Sunday, July 1, 2012
Another voice in favour of LVT
Here's a hypothetical question: if you inherit a house, worth a million pounds, and rent it out for Â£50,000 a year, should you pay more tax on that income or less than someone who works an 80-hour week for the same salary? Some readers may disagree, but I think that you should pay more. You've done nothing to earn that money â€“ you simply own a property that somebody else finds useful. But if you own a property, you only pay income tax on the rent you earn from it. If you work for your income, you pay three income taxes â€“ there is national insurance and, effectively, employers' national insurance too. That brings the effective tax rate paid on PAYE income up to 40pc for basic rate payers, compared to 20pc on non-PAYE income. The worker pays a higher tax rate than his landlord.