Firstly let me make it clear that the proposed Mansion Tax has no effect whatsoever on me.
Our greatest ever Prime Minister, Margaret Thatcher, famously said: “The problem with socialism is that you eventually run out of other people’s money”. This is something that we all know to be a truth and which we have seen with every British Labour government. Basically their ridiculous dogma forces them into fiscal incontinence. They mistakenly believe that state spending has merit and that more state spending has more merit. So they spend, spend, spend other people’s money.
Successive Labour governments have tried to fund their uncontrolled spending either by screwing it out of people who have succeeded (Wilson and Callaghan) or by borrowing like crazy, in the expectation that future generations will pay for it (Gordon Brown).
Now Ed Balls is in a corner, he wants to spend like crazy but he cannot borrow more money. So he is going to extort it from successful people instead with his Mansion Tax. Home owners in the £2m to 3m band will pay an extra £250 a month through this new tax. owners of homes worth tens of millions of pounds will make much bigger payments. Second home owners will pay far more than people living in their only home. Retired people, who have worked and saved all their lives but who cannot afford this extortion will have it deducted from their estate when they die.
The estate agents Knight Frank say that 36% of £2m plus homes are detached, 31% are terraced, 22% are flats and 11% are semi-detached. So hardly mansions. David Cameron says it “is not sensible for a country that wants to attract wealth creation, wants to reward saving and people who work hard and do the right thing”. He is right. Paul Green of Saga says: “This is not a tax on the sort of people in Downton Abbey. This is a tax on ordinary families who live in ordinary suburbs who may have lived in their house a long time and seen house prices grow significantly in their area. Many will not be wealthy. It will be a frightening prospect to many older people who already worry about bills”. He is also right.
There is a very simple way for rich and successful people to avoid paying extortionate taxes and that is to move to a place where the taxes are lower. Dubai, Switzerland, Monaco, Jersey, Isle of Man, Singapore, Andorra etc. It is not just Lewis Hamilton and Philip Green. Many hundreds of thousands of wealthy people have voted with their feet to escape excessive UK taxes. We lose at least a half of our potential Income Tax revenue by frightening away the most successful people in our society. George Osborne is already taxing the rich far, far too hard.
In Britain we often get taxed twice on the same money. Once when we earn it and again when we spend it. Sometimes we get taxed three times on the same money, once when we earn it, a second time when we buy assets and a third time when we die. Now Labour want to tax people four times on the same money, Income Tax when they earn it, Stamp Duty when they buy a house, Mansion Tax as a punishment for being successful and then Inheritance Tax when they die. The state is utterly out of control and we voters should be doing something about it.
Another stupidity of the Mansion Tax is that it rewards the wrong sort of behaviour. If someone is successful and earns lots of money which they spend on coke and hookers then the government only collect tax once, when the money is earned. If however that person spends their money building a home for their family then they will be taxed four times. This is very wrong.
Now we come to the most ridiculous part. The great, Nobel Prize winning, economist Friedrich August von Hayek said: “If socialist understood economics, they wouldn’t be socialists”. So it is with the Mansion Tax. It will probably reduce government income. This is because price elasticity of demand means that it will greatly reduce house prices. So the government will collect far less in Stamp Duty. A reduction probably greater than what Mansion Tax will deliver. The thing is that Labour must know this, the Mansion Tax makes no economic sense. Which means they must only be proposing it for political reasons. Class warfare. Being seen to punish success and reward failure. Mansion Tax is purely an envy tax.
In 2013/4 revenue from Stamp Duty on property was more than £9bn. Labour say that the Mansion Tax will create £1.2bn. The Centre for Economics and Business Research have analysed the revenue claim. They say that only £162m a year will be received from the 54,000 homes worth £2m to £3m. The remaining £1.04bn would have to be taxed on the 43,000 homes worth over £3m, which averages £24,000 per home. And remember that the British Government spends £2bn every single day. So the £1.2bn that Mansion Tax is supposed to generate is petty cash. More proof that this is a purely political move.
It is one of the nastiest facets of the British personality that there is so much envy in our society. Stoked up by the left. Hard work, investment, risk taking and success is seen as being somehow bad and something to be punished. Whilst laziness, fecklessness and failure are something to be rewarded. Any way you look at this it is utterly disgusting and amoral.