MSW does another half-hearted attack on the concept of Mansion Tax, using the following bizarre logic:
Most people will by now be familiar with the concept of fiscal drag (the main means by which our government manages to regularly increase its tax take).
Assume that this will be used as much as possible with the mansion tax – ie, that the limit for it will not be raised in line with house-price inflation – and even if the threshold were set at £2m, there would be 775,500 houses paying the tax within 25 years (that's all houses currently worth £540,000 or more).
Mombers left this comment:
You're right that this should replace stamp duty but you're wrong that more people will pay it as time goes on.
The tax incidence of council tax is on the seller, not the buyer, so selling prices will be reduced accordingly.
So instead of paying x in mortgage/rent and y in council tax, you'll pay x-a in mortgage/rent and y+a in council tax, net effect zero. This is easily observed in the case of Business Rates.
However ill-advised or badly calculated a tax on the rental value of land is, market selling prices adjust down (or indeed up) to compensate.
So even if the original tax bill for any home was subjectively somehow "incorrect" (and on Planet Home-Owner-Ist, every last penny is incorrect), the rental value is fixed anyway (or beyond the control of the owner) and the market selling price is always correct once you take the tax into account.
And by reverse logic, the tax is always correct once you take the selling price into account (for a given rental value).
The whole article is a joke anyway, the headline is The mansion tax: a patently bad tax that won't just hit the 'rich'.
The idea is not to "hit the rich" or indeed "hit hard working hard pressed pensioners who have made sacrifices all their lives to take a stake in society blah blah blah", it is to raise public revenue by collecting the rental value of land instead of taxing incomes.
I'm not sure what's so difficult to understand about that.
