Mansion tax: most voters are with Ed Miliband, not Myleene Klass
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Version 0 of 1. Myleene Klass isn’t the only one indignant at Labour and Liberal Democrat plans for a tax on mansions worth £2m or more. In London it rankles even with some Labour supporters – from Melvin Bragg to London MPs including Glenda Jackson, whose Hampstead seat hangs by a thread, while Labour mayoral hopefuls get jumpy about offending potential donors. On ITV’s The Agenda on Monday Ed Miliband hardly got a word in edgeways, blindsided by a sassy attack from a well-briefed pop star, far harder to tussle with than a mere politician. Look elsewhere if a polished performer is what you prize most in the next prime minister: Cameron and Blair are past masters, setting a high thespian bar. But if it’s the policy that matters in government, Miliband is right on the principle of a mansion tax. Clement Attlee might have been flummoxed too in handling Myleene, but my guess is that he would also have taken the proceeds of the mansion tax if he needed to shore up collapsing finances in the NHS. Klass made the usual plea of the rich, not for themselves but for “little grannies” who are asset-rich and income poor, clinging to their lifelong homes. But they don’t have to move: Labour would let the tax – around £250 a month for a £2m-3m home – roll up until they sell or die. Many “grannies” are reassured to hear this, and others reassured that there will be no fiscal drag to spread the net wider. Heirs may inherit a bit less, but £3,000 a year doesn’t begin to reflect the annual gains of the past or that property values are still soaring upwards. This tax would catch foreign buy-to-mothball owners too: one pays £26 a week council tax on a £146m property. Four out of 10 of the world’s most valuable properties are in London, nearly entirely untaxed. The public overwhelmingly agrees that the rich should pay a share of this windfall wealth – and the mansion tax is massively popular. The Institute for Fiscal Studies says there is “sensible logic underpinning it”: property should be taxed. You can debate the mechanics, such as increasing council tax bands or making this a temporary step towards land value tax. But what inflames inhabitants of the 0.5% of properties affected is the idea of paying at all. No one likes taxes, especially new ones. But every rational review of the UK tax system concludes that failure to tax assets is a disastrous distortion. The sweat of our brow is taxed but not the unearned, undeserved windfalls from damaging property bubbles. Homes often earn more than their occupants do at work. That makes neither economic nor social sense. Even in America most states tax homes at around 1% a year. Wealth is even more unequal than pay: the top 1% own more than the bottom half, and the richest fifth own a hundred times more than the bottom fifth. Gigantic senior executive pay since the 70s is converted into even more unequal assets. Capital gains tax, which the former chancellor Nigel Lawson rightly levelled with top income tax, is now so low it encourages manipulation to express income as a capital gain: that’s why Warren Buffett warns he pays less tax than his secretary. Today the Office for National Statistics reported that pay is falling yet again, so Labour is right not to raise cash for the crippled NHS by increasing basic income tax or VAT. Better by far to take it from the unearned property bubble. Following Colbert’s dictum – pluck the feathers that the make the geese squawk least. But the squawking shows just how much noise a few fat geese can make, with wild talk about mansion tax dangers: people will brick up their expensively dug-out basements and seal off their loft conversions to keep their valuations under £2m. The construction industry will be hit and even private schools will shut because parents paying an extra £3,000 can’t afford the fees. Mansion tax objections show how much the national discourse is controlled by a tiny core of London homeowners, oblivious to everyone and everywhere else. These influencers control levers of power and persuasion to deceive about distribution of wealth, calling themselves “wealth creators” as they drain wealth from the rest. Maybe they deceive themselves too: our book Unjust Rewards found focus groups of the super-rich clueless about what others earn or where they themselves stand on the income/wealth spectrum. Everyone they know is like them, they say, ignorant of the other 99.9%. How quickly wealth loses touch, bestowing the sense of indignant entitlement Klass displayed as she claimed you could only buy “a garage” for £2m in London. Polite Miliband may have been stumped about where to begin a riposte, but on this issue most people see the obscene spectacle of London property wealth – and rightly think the rich should pay a bit more. |