Richard Murphy, not for the first time, gets his facts wrong. The proposed mansion tax will only apply to the value of the property above £2m. So the mansion tax on a £2.1m house would be 1% of £100,000 which is £1,000.

Why do we keep having all this rubbish. Richard, rather than spouting the waffle you usually do, why not come up with a set of proposals and evidence as to why it would work. You know, things like:
The income tax system is designed to optimise the tax collected from income. Describe how you would stop the cash economy and general evasion in non-PAYE methods.
Tax free allowance £12500
20% for the next £25000
40% for the next £42500
50% afterwards

Also, what exactly is a progressive system and why is it more efficient in collecting tax (or is it)? Does it encompass all taxes both on income and spending?

Otherwise you are just tweaking the edges and making no positive contribution.

I am not entirely sure what the problem here is . We do not need a 50p rate because it costs money ,quite a lot in the long term, and it is hardly apereciated by tax payers that the bill must increase just to keep Murphys law or equal misery alive.
All threshholds are unjust, and we already have that problem with stamp duty and losing child benefit at just above £42k is going to be excrutiating. Taxing welath is a good idea and letting faintly senile utopians stand in the way of the right direction is ridiculous. If there was any doubt about the justice of a Mansion tax it was dispelled by readung Joan Bakewell bleating that she only bought her house for £12,000 . Poor diddums, only about £1.5 mio. for stiing on her old scarggy arse telling the rest of us to be more generous. She has no right to all that wealth and she will have to move .
The only possible objection to this idea is that temporary taxes always become permament and ‘or’ always becomes ‘and ‘. Once this deljghtful source of reveue has been supped we will see it expand and we will not see taxes on income reduce , just more waste from the state and more parasites for us to carry on our backs

[the Tories] have just passed a law making it illegal for a person to live in a property with a spare bedroom – and compelling people to move if they do.Eh? Please cite.

Just as we need a land value tax.

Common ground between Murphy and one T Worstall.

@4 – he’s either referring to changes in the way housing benefit is calculated, or the proposals to change council tenancies to try and prevent under-occupancy.

There are good reasons for opposing both these changes, however the fact RM can’t tell the difference between a technical change in the way a benefit is calculated or a tenancy allocated, and what a law is doesn’t inspire confidence that he is the person to make the case for opposing these changes.

More generally, one would have wanted somebody who pays attention to detail to be the person proposing ideas for tackling tax evasion and avoision.

the value of an asset falls when a tax becomes due on it, perversely!

anyhoo, here’s the eminently sensible Felix Salmon making the case for a wealth tax:

http://blogs.reuters.com/felix-salmon/2012/02/08/mark-zuckerberg-and-the-case-for-a-wealth-tax/

Never mind the LibDems proposed (unworkable) Mansion Tax, for interest, try this on the tax burden in Denmark 1960-2012:
http://www.skm.dk/foreign/statistics/thetaxburden.html

According to the OECD:

“Denmark is confirmed as the OECD’s highest-tax country, followed by Sweden, while Mexico and Turkey remain the lowest-taxing countries, according to figures in the latest edition of the OECD’s annual Revenue Statistics publication.”

“The tax-to-GDP ratio of Denmark has been relatively constant during the last 15 to 20 years fluctuating around 48-50 per cent, as can be seen from figure 1.1. In 2004 the tax burden increased to 49.7 per cent of GDP (it was 49.0 per cent in 2003) as economic performance was better than expected. Since the second half of the 1980s, the tax burden in Denmark has been relatively constant while it increased sharply in the period from 1965 to 1988. During the latter period the tax burden increased from around 30 to 50.4 per cent of GDP or approximately 0.8 percentage points per year on average. Only Sweden with a tax-to-GDP ratio of 50.8 per cent has a higher tax burden than Denmark. In 2002, the EU-average is 40.6 per cent while the OECD-average is 36.3 per cent.”

The really worrying aspect is that the Danes are content to pay their taxes because of the social benefits from public spending on their welfare state.

If it is happiness you are seeking a move to Denmark could be in order, according to the first scientist to make a world map of happiness.

Adrian White, from the UK’s University of Leicester, used the responses of 80,000 people worldwide to map out subjective wellbeing.

Denmark came top, followed closely by Switzerland and Austria. The UK ranked 41st. Zimbabwe and Burundi came bottom.[ BBC website 2006]

“So the mansion tax on a £2.1m house would be 1% of £100,000 which is £1,000.”

Yeah that’s really going to hit them where it hurts. Anyone got any ideas on this or is it just a pile-on?

@8 Well it’s got ‘Richard Murphy’ at the top of the OP, so it’s probably just a pile-on.

Somehow I knew that the epitome of the ” last man ” would be against moving the tax system away from taxing earned income towards taxing unearned wealth. The fact that the issue provokes self-absorbed selfish whining from Joan Bakewell is evidence enough that it is a good idea. What do we tell people living in communities where there are limited employment opportunities? Move to where there are jobs. Move to a cheaper house to avoid the tax would obviously be an outrageous injustice. Moving is something that should only apply to the untermensch.

Getting rid of complexity in the tax system that only encourages avoidance and evasion and moving to a simpler system would be a no-brainer to the sane. Except of course if one has a vested interest in complexity. With the IMF and OECD both encouraging governments to shift the burden of taxation away from labour and production to unearned wealth, this increasingly is the way that the western world is going to move. It is an indirect consequence of globalisation.

Wealth taxes are the wrong way to think about these issues unless one is a particular bitter lefty who just hates people with more wealth than they have. Moreover, the tax system should not be used as a weapon to punish those we do not like for some weird ideological reasons. The point is to fairly capture for the rest of the community UNEARNED increases in wealth. A mansion tax is not the solution per se. However, it would be a step in the right direction. A property gets its monetary value from its location. A location gets its value from the efforts of the rest of the community. Therefore, the rest of the community are only collecting what they helped to create. What is outrageous is when these uplifts in value are collected by those who did nothing to create them. We are taxing the labour of workers and others are collecting the increase in land rents that the government spending causes. Labour and production are not benefiting. Hopefully, increasingly moving our current system away from taxing labour and production will be the main feature of our tax regime. Not before time.

“A property gets its monetary value from its location. A location gets its value from the efforts of the rest of the community. Therefore, the rest of the community are only collecting what they helped to create. ”

Quite so. Like IHT, a Mansion Tax is another way of screwing more out of Londoners.

House valuations with sitting owner-residents are hardly an exact science. We would have another cliff-edge problem. With a house worth only £1,900,000 – no tax. But when the valuation rises to £2,100,000 – bang.

Why not compare Denmark for inspiration about how to raise more tax revenues and maintain high rates of employment?
http://www.da.dk/bilag/Flexicurity%20in%20Denmark.pdf

“House valuations with sitting owner-residents are hardly an exact science. We would have another cliff-edge problem. With a house worth only £1,900,000 – no tax. But when the valuation rises to £2,100,000 – bang.”

I believe (hope) the proposal is that – unlike stamp duty which has such problems -the tax would apply to the value over £x rather than to the total value.

““A property gets its monetary value from its location. A location gets its value from the efforts of the rest of the community. Therefore, the rest of the community are only collecting what they helped to create.”

Hmmmm….I don’t think that applies to the premium enjoyed by (e.g.) waterfront properties, and what the residents of Blackpool have done to make Knightsbridge a high value location is not terribly clear either. There may be a case for such a tax but that probably isn’t it.

Since land values in London are determined by it being the centre of government and having more services and facilities than any other part of the country, of course land will have more value. You did not think it was the tooth fairy that made this phenomenon happen, did you? Company HQs are in London because that is where the government are located. Transport hubs, cultural and artistic centres are located in the the capital and not in Bournemouth, which means that London land will be more expensive than Bournemouth land. Since the aggregate spending by government will be roughly equal to aggregate rent based on land value. Clearly, London is capturing more public money than everyone else as can be seen in land prices. See the George Theorem. http://en.wikipedia.org/wiki/Henry_George_Theorem

Denmark have at the local level a grundslyld (ground rent) averaging 2.4% of assessed value, and a 1% property tax at the national level.

“Denmark have at the local level a grundslyld (ground rent) averaging 2.4% of assessed value, and a 1% property tax at the national level.”

And Britain has the Council Tax assessed – as of 2011, the average annual levy on a property in England was £1,196.

@ 12. cjcjc

How exactly would the residents of Knightsbridge enforce their claims to ownership without a legal system and a system of government in place to respect their exclusive use claims by enforcing contracts? Who are you going to call when someone comes along and says, ‘ that is a nice Knightsbridge apartment you have, I think I will take it’. They would find that monetary values would quickly disappear without a system that respects contracts. For the purposes of the debate we should consider all members of the population as contributing to our system as a whole.

Research by the consultancy Oxford Economics prior the financial crisis, concluded:

“As in previous years, the analysis shows that it is only the wider South East (Greater London, the South East and the Eastern Region) that made a positive net contribution to the UK public finances in 2006-07, with the Northern regions, the Midlands and the South West joining Northern Ireland, Wales and Scotland as a net drain on the Exchequer.”
http://www.isitfair.co.uk/Reports/Public/OE%20UKPublicFinance.pdf

A Mansion Tax, like IHT, is just another way of discriminating against residents of London and the South East regions.

Not much good only counting identified public expenditure in their report. Really need to attribute the entire unidentified spending into the London and SE column where it belongs. For example, we do not have national secret security services we have London security services as that is where they are based. We would not be wanting to say that cultural spending on the arts that occurred in national centres was equally being spent in Norwich at the same time as being spent in London. If the money is spent in London galleries museums etc we should identify it as London spending. If we spend money on London air traffic control systems we should call it London spending. We should not pretend rural Wales has air traffic control systems. The list is endless.

“Not much good only counting identified public expenditure in their report. Really need to attribute the entire unidentified spending into the London and SE column where it belongs. For example, we do not have national secret security services we have London security services as that is where they are based.”

C’mon. The benefits of the security services are diffused nationally. Recall that while three of the four 7/7 bombers in London came from Yorkshire, the IRA had bombed in Birmingham, Manchester and Warrington. Even so, the tax revenues generated by financial services in London are huge relative to revenues generated elsewhere. The proposed Mansion Tax, in addition to IHT, will obviously discriminate against Londoners. Come elections, we need to remember that.

It’s a myth that all affluence is concentrated in London when it isn’t. In 2007, the Daily Mail produced this list of the 100 most affluent Parliamentary constituencies in England based on research by Barclays Capital:
http://www.dailymail.co.uk/news/article-477325/League-Wealth-Tables.html

Just as we need a land value tax.

Common ground between Murphy and one T Worstall.

Indeed, indeed. Although I do fear that Murphy doesn’t actually understand it but then I think that about Murphy about most things…..

“And a local income tax one day,”

And another one where we agree. Although for different reasons: I think money raised and spent locally will be spent how local people want it to be raised and spent.

Ritchie, I assume, just wants to be able to complain about the tax abuse going on as people move from Downham Market to Ipswich in protest at the high tax rates Ritchie imposes.

But to be serious, do you know what the Danish national income tax rate is? 3.76%. Top national income tax rate is 15%. I like those rates, I really do. All other income taxes are set at the level of the commune (about the same size as a Parish in hte UK, maybe a council ward.)

Real local democracy, bring it on!

Tim: “And another one where we agree. Although for different reasons: I think money raised and spent locally will be spent how local people want it to be raised and spent.”

You have more faith vested in local government than I have. Local councillors are all too easily motivated to back daft policies and then dig in when criticism emerges, which is often late because few in local electorates bother to keep informed about local issues.

An obvious example is the ridiculously high salaries being paid to some council chief executives and chief officers – and we are talking about rates of pay well in excess of the PM’s pay. That money could have been spent on local services instead of the salaries of the senior staff. Local government management is far more hierarchical than the civil service. Notice that the government’s policy of “localism” isn’t intended for processing planning applications, which is being held responsible for the high price of housing.

“they have just passed a law making it illegal for a person to live in a property with a spare bedroom”

Er… you what?

Mansion owners can sleep easy as tax plans are ‘scrapped’… but now top earners face pensions crackdown after Coalition deal

Clegg and Cameron agree new raid on wealthy as part of deal that would allow Tories to scrap 50p tax rate

Ha ha ha ~ !

@Bob B #20:

An obvious example is the ridiculously high salaries being paid to some council chief executives and chief officers – and we are talking about rates of pay well in excess of the PM’s pay.

No chief executive or chief officer in local government receives a pay package that even approaches the PM’s package of >£500,000.

Quick question – what were Fred the Shred’s earning in the year he left RBS?