Idiot calls for a new wealth tax

[IR35 Avoider]

You receive "income" in the form of services from your house

Just to expand on this. Assume I want to retire in my current home, and that I need 400K of capital to generate income to meet my non-housing needs. If I own my home I will pay tax only on the income from the 400K.

Assume the flat is worth 400K. If I sold my flat to a property unit trust in exchange for shares in the trust, rented it back, and used the investment income to pay the rent, suddenly my tax bill would be based on income from 800K of capital, more than doubling even though my overall financial circumstances were really unchanged. This is an anomaly the proposed tax would correct.

None of which means I'm in favour of it. (I used to be, because I think it's right in principle, but now I think it's to complicated to be worth the effort.)

[wendigo100]

Doesn't all this further complicate a complicated tax system? I thought we were in favour of simplifying it.

I'm most worried about how you arrive at what the value of your house is for tax purposes. It is not the same as having 6 or 7 broad bands, as with council tax. Is it to be deemed by HMRC, meaning that anyone who disputes it will have to tangle with their inspectors, like IR35 and S660 victims?

[AtW]

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.

There should be a law that requires all senior level politicians and civil servants to be subject of any tax laws for a few years prior to roll out to main population.

[zathras]

Well after reading the paper I actually liked some of his ideas. He wants to replace other taxes such as the council tax with the property tax and not just introduce another source of revenue for the state.

When some sources of income (house price inflation) are not taxed and other sources of income (stocks) are, it makes the market less efficient because people no longer choose their investments according to their real value.

Of course the problem is that this tax can lead to a major drop in house prices...

Biggest problem with this is fairly simple and was used as one of the arguments against the Poll Tax. Take someone who bought property decades ago. They are now retired and the modest income they get having paid the mortgage off, got kids through College and University. They do not have a large disposable income

Next door we have the new couple. Still with a big mortgage but also on a fairly good wage and plenty of disposable income.

Tax the property and the old couple having invested in society are now forced out of home because they cannot pay the tax. That means they downgrade and as they have a large chunk of change, they will then find a home is out of the question. Means tested benefits are denied them because of this large chunk of cash. Having paid their debt to society over 40-50 years society discards them. Had they not bothered then society would pick up the tab. You discourge thrift and develop a society full of those who depend on it.

The only answer is to introduce an income element into the equation and what you get is the Council tax!

[wendigo100]

The only answer is to introduce an income element into the equation and what you get is the Council tax!

Does the Council Tax have an income element? I thought it is based purely on the size of your house.

[shaunbhoy]

Okay, so just tax homeowners on the house they live in.

Why don't you **** off?

[zathras]

Does the Council Tax have an income element? I thought it is based purely on the size of your house.

While initially based on property values if one is unemployed or retired it gets reduced. Also if their is a single occupant you get 25% off.

[boredsenseless]

While initially based on property values if one is unemployed or retired it gets reduced. Also if their is a single occupant you get 25% off.

Surely we already pay taxes on 'over-inflated' housing its called council tax, and for those that either have to or want to move its also called stamp duty.

[John Galt]

Isn't it about time that the Government started encouraging the generation of wealth rather than the taxing of it?