Homeowners must be taxed on equity in homes to address crisis, MPs told

[northernladyuk]

Yes, exactly. The implementation details matter a lot here - it should not be levied at the point of transaction - but it’s perfectly doable. Stamp duty has monumentally gummed up the market so, if that’s the true opposition, pretty much everyone can get onboard with a sensible implementation. Of course, that isn’t the true opposition.

The Tories could never get it past the Mail. And it's hard to see all the BTL landlord MPs voting for it.

[Pip in a Poke]

CGT would be a tax on sale, which to be fair to you is what the article referenced suggests. JB (I think) and I are suggesting something different which is an annual tax on assets, offset by reductions in taxes on productivity. It would encourage a more efficient use of assets, particularly of property (or for the purists, of land).

I completely disagree with what you and James Cooper are saying.

What about the cash strapped landed classes, farmers etc who have everything tied up in their assets?

It all smacks of the politics of envy to me.

[jamesbrown]

It all smacks of the politics of envy to me.

Meh. What is the principled case for taxing assets more lightly than earned income? I don’t believe I’ve implied anything about rates, Gricer, simply about modality.

[northernladyuk]

I completely disagree with what you and James Cooper are saying.

What about the cash strapped landed classes, farmers etc who have everything tied up in their assets?

It all smacks of the politics of envy to me.

Fair point about farmers, who are often treated exceptionally in such models. 'Politics of envy' is a bit of a meaningless cliché. This is about looking at a more efficient way of taking tax. It means moving the balance somewhat away from profits and income and towards assets. It encourages a more efficient use of assets, while reducing the tax burden on productive business and work, which will further encourage efficiency.

It should be seen within the context of an economy which is overly balanced towards rent-seeking, instead of towards productivity.

[unixman]

Johnson has been banging on about this for a good while.

Michael Johnson's letter to the Telegraph on property taxes - Centre for Policy Studies

Instead of a random tax, here's an idea: stop encouraging everyone to move to the South East by spending a little money elsewhere. In Co. Durham, a spiffing 3 bed can be bought for 70k, and not in a horrible area. 200k will get you a 4 or 5 bed detached with large grounds. (If you *can* brave a horrible area, 15k gets you a basic terraced house).

[Pip in a Poke]

Meh. What is the principled case for taxing assets more lightly than earned income? I don’t believe I’ve implied anything about rates, Gricer, simply about modality.

Because the custodians of our heritage, families who are woven into the woof of this nation, will be forced to sell up to Russian Oligarchs and vulgarians like Katie Price.

[northernladyuk]

Because the custodians of our heritage, families who are woven into the woof of this nation, will be forced to sell up to Russian Oligarchs and vulgarians like Katie Price.

You're overdoing the provincial bore shtick now - can you dial it down a bit?

[ChimpMaster]

Aren't you guys just talking about a wider hitting version of the Mansion Tax?

So instead of just taxing people with houses worth > £2m, this new idea would mean a tax on anyone, even that young couple who bought their first pad for £120k and now it's worth £180k, even though they're not going to sell it.

The problem is, a primary home is a home, it's not typically bought as an investment. Yes, for many it's a nest-egg that can be relied on in old age to cash out for funding elderly care etc. But it's not an investment.

So why punish people with an annual tax on equity? It's no fault of their own - they didn't ask for their home to gain value.

Second homes and BTLs, these are investments. And they are taxed as investments. They're not even subject to normal CGT - they are taxed at higher rates and now release of equity is taxed by way of interest-relief being denied.

Income from assets is already taxed at income tax rates, so again, the asset is being taxed.

The UK tax system is complicated enough as it is. Simplify it, increase confidence and transactions, and higher more stable tax revenue will follow.

[northernladyuk]

So instead of just taxing people with houses worth > £2m, this new idea would mean a tax on anyone, even that young couple who bought their first pad for £120k and now it's worth £180k, even though they're not going to sell it.

I've cut it down to this example. If the couple is an average couple in terms of their income and asset, you should find that they break even. Perhaps they are paying £1200 in a new tax on their asset, but £1200 less on their income.

So why punish people with an annual tax on equity? It's no fault of their own - they didn't ask for their home to gain value.

Why punish people with an annual tax on income? It just acts as a disincentive towards productive labour.

[jamesbrown]

Because the custodians of our heritage, families who are woven into the woof of this nation, will be forced to sell up to Russian Oligarchs and vulgarians like Katie Price.

Tedious. Your stable of sockies has roughly the productive capacity of an untaxed asset.