Idiot calls for a new wealth tax

[stackpole]

Hold on, there seems to be a mindset here that any kind of wealth must be taxed, simply because it is wealth. Well, that is bollocks.

Firstly, a house is a home, so to the great majority of people it is not like other investments, such as stocks and shares.

Secondly, council tax doesn't involve annual valuations of each individual property to the nearest hundred quid in order to work out each and every homeowner's tax bill, thousands more bloody civil servants to do it, or the inevitable appeals. What this man is proposing is another complicated tax system, full of uncertainty and expensive to collect, which seems to be the byword of this fecking government.

There is no good reason for this, only bad reasons.

[AtW]

There is no good reason for this, only bad reasons.

Lone Starr: A million? That's unfair.
Pizza the Hutt: Unfair to payor but not to payee. But you're gonna pay it, or else!
Barf: Or else what?
Pizza the Hutt: Tell him, Vinnie.
Vinnie: Or else pizza is gonna send out for *you*!

---------

Taxes are only good for those who receive more then they pay.

[threaded]

They tried doing that kind of thing over here, but soon found all them with a clue were leaving, so now, if you are seriously rich, Denmark is a really quite a low tax place to live.

It is said one old boy I know has a meeting with the finance minister each year to discuss how much tax he might pay. OK if you have the free time I guess.

Me, I have my accountants chat with the people at the Kommune.

[VectraMan]

Firstly, a house is a home, so to the great majority of people it is not like other investments, such as stocks and shares.

The great majority don't have stocks and shares, but many have made more money on their home than they might have from stocks and shares, so why is that tax exempt?

Buying a house is an investment, so should be taxed as one.

[threaded]

Well, if that is the case, I think people who live in rented accomodation are avoiding paying their proper proportion of tax so should have a 'deemed' house valuation placed on them.

It is only 'fair' you see.

[stackpole]

The great majority don't have stocks and shares, but many have made more money on their home than they might have from stocks and shares, so why is that tax exempt?

Buying a house is an investment, so should be taxed as one.

Of course it isn't.

1. How much money are you making on your home (the one you live in) while you are holding it? None.

2. You only make money if you sell. Like other investments, house prices can go down as well as up. But this bloke is suggesting a tax on value regardless of profit or loss on sale, which is hardly the same as other investments.

So, if you want to tax capital gains made on a house if you sell it, that is something different, but you will get an inequitable tax.

1. An old boy who bought his modest house for ten grand thirty years ago might find it worth 200 grand now - if he needed to sell he'd pay tax on 190 grand. It is the equivalent of paying an inheritance tax while he is still alive!

2. A couple who bought a 250 grand flat in London last year and are trying to shift it for 220 grand today - do they get tax relief?

[ASB]

Personally I do think most investment taxes are not good. They stifle economic development to a large agree.

Why? Disincentive to hold a stake. You start with income, taxed. You invest in (be it in another houses XYZ plc or whatever). The consumption helps create employment. XYZ PLC's employees get taxed. XLZ make a reasonable profit. They get taxed. They pay you a bit of income - already taxed, but possibly taxed agains. At some time in the furtre you flog the shares in XYZ to repeat the process with ABC. You get taxed. The ability to fund economic activity is now diminished.

governemnts taking a short term view (they can't do much else) cause a lot of the problem. They want their pound of flesh now, but the natural maturity of what they are taxing is a long way away. That is one of the reasons the welfare state is in such a mess - paying everything out of current income.

To be fair capital tax reliefs are quite generous, and a lot can be done to avoid them.

[ASB]

1. An old boy who bought his modest house for ten grand thirty years ago might find it worth 200 grand now - if he needed to sell he'd pay tax on 190 grand. It is the equivalent of paying an inheritance tax while he is still alive!

2. A couple who bought a 250 grand flat in London last year and are trying to shift it for 220 grand today - do they get tax relief?

1) Sadly there are continuous rumours about this. But it would be an ambitions man who removed the PPR exemption. Still, it should at least help reduce IHT. Or perhaps they'd forget that bit...

2) I would expect they would. Same as you currently do in that situation. But it would only be allowable against income of the same type. [Likely property would become a specfic tax to prevent it being reclaimed against anything other that other property transactions]

[IR35 Avoider]

1. How much money are you making on your home (the one you live in) while you are holding it? None.

You receive "income" in the form of services from your house, this income is currently untaxed in the UK. Several other European countries do tax it, and according to the article the UK used to until 1960.

2. You only make money if you sell. Like other investments, house prices can go down as well as up. But this bloke is suggesting a tax on value regardless of profit or loss on sale, which is hardly the same as other investments.

I think the article misrepresented this in calling it a wealth tax. What it actually should be is income tax on the "deemed income" from the services your house provides to you. If we estimate the "deemed income" at about 5% of the value then basic rate tax of about 20% on that equates to 1% of the capital value. Of course you should be allowed deductions for repairs and maintenance, and (to be completely logical) mortgage interest, which then starts to make the whole idea so complicated that it's not worth pursuing.

So, if you want to tax capital gains made on a house if you sell it, that is something different, but you will get an inequitable tax.

1. An old boy who bought his modest house for ten grand thirty years ago might find it worth 200 grand now - if he needed to sell he'd pay tax on 190 grand. It is the equivalent of paying an inheritance tax while he is still alive!

2. A couple who bought a 250 grand flat in London last year and are trying to shift it for 220 grand today - do they get tax relief?

Capital gains (and losses) are a completely separate issue. (If we're going to be completely consistent and logical the CGT exemption for home-owners should be abolished though.) Just as you pay income tax on dividend income from shares and CGT on the change in value, you should for your own house. The tax in the article actually represent the tax on the income, even though it is calculated from the capital value. (The article was wrong to represent this as a wealth tax. A wealth tax, which is payable on all wealth not just houses, like they have in France, is an alternative to CGT; you shouldn't have both within the same system since they are taxing the same thing.)

[VectraMan]

1. How much money are you making on your home (the one you live in) while you are holding it? None.

2. You only make money if you sell. Like other investments, house prices can go down as well as up. But this bloke is suggesting a tax on value regardless of profit or loss on sale, which is hardly the same as other investments.

I disagree with that, but I was arguing that a gain because of house price rises ought to be treated like any other capital gain, because a house is an investment (otherwise why not just rent?).

1. An old boy who bought his modest house for ten grand thirty years ago might find it worth 200 grand now - if he needed to sell he'd pay tax on 190 grand. It is the equivalent of paying an inheritance tax while he is still alive!

You'd have to structure it so there was an allowance per year of ownership, and allow for inflation, but basically yes, the longer you stayed somewhere the bigger the potential bill at the end. But then that's paid out of the profits from the sale. The government would control the allowance, which would help keep a lid on house price rises.

2. A couple who bought a 250 grand flat in London last year and are trying to shift it for 220 grand today - do they get tax relief?

Seems fair.

Really this comes down to the question of the expemption of capital gains tax on homes, which encourages out of control house price booms. I think the economy has been hurt enough by that over the last 15 years, so maybe it's time for a change.