Monday, September 28, 2009

Excellent article suggesting we re-introduce Schedule A taxation

Yes, let's tax home-ownership

... and reduce income tax rates accordingly. For my part, I'd use any new property tax to replace Council Tax, Inheritance Tax, Stamp Duty and the TV licence fee, and then move on to cutting other taxes, but hey.

Posted by mark wadsworth @ 10:18 AM (930 views)
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9 thoughts on “Excellent article suggesting we re-introduce Schedule A taxation

  • A good argument but why is he describing his proposal as a new tax when, as M.W points out, he is talking abour Schedule A of Income Tax which was abolished in 1963? (When our problems began).
    Land value Tax is the better option because it would tend to increase the number of houses for sale by discouraging developers from sitting on extant planning permissions and would make them do what they’re supposed to do.Schedule A was so feared that people would rather rent to avoid the tax liability.But as Andrew Oswald has repeatedly shewn that is no bad thing ,as mass homeownership increases unemployment,congestion and the hiring of unsuitable local people to do key jobs in high house-price areas.

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  • Matthew Parris wrote well on this:

    http://www.timesonline.co.uk/tol/comment/columnists/matthew_parris/article6850124.ece

    It is socially acceptable to be taxed when you earn, and taxed when you spend; but being taxed on what you have is a step too far..

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  • Matthew Parris did a good summary of the philosophy underpinning Home-Owner-Ism, but you must realise that Home-Owner-Ism is a relatively recent development – it only became the dominant economic ideology in this country in the last fifty years or so, which has seen some of the worst house price bubbles (with resulting recessions) ever.

    He did also point out that there is no real economic or intellectual argument against property taxes, but rather than trying to educate people about this, he concluded it was easier for politicians to try and pander to the Home-Owners (as futile as this may be in the longer run).

    I for one find it unacceptable to be taxed on what I earn or spend, rather than paying for exclusive use of collective wealth.

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  • Eternal Sceptic says:

    It would appear far more socially acceptable to do away with a direct tax on a property and replace it with a local banded income tax. A tax on property based on ability to pay may be undersirable (as is all taxation) but at least it would be fair. Should a pensioner pay the same amount as a family having 3 kids in fulltime education when both live in identical properties? Should an unmarried mother with three children by different fathers be able to enjoy a higher standard of living than a pensioner, when both live in social housing?
    The entire pension, benefit, housing tax fiasco needs urgent review and to be made more simple, equitable and transparent.

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  • • It’s difficult to collect

    Is it any more difficult to collect than council tax?

    @uncle tom,
    I think Matthew Parris is wrong. The United States already taxes property heavily (by our standards); yet people just accept it. For most people LVT wouldn’t be much different to council tax; with the notable exception of London where the new tax would probably be higher. Since most media commentators are both property-rich and based in London, it’s no surprise to see them strongly opposed to the idea. Parris himself owns three homes, according to Wikipedia.

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  • Taxing earnings & spending appears socially acceptable whenever the taxation is not regressive over and above a socially acceptable minimum ( and sometimes is still socially accepted, i.e.: when society does not realise there is inherent regression over some point far beyond social norms, e.g. US income tax ) but this is only because it is relatively>/i> socially acceptable – it is a least-worst alternative given that there is to be taxation.

    Taxation of an asset class which one owns would be socially acceptable if the ownership of that asset decreases other people’s happiness. Window tax is used as an example in Matthew Paris’ article, however if I have many windows in my house does it stop others getting light? Ask the same question again with another asset class: If I have many houses ( or a huge house, or, indeed, a lot of land ) does it hinder others ability to own houses [ land ]?

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  • closing italic tag properly, oops.

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  • The Parris article, as MW points out, was nothing but an argument for weak leadership and avoidance of difficult decisions, the very opposite of what most seem to want up and down the country and what is frequently expressed on this blog.
    What we hear day after day, whether it be from left or right, are calls for us to get paid what we earn. The logical conclusion of this is that the most socially acceptable tax would be one on unearned property gains, which is not in fact a tax on what one owns, but what one has gained from the efforts of others.
    The reality is that no matter how it is stacked up, LVT is the most fair and least avoidable tax, while also acting to prevent housing cycles. The issue is simply in the correct explanation and implementation of it.
    The real problem, as MW has also pointed out many times, is the malign influence of the home-owning obsession in this country. Having already contributed to the worst recession in decades, apparently we now desperately wish to destroy the futures of the next generation as well.

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  • 4. Eternal Sceptic said…
    “Should a pensioner pay the same amount as a family having 3 kids in fulltime education when both live in identical properties? Should an unmarried mother with three children by different fathers be able to enjoy a higher standard of living than a pensioner, when both live in social housing?”

    Yes, because if they live in similar properties then they have both benefited from property value rises to the same amount – it is their property wealth that they did not earn that is being taxed and so it is perfectly fair. Of course in the pensioner’s case they may pay nothing and the amount collected on inheritance.
    Unfortunately too many objections to land or property tax are based on fundamental misunderstandings of what is being taxed.

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