'm not saying the system is 100% fair as this is unattainable but perhaps fairer than taxing the arse out of the current generation who have no chance? I'd say go after all of: hard work, good luck and smart purchasing, rather than just workers as at present. In any case, perhaps the relative value of sunny Cambridge would cause a London exodus and an end to crazy London prices.

L: And again, how are we going to adjudge the value of houses on an annual basis. For instance, a house with four bedrooms is worth a lot less if you convert the smallest bedroom to a bathroom. Or knock a stud wall down to convert two bedrooms to one.

SC: Easy - self declaration. Government has automatic option to buy your house off you at a 20% premium to declared value to keep people honest. If the consequence is that houses are relatively better furnished with bathing facilities then I can live with that.

L: Anyway, it would be a brave politician who decided that the papers covering a constant stream of pensioners being forced from their homes is really going to endear them to the electorate.

SC: Pensioners - f**k em. But I agree. The guys running the country have to win a popularity contest so the best policy is tempered by what will play well. Clearly running the country should be like jury service - thrust upon citizens at random. Or at least the people that get to run the country should have to compete in a chess contest or some sort of optimisation exercise rather than polling. I reckon my wife would make a good fist of it. She's quite bright and shows absolutely no interest in politics which are pretty much the key attributes I would look for.

Edited as too many scoops tonight and rambling in places....

[Loz]

Senor Chevalier Wrote:

-------------------------------------------------------

> SC: Agreed you could go after all capital gains if you like inc the folk in Cambridge. I'm not

> saying the system is 100% fair as this is unattainable but perhaps fairer than taxing the

> arse out of the current generation who have no chance? I'd say go after all of: hard work, good

> luck and smart purchasing, rather than just workers as at present. In any case, perhaps the

> relative value of sunny Cambridge would cause a London exodus and an end to crazy London prices.

Hang on - you've diverted a little here. There is a huge difference between the Lib Dems' mansion tax (which is directly taxing an asset on it's full value, whether iot has gained in value or not) and a capital gains tax (which is taxed upon sale of the asset and only upon it's capital gain). I think the former is very problematic. I have no problem with the latter.

Capital gains tax is already in existence, though it is not levied upon primary residences (give or take a bit of a loophole around the two year rule).

[Magpie]

Right so if I can summarise some of the views supporting this measure:

Tax pensioners who live in nice houses; these are people who were taxed all there life while working, had their savings taxed, have their pensions taxed, and now you want to tax their homes, on the basis that its "not fair" - the result being that they are forced to sell and move out - with the capital gain on their primary residence also being taxed. Then you want to give the home to council tenants - some of whom have never paid any tax, but have lived in receipt of benefits. It really does sound "fair".

[Marmora Man]

Fortunately there only appear to be two people supporting this measure and their views are both muddled and illogical.

It makes headlines for the Lib Dems and Vince Cable but is unlikely to ever become law.

[Senor Chevalier]

Muddled and illogical - ouch. Magpie - not sure wat you are summarising, presumably LadyD's comments for which I agree MM's comment is probably a fair cop. But don't lump me in (if you are) just because I had 3 too many beers last night and got distracted by Loz's Cambridge side show.

All I'm saying is a tax on assets over ?1m (or at some sensible level) including houses is not objectionable per se. Yes, yes, the poor long suffering pensioner... If they were living their life again 40 years later and did the same job then they would pay more tax and have a fraction of the net worth at the end of it. Is that fair on this generation of would be pensioners?

So, to try to put it succinctly and in an unmuddled and unmuddling way:

It would be fairer IMHO to shift the balance and tax the wealthy pensioner a bit harder (not to mention all the others with significant assets that are less emotive than our long suffering pensioners with their gammy knees) and tax income a bit less to redress the intergenerational imbalance.

That's it.

[Huguenot]

I can't believe that anyone is seriously proposing that we forcibly deprive pensioners of their lifetime achievements and their house to satisfy what could only reasonably be described as an 'Envy Tax'.

As for the bizarre logic that some pensioners don't 'deserve' their houses because they lucked out in the property market... words fail me.

LD's stumbling through a fairly confused argument mainly because she isn't saying what she actually means - which is that she doesn't believe in private ownership of property full stop - she believes property is theft, and that someone who has worked hard to pay off their mortgage has only the same right to enjoy property as someone who's lived their life on benefits.

It's a principle and key motivation of our society that individuals are free to reap the benefits of their labour - and we don't deprive them of that because we're jealous, because they chose a good career, or worked hard, or got lucky.

[resident25yearsED]

Huguenot Wrote:

-------------------------------------------------------

> I can't believe that anyone is seriously proposing

> that we forcibly deprive pensioners of their

> lifetime achievements and their house to satisfy

> what could only reasonably be described as an

> 'Envy Tax'.

>

> As for the bizarre logic that some pensioners

> don't 'deserve' their houses because they lucked

> out in the property market... words fail me.

>

> LD's stumbling through a fairly confused argument

> mainly because she isn't saying what she actually

> means - which is that she doesn't believe in

> private ownership of property full stop - she

> believes property is theft, and that someone who

> has worked hard to pay off their mortgage has only

> the same right to enjoy property as someone who's

> lived their life on benefits.

>

> It's a principle and key motivation of our society

> that individuals are free to reap the benefits of

> their labour - and we don't deprive them of that

> because we're jealous, because they chose a good

> career, or worked hard, or got lucky.

well said i really agree with you. i only begin to become envious when they have more than is really necessary, i mean way beyond modesty. thanks for hte posting hugenot

[zeban]

Oh dear of course it's all about envy ay Huguenot?!!! give me a break! it has absolutely nothing to do with envy.

[Senor Chevalier]

OK Huguenot. I take your point (to a point) but I do not agree that you could only describe it as an envy tax. You could describe it as many things, an equalisation tax perhaps. It really (really) it isn't a question of envy particularly.

If (???) we accept that the current generation have it much tougher than the previous generation because of higher taxes now, tuition fees, a spike in asset prices etc.... (I don't think anyone is disputing this "fact" are they?) then are we really prepared to say that it is right that the hard work / luck of this generation is worth less than the hard work / luck of the past generation?

So the question is - what on earth do we do with a whole generation that have a rotten deal compared to their predecessors?

Do we just say - shit happens, you should have been born in the 50's, you weren't, life's a bitch?

I personally think that it is very, very difficult for young people starting out and trying to make ends meet - the hill they have to climb is far steeper than it ever was before. And I do think that is a bigger injustice than applying some (a bit) tax on wealthy people (with the regrettable pensioner anecdote: that they need to sell their mansion and feck off to live in Cambridge with a bigger garden instead - I spent a few years there myself and it wasn't so terrible).

By the way, I was born in the 70s so I am kind of neutral on all these things - I got a worse deal than my parents who mortgaged themselves to the hilt and bought a house in the 80s and got lucky. But I got a far better deal than the guys born in the mid 80s that are wondering if they will ever own a house. If we even it all out then I guess I'd personally stay in roughly the same place.

So new question for Huguenot and Marmora Man to work on - what should we do with the youth of today? Figure that out and I'll stop trying to piss in your pension pot.

Anyway - off on holiday so see youse all in a week or so...

[Huguenot]

Zeban, I distinctly recall you arguing a year or so back that the government should provide you with a free roomy single occupant flat - because it was your right to have one. It seems that in order to pursue that goal you're prepared to deprive pensioners of ones they have bought and paid for?

Se?or C I don't think it's reasonable to claim that the economic challenges faced by today's youth can be heaped upon a small group of wealthy pensioners, nor solved by dispossessing them of their homes.

Just from a property perspective a better start would be to deprive middle aged aspirant tycoons of the tax breaks that allow them to snap up multiple homes at low interest rates and force young people into renting from them.

The second primary cause is investors 'squatting' on empty property for a long term return. Tax should be aggressively imposed upon residential properties not used as the primary residence according to land value.

Young people are never going to be able to buy Multi million pound houses forcibly vacated from pensioners, it's far more likely that this housing shortage is generated by young people wanting to single occupy entry-level premises.

It should also be noted that the housing crisis for youth is predominantly one of the South East. A better strategy than hammering pensioners out of their homes might be to engineer job opportunities elsewhere in the UK, where housing is plentiful and deserted, so that every 22 year old doesn't see moving to London as their only opportunity in life.

So rather than abuse pensioners with an unsupported envy tax that is unlikely to have any impact other than impoverishing people, you either you need to legislate to prevent Zeban living alone, stop property squatters, create jobs elsewhere or build more stock.

You make your most important point in the first sentence where you describe it as an 'equalization tax'. Within this you emphasize the foundation of your argument. It is essentially a socialist goal for the redistribution of wealth from the bourgeoisie to the proletariat. There are no examples of successful socialist states in the world, so it seems illogical to state that pursuing their manifesto could have anything but a destructive impact.

People need incentives - if you forcibly deprive them of the rewards for their labour, they simply won't work.

[Senor Chevalier]

H: Se?or C I don't think it's reasonable to claim that the economic challenges faced by today's youth can be heaped upon a small group of wealthy pensioners, nor solved by dispossessing them of their homes.

SC: Can we please move away from this bloody pensioner rhetoric - I am not saying that at all. What I am saying is that a certain cohort have a tough deal and need a reduced burden. In order to maintain a constant tax take then there is no other option but for the burden to shift to others.

H: Just from a property perspective a better start would be to deprive middle aged aspirant tycoons of the tax breaks that allow them to snap up multiple homes at low interest rates and force young people into renting from them.

The second primary cause is investors 'squatting' on empty property for a long term return. Tax should be aggressively imposed upon residential properties not used as the primary residence according to land value.

SC: Fine with that too.

H: Young people are never going to be able to buy Multi million pound houses forcibly vacated from pensioners, it's far more likely that this housing shortage is generated by young people wanting to single occupy entry-level premises.

SC: Or even for them to buy a small basic terraced house in a relatively inexepensive parts of South London.

H: It should also be noted that the housing crisis for youth is predominantly one of the South East. A better strategy than hammering pensioners out of their homes might be to engineer job opportunities elsewhere in the UK, where housing is plentiful and deserted, so that every 22 year old doesn't see moving to London as their only opportunity in life.

SC: Job creation would be a neat trick. Others have tried and failed. I look forward to your plan.

H: So rather than abuse pensioners with an unsupported envy tax that is unlikely to have any impact other than impoverishing people, you either you need to legislate to prevent Zeban living alone, stop property squatters, create jobs elsewhere or build more stock.

You make your most important point in the first sentence where you describe it as an 'equalization tax'. Within this you emphasize the foundation of your argument. It is essentially a socialist goal for the redistribution of wealth from the bourgeoisie to the proletariat. There are no examples of successful socialist states in the world, so it seems illogical to state that pursuing their manifesto could have anything but a destructive impact.

People need incentives - if you forcibly deprive them of the rewards for their labour, they simply won't work.

SC: You're over playing this slightly (by an order of magnitude actually). I am not trying to cap wealth and this is not a political philosophy. It is just an objective comment (I would say that). I am simply suggesting to shift the balance of tax burden a bit. Maybe tax earners today what people 30 years ago were taxed and then collect the required extra over from everyone rather than the current workforce...

I don't want to give feckless youth a free ride in a nice appartment - the entitled youth can absolutely feck off as well. I want to make it easier for hard workers these days to get somewhere. Your incentives argument is dead right (although also wrong) by making the deal for the youth of today so crap in terms of tax and asset prices etc there is no incentive for them. Whereas the previous genereation who are wealthier than they could have hoped for have been given a relative freebie they were not expecting. This is not what incentivised them and simply cannot be argued as such.

[Huguenot]

There is already a system in place to increase the burden of tax in line with the contributors ability to pay - it's called progressive taxation. If you want to shift this around then you simply need to do the maths.

Taxing property value is a disincentive to property development - it would result in property squatters ruining buildings to reduce the burden. Hence taxing land is more effective as it promotes development.

Taxing people in multi million pound houses will not generate any meaningful change to the government tax income, and so would not support tax reductions for yoof. Hence your proposal isn't fit for purpose.

In general tax cuts for youth won't give them access to buy property, it will simply result in a rent spike.

The proposals most likely to deliver your residential objectives are the ones I outlined earlier.

Besides, your claim of the deal for youth of today being crap is simply not true, we are in the middle of a major social transition created by a flawed economic model and increasing pressure on global resources. Tax breaks are not going to solve this for youth - their tax burden is low anyway.

Additionally this obsession with house ownership is a particularly British thing. The youth elsewhere in the world aren't crippled by their inability to buy a house.

[Huguenot]

"Maybe tax earners today what people 30 years ago were taxed and then collect the required extra over from everyone rather than the current workforce..."

This is where it all goes spectacularly wrong for your argument. Tax three decades ago was far higher that it is now.

In 1978, the basic rate of tax was 34%, with the top rated tax at 83%!!! The basic rate now is only 20%. The tax burden is lower for the yoof of today than ever before.

'everyone other than the current workforce' is tansparent. Since we can assume you don't mean children, the sick or the unemployed, then you can only be referring to asset stripping pensioners.

[zeban]

How dare you Huguenot- but well done for twisting the argument I was making a year ago. Just so you might recall here is the real argument I was making.

I've worked since I was 15 and never stopped. I've accepted that I'll never be able to buy a property in this country- I come from a poor single parent family so don't have Mummy and Daddy to help me with the deposit. So I rent. Unfortunately, because of the property bubble and the attitude that buying to let is a great way of making money out of people like myself, rents are ridiculously high and many wages are very low, having also been frozen or even reduced for many recently.

This means that I have to claim housing benefits as well because my salary doesn't stretch far enough. This doesn't mean I get a free nice apartment thank you very much. I rent a studio flat for which I pay the majority of rent, the council tex and the bills. I'm 28, have been in shared accomodation from 19 to 26, having never been able to run back to Mummy's when times got hard. And even if I was in shared accomodation I still couldn't afford all of my rent because I'm on mimimum wage. And this is going to get much worse when they bring in the new legislation which means no one up to the age of 35 will be able to claim for a self contained place as all that will happen is the demand for larger houses will increase so the landlords will put up their rents meaning a number of people will be priced out of all rental accomodation too.

If I could pay it all of course I would. In fact I wish I could. I'm hardly living the life of riley or getting a free ride. I'm just trying to make a life for myself. As are most people. Many people I know, and myself included, would quite happily rent for the rest of their lives if there was rent control and some kind of security like they have in all other parts of Europe.

So in these circumstances what do you expect me to do Huguenot? What is your solution. Because Senor Chevalier is right. We have a generation who won't ever be able to afford to buy their own houses- and by that I mean the one they'll live in rather than ones to invest in! As I recall, you got a bonus which enabled you to buy your house all of those years ago. I'd say that was luck then, given I have no doubt in my mind that I work just as hard as you, just in a different industry.

So you see it's not about envy at all. The 'pensioner can keep his mansion. Just as long as he does his bit to help future generations which will never have the luck he had. It's about caring about the rest of humanity. It's about saying I'd like to give back a bit to help others.

[Huguenot]

You seem to have confused my reference to your situation as an attack on you personally. It wasn't.

I was merely pointing out that the problem with housing doesn't revolve around rich pensioners stealing from the youth of today so much as young people having increased expectations on living alone.

You have also previously made clear that you're not prepared to do the kind of 9 to 5 job that would furnish you with the kind of lifestyle you want. Instead of accepting your own responsibility in that decision, you've decided to join a crowd lynching pensioners for their wallets.

I don't expect you to do anything, I make no demands on you apart from suggesting that blaming rich pensioners for not giving you enough is cheeky.

If you would be happy renting so long as there was rent control, why not pursue that campaign instead of asset stripping others?

[zeban]

I am pursuing that Huguenot.

And I said I don't want to work in an office, that's not exactly the same as saying I don't want to work a 9-5. I work in a hair salon where the hours are longer than 9-5! So I'm assuming by saying that that you think I'm choosing to be lazy and then expect someone else to fund my 'lifestyle'. It's a safe roof over my head not a 'lifestyle'. Everyone no matter what job they're in should be able to have that. I'm living within my means. Sadly many middle classes mortagaged up to their eyeballs with thousands of pounds of debt are not.

[Huguenot]

Sure, and I think that's all valid in its own way.

However, this thread was essentially about asset stripping pensioners. This won't solve your housing problem, it won't shift the burden of taxation from 'youth', and it won't suddenly create a wondergul rosy future for our nation.

So we are left with no other logic for attacking geriatrics than envy or punishment.

Having said that, if the Lib Dems can use theis 'extremist' approach as a way of highlighting and addressing imbalances in the UK property market then it may have been a worthwhile exercise.

Regardless of that, it isn't going to give the same lifestyle to vendors of services perceived to have low financial value at low volumes compared with those that do the opposite.

The only way you get that is through state property and social totalitarianism, and that's a proven disaster.

[Senor Chevalier]

OK - am on hols and promised myself a week off - but a bottle of rosso di toscana at lunchtime and I can't resist the urge to debunk Huguenot. So ...

H: However, this thread was essentially about asset stripping pensioners.

SC: Well, yes, in your mind. To such an extent that you don't consider the arguments being put on their merits but react accordingly.

H: This won't solve your housing problem

SC: Solve, perhaps not. But by making more expensive houses more costly to uphold, a direct downward pressure will be applied to house prices which would clearly contribute in a tangible way to addressing the barriers to entry in housing that people are faced with.

H: it won't shift the burden of taxation from 'youth',

SC: er, well, actually I'm afraid that's bollox, taxing assets more and income less would in on average reduce the tax burden on young workers who are the people we are arguing deserve a better deal for. You can declare this not to be the case, but that would be manifestly incorrect.

H: and it won't suddenly create a wondergul rosy future for our nation.

SC: Yes, if you track back through this thread you will see that the goal of those arguing for some sort of adjustment to the status quo then you will see it as all about the rosy-tinted utopia where people hold hands and sing songs and cuddle puppies etc, etc. Or Not. Non-argument and complete nonsense as you well know.

[Huguenot]

In taxing the wealthy, the only difference between higher income tax and a property tax is that the property tax also hits people who live in high value houses who don't have an income.

Predominantly this is pensioners. Therefore the only unique argument for a Mansion tax is asset stripping pensioners. QED this thread is about asset stripping pensioners.

I think the rest of your argument is calculated on tax mathematics that you simply haven't done. The evidence from elsewhere, as I've pointed out before, and you've ignored, is that property taxes simply cannot generate enough income to make a measurable contribution to overall tax take.

This means that your view that 'in principle' it means lower tax to youth, 'in practice' means no change at all.

The reason why you continue to argue in spite of this wealth of evidence to the contrary is that this pointless tax can only possibly appeal as an envy or punishment tax.

[Senor Chevalier]

H: In taxing the wealthy, the only difference between higher income tax and a property tax is that the property tax also hits people who live in high value houses who don't have an income. Predominantly this is pensioners.

SC: Predominantly, perhaps but not exclusively and if the tax were escalating it would apply to anyone who had proportionately more wealth than the tax they paid and there are various measures that could be applied to mitigate the impact on pensioners. The idea does not have to be a non-starter because of one possible side effect.

Your argument about degrees of and measurable contributions is all well and good but is a calibration point. Let's get the principal straight first.

Say we needed to raise more tax than the current amount. Do we apply ever increasing income tax? Or does there come a point where taxing wealth as an alternative stacks up?

Let's look at a more extreme case. Imagine we need to set income tax at 80% or even 100% to generate the required tax haul. (yes, yes ridiculous).

But if this were the case then there would be no incentives to work - the rich stay rich, the poor stay poor.

Does there ever come a point where in your view it might be appropriate to tax wealth over income? Or in your view is it sacrosanct / and income is the only way to go.

If we can agree that there comes a point (somewhere before income tax of 100%) where it would be better to tax wealth than income then the question is where is that point and have we reached it yet?

So is your view:

1) Yes I concede at some point a shift to taxing wealth is appropriate but we are not there yet; or

2) No, at no point would it be appropriate to tax wealth.

These are mutually exclusive, exhaustive options, so please answer 1 or 2 so we know where our dividing lines are for clarity's sake.

There is something we need to consider and I'm not sure what the right words for it are, but it is probably something along the lines of "life trajectories" or some other suitable jargon. We need to consider some archetypal people today and contrast with their predecessors.

For example, my parents, retired, currently in their 60s, mother a primary school teacher of state employ, father a civil servant earning less than mother. They have a house probably worth ?750k, bought in 1981 (third home) with a 15% deposit and mortgage of c. 3.5x income. Interest being deductible against tax at the time. Now retired drawing state pension.

Let's look at the same archetypal couple today. Perhaps first property at 35 with little hope of capital appreciation, more likely the opposite, can't get enough mortgage, interest non-deductible, state pension in the future? Don't bet on it... Realistically these people have no chance whatsoever.

What do you suggest? Yes house building and job creation outside London and I agree with all that but I don't think it is realistically enough.

The balance is skewed - that's all I am saying.

If we could find a way to all agree that our property is worth half what we currently think then things would be easier and your pensioners could stay put, but I'm not sure how we get there.

PS: I am ignoring the words "pensioner", "punishment" and "envy" in your responses from now on. I think you have some reasonable points and together we might be able to arrive at a sensible position but the dramatic rhetoric is frankly a distraction from getting to the bottom of this.

[Marmora Man]

SC - it's not that often that Hugenot and I argue for the same case but in this case I am in absolute agreement with his points.

I stated very early on in this thread that a Mansion tax is illogical and two pages later I see no case being made that changes my view. You have attempted to move the argument and make the case for a general wealth tax - but it appears to be just a vanguard for a socialist utopia that will never be achieved.

You do not have any rational argument as to why those that have worked hard, paid taxes and taken little from the ?state? should now be taxed on the assets they purchased with their post tax earnings. Given, that as Hugenot has pointed out, the maths means that such a tax will raise very little, it must be just an envy tax.

To present a real argument you need to define some terms. What do you consider wealthy, what do you consider poor?

Are your parents wealthy - it appears they have a house worth a significant sum. To make the sort of difference you wish to see the wealth tax would have to target people with houses of similar values. Can they afford to pay ?7,500 (1%) of the house's value every year? Would it improve your life, Zeban's or Lady Deliah's if they did pay this?