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Labour Mps Oppose The Mansion Tax

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http://www.theguardian.com/politics/2014/oct/02/glenda-jackson-london-labour-mps-opposed-mansion-tax

Okay, so it's an imperfect policy, and as discussed, is a long way from a LVT, but it is the only tax on unearned income on the table, and the fact that supposedly leftwing MPs (Glenda Jackson + Diana Abbott) are opposing it, just goes to show how deep the vested interests go.

Using the mythical "asset rich, cash poor" little old lady who bought in 1950 argument is very weak. Their own property portfolios are probably a better place to look for justification.

If the traditional left can't even back a policy like this, then what hope to do the poor have?

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http://www.theguardian.com/politics/2014/oct/02/glenda-jackson-london-labour-mps-opposed-mansion-tax

Okay, so it's an imperfect policy, and as discussed, is a long way from a LVT, but it is the only tax on unearned income on the table, and the fact that supposedly leftwing MPs (Glenda Jackson + Diana Abbott) are opposing it, just goes to show how deep the vested interests go.

Using the mythical "asset rich, cash poor" little old lady who bought in 1950 argument is very weak. Their own property portfolios are probably a better place to look for justification.

If the traditional left can't even back a policy like this, then what hope to do the poor have?

But it's incredibly poorly thought out.

Think of all the people trying to buy FTB flats who will be crowded out by people recycling capital from property that might get mansion taxed into piecemeal BTL.

They should be cutting the debt/tax shield on BTL to make the cash flows of owner occupation comparable to BTL, in order to dampen speculative behavior in the housing market.

Edited by bankstersparadise

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An easy fix for "the little old lady problem" is to lower the threshold to £1.5 million, increase the tax rate to 1.5% of the value exceeding £1.5 million and to impose the tax on the last transaction price rather than the current fair market value.

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But it's incredibly poorly thought out.

Think of all the people trying to buy FTB flats who will be crowded out by people recycling capital from property that might get mansion taxed into piecemeal BTL.

They should be cutting the debt/tax shield on BTL to make the cash flows of owner occupation comparable to BTL, in order to dampen speculative behavior in the housing market.

Yep, it's generally pretty crap as a policy to reduce property speculation, I suspect that is not its aim though. It's an attempt at a populist policy that taxes wealth rather than income. It's what the left are supposed to be good at.

But the left can't even support it themselves. I suppose you could describe Abbott as a rebel back bencher, but she and Jackson are historically fairly high-profile and outspoken figures on the left.

I despair of the Tories for being so blatantly supportive of their own privileged class above anyone else, which is not what conservatism is supposed to be about, and I despair of the Labour party for being so bad at being leftwing. I despair at the Liberal democrats for damaging the perception of liberal politics in the UK for a generation.

They are all utterly useless.

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Labour MPs who might pay the mansion tax themselves - oppose the mansion tax.

Not a well designed policy - but it will hit the oligarchs hardest and is hard to avoid. At present most of them pay less in annual property (council tax) than your parents/grandparents in their modest terraced houses - cos the Westminster council tax is less than half the national average (well they raise only £40m in council tax and £100m in parking income - go figure!)

PS Glenda is retiring - she can fund it out of her MPs' pension!

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The LibDem conference starts today so it's another few days of "promises" (including their mansion tax version) that would be reneged on and with the LibDem reneger in chief speaking next Wednesday.

Edited by billybong

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The LibDem conference starts today so it's another few days of "promises" (including mansion taxes) that would be reneged on and with the LibDem reneger in chief speaking next Wednesday.

Cleggsy Bear's farewell speech. To the nation and to the party, he's been instrumental in destroying them both.

Edited by zugzwang

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Bit of a nonsense to apply a wealth tax to only one type of asset.

Bit of a nonsense to apply capital gains tax before an asset is sold.

Ill thought out 'politics of envy' guff.

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Bit of a nonsense to apply a wealth tax to only one type of asset.

Bit of a nonsense to apply capital gains tax before an asset is sold.

Ill thought out 'politics of envy' guff.

A bit of nonsense to exempt one type of asset (primary residence from tax too)

Why If the man next door has a house with a 3 acre plot and thus worth a lot more than my house with a 1/4 acre plot pay no tax on the uplift in value, and yet if I have a 2.75 acre plot a mile down the road to enjoy, I have to pay CGT on that, despite my plots having a far lower combined value?

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I suspect that one reason for the UK's love affair with HPI is the principal private residence exemption from CGT. Making the only asset class where 95% leverage is freely available exempt from CGT strikes me as a very good way to create a significant mis-allocation of assets.

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I suspect that one reason for the UK's love affair with HPI is the principal private residence exemption from CGT. Making the only asset class where 95% leverage is freely available exempt from CGT strikes me as a very good way to create a significant mis-allocation of assets.

Helps pump money into the system.........anyone worth any money is pushed into taking on as much debt as they can handle.....they don't want your savings, they want your debt together with a long working life that can pay for it....with a bit of luck you will then time it to drop down dead, expensive non productive liabilities are a drain on society and growth....having said that, on the plus side those with many needs do generate plenty of jobs. ;)

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http://www.theguardian.com/politics/2014/oct/02/glenda-jackson-london-labour-mps-opposed-mansion-tax

Okay, so it's an imperfect policy, and as discussed, is a long way from a LVT, but it is the only tax on unearned income on the table, and the fact that supposedly leftwing MPs (Glenda Jackson + Diana Abbott) are opposing it, just goes to show how deep the vested interests go.

Using the mythical "asset rich, cash poor" little old lady who bought in 1950 argument is very weak. Their own property portfolios are probably a better place to look for justification.

If the traditional left can't even back a policy like this, then what hope to do the poor have?

It is a crass and crazy policy. A person's own house provides no income unless it is sold or let. The hypothetical value of it is not unearned income. The only effect the policy will have is to devalue houses which are around and above the threshold for the tax. Those people who don't wish to, or cannot afford to pay it will have to sell the property. It could be as perverse as someone living in a house, having the value of their houses assessed at 2.25 million, having to sell it, but only finding a buyer prepared to pay £1.95 million for it. They new owner could then justify not having to pay the tax, when the previous had owner was forced out by it! Then it will cause an even bigger ripple effect out from London from people trading down to houses just under the threshold, or selling a few high value properties to recycle the funds into a larger number of cheaper properties.

The mansion tax will not make it any cheaper to buy a normal house, that is for sure.

Edited by BalancedBear

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It is a crass and crazy policy. A person's own house provides no income unless it is sold or let. The hypothetical value of it is not unearned income. The only effect the policy will have is to devalue houses which are around and above the threshold for the tax. Those people who don't wish to, or cannot afford to pay it will have to sell the property. It could be as perverse as someone living in a house, having the value of their houses assessed at 2.25 million, having to sell it, but only finding a buyer prepared to pay £1.95 million for it. They new owner could then justify not having to pay the tax, when the previous had owner was forced out by it! Then it will cause an even bigger ripple effect out from London from people trading down to houses just under the threshold, or selling a few high value properties to recycle the funds into a larger number of cheaper properties.

The mansion tax will not make it any cheaper to buy a normal house, that is for sure.

Surely the properties that were already only (ha!) £1.95m at the start of that scenario would have to drop their prices as the £2.5m properties came down to meet them? And then the £1.8m properties would have to reduce in order to look appropriately valued against the old £1.95m properties, and then the £1.7m properties would have to come down otherwise they'd look overpriced in relation to those that were previously £1.8m, and on, and on, and on...

Doubt that's the intention, but unforeseen consequences and all that.

Edited by Neverwhere

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Surely the properties that were already only (ha!) £1.95m at the start of that scenario would have to drop their prices as the £2.5m properties came down to meet them? And then the £1.8m properties would have to reduce in order to look appropriately valued against the old £1.95m properties, and then the £1.7m properties would have to come down otherwise they'd look overpriced in relation to those that were previously £1.8m, and on, and on, and on...

Doubt that's the intention, but unforeseen consequences and all that.

Many properties at that level are individual and hard to specifically value anyway. It is not like rows of identical 1960's semis or Victorian terraces, where there are specifically comparable properties. Just because a house that could have been valued at £2.5m may get sold for £1.95 million does not mean £1.8 million properties are going to get much cheaper. Just like houses that cost around 250k. Many houses could be worth more when compared with others but will not get bought for more due to the stamp duty threshold.

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Many properties at that level are individual and hard to specifically value anyway. It is not like rows of identical 1960's semis or Victorian terraces, where there are specifically comparable properties. Just because a house that could have been valued at £2.5m may get sold for £1.95 million does not mean £1.8 million properties are going to get much cheaper. Just like houses that cost around 250k. Many houses could be worth more when compared with others but will not get bought for more due to the stamp duty threshold.

Clearly you've not spent much time in Chelsea...

kensingtonhouse-370x229.jpg?1290790746

http://www.accountancyage.com/aa/news/2339162/londoners-face-annual-gbp1bn-mansion-tax-bill

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Interesting snippet in Times Property today, re GLenda Jackson, who has come out against the tax. She has a majority of just 42 votes in her constituency of Hampstead and Kilburn, where (it says) 5.5% of all properties sold since 2011 sold for £2M or more. Tbh I would have thought it might have been more.

Not that I am suggesting that her tiny majority has anything to do with her no doubt highly principled decision on this.

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Interesting snippet in Times Property today, re GLenda Jackson, who has come out against the tax. She has a majority of just 42 votes in her constituency of Hampstead and Kilburn, where (it says) 5.5% of all properties sold since 2011 sold for £2M or more. Tbh I would have thought it might have been more.

Not that I am suggesting that her tiny majority has anything to do with her no doubt highly principled decision on this.

To have created Dan Hodges she clearly is a confused and not overly bright woman, just another luvvy with her scouse snout in the trough, even at 78 she is too afraid of having her snout removed for what she is supposed to stand for.

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No, but you are also not looking at the average looking houses which are creeping into the threshold. I imagine many of these places in Chelsea are way above the proposed threshold and are not borderline cases. Places worth tens of millions are not suddenly going to be sold for less than two!

Edited by BalancedBear

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No, but you are also not looking at the average looking houses which are creeping into the threshold. I imagine many of these places in Chelsea are way above the proposed threshold and are not borderline cases. Places worth tens of millions are not suddenly going to be sold for less than two!

The mansion blocks are all flats, and even quite a few of the terraces are divided up into flats and maisonettes, so many of them are lower down the price spectrum than you might expect. On Rightmove there are currently 144 properties listed in Chelsea with asking prices between £1.75m and £2.5m, right in the mansion tax price movement sweet spot, and 508 with asking prices of £1.75m or less. In London you often need to be up in the tens of millions before you hit unique, hard to value properties; under this it's often identikit, albeit potentially very well made antique identikit.

Ambitious speculators are even building new (and we all know what that often says about build quality) identikit houses in what used to be thought of as relatively run of the mill areas and pricing them well inside the mansion tax threshold, such as this development just off the north circular in Brent Cross:

2eeaot4.jpg

http://www.rightmove.co.uk/new-homes-for-sale/property-32492589.html

If average looking houses (not that my examples count as such) are creeping into the threshold for a mansion tax then that is ludicrous, but it would make it look even more like its implementation (or even the perceived threat of such) could cause price movement as average looking houses are, by definition, easily comparable with other average looking houses.

Edit: to add, although I'm heavily in favour of a radical move away from income tax and towards a land value tax I'm not pro-mansion tax as the concept is totally flawed on all sorts of levels, I just think that one of those flaws might be that it accidentally encourages a crash in house prices...

Edited by Neverwhere

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It is a crass and crazy policy. A person's own house provides no income unless it is sold or let. The hypothetical value of it is not unearned income. The only effect the policy will have is to devalue houses which are around and above the threshold for the tax. Those people who don't wish to, or cannot afford to pay it will have to sell the property. It could be as perverse as someone living in a house, having the value of their houses assessed at 2.25 million, having to sell it, but only finding a buyer prepared to pay £1.95 million for it. They new owner could then justify not having to pay the tax, when the previous had owner was forced out by it! Then it will cause an even bigger ripple effect out from London from people trading down to houses just under the threshold, or selling a few high value properties to recycle the funds into a larger number of cheaper properties.

The mansion tax will not make it any cheaper to buy a normal house, that is for sure.

Valuation is always an issue with property and land taxes, but I don't see how the argument that you are making is any different from your house falling between two bands of council tax.

Not ideal, but hardly the end of the world, and you don't hear people blaming council tax for significantly distorting the housing market.

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Valuation is always an issue with property and land taxes, but I don't see how the argument that you are making is any different from your house falling between two bands of council tax.

Not ideal, but hardly the end of the world, and you don't hear people blaming council tax for significantly distorting the housing market.

The difference in council tax cost between small houses and mansions can be about £1000 per year depending upon where you live, as the top band covers a very wide range of properties. In the case of a mansion tax, if a level of 1% were charged, you are talking about an annual bill of £20,000 + or zero if you are just below it. This is very significant unless you are a millionaire several times over.

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The mansion blocks are all flats, and even quite a few of the terraces are divided up into flats and maisonettes, so many of them are lower down the price spectrum than you might expect. On Rightmove there are currently 144 properties listed in Chelsea with asking prices between £1.75m and £2.5m, right in the mansion tax price movement sweet spot, and 508 with asking prices of £1.75m or less. In London you often need to be up in the tens of millions before you hit unique, hard to value properties; under this it's often identikit, albeit potentially very well made antique identikit.

Ambitious speculators are even building new (and we all know what that often says about build quality) identikit houses in what used to be thought of as relatively run of the mill areas and pricing them well inside the mansion tax threshold, such as this development just off the north circular in Brent Cross:

2eeaot4.jpg

http://www.rightmove.co.uk/new-homes-for-sale/property-32492589.html

If average looking houses (not that my examples count as such) are creeping into the threshold for a mansion tax then that is ludicrous, but it would make it look even more like its implementation (or even the perceived threat of such) could cause price movement as average looking houses are, by definition, easily comparable with other average looking houses.

Edit: to add, although I'm heavily in favour of a radical move away from income tax and towards a land value tax I'm not pro-mansion tax as the concept is totally flawed on all sorts of levels, I just think that one of those flaws might be that it accidentally encourages a crash in house prices...

I thought the poster was referring to an entire mansion, not one divided into flats. These flats valued at just over 2 million will probably see price falls if a mansion tax comes into being. However, even if they then get purchased for £1.9 million, who is to say that 5 years later the government's valuation agency would rot value it at 2.1 million making occupiers pay the mansion tax?

Knowing how wedded the government is to HPI, I would not put it past them to deliberately inflate valuations even if the market were to fall.

New taxes never make life cheaper.

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