Monday, Jun 07, 2010
'Join' who exactly? Oh, the Telegraph editors.
Telegraph: Readers join fight against CGT rise
astroturf - August 9, 2006 Urban Word of the Day. Creating the impression of public support by paying people in the public to pretend to be supportive. The false support can take the form of letters to the editor, postings on message boards in response to criticism, and writing to politicians in support of the cause. Astroturfing is the opposite of "grassroots", genuine public support of an issue. EXAMPLE: "Microsoft didn't have grassroots support, so they created astroturf support."
Posted by paul @ 06:43 PM (1764 views) Add Comment
28 Comments
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1. the number cruncher said...
The art of those who wish to manipulate public opinion is often referred to as 'manufacturing consent'. This is exactly what the right wing(and to be perfectly honest left wing) papers are seeking to do. They portray an issue that is only really for the benefit of a small elite as a widely held opinion. Most humans are herd like in their thinking and adopt that opinion as received wisdom and support that. Every day we get messages from lots of sources, many of which are being manipulated to create a false consent. Most of the time this is innocent biase, but a lot of what we read is malicious, like this telegraph article, purely designed to socially engineer the thoughts of its readers.
For more info on this topic read this wikipedia article are read the brilliant book by Edward S. Herman and Noam Chomsky
http://en.wikipedia.org/wiki/Manufacturing_Consent
2. doom&gloom said...
In the main I'm personally in favour of increasing CGT to the level of income tax, and find it mildly amusing when Daily Torygraph journalists bleat on about how unfair it is on poor second-home owners who are 'just saving a nest-egg for their retirement'.
However, in it's current form CGT is a tax on inflation, so unless inflation relief is introduced it could become an increasing burden on people with assets as inflation increases.
3. dbc reed said...
The Homeownerists show their hand.They are quite prepared to bust up the coalition government to defend unearned capital gains in second homes. God knows what they would do if capital gains tax on first homes were on the cards.Cable and Huhne could walk if Cameron gives way to this lot of blackguards.
4. Acid said...
I noticed most of you other HPCers seem to be all for the CGT hikes. I'm longing for house prices to get back to sensible prices as much as the rest of you and hitting the BTLers might help this, sure.
Surely though for most of us sitting around waiting to buy, one of the most attractive places to stick the cash that would've gone on a house (and/or mortgage) has been the stock market - or other types of investment that will attract CGT. Don't tell me you've been stashing your hard earned disposable income as cash?! Seriously?
With the 10k allowance plus the ISA allowance that's not so bad - but the politicians seem to be keeping worryingly silent about whether they will cut that allowance - and hardly anyone in the media seems to confront them about it in interviews. So I welcome this article. I just wish there were more like it.
5. braindeed said...
3. dbc reed @said...
'Cable and Huhne could walk if Cameron gives way to this lot of blackguards.'
I used to think that in the early days of the coalition, but now they've been in (albeit) shared gorvernment for all this time, you can see their principles fading to grey
6. estrader said...
With such low interest being paid for keeping money in a Bank account and not wanting to put my money into bricks & mortar I invest my money in the stock market as a way of preserving (and growing) my ‘wealth’. The rise in CGT doesn’t just affect ‘greedy’ BTL’s and home ownerists. It affects wise and prudent investors who never needed low interest rates to keep them afloat. I know this is a HPC site but for those who care to look outside the 'housing box' will see that there is more to life than owning a house. I am all for affordable housing but I would gladly join the campaign against a rise in CGT. I'm sure thiose who sold their house and invested in gold would agree, I know there are many here.
7. greenshootsandleaves said...
It would appear that, contrary to an oft-repeated claim, political parties are not *all the same*! We can be pretty sure that a Conservative Government with an overall majority in the House of Commons (and yes, even a minority Tory Government) would by now have ditched the proposed increase in CGT. The fact that the country is being run by a coalition at least gives the proposal a fighting chance. With the first-past-the-post system running out of puff and delivering a PR-type result, this could serve to show proportional representation in a positive light.
PS I must admit I sometimes find it difficult to decipher those recaptchas. Luckily there's this computer program on the internet that does it all for you.
8. clockslinger said...
CGT back to what it was three years ago....diaster, surely! The fourth horseman has just arrived!
Just hope the anti CGTers in the Tory party and on this site have some other spiffing ideas about how to fill the debt black hole Mr Cameron apparently missed noticing properly all the time he was in opposition. Oh, and other "spiffing ideas" do not include the usual Tory ones about making the poor and vulnerable pay most by the way. Errr, Tory tool box empty, is it?
9. gone-to-colombia said...
Either CGT, some other tax, or deeper cuts. The money must be raised or saved some how.
Seems fair to me to tax the CG's that a few have made at the expense of the many.
And, if it reduces house prices, then so much the better.
10. Davepage said...
"...I'm sure thiose who sold their house and invested in gold would agree, I know there are many here".
Hilarious -- more of dbc's unearned income, but it's alright if you sold at the top and join a HPC site to try and make a killing at the bottom.
No better then the BTLers you villify. Pathetic
11. estrader said...
@7 clockslinger, what about a higher consumption tax? CGT is only collected when and if somebody sells an asset that has gained in value and in all fairness, an investor should be able to offset capital losses as well. Higher CGT doesn’t protect the poor and the vulnerable. From what I remember the Global financial crisis was not caused by an excess in savings and investment, it was excess debt and consumption by both the public and Governments.
Debt and consumption, they might be a clue as to where more revenue can be raised... But no, tax the wise and the prudent again. Yes, don’t tax the poor borrowers and spenders, instead, get more tax from those irresponsible individuals who deferred consumption today because they couldn’t afford it and didn’t want to borrow and chose to save and invest...bastards!
12. estrader said...
@8 "Seems fair to me to tax the CG's that a few have made at the expense of the many."
You must be under the age of 25? Ok, so CGT makes houses affordable, great! So, you buy a house and then what will you do with any money left over after you have paid your cheap mortgage? Put it in the bank? Spend it? Put some away for your retirement?...Ahhh! Ahhh!
13. str 2007 said...
Perhaps someone will differ to this and call it gambling not investing, however, it seems to me that spare money should be encouraged to be invested in UK companies - particularly if their is a shortage of funds from banks.
Therefore should taxable gains on shares be alot less than essentially unearned income on second homes ?
Lets not forget first homes are still tax free.
If you own homes abroad I'm fairly sure you'd have to pay a capital gains tax and lets not forget in France Notaire (solicitor) fees can be approaching 10% of purchase price and that's for your first residence.
So all in all I think we get off quite lightly in this country with regard to property tax.
14. flashman said...
str 2007: Yes, that’s right. I paid CGT when I sold my house in America. It never occurred to me that it was unfair. I was a top rate taxpayer, so it would have been bizarre if I had not paid any tax on what was essentially a chunk of unearned income. In my opinion we should pay CGT, on any above inflation profits, on our sole residence. I understand your comments regarding encouraging company investments but if you favour one form of 'investment' income over another then you distort the market. If stock market investments were exempt from higher CGT taxation, then the FTSE would soar instead of house prices and a giant bust would one day be the consequence. If we tax every type of capital or investment at the same level, then we would not encourage bubbles and we could pay a more reasonable CGT rate (because the load would be spread over all classes capital income).
15. estrader said...
I am not sure what impact the CGT will have on property prices, but think about this. The main problem is most people (here?) think that the stock market is only a place only for ‘City’ people, gamblers and risk takers. Nothing could be further from the truth.
Let’s say two people each have £165K and want to invest it.
Person A doesn’t want to pay rent anymore and decides to buy an average house to live in.
Person B doesn’t want the hassle of owning property and decides to invest £160K in a balanced stock and share portfolio and continue renting.
Over the next 15 years the economy booms and person A’s house has doubled in value and is now worth £330K and similarly, Person B’s portfolio has doubled in value and is also worth £330K. Now they both have a change in sentiment, Person A wants to sell their house and invest in the stock market and Person B no longer wants to rent and wants to buy an average house which now costs £330K.
Person A sells their house and pays NO CAPITAL GAINS TAX and invests the full £330K in the Stock Market.
Person B sells their Stock portfolio, pays 40% CGT and is left with £264K as a result and so needs to borrow £66K to buy an average house.
Is this fair?
Makes me think house prices won’t be falling as a result of CGT increase.
16. mark wadsworth said...
@ Estrader (various comments), that's the clever bit in the whole Home-Owner-Ist and Rent-Seeking philosophy, to turn any sort of underlying logic on its head.
1. For a start, CGT collects very little in tax (£2 billion or so). I suspect that the Tories proposed this reversal of the CGT cut of two years ago as a sop to the Lib Dems.
2. IMHO capital gains on shares should be entirely CGT free, because the value of your shares represent income that has been taxed already and/or the NPV of future post-tax income (and higher rate tax on dividends and Stamp Duty can go as well). But most gains on shares are already exempt because owned by pension funds or unit trusts, owned by foreigners, gains less than personal allowance, sheltered by other reliefs or simply not reported. So the pension industry (a massive subsidy black hole - they only pay out what people put in in cash, and the tax breaks, which are worth nearly as much again jsut go on fees and commissions) will be delighted at this because they will say it is yet another reason to give them the money to invest 'tax free'.
3. If we binned the pension fund tax breaks, and as a quid pro quo hiked the basic state pension, scrapped Stamp Duty, higher rate tax, CGT and so on, we'd also get back to the small shareholder culture who are far better at keeping boards of directors on their toes.
4. So far so good. But you cannot in any way say that second homes or investment properties (or even a main residence) is in any way deserving of the same favourable CGT exemption. While the original cost may represent post-tax income, the gain certainly does not. It is hitherto untaxed. As a reader's letter in yesterday's ES put it (I paraphrase), how come it's OK for people to bank these entirely artificial capital gains on housing tax-free, but the poor s*d who wants to buy it has to pay off the vastly too big mortgage out of income which has been taxed at savage rates?
5. As to taxes on consumption, don't get me started. VAT is NOT a tax on 'consumption' it is a tax on gross profits (the clue is in the name) and as it is payable even where a business makes a net loss, it is the most damaging tax of all. One man's consumption is another man's production, don't forget, with the narrow exception of....
6..... consumption of land, which is not just the raw materials you get out of the ground, but simply occupying a favourable spot (or even worse, owning a favourable spot and leaving it vacant while relying on The State to enforce your rights for no extra cost). The only consumption you can tax without simultaneously wreaking huge damage on the productive economy is consumption of stuff that comes out of the ground or the right to exclusive occupation of land. i.e. the only true tax on consumption which is not simultaneously a tax on human enterprise is ... Land Value Tax.
7. Here endeth.
17. str 2007 said...
Flashman and estarder
There's also another important point missed. Leverage.
Moving away from prime residence onto investment/2nd homes.
If a person has 50k to invest and puts it down as a deposit on a 200k holiday home (and covers the £150k mortgage and maintenance with rent)
& the other person buys £50k of shares.
5 years down the line and a 50% increase in each (optimistic I know)
The share holder has gained £25k.
The holiday home owner has gained £100k
Even if they were both taxed at 40% capital gains the holiday home owner walks away with £60k against the £15k net gain of the share holder.
Agreed there could be some discussion on rental returns and dividend payments.
However people have repeatedly seen the stock market tank quite quickly only to take alot longer to recover.
Whereas to date houses have corrected but not crashed in the same sense.
Also a company could go bust, unless you've bought on a flood plain or some such then a house is unlikely to become worthless.
Still looks like a no brainer even with CTG on 2nd/investment homes.
18. mark wadsworth said...
8. This would of course sort out your Person A/Person B dilemma, which I have used as an illustration many times.
Person B gets his dividend income as he goes along, after corporation tax of 30% but no higher rate tax. That's his money to spend (on rent*, in your example). If he sells his shares, he might make a gain (good luck to him) or he might make a loss (tough).
Person A buys a house for £165,000 with a rental value of (say) £10,000 and would pay (say) 30% LVT every year = £3,000. This would dampen the price rises he gets, if he sells at a gain, then the tax obviously wasn't high enough, but hey...
* We also have to think about Person C, who is Person B's landlord. He would get the rent out of B's net income and has to pay £3,000 LVT on the place that B occupies as well as income tax on the net rent.
So he would still be unfairly treated under the system I proposed so far, and I am nothing if not fair. The only way to put A B and C on a level playing field is to exempt rental income from income tax or even better, simply to hike LVT even further and do away with corporation tax and income tax entirely (my preferred option). That way Person A pays £6,000 a year LVT (on plot A which he owns/occupies) and B and C between them (one of whom owns and one of whom occupies plot BC) also pay £6,000 LVT and that is the end of that.
19. str 2007 said...
Well for my reasons and Mark Wadworths I see no reason to tax capital gain on share prices.
There's more risk involved than property purchase.
You don't generally have the benefit of leverage
As Mark says alot of investment is tax free anyway (pensions etc)
And why should you get a tax break by introducing more paperwork and being committed to buying an annuity.
Afterall you are actually doing some good to the nation by investing in a company.
20. estrader said...
@15, str 2007 an investor can get leverage through CFD's and other derivatives as margin loans are not available in the UK, but I would call them speculators/traders rather than investors. A stock market *investor* aims for the same sort of long term growth/income/security that property provides but without the need to borrow heavily, and/or have all the other headaches associated with property ownership- maintenance, insurance etc.
21. str 2007 said...
estrader
Yes I assumed there was a way of leveraging up (other than spreadbetting) but as you say not for the amateur perhaps.
Indeed ther is hassle ith all investment, but I can't help thinking that property is less time absorbing than keeping up with world events and juggling your portfolio accordingly and correctly.
Be honest, it's nore than most of us succeed at these days to keep the correct savings rate on our cash.
So as I said above (and it's not meant to be a property bull comment) but property still looks like a no brainer with CTG on second homes in place.
I personally doubt CGT will ever visit primary residence.
On the subject though, I strongly believe the majority of house CTG isn't paid or acknowledged. Back to my car analogy. The governement seem to know who owns every car and whether it's taxed & insured yet I question if they know who owns 1/2 as many immobile houses and whether that erson owns any others.
A bizarre situation that needs addressing for a 2nd home CGT to be implemented with any effect.
22. flashman said...
It's easy to find reasons why one form of investment income is nobler than another. Ultimately if you favour one form over another, you will distort the market and the 'wrong' people will find way of exploiting a well-intentioned tax policy. Either no CGT taxation across the board or equal CGT taxation across the board. We are largely where we are because of distortions.
I recently bought building plots and sold them at a profit. I only paid 18% tax, which is entirely justified because I provided a noble service to self-builders. The average self-builder can’t afford a multiple plot so they are all sold to exploitative developers. I liberated my multiple plots (Robin Hood style) from the hands on the evil big builders and split them into affordable plots for delighted self-builders. I think I should be thanked and knighted for the large profit I made, rather than taxed on it. Over the years I’ve also made enough on the stock markets to pay for several houses. I should also not be taxed on this profit because of the countless companies I’ve helped with my stock purchases. They know I only did it for altruistic reasons and I don’t think that they minded me selling them in the last remaining days of the 18% CGT. The rest of my income was taxed at 50% but that was not noble income, so its a fair cop
Obviously every one else should pay large amounts of CGT because they are not as noble as me.
23. str 2007 said...
Flashman
OK point taken.
You didn't build in the end then and provide a young family with a reasonably priced home to call their own.
You grubby speculator you ;-) LOL
24. flashman said...
I'm afraid so. A man's got to eat!
25. str 2007 said...
You go steady on that Beluga Caviar.
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