As the FT reports this morning:
The top 20 [parliamentary] seats by [house price] value, of which 11 are held by Conservative MPs, have property worth a total of £741bn. The cheapest 20 seats, of which 15 are represented by Labour, are collectively worth just £57bn.
That total figure is less than any of the three most valuable seats in the country: Cities of London and Westminster (£78.8bn), Kensington (£74.8bn) and Chelsea and Fulham (£61.8bn).
That is a measure of real inequality for three reasons.
First, some of that difference reflects the quality of housing.
Second, a significant part of that difference access to work.
And third, house prices do, in the UK economy, reflect ability to access capital and so opportunity to create self employed businesses of any size.
The inequality this survey reveals does not simply represent a pricing issue. They also represent social, physical and economic inequality that needs to be addressed in the UK.
There is a very strong case for a wealth tax in this country. This is another argument for it.
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There is already wealth tax, as those figures show.
The problem is that it’s being collected by landowners and mortgage lenders. The case for a proper land value tax would be much more readily accepted if people realised that they were already paying it, but just not getting anything in return.
The three you have mentioned are expensive.
They have been expensive all during my life time. My parents life time and my grandparents life time.
Changes haven’t happened during the last 100 years. Suggesting an envy tax is just silly.
What you prove is that inheritance tax has not changed anything
Which is why we need more effective taxes to end the curse of inequality which is dragging our economy down
A wealth tax wont help anything. It will not be accepted as its a double taxation. If someone who is old as you suggest doesn’t have an income, however gets wealth taxed one year. Then the second year taxed again on the same wealth. That’s not fair for anyone. Its an envy policy.
So you think everyone paid 100% of the price of their house in cash?
Or that all shares were paid for at current price?
And that inequality does not matter?
People do realise how wrong you are
And only the wealthy suffer the politics of envy
The shares paid for at the current price is a possibility or was a few months ago. The stock market has had its ups and downs.
Taxing wealth more than once is unfair. I am sorry that you think its fair. If someone has 1 million pounds then is taxed and they are left with 800,000 then taxed again on their 800,000 etc etc. What would be the point in investing in their house working the long hours to provide for their family.
So the stock market goes down or the housing market goes down and they have less wealth do they get a refund on the tax they have paid.
So you don’t want anyone to do well or to live in a nice house.
If you honestly think people would stop bothering for paying a 2% wealth tax I think you are very seriously mistaken
Candidly, your suggestion is just absurd
And nice houses will not go away – but their price might fall – which would be very useful
And that behavioural change is one of the reasons for tax
Maybe you aren’t aware of that? Maybe you’re just too blinded by envy
You are quite wrong James -the housing bubbles of the last 30 years we deliberately orchestrated by the financial world and have significantly contributed to the flatlining of wages and economic activity for the majority. Average mortgage/rent have reached a staggering 37% of income with some areas reaching over 60%-that was NOT the case for my parents post war generation. Your pathetic and pusillanimous response that every critique of our economic norms is based on envy is utterly risible. Envy of what? Selfish, rapine and environmentally idiotic lifestyles fostering social injustice? Why be envious of that?
Wake up man and remove your conveniently angled blinkers!
It would be interesting to know the 9 seats which were not conservative but amongst top 20 for house prices?
I do not know
Sorry
Richard
2 minutes reading the FT article would have given you (and Larry) at least part of the answer;
“All of the five Labour seats in the 20 most expensive areas are based in London: Westminster North, Hampstead and Kilburn, Holborn and St Pancras, Hammersmith, Tooting and Islington South and Finsbury.”
Well, you did the job for me
I did not go back to it
Probably Islington North/South, Hammersmith, North Kensington & Regents Park, Holborn & St Pancras, Hackney South, Poplar & Limehouse, Lambeth North. Plus one other.
LVT would address this – but tories will still have bigger, more expensive houses – so we need a mansion tax as well.
I don’t understand why we need a wealth tax: surely abolishing capital gain tax exemption for the main residence would better solve the disparity between property and other forms of investment.
One could argue separately that owner occupied houses generate an untaxed benefit to home owners (compare a renter with savings and an owner with the same equity) which should be addressed. I think assuming a 2-3% implicit income from all property (or the higher of the basic assumed income and actual rent received from the property) would be better. Just include it in the normal income tax. Raise allowance even higher if desired. I don’t really think it’s fair to treat it as a special tax. By all means add some form of capitalization if desired, but assuming all other circumstances shouldn’t affect this tax seems wrong to me.
Wealth taxes are quite complicated to impose (think about small businesses) and I think they are not really needed.
The world is moving towards wealth taxes
Like it or not
“The world is moving towards wealth taxes Like it or not”
“the case for wealth tax is now made”
Which countries have recently adopted wealth taxes?
I am aware that in the past couple of decades, Iceland, Spain, Austria Germany, Luxemberg, Sweden and Denmark have all abolished their wealth taxes.
It is therefore an odd statement you make that the world is moving towaards wealth taxes when I am not aware of any countries that have recently adopted them but can list many countries that have abolished them..
As for the impact of wealth taxes, Éric Pichet the French economist estimated that while the French welath tax brought in 2.2bn euro a year, it was responsible for 106bn euro in capital flight since 1997.
Even among Labour MPs a recent survey found 40% of them did not agree with a ‘mansion tax’.
Doesn’t sound to me as if the case has been made at all.
I have been told so often in the last decade that I am wrong that I really am indifferent to it
In 2009 I was told automatic information exchange would not happen in my life time. Now it is going to happen between 91 states from 2016
And country-by-country reporting was impossible in 2012 and now will be UL law in 2015
And beneficial ownership records would never happen…and are
And on, and on
So keep dreaming I am wrong, I suggest. Saying I am does not seem to work, so dreaming might
“But the Tories would still have bigger, more expensive houses – so we need a mansion tax as well.”
I’m sure that doesn’t read as Carol intended. Perhaps she would like another go?
If read in the context of an LVT comment as well I can’t see how you misread that
I’m not sure ‘misreading’ is an issue. But it does have two serious flaws.
1) It mentions ‘tories’, as if people who aren’t tories don’t have expensive houses. Or would the tax not apply to Labour supporters in expensive houses? There must be a lot of them given that the Tories only hold just over half of the top-20 constituencies cited.
2) If you have LVT, you don’t need an additional mansion tax. Mansion tax is, itself, a narrowly-based LVT. I expect you could have higher LVT rates for properties above a certain value, though I’ve never seen any LVT advocates arguing for that.
Carol?
I used ‘tories’ as shorthand for ‘tory areas’.
The case for mansion tax plus LVT is to reach the parts that LVT can’t, i.e. the vast wealth accumulated from property ownership, often from inheritance, not hard work. Housing is a basic human need so a reasonable living space would not be taxed. Whilst I agree with Richard that a general wealth tax would work on the basis of self-declaration (with checks and sanctions), a house cannot be hidden in a tax haven so not much point in trying to cheat.
We already tax basic human needs, though. So why would land be any different? We’re taxed on our wages far below the point where anyone could possibly afford to feed, clothe and house themselves.
Also, as per my comment at the top, everyone who doesn’t already own their home outright is being taxed on it anyway. It’s just that the tax is collected by the landlord or the mortgage lender. As living space is already priced at the highest level the market will bear, the incidence of LVT would be on the sellers/rentiers of land.
So I would respectfully disagree that LVT shouldn’t apply to ‘reasonable’ living space. It should apply to all land. It’s the price to be paid for the state protecting your rights of occupancy/monopoly, and the infrastructure around you that makes it work.
‘Serious’ LVT advocates tend to argue that it should go alongside reductions in more damaging/ineffective taxes (i.e. all of them), and ideally be combined with a Citizens Income which would, in any case, cancel out any incremental tax paid by people in merely ‘reasonable’ living spaces. I’m aware that Richard doesn’t support anything as wide-ranging as that.
Oh, and I really don’t see why you need a Mansion Tax on top. Say LVT is 3% of the value of all land. If you want a Mansion Tax of 3% of £2m homes on top of that, why not just say that LVT is 3% on land up to £2m, and 6% thereafter? That has the bonus of catching wealthy people with big portfolios but, perhaps, no individual properties over £2m – although I think a 6% wealth tax sounds extremely high. I’m not trying to help out the Mansion-dwellers, just keep the tax system simple!
@Lee T
You misunderstand me. I’m an LVT advocate (secretary of the Labour Land Campaign). I’m talking about excluding ordinary size homes from the mansion tax (my own version). Georgists do not like the idea of taxing buildings because they are capital, not land, and buildings wear out. But then, they don’t want to tax anything else either because they are generally libertarians, not socialists. But I say that you can tax the house structure as a wealth tax.
Wealth taxes are deeply unfair.
You work, earn and pay tax, then you buy something with what’s left. Through no fault of your own, it grows in value. If it provides an income, then that’s taxed, but now the profligate Left want to tax you on the value of it as well.
How the little old lady in the former Council flat in Westminster she bought in 1987 will pay it from her State Pension, I don’t know.
First, roll up on wealth taxes is always possible
Second, isn’t it unfair some do not partake in such gains?
And third, given we know wealth does not create prosperity in the broader economy, what’s unfair about achieving the latter?
Sorry: the case for wealth tax is now made. The only question now is doing it
“Sorry: the case for wealth tax is now made.”
Very categorical and without any proof. Speaking for the masses again are we?
Sure
I’m happy to do that
Piketty tipped this one for good
“Tory areas” rather than “Tories”. Thanks for clarifying that Carol; for a moment I thought your motives were ugly.
If someone falls into a mansion tax bracket and does not have the income to pay tax means they are asset rich and cash poor. They can always get a loan payable on death or sale of house or sell the asset and move into a cheaper property and have lots of cash in the bank to spend and enjoy. HMG should not be in the business of ensuring parasitical children are well heeled when the parents die. This scaremongering always uses the poor widow, and was called the “poor widow bogey” by Winston Churchill. It is old and an easy one to put down.
@Lee T
Currently:
1. We take privately created wealth in the form of Income and Sales Taxes to pay for common services.
2. We allow commonly created wealth in the form of land values (the landowners do not make the values and any value lifts) to be appropriated by private landowners.
We should exactly the reverse.
a) Use commonly created wealth to pay for common services (reclaim wealth in the form of land values).
b) Keep privately created wealth in private pockets (abolish income and sales taxes).
Using commonly created wealth to pay for common services is the key. Then economic justice will emerge.
@John Moss
Wealth taxes are very fair. Taxing income is very unfair and unjust.
You buy a house (land) it grows in value through the economic efforts of the community, not your own, and the community reclaims the value it created via wealth tax. Sounds very fair and just indeed.
John Moss wrote….”How the little old lady in the former Council flat in Westminster she bought in 1987 will pay it from her State Pension, I don’t know.” I see you have rolled out the poor widow bogey as Winston Churchill called it. It sounds like a ploy directed from Tory Central Office. 🙂
@ Carol Wilcox
I think you’ve now just about exposed what your LVT, mansion tax, wealth tax etc campaign is really about. ‘Tories’ – oh wait ‘Tory areas’ must be taxed, but who else? And ‘reasonable’ living space won’t be taxed. (Carol will decide what’s reasonable, I imagine)
This is extremely bad politics. If you want to get LVT accepted by the voters (interesting approach, I know) then I suggest you need a simple explanation.
You have clearly not noted there is a correlation between wealth and voting Tory
Your political education appears somewhat incomplete
Well, obviously I’ve noticed it. Quite how you know who voted for who in specific areas, other than their elected MP, I don’t know.
So if I voted Labour, but live in a Tory MP constituency, then what?
Maybe people vote Tory first & then get wealthy?
I am entirely satisfied that Carol used a reasonable linkage between an area and its political affiliation which has a logical basis
I can find no such logic in your commentary
I have to tell you Max, that the main proponents of LVT are libertarians. You should inform yourself before commenting further.
I have to tell you Carol, that I will comment as long as RM lets me, not when you say I can. You should actually try to answer the point before you comment further.
If you threaten other commentators you won’t be commenting for long
The Labour party considered wealth taxes in the 1970s. In the end, former Chancellor Denis Healey concluded that attempting to implement wealth taxes was a mistake, “We had committed ourselves to a Wealth Tax: but in five years I found it impossible to draft one which would yield enough revenue to be worth the administrative cost and political hassle.”
And that’s the problem. You put forward yet another idea that will ‘solve all our problems’ but in reality wealth taxes don’t raise much and are difficult to administer and implement. Even in France there are currently 60 parliamentarians in disputre with the French tax authorities.
A roll up of wealth taxes? Most likely to affect those in retirement but now people can look forward to 30 years in retirement. So the tax rolls up but the spending will still take place – yet another example of the oft-seen “this tax will bring in £X and we will spend it on Y” The tax doesn’t in the end bring in the amount estimated but the spending goes ahead anyway – funded by yet more borrowing.
Just more wishful thinking on your part Richard.
It has never been possible before – the money could be hidden offshore
But now I and the TJN have successfully argued for automatic information exchange. So now the money can be traced
And the result is wealth taxes can work
You may think they will not work – but I can assure you, the will to deliver is developing, quickly. Of course, some oppose> So what? Al tax is opposed by some. Yours is another case of wishful thinking that I am wrong
I’m not. I have no a doubt I am right
As others have already pointed out, wealth taxes are a hiding to nothing.
Land Value Tax is the way forward.
The point being if you make the mistake and assume that “land” is wealth like anything else and apply the same tax rate to all of it (let’s say 1%) then you don’t get much in revenue, maybe £10 billion for the UK (going by the wealth tax which Germany got rid of ten or twenty years ago).
If you just taxes land values and nothing else, you can collect anything up to the total rental value of UK land, which is well in excess of £200 billion a year. And all this without any distortions to the economy or disincentive effects.
I wish I could agree with your second claim
I doubt I ever will
But a serious sum – I agree with that
http://www.theguardian.com/housing-network/2015/jan/14/no-social-housing-luxury-london-flat-advert