Friday, 15 February 2013

A 10p tax rate paid for with a mansion tax? Two unfair proposals in one stinking package

There’s a big house a few doors down from us which is much larger than its neighbours. Because it has garages and a guest cottage in the garden I reckon it’s worth something quite a bit north of £2 million. The property developer who bought it some twenty years ago when it was pretty run down must have spent a fortune doing up the place – van-loads of builders and decorators seem to turn up every few weeks or so, which can be a bit wearing for the rest of us, but the improvement to his property will undoubtedly have added quite a few thou to the value of ours, so they’re forgiven.

They’re not short of a bob or two – they have three sons, all at private school; they drive expensive cars; and they don’t appear to stint on holidays.  His business must be doing well, and his wife works: between them, they must have paid a fortune in tax. Contemplating how successive governments will have spent that money is too depressing, but one assumes that very little of that expenditure will have benefitted the couple or their children directly or indirectly.

Despite the fact that they’re undoubtedly net contributors to the public purse on a fairly lavish scale, despite the fact that they’ve paid for their kids’ education while being forced to contribute generously to the education of other people’s children at state schools, and despite the fact that every pound they’ve spent on their property will already have been taxed (probably several times over), the Labour Party, the Lib-Dems and various pseudo-Conservatives want these hard-working, law-abiding (as far as I know), productive people to pay yet more tax for the crime of owning an expensive property.

Why the hell should they? I presume they already pay top-whack council tax, and I presume they already pay all the tax required of them by the Inland Revenue on their earnings. Should they die and pass the house on to their children, there’ll be another 40% tax bill to pay in the form of inheritance tax. And if they sell the house and move, they’ll have to pay another shed-load of tax in the form of stamp duty. And the chap’s company no doubt pays corporation tax on its profits.

I mean, holy crap! Exactly how many times can you tax the well-off on the money they earn? 

(I should add here that these people aren’t friends of mine – they have a yappy little dog with a nerve-shredding shriek which drives me and many of their neighbours mad, and I haven’t been slow to complain. I’m not arguing on behalf of chums here. And everything I’ve said about their income is pure surmise. And I have no idea which party they vote for  - or, indeed, whether they vote at all.)

People who are friends of ours own a house in nearby Bedford Park which is also probably worth more than £2m. They’re well off, certainly, but they don’t give the impression of being wealthy – apart from their property. The house was originally divided into three flats when the husband first bought one of them. They subsequently bought the other two flats when they came on the market, no doubt making many sacrifices in order to do so, and then spent a lot of money turning the property into a single dwelling again.

The couple are both approaching retirement. Labour now intends to punish them for working hard in order to own a biggish house in a nice part of London. How does that make sense? How is that fair? What does that have to do with social justice? (I have never discussed any of this with our Bedford Park friends, by the way. We aren’t political soul-mates, so for all I know they might welcome the prospect of being flayed for being financially prudent.)

Why are our politicians busily trying to figure out ways to further disincentivise these people from working hard and increasing the nation’s wealth? Well, the answer to that is fairly obvious. As Thomas Sowell put it: “…politicians are not trying to solve our problems. They are trying to solve their own problems — of which getting elected and re-elected are number one and number two.” Our left-wing leaders need money to bribe voters – the alternative (i.e. telling the truth and taking an axe to government spending in order to start paying off our grotesque debt) is simply too much effort.

Labour’s specific plan is to take the money they intend extorting from productive members of society and use it to re-introduce the 10p tax rate (that their own party abolished), thereby ensuring that many low earners who currently pay a pittance in tax  will be putting even less into the pot than they already do. As Alexis de Tocqueville summed it up a century and a half ago, “A democratic government is the only one in which those who vote for a tax can escape the obligation to pay it.”

Of course, not everyone who owns a multi-million pound property is a productive member of society. Some of them are greedy, plundering swine, and some of them are just plain lucky. But it’s difficult to figure out how to penalise greedy pigs and lucky devils without also punishing the vast majority of those who live in £2m+ properties who are neither.

It really is time I finally get round to reading Ayn Rand's Atlas Shrugged (1957), whose central premise is that wealthy Americans, sick of being hyper-taxed in order to fund the non-productive elements of society, decide to go on strike.

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