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fru-gal

Labour's Mansion Tax: Charging Foreign Buyers And Empty Houses More Would Raise Same Cash For Less Pain

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You know what Telegraph are going to say without even reading their articles these days.

Do people actually pay for this daily cofirmation bias? Astonishing

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How my heart bleeds for those cash strapped families in their 2 million pound houses.

Well I still think it is unfair for anyone who has such a house in London when elsewhere in the country the same house would cost 500k

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"cash-strapped families"

Yeah, I thought it was only little old ladies who bought their homes for thrupence ha'penny in 1955 that we're going to be hit by the mansion tax.

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Well I still think it is unfair for anyone who has such a house in London when elsewhere in the country the same house would cost 500k

And I think it is unfair that council tax in the most expensive areas of London is less than I pay for a bog average house outside of London.

The "mansion tax" of about £3k a year on a £2m house is about £500-1000 a year more than the highest council tax band anywhere else.

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Labour could generate the same amount of money by ditching the mansion tax and instead raising levies on empty houses, foreign buyers and buy-to-let landlords, a new report has found.



Thatd crash the property market overnight, i say tax the f'en lot of them ... and i've a feeling that they will if in power with the SNP.



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And I think it is unfair that council tax in the most expensive areas of London is less than I pay for a bog average house outside of London.

The "mansion tax" of about £3k a year on a £2m house is about £500-1000 a year more than the highest council tax band anywhere else.

Two issues - first the fact that you council charges more council tax than a London council is an issue for your council. Secondly, the introduction of a mansion tax will mean that it will be extended down to other properties, just like other taxes have ever done.

40% tax was only intended to tax "rich people" At the time of introduction about what a 100k in today's money.

Stamp duty was a tax only originally levied on mansions.

VAT has been increased many times.

More taxes mean more government waste and more money given over to buying votes.

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Why?

What is unfair is that a home worth a million or two (money gained on paper for nothing) in central London pays less in council tax than a house worth £500k in another part of the country......that is what has to change.

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Why?

Most people buying a house buy a home. 15 years ago the discrepancy between London an other parts of the UK is not what it is today. What did owners of homes in such a position do to deserve an extra tax? It is still their home, just because it has a paper value does not mean it can be realised, or that it will always have the same value.

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Most people buying a house buy a home. 15 years ago the discrepancy between London an other parts of the UK is not what it is today. What did owners of homes in such a position do to deserve an extra tax? It is still their home, just because it has a paper value does not mean it can be realised, or that it will always have the same value.

The house in London is more expensive because it's in London - a location premium. Salaries are higher, rents are higher, related borrowings and taxpayer investment greater, infrastructure and provision better. Those things are what society - everyone - has contributed, accomplished and paid up for. Those in the most expensive houses on the most expensive land have by definition received the greatest increase in location premium.

Therefore when you ask 'what did owners do to deserve an extra tax' that has to be qualified by asking 'what did owners receive to deserve an extra tax' and 'what did everyone else contribute to facilitate the rise in location premium, pricing themselves out'. I understand what you mean but that's not an argument against the merits of a mansion tax. Using similar terms to your argument one could extrapolate that to saying income tax rates are unfair to Londoners because they earn and pay more than elsewhere doing the same jobs? But I doubt that's what you mean.

Taxation creep is a fair point, where the right/wrong depends on perspective. I share your general view on taxation, but taxing income is just about the most inefficient and destructive means so anything else is better. A mansion tax is imperfect, adding bands I to Z would be even fairer but it's a start.

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The house in London is more expensive because it's in London - a location premium. Salaries are higher, rents are higher, related borrowings and taxpayer investment greater, infrastructure and provision better. Those things are what society - everyone - has contributed, accomplished and paid up for. Those in the most expensive houses on the most expensive land have by definition received the greatest increase in location premium.

Therefore when you ask 'what did owners do to deserve an extra tax' that has to be qualified by asking 'what did owners receive to deserve an extra tax' and 'what did everyone else contribute to facilitate the rise in location premium, pricing themselves out'. I understand what you mean but that's not an argument against the merits of a mansion tax. Using similar terms to your argument one could extrapolate that to saying income tax rates are unfair to Londoners because they earn and pay more than elsewhere doing the same jobs? But I doubt that's what you mean.

Taxation creep is a fair point, where the right/wrong depends on perspective. I share your general view on taxation, but taxing income is just about the most inefficient and destructive means so anything else is better. A mansion tax is imperfect, adding bands I to Z would be even fairer but it's a start.

If a mansion tax were to replace an element of income tax, I would not have a such problem with it, but it would still be a problem for people who have bought a property during their working lives and then retire. I have a problem with governments taking more and more tax, without real justification, and whilst not spending money already collected wisely.

With regard to London being a premium Location, that is a subjective matter. You could not pay me to live in London, in my mind it is a dump. However, I'm glad lots of people think otherwise, or we would have even more pressure on towns and villages outside London.

Edited by BalancedBear

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If a mansion tax were to replace an element of income tax, I would not have a such problem with it, but it would still be a problem for people who have bought a property during their working lives and then retire. I have a problem with governments taking more and more tax, without real justification, and whilst not spending money already collected wisely.

With regard to London being a premium Location, that is a subjective matter. You could not pay me to live in London, in my mind it is a dump. However, I'm glad lots of people think otherwise, or we would have even more pressure on towns and villages outside London.

A mansion tax will reduce the price of houses. If houses are cheaper less has to be spent on rent or mortgage. If less is spent it makes speculation less appealing and leaves more disposable income for other stuff. So it's equivalent to an increase in take home pay (a tax cut) for everybody else.

It will also raise public revenue; at worst delaying rises in other taxes, at best precluding the need for rises. Council tax isn't really a tax, it's a user charge according to received benefits (or at least was/should be) - recycling location premium back to the wider community that made it so. This is better than other options where yes in a world of choices and rule by a bunch of <pick your word> no taxes are 'fair'.

I said 'location premium' not 'premium location', which is not subjective. While huge chunks of central borrowing and taxation that you, I and society have to contribute to are, for example, used to build another train line in London - lifting local prices a lot, surrounding prices a bit and making the costs of housing and working there even less affordable for everyone else - something is better than nothing. The only way we catalyse and motivate national rather than regional progress is by leveling out the playing field - taxing location premium via user charges seems the fairest way to do it but I'm interested in other ideas because it bothers me a lot.

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A mansion tax will reduce the price of houses. If houses are cheaper less has to be spent on rent or mortgage. If less is spent it makes speculation less appealing and leaves more disposable income for other stuff. So it's equivalent to an increase in take home pay (a tax cut) for everybody else.

It will also raise public revenue; at worst delaying rises in other taxes, at best precluding the need for rises. Council tax isn't really a tax, it's a user charge according to received benefits (or at least was/should be) - recycling location premium back to the wider community that made it so. This is better than other options where yes in a world of choices and rule by a bunch of <pick your word> no taxes are 'fair'.

I said 'location premium' not 'premium location', which is not subjective. While huge chunks of central borrowing and taxation that you, I and society have to contribute to are, for example, used to build another train line in London - lifting local prices a lot, surrounding prices a bit and making the costs of housing and working there even less affordable for everyone else - something is better than nothing. The only way we catalyse and motivate national rather than regional progress is by leveling out the playing field - taxing location premium via user charges seems the fairest way to do it but I'm interested in other ideas because it bothers me a lot.

I'm not sure a mansion tax on its own will reduce prices. It may just make the houses only affordable by those who can pay the tax. The only way to significantly decrease prices is to build more homes, and reduce immigration to reduce demand. Also there needs to be less government intervention o keep prices up. Investors only invest as they believe it is a one way bet.

Location premium is also subjective to some degree. Someone working as a plumber in a van is unlikely to care whether he has a tube stop 5 minutes away or ten minutes away. Also it can still be quicker to travel into a place in London from outside, then to travel across London on the tube.

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I'm not sure a mansion tax on its own will reduce prices. It may just make the houses only affordable by those who can pay the tax. The only way to significantly decrease prices is to build more homes, and reduce immigration to reduce demand. Also there needs to be less government intervention o keep prices up. Investors only invest as they believe it is a one way bet.

Location premium is also subjective to some degree. Someone working as a plumber in a van is unlikely to care whether he has a tube stop 5 minutes away or ten minutes away. Also it can still be quicker to travel into a place in London from outside, then to travel across London on the tube.

It will reduce prices, that's why there's so much furore about it (aside from what seems a moral rather than economic argument like yours). The economic burden of paying it falls on the owner/seller so a future of higher annual charges translates into a lower value today.

On building more and intervention I agree. On immigration I have mixed views - it's probably good for the country but definitely bad for the least well paid. I think price demand props and supply constraints arising from a builder-cartel and land-monopoly have a far bigger impact than immigration. But I welcome opinion and action when representative of democratic opinion. The entire ethos of taxes on property rather than income is to reduce the speculative nature - end the one way bet.

When I refer to location premium that's simply the price difference between two equivalent houses in different parts of the country (really it's the land not the house). The plumber may not care, but that doesn't diminish the price reality. Transport is part of the problem. Economic theory says the location premium between place A (city) and place B (suburbs) will be absorbed through travel costs among other things. Commuting from my town into London costs approx £4k a year - extrapolate that out over time then PV the extra and it accounts for a large part of the difference. Which is why choosing where to live really comes down to whether you like it or not (or in today's world, speculating on HPI), rather than assuming it's cheaper. And that's why in much of the country outside cities local wages are so out of line with local prices.

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It will reduce prices, that's why there's so much furore about it (aside from what seems a moral rather than economic argument like yours). The economic burden of paying it falls on the owner/seller so a future of higher annual charges translates into a lower value today.

On building more and intervention I agree. On immigration I have mixed views - it's probably good for the country but definitely bad for the least well paid. I think price demand props and supply constraints arising from a builder-cartel and land-monopoly have a far bigger impact than immigration. But I welcome opinion and action when representative of democratic opinion. The entire ethos of taxes on property rather than income is to reduce the speculative nature - end the one way bet.

If we knew what a mansion tax would cost for the next 100 years then it would be quantifiable. However in reality nobody would know how much extra tax the government would seek to extract, which is not so bad if car taxes change, as cars are regularly changed. but not many people want to uproot their home on a whim of a politician.

With regard to immigration, it is an irrelevance whether you feel it is good for the country or not, if not enough homes exist to accommodate people. I agree that the planning system rationing land is a serious hindrance to building homes, but whilst the country has such a system, immigration just fuels the fire. As soon as the balance of supply and demand is tipped in favor of demand, prices will increase. This means homes in places where people want to be, not just he number of homes in the country matched to the number of people.

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People talk about the Mansion Tax being unfair but aren't lots of taxes unfair? For example, why should people be taxed on their work income? Why should someone be taxed at say 40% if they earn £50k slogging their guts out yet it is considered unfair to tax someone whose house has "earned" £500k, less than 1% of that unearned income. Is working for money some sort of privilege that we don't know about? Surely taxing income just discourages people from working and climbing up the proverbial ladder. The incentives to make money in the UK are all upside down and people see worklessness (whether via benefits or BTL or unearned millionaire boomer OOs) as the way to riches. That is why society is fundamental screwed.

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If a mansion tax were to replace an element of income tax, I would not have a such problem with it, but it would still be a problem for people who have bought a property during their working lives and then retire. I have a problem with governments taking more and more tax, without real justification, and whilst not spending money already collected wisely.

With regard to London being a premium Location, that is a subjective matter. You could not pay me to live in London, in my mind it is a dump. However, I'm glad lots of people think otherwise, or we would have even more pressure on towns and villages outside London.

Do you have a problem with people whose houses have increased in value by £100,000s simply by being bought at the right time being able to cash in their houses for unearned untaxed profits? The argument seems to only go one way - the Mansion Tax is unfair because it penalises little old ladies who bought decades ago and live on their pensions yet nobody seems bothered about the corollary that the little old lady has basically won the lottery without actually buying a ticket. Unhappy with paying another £3k per year but not bothered about being able to extact hundreds of thousands of £s unearned and untaxed!

Edited by fru-gal

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Most people buying a house buy a home. 15 years ago the discrepancy between London an other parts of the UK is not what it is today. What did owners of homes in such a position do to deserve an extra tax? It is still their home, just because it has a paper value does not mean it can be realised, or that it will always have the same value.

You have heard of MEW right?

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If we knew what a mansion tax would cost for the next 100 years then it would be quantifiable. However in reality nobody would know how much extra tax the government would seek to extract, which is not so bad if car taxes change, as cars are regularly changed. but not many people want to uproot their home on a whim of a politician.

With regard to immigration, it is an irrelevance whether you feel it is good for the country or not, if not enough homes exist to accommodate people. I agree that the planning system rationing land is a serious hindrance to building homes, but whilst the country has such a system, immigration just fuels the fire. As soon as the balance of supply and demand is tipped in favor of demand, prices will increase. This means homes in places where people want to be, not just he number of homes in the country matched to the number of people.

We don't need to know what it would cost for the next 100 years. Prices and forecasts will behave on what it is, or assumed to be. Nobody knows what they'll be earning in 10 years but they make decisions based on assumptions. People are already at the whim of politicians in terms of taxes and spending choices. Many also at the whim of HPI policy meaning they're not even in a position to consider uprooting. So I don't think that's a valid argument in mansion tax terms. As I said earlier though if property taxes rise, prices and speculation fall and disposable income for most rises.

Immigration - I said it was my view, conceding that policies are bad for many and if enough people don't like it we should do something about it, and if my view is as valid as anyone else's I hope it's not irrelevant. Similarly with you. I also believe immigration fuels the fire, but mostly due to media baiting rather than economic reasoning. A bit like 'cash-rich foreign buyers' with no appreciation that they generally financed the cash purchase by borrowing overseas.

Supply/demand - you're confusing price with demand. You assert that there aren't enough homes, but your actual contention is that prices are too high. That may or may not be accelerated by immigration, but price-demand (affordability) is not the same as demand (numbers).

e.g. assume a change to no price-props and 3.5x income limit. Prices would have to fall, but demand hasn't changed. What's changed is affordability, and it's this that sets house prices. What the system facilitates as a measure of affordability determining rents & prices is not the same as broadening the argument to demand by numbers. If houses cost X but people (even loads of extra people) could only afford X/2 prices will fall. The building industry only supplies stock to match demand, no more. And there's no price competition. Which in turn means (assuming there's an undersupply of homes due to immigration) even if they built a lot more houses, if nothing is done about maximising the % of disposable income spent on housing (affordability) prices wouldn't fall because price-demand is the same.

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The house in London is more expensive because it's in London - a location premium. Salaries are higher, rents are higher, related borrowings and taxpayer investment greater, infrastructure and provision better. Those things are what society - everyone - has contributed, accomplished and paid up for. Those in the most expensive houses on the most expensive land have by definition received the greatest increase in location premium.

Therefore when you ask 'what did owners do to deserve an extra tax' that has to be qualified by asking 'what did owners receive to deserve an extra tax' and 'what did everyone else contribute to facilitate the rise in location premium, pricing themselves out'. I understand what you mean but that's not an argument against the merits of a mansion tax. Using similar terms to your argument one could extrapolate that to saying income tax rates are unfair to Londoners because they earn and pay more than elsewhere doing the same jobs? But I doubt that's what you mean.

Taxation creep is a fair point, where the right/wrong depends on perspective. I share your general view on taxation, but taxing income is just about the most inefficient and destructive means so anything else is better. A mansion tax is imperfect, adding bands I to Z would be even fairer but it's a start.

Most of the people living in London own their homes outright or have a very small mortgage outstanding....many more only pay the interest only because it suits them that way and in the case of BTL is a tax benefit to pay it that way....this does not mean they do not have the money, it means they use the money to invest it in other ways.

Living in London is one of the cheapest places to live if you own your own home....the council tax and water rates are some of the cheapest in the whole country...transport and other infrastructure is better, IT communications is far superior than other places.....you can live for very little in London, everything is close at hand and available....and the wages in a higher percentage of jobs are better than almost all other places.

Their homes have risen in price because of the above......so the people that own them win because of what is around them even though they may not always pay much in themselves in, they take lots out via HPI......non doms and those that do not even live there pay even less towards the facilities, social services, transport and infrastructure.....laughing all the way to the bank. ;)

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