Debate Magazine

Killer Arguments Against LVT, Not (469)

Posted on the 18 September 2019 by Markwadsworth @Mark_Wadsworth

From Letting Agent Today:
An influential think tank [the Institute for Public Policy Research] says Capital Gains Tax on buy to let properties and second homes should be levied at the higher rate of the income tax of the owner. Meanwhile the annual exempt allowance of £12,000 on CGT should be slashed to £1,000...

CGT has traditionally been lower on investment properties and other activities because they involve risk-taking, while heavier taxed income from employment and savings interest reflect their much lower risk.

That doesn't make sense and is wrong on the facts. "Traditionally", CGT rates are graded so that gains arising from effort and risk taking (and a fair bit of good luck), in other words building up and selling an actual business, are taxed at the lowest rate (10%) and pure windfall/unearned gains, in other words, buying and selling housing are taxed at a higher rate (28%, was 40% until 2008 or so). And savings income is taxed at much lower rates than employment income. Home-Owner-Ists have little grasp of reality.
Landlords buy housing to collect rental income (or exploit the difference between rental yields and mortgage interest rates) and capital gains are a bonus. Even if we knew that house prices would never go up or down, it would still be worth doing if you can collect more rent than you pay in interest.
This is the most messed up comment:
Paul Barrett:
They just hate the idea of anyone struggling and striving to achieve asset purchases.
They want everyone on slave wages so they can be better controlled..
Asset income gives the owner financial freedom which they hate.

Imagine a slave owner arguing against abolition on this basis. The landlord's easy life style can only be supported if there are wage, tax and rent slaves. Just because slavery is abolished does not mean that everybody is now a slave; it means that everybody is free, or given that there is no absolute total freedom, everybody is equally free, which maximises total freedom.
The only struggling and striving which landlords have ever done is getting the deposit together for their first BTL, after that, they are coasting. From then on, their tenants struggle and strive, pay off the landlord's mortgage for him and contribute the funds for the deposit for his next purchase.
Even more messed up is the fact that if our Paul is happy being a landlord, he'd have no intention of selling up; if he does sell up, he would only have to pay tax if he's made windfall/unearned gain.
Then, from The Sun:
LABOUR plans to clobber buy-to-let landlords despite a quarter of its Shadow Cabinet having second homes, a Sun on Sunday investigation reveals. It wants to give private ­tenants the same right-to-buy deal as council tenants...
Tory MP Andrew Bridgen said: “The Sun on Sunday’s findings once again expose the vile hypocrisy of the Left. On one hand they are plotting policies to target landlords while at the same time sitting on valuable second homes themselves.”

That's simply not an argument for or against any policy proposal, it's called shooting the messenger. The Sun might as well have said "LABOUR plans to clobber buy-to-let landlords because three quarters of its Shadow Cabinet don't own a second homes, a Sun on Sunday investigation reveals."
As Russell Brand said, “When I was poor and complained about inequality they said I was bitter; now that I'm rich and I complain about inequality they say I'm a hypocrite. I'm beginning to think they just don't want to talk about inequality.”.

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