To think that the mansion tax breaks the principles of taxation

[NorthXNorthWest]

Most taxes fall into:
Income you receive
Profit you realise
Spending you choose

Council tax sit outisde of this. Its more like levy based valuation bandings and was a quick and dirty fix after the poll tax fiasco. It is effectively a service charge not a wealth tax.

Whereas mansion tax is the government estimating the value your actual house, then treating this valuation as pure profit then taxing you on this. Given the majority of homes are purchased with mortgages and paid for by already taxed money:

Why is

Mansion Tax = Estmated value × %

More reasonable than

CGT = Profit * % (Profit = Actual sales price - (Purchase price + actutal costs)

With actual costs being renovations not stamp duty or interest paid on your mortgage

I am not in the mansion tax bracket. I do accept that some taxes need to rise but I don't believe this is the solution.

Property and land taxes were the first taxes, the basis of the Domesday book in England.

There are no principals of taxation. Democratically elected governments can tax what they like.

Inheritance tax falls outside your principles (it’s not tax on income received because the estate can’t avoid it by leaving a tiny amount of money to a large number of people).

Road tax? That’s not income, spending, or profit.

Council tax as you acknowledge is another exception.

There’s no rule that tax has to fall into those categories.

I think there are coherent arguments to be made against the mansion tax. I just do not think this is one of them.

With tax you are basically looking for the least-bad option.

A property value tax is far preferable to SDLT and CGT, which discourage transactions. That makes the property market far less fluid, people don’t up-size/down-size/move for work.

They should have abolished SDLT and made it all a property value tax. Most wealth taxes are a bad idea partly because it’s easy to move wealth, but that doesn’t apply to property value tax in the same way.

Original English taxes for English people !

Tbh, the mansion ‘tax’ is so piddling in value, it’s really just a political statement - ‘Look! We’re taxing the rich!’

Absolute nonsense.

What do you think the coherent arguments against it are, out of interest?

Council tax is not a service charge. It’s a very crude wealth tax. If it was a service charge they wouldn’t charge more to people in more expensive houses.

On the whole I think we need more taxes on wealth and less on income or spending.

I was very glad to hear that Royal residences will also be incurring the tax!

I'm a big fan of property taxes, land taxes.

I think the biggest issue we have is related to our housing, and who is holding so much of it.

It needs redistribution - I'd personally start with one of the excess palaces being turned into very basic apartments for key workers in London.

I disagree with it. Older people who bought their London homes 60 years ago in places like Hackney maybe sitting on a gold mine and are most likely asset rich but cash poor. Are they expected to sell up in order to pay this tax.

I honestly don't think it will go ahead. Forget the demonisation of the working class, now its the demonisation of anyone who earns well. I am not a big earner either but sick of hearing about rich people.

and prostitution is the oldest profession

doesn’t make it a good one

What @Mslak said

Road tax and council tax are service or usage charges. They are not trying to tax wealth.
A mansion tax explicitly claims to tax wealth, yet it uses an unrealised estimate rather than real money.

We only tax wealth elsewhere on realised profit, because that is when cash actually exists.
That is why Estimated Value × % is weaker and harsher than Actual Profit × %.

There used to be a window tax. People were taxed according to the number of windows they had. Many people bricked up windows to reduce their liability. The tax was unpopular.

I agree, an alternative could have been CGT applied to a primary residence for any capital gain realised over 1 million. I think it would raise a lot more money. And at least there is actual realised profit there to be taxed.
Mansion tax raises a very low amount. 400million is the estimate.
I will get hit with this tax in all likelihood. Although personally I am better off with the mansion tax (by far) than I would be with CGT.

Taxing a mortgage which it will be in a lot of cases isn't taxing wealth, it's taxing a debt

Other European countries tax property value.The IFI is an annual property wealth tax in France, payable if the total value of your taxable French real estate exceeds €1.3 million on January 1st of the year.

My friend lived in Durban. Property taxes were 0.9% of the value of the property each year. So if you had a £2m house you've be paying £15k per month. When you look at through that lens, £200 per month which can be deferred til you sell or die seems quite reasonable.

I think the tax is OK: the baby boomer generation who I think are by far the biggest owners in this bracket didn't pay enough tax through their lifetime and are now creating big NHS expenses. So the wealthiest of them - and the millionaires who put their wealth away from the reaches of our state while enjoying all the benefits of it - can fund it out of their unearned wealth.

I think it also has the added benefit of curbing house price rises and starting gently deflating the housing market, which is needed so our young people can start to buy houses of their own but not so much that it causes a crash. It also encourages people to live in the right-sized houses.

Agree.

Legally, they can tax what but as we saw with the poll tax it can lead to distortion, backlash and policy failure. It doesn't mean that it is a reasonable or well designed tax.

I basically agree with this. CGT raises relatively so little money because it encourages people to hold onto assets (often until they die) and there are so many reliefs to it which are needed to protect the economy.

SDLT is a terrible tax because it disincentives moving house and therefore encourages people to live in a house which isn’t suitable for them or from moving for a new job etc. I personally live in a 4 bed house post divorce in part because of the huge SDLT cost of downsizing in circumstances where I will probably only want to stay in my current area for the next 5 years. It’s also inherently unfair as someone who lives in their home for 30+ years might pay it once, whereas someone who has to move every 5 years for work/ family could pay it multiple times.

The difficulty is transitioning to a property tax system when people have already paid SDLT once and bought their home without factoring it in. Plus wealth taxes are difficult and expensive to administer compared to income taxes or transaction taxes.

But there’s nothing inherently fair about taxing income, particularly employment income, so heavily and not assets. We just do it because it’s easier to work out how much tax is owed and collect it and theoretically people will always have the cash to pay it.

What we don’t want is SDLT, council tax, a property tax and cgt on disposal in parallel, though that’s probably what we’ll end up with.

The poll tax was a paradigm of people who voted for leopards to eat their faces suddenly having their faces eaten by leopards. Because all of a sudden households of two that had a cushy deal under rates, discovered that they had been underpaying for decades.

Also, very few people remember that the shortfall from uncollected poll tax (about £5billion) was never ever made up. So one drag on local authorities started nearly 40 years ago.

It also encourages people to live in the right-sized houses

Crickey. That sounds a bit Soviet

Never forget the right and left wing meet round the back (of the bike sheds).

It's designed to be extended to all private property and reduce home ownership. Everyone but the corporations will be subject to it in time.