Problems of the Mansion Tax,.,,,

I noticed the  other night alot of Twitter-love for the idea of a mansion tax – indeed there was a lot of left-wing opinion seemingly in favour and, why not? After-all what could be more left-wing than taxing a greedy rich mans plush pad? Sadly, for me, it said alot about the left’s lack of critical faculties when it comes to ideas that look fine on the surface but tend to be less than ideal in execution.

Firstly, I note that nobody has asked why the Conservatives seem to be willing to support this measure in exchange for the abolition of the 50p band of income tax. I would surmise that they are because they know even with the additional mansion tax the abolition of this band will deliver a real-terms tax-cut to the rich.  In that sense, I agree with Ed Balls that any proceeds from the tax should go towards tax credits, not abolishing the 50p band.

Secondly, basing any calculation of tax on property is extremely problematic because one of the first things you notice about property values is that they change.  This means there is some logical sense in arguing that the ‘super-rich’ may not be hit because the income of those effected is assumed to be de facto a high one which it may not be. For perfectly sensible reasons, even if a persons income falls their house is the last thing they are like to sell or downsize. Obviously, this tax takes no account of actual income because it taxes static wealth. Furthermore, it is easily evaded buy manipulating the valuation system.

I am obviously not against the idea of taxing richer people more but I am not actually sure this is the correct mechanism through which to do it. I tend to see it as a poor and ineffective way of tackling real social inequality because that inequality begins and ends with incomes; not with the property that people live in. When these ideas arise, the left needs to problematise them rather than swallow them whole. If it doesn’t then it will probably find itself signing-up for something it really wished it hadn’t.

 

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About darrellgoodliffe

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