Wealth tax and the rich

[Lootman]

Your analogy of US property taxes has a few flaws

Did I claim it was a perfect analogy, or indeed an analogy at all? All tax systems work slightly differently, but the difference between Buck House paying less than £2k, and less than Band B properties in other parts of the UK, compared to the millions that it would be liable for in New York say, is a glaring anomaly.

Converting Band H to a property tax would go some way to removing that anomaly, even if it was only levied at say 0.5%.

Another point of view is that council/property taxes should be capped. After all owning a huge house does not necessarily mean that you have the cash to pay millions a year in council tax. The tax is to pay for local services and is not formally an instrument of wealth redistribution.

In any event do public properties even pay council tax? Buck House belongs to the nation and not the royal family.

[Hallucigenia]

Another point of view is that council/property taxes should be capped. After all owning a huge house does not necessarily mean that you have the cash to pay millions a year in council tax. The tax is to pay for local services and is not formally an instrument of wealth redistribution.

In any event do public properties even pay council tax? Buck House belongs to the nation and not the royal family.

Conversely if you can't afford 0.5% of the value of the property then you can't afford to look after it properly either, and it would be economically efficient for you to downsize and let someone buy the property who can afford to look after it.

Don't get too hung up on Buck House per se, it's just more recognisable than Apsley House or Witanhurst or some penthouse on top of the Shard. It's a weird one as it's part of the Crown Estate which has a funny status, not formally owned by the government although most of its revenues go into the government pot.

[Lootman]

Another point of view is that council/property taxes should be capped. After all owning a huge house does not necessarily mean that you have the cash to pay millions a year in council tax. The tax is to pay for local services and is not formally an instrument of wealth redistribution.

In any event do public properties even pay council tax? Buck House belongs to the nation and not the royal family.

Conversely if you can't afford 0.5% of the value of the property then you can't afford to look after it properly either, and it would be economically efficient for you to downsize and let someone buy the property who can afford to look after it.

Call me old-fashioned but I am not a big fan of people being forced out of their homes because of huge increases in taxation.

And wasn't it IHT that caused grand stately homes ending up with the National Trust?

[Nimrod103]

The usual argument for high property taxes is that it forces older people to downsize, freeing up larger houses for use by big families. But running costs do the same thing more efficiently, and the best solution is to make the sale and purchase of houses as friction free as possible. Abolishing stamp duty would achieve this.

[Hallucigenia]

And wasn't it IHT that caused grand stately homes ending up with the National Trust?

Complex story - the deaths of many heirs in two world wars also played a part. But if the NT is the best outcome for an asset then why not? Although these days they generally only take on new properties if they come with an endowment to pay the bills.

Otherwise it is a question for Mr Market to find the economically most efficient use for an asset - surely you are in favour of that?

[Lootman]

Otherwise it is a question for Mr Market to find the economically most efficient use for an asset - surely you are in favour of that?

A huge tax hike is a government action and not a market move.

At minimum I think there would have to be transitional provisions to ease the hardship of those suddenly exposed to a tax bill that is orders of magnitude larger than at present.

Maybe you like the idea of a land value tax? Or maybe you just like more taxes

[Hallucigenia]

At minimum I think there would have to be transitional provisions to ease the hardship of those suddenly exposed to a tax bill that is orders of magnitude larger than at present.

Of course, that's true of any significant change. But we also need to be mindful of the hardship of a single mother for whom 75% of £2k of council tax for her Band B terraced house in Dorset might be 7% or more of her gross income. When the Duke of Wellington is paying that on Apsley House, then we can worry about hardship.

Maybe you like the idea of a land value tax?

I think you could say my thoughts on LVT align more with Adam Smith and Milton Friedman than with Karl Marx.

Or maybe you just like more taxes

You may think that - but not particularly. I am interested in tweaks that remove obvious unfairness, and more generally I'm interested in changes to our system of government that make it work better for people. A big part of that is removing the remoteness of decision-making and bringing it closer to people, which would mean less Whitehall and more power to local government, and in turn we need more taxes at local level and less at national level. Raising 30% of tax at local level would seem a good target to aim for rather than councils relying on handouts from Whitehall.

[Alaric]

A big part of that is removing the remoteness of decision-making and bringing it closer to people, which would mean less Whitehall and more power to local government,.

That may not be a good thing. If they have the power, local politicians can have a liking for imposing rules that go against the national rules, essentially beacuse they can. We see that with the Welsh and Scottish assemblies.

[tjh290633]

That strikes me as being a good thing. Perhaps they are trying to work their way out of so-called poverty? Since the definition of poor is a defined proportion of households, or people, without regard to the actual income, it's not surprising if many of those working part time fall into that category.

TJH

A good thing that they're in work or a good thing that they'd poor?

Actually the definitions of poverty used are:

[i]How is poverty measured?

The focus in this briefing is on poverty defined in terms of disposable household income (income after adding on benefits and deducting direct taxes).

https://commonslibrary.parliament.uk/research-briefings/sn07096/

A good thing that they are working to some extent to alleviate poverty. That is surely better than sitting at home, relying on welfare benefits and handouts from food banks. Family circumstances may mean they can only work part time,

I read it that the number of people in households under the arbitrary definition of poverty who are working has doubled. It could of course be children doing paper rounds or waiting in cafes.

TJH

[stevensfo]

The usual argument for high property taxes is that it forces older people to downsize, freeing up larger houses for use by big families. But running costs do the same thing more efficiently, and the best solution is to make the sale and purchase of houses as friction free as possible. Abolishing stamp duty would achieve this.

Like many Brits, you are forgetting that their house may be their lifelong abode, and they don't want to move. I noticed this years ago c.1986-89 when I lived in Whitechapel. Although before the horrendous increase in house prices, there were still those who wanted only to live a peaceful life.

Why should people have to sell their house and find another? What have they done wrong? If it's the house where they grew up in and want to live, why should they have to disrupt and change their life because of stupid increases in house prices that are out of their control?

You really think that abolishing a 0.5% tax would save the world????

House prices are too high. We all know that!

Steve

[Nimrod103]

The usual argument for high property taxes is that it forces older people to downsize, freeing up larger houses for use by big families. But running costs do the same thing more efficiently, and the best solution is to make the sale and purchase of houses as friction free as possible. Abolishing stamp duty would achieve this.

Like many Brits, you are forgetting that their house may be their lifelong abode, and they don't want to move. I noticed this years ago c.1986-89 when I lived in Whitechapel. Although before the horrendous increase in house prices, there were still those who wanted only to live a peaceful life.

Why should people have to sell their house and find another? What have they done wrong? If it's the house where they grew up in and want to live, why should they have to disrupt and change their life because of stupid increases in house prices that are out of their control?

You really think that abolishing a 0.5% tax would save the world????

House prices are too high. We all know that!

Steve

What is 0.5%? Residential stamp duty rates vary between 5 and 12%.
I sympathise with those who do not wish to downsize for whatever reason, and I don't think they should be penalised, but it is left wing policy to get underused property more fully occupied.

[88V8]

... it is left wing policy to get underused property more fully occupied.

'Good morning, brother. I am your Council's billeting officer...'

V8

[scrumpyjack]

... it is left wing policy to get underused property more fully occupied.

'Good morning, brother. I am your Council's billeting officer...'

V8

Somehow I can't see the luvvies with big houses in Hampstead liking that!

[DrFfybes]

'Good morning, brother. I am your Council's billeting officer...'

V8

Somehow I can't see the luvvies with big houses in Hampstead liking that!

It would be based on Bedrooms. We only have 1 bedroom, one office for me, another office for MrsF, the washing drying/ironing room, the present wrapping room, etc etc. Couldn't possibly take anyone in

[Hallucigenia]

it is left wing policy to get underused property more fully occupied.

"We need to put an end to the unfair situation where the taxpayer is subsidising people to have homes, paid for by the state, with spare rooms they do not need. "

" We do not think that taxpayers should be expected to meet the cost of somewhere approaching 1 million spare bedrooms, a cost of around £0.5 billion every year"

I guess IDS and Lord Freud, Tory former Minister for Welfare Reform and ex UBS banker, might both be considered left-wing by your standards, but it would require a considerable shifting of the Overton window for most people. This was in the context of introducing the under-occupancy penalty (aka "bedroom tax") in the Welfare Reform Act, a policy opposed by Labour.

[Lootman]

it is left wing policy to get underused property more fully occupied.

"We need to put an end to the unfair situation where the taxpayer is subsidising people to have homes, paid for by the state, with spare rooms they do not need. "

" We do not think that taxpayers should be expected to meet the cost of somewhere approaching 1 million spare bedrooms, a cost of around £0.5 billion every year"

I guess IDS and Lord Freud, Tory former Minister for Welfare Reform and ex UBS banker, might both be considered left-wing by your standards, but it would require a considerable shifting of the Overton window for most people. This was in the context of introducing the under-occupancy penalty (aka "bedroom tax") in the Welfare Reform Act, a policy opposed by Labour.

I had thought something similar about the reduction of benefits for individuals with an unused bedroom. It makes sense to not use public money to subsidise the lifestyle of a person who could rent out their spare bedroom (and not even pay tax on that via the "rent a room" deal).

However welfare handouts are a direct cost to the taxpayer. But the mere failure to tax the spare bedrooms of folks not on welfare is different. It is not a cost at all. At best it is a missed opportunity to tax even more people who already pay a lot of tax.

See the distinction?

[Nimrod103]

it is left wing policy to get underused property more fully occupied.

"We need to put an end to the unfair situation where the taxpayer is subsidising people to have homes, paid for by the state, with spare rooms they do not need. "

" We do not think that taxpayers should be expected to meet the cost of somewhere approaching 1 million spare bedrooms, a cost of around £0.5 billion every year"

I guess IDS and Lord Freud, Tory former Minister for Welfare Reform and ex UBS banker, might both be considered left-wing by your standards, but it would require a considerable shifting of the Overton window for most people. This was in the context of introducing the under-occupancy penalty (aka "bedroom tax") in the Welfare Reform Act, a policy opposed by Labour.

What you describe is taxpayer subsidized lodgings which these people occupy. It was not their property, and it was property to which I was referring. It could become their property if they exercised Right to Buy like Angie Rayner, though ordinary people have to follow certain rules about purchase which the likes of her don't seem to have to follow.
Right wingers believe in property rights, left wingers believe that taking away those rights is OK.

[Gilgongo]

Buck House belongs to the nation and not the royal family.

Not that it matters, but the palace, along with Windsor Castle, is owned by the reigning monarch under "right of the Crown". It's part of a collection of properties separate from the Crown Estate's holdings and the monarch's personal possessions. This was part of the grumbling about charging fees for entry (currently £95.00 per person for guided tours) when that started as you'd think the civil list and other income would be enough to allow free entry.

[Gilgongo]

Right wingers believe in property rights, left wingers believe that taking away those rights is OK.

That's a bit asymmetric. The "far left" do advocate for the abolition of property rights, based in part on Adam Smith's dislike of that and his advocacy of punitive taxation on land, while the "far right" have historically felt similar but for different reasons. For example, Hitler said that land was “national property, and in the end only given to the individual as a loan.” The Nazis only recognised private ownership insofar as it was used according to the principle “common benefit ahead of private benefit”.

Back to current political reality, as far as I know I think you'd be hard pressed to find anyone on the elected UK left wing (John McDonnell, Caroline Lucas, et. al.) who would advocate for anything much more than rent controls, higher taxes, and the abolition of some property-related tax breaks.

[MuddyBoots]

Right wingers believe in property rights, left wingers believe that taking away those rights is OK.

That's a bit asymmetric. The "far left" do advocate for the abolition of property rights, based in part on Adam Smith's dislike of that and his advocacy of punitive taxation on land, while the "far right" have historically felt similar but for different reasons. For example, Hitler said that land was “national property, and in the end only given to the individual as a loan.” The Nazis only recognised private ownership insofar as it was used according to the principle “common benefit ahead of private benefit”.

Back to current political reality, as far as I know I think you'd be hard pressed to find anyone on the elected UK left wing (John McDonnell, Caroline Lucas, et. al.) who would advocate for anything much more than rent controls, higher taxes, and the abolition of some property-related tax breaks.

The Nazis were National Socialists weren't they, a mixture of right and left wing but certainly big on state control. I think the designations of right and left wing get blurred with dictators and authoritarian regimes.