How to protect your assets under a Corbyn government

zagfles

BananaRepublic wrote: »

It has? Not according to the data I've seen. House building has been ~150,000 per year for the last ten years, immigration alone has been ~300,000 a year, then throw in population growth due to net births, and more people living on their own, and you see that house building is far below demand.

So one extra house for every 2 extra people. I'd wager the average immigrant lives in a house with more than 2 people.

Population in 1970 was about 55.6 million. In 2010 about 62.8 million. A 13% increase.

Housing stock in 1970 was about 18 million, in 2010 about 26 million. A 44% increase.

So where's the problem, demand or supply?

bigadaj

Malthusian wrote: »

Charging CGT on primary residences would destroy the housing market. It would mean that you couldn't move house without having to downsize, live in a poorer area, or spend money for nothing just to keep the same quality of life. Because although your house has increased by X%, the house you want to buy has also increased by X%, and as you would have to pay a CGT bill, you can't afford as nice a house anymore. So no-one would move if they had any alternative.

While this problem technically already exists with stamp duty (which should be abolished), charging CGT on main properties would ramp it up 10-fold for anyone unfortunate enough to live somewhere where people want to live.

It would be a terrific boost for very rich landlords and property developers as a) limited companies don't pay CGT b) as being a homeowner would be a millstone, far more people would rent c) for the same reason, houses would be cheaper.

A classic case of smashing the middle class to make a political point.

What complete rubbish.


Assuming this starts from today, then excess profit would simply be taxed at a rate once you're cgt allowance is used up.


So the fact that you're moving up the property market just means the steps will be smaller, as there is far less attraction in making a large profit if that profit is taxed.


It's simply a way to damp the market, affordability wouldn't be affected, as the same would apply to the next house up or down the ladder and the people owning those houses.


The issues around taxation of companies owning residential properties would also need to be addressed, but that doesn't mean the principle isn't correct, it is.


So the way to deal with excessive house prices is to stoke up demand and attractiveness, primarily as a political bribe to those who think they are clever because they've bought a house and it's magically gone up in value through no effort on their part.


It might also lead to people investing more into areas that are truly productive and might lead to real increases in growth and the economy.


I despair of british attitudes to housing, obviously immigration and housing supply is an issue, but removing a tax incentive to push a housing bubble higher and higher is making the vast majority of people's lives worse.

BananaRepublic

zagfles wrote: »

So one extra house for every 2 extra people. I'd wager the average immigrant lives in a house with more than 2 people.

Population in 1970 was about 55.6 million. In 2010 about 62.8 million. A 13% increase.

Housing stock in 1970 was about 18 million, in 2010 about 26 million. A 44% increase.

So where's the problem, demand or supply?

Here's just a few sources that disagree with your assertion:

https://www.parliament.uk/business/publications/research/key-issues-parliament-2015/social-protection/housing-supply/
https://england.shelter.org.uk/campaigns_/why_we_campaign/the_housing_crisis
http://www.bbc.co.uk/news/av/uk-34311522/scale-of-uk-housing-shortage-revealed
https://www.theguardian.com/business/2016/nov/20/britains-housing-crisis-must-be-tackled-now

You completely ignored the fact that more and more people live on their own compared to the past, which along with net immigration, people living longer and natural population growth increase demand for housing.

zagfles

BananaRepublic wrote: »

Here's just a few sources that disagree with your assertion:

https://www.parliament.uk/business/publications/research/key-issues-parliament-2015/social-protection/housing-supply/
https://england.shelter.org.uk/campaigns_/why_we_campaign/the_housing_crisis
http://www.bbc.co.uk/news/av/uk-34311522/scale-of-uk-housing-shortage-revealed
https://www.theguardian.com/business/2016/nov/20/britains-housing-crisis-must-be-tackled-now

You completely ignored the fact that more and more people live on their own compared to the past,

That's the whole point! Households are now smaller, people are sharing housing less. That stokes demand. The only solution most people see to higher demand is to pander to it, rather than policies which reduce demand. Such as taxing housing profit to reduce the investment value of housing. Or taxing excess housing consumption (second homes,, empty homes, no discount for sole occupliers etc).

which along with net immigration, people living longer and natural population growth increase demand for housing.

That's all accounted for in the population figures above! Housing supply has increased faster.

Glen_Clark

zagfles wrote: »

more people can afford multiple homes, raising prices back to where they were!

If prices were the same how could more people afford them?

zagfles

Glen_Clark wrote: »

If prices were the same how could more people afford them?

More supply - prices drop temporarily - more people able to afford second/bigger homes - prices rise again.

While property is seen as a good investment, demand will increase with affordability. Increasing supply will just increase demand because people can "invest" more. It's why even the Adam Smith institute said the Help to Buy schemes are like pouring petrol on a fire.

Policies are neeed to make housing like most other stuff you buy. You buy to use, not to invest. When housing becomes a bad "investment", it will be affordable.

BananaRepublic

zagfles wrote: »

That's the whole point! Households are now smaller, people are sharing housing less. That stokes demand. The only solution most people see to higher demand is to pander to it, rather than policies which reduce demand. Such as taxing housing profit to reduce the investment value of housing. Or taxing excess housing consumption (second homes,, empty homes, no discount for sole occupliers etc).

Your argument is confused. You are now saying there is no shortage of housing because people can share a home. Well, fair enough. Move those selfish old people out of their homes and into shared ones. Have those selfish young couples with a baby into shared housing. Why should these people have their own home?

Alternatively, recognise that there is a shortage.

I do agree that we should tax second homes, and remove the tax advantages of BTL. I find it invidious that some people can create fat pension funds from BTL while those less fortunate are forced to rent.

bigadaj

BananaRepublic wrote: »

Your argument is confused. You are now saying there is no shortage of housing because people can share a home. Well, fair enough. Move those selfish old people out of their homes and into shared ones. Have those selfish young couples with a baby into shared housing. Why should these people have their own home?

Alternatively, recognise that there is a shortage.

I do agree that we should tax second homes, and remove the tax advantages of BTL. I find it invidious that some people can create fat pension funds from BTL while those less fortunate are forced to rent.

Well btl is being made less attractive.

There's also the advantage that someone with a large btl portfolio has difficulty chasing it in without incurring significant cgt liability.

grey_gym_sock

[a delayed reply, to various points made ...]

1) is a small fall in the real value of earnings over 10+ years an acceptable outcome, given the hit the economy took from the GFC?

first, the economy has grown (slowly) over that time, which was partly to due population growth, but it's also grown per capita. but earnings have declined, even as GDP-per-capita has risen: see the first graph in this article: http://www.taxresearch.org.uk/Blog/2017/09/07/growth-but-not-as-weve-known-it-is-an-issue-we-have-to-face/ ... so we have a distribution problem: all benefit of the growth (plus a bit more) has gone in profits (to the richest few percent), not to workers.

secondly, it is a lot worse when you take into account house prices. these are excluded from all inflation measures, and have risen much more than any inflation measure. nearly everybody wants to buy a house at some stage in their life. as a result, we have effectively seen a huge wealth transfer from people who haven't yet bought a house to people who own (or inherit) more than 1 house. this is a big part of why so many younger people are (rightly) angry.

2) but does growth matter anyway?

no, it doesn't. what matters is that

- austerity is literally killing people ( http://www.independent.co.uk/news/health/tory-austerity-deaths-study-report-people-die-social-care-government-policy-a8057306.html ) mainly due to underfunding social care and health care;

- not enough housing is being built (and what's being built is too expensive: we need to built lots of council houses - which hasn't been done for many decades, including by the last labour government);

- many people can't afford to feed themselves or heat their homes;

- public investment in clean energy (especially tidal power - which is reliable, and the UK is exceptionally well placed for), and electrification (of railways, but also a commitment from the government to a comprehensive network of recharging stations, to encourage electric cars), and other areas, is far too low

and while i don't care about growth per se, directing resources at all the above things will, both directly and indirectly, happen to increase GDP. so right now, to address various specific needs, we do need some more growth.

3) but don't we need to raise taxes to pay for that?

not necessarily; and definitely not pound-for-pound (i.e. not as much as £1 extra tax raised for every £1 extra public spending).

because public spending can, under some conditions, pay for itself. see http://touchstoneblog.org.uk/2017/07/can-increased-public-spending-pay/

the economy is a dynamic system: changes in both public spending or in taxes will affect what households and businesses do. when higher public spending gives households more income, they will spend most of it, in the private sector, which gives other households and businesses more income again. all this extra household expenditure will hopefully also encourage businesses to invest more. so £1 of extra public expenditure typically increase GDP by more than £1; this is the "multiplier" - e.g. if the increase in GDP is £1.50, then the multiplier is 1.5. as a result, a large proportion of the extra public spending ends up coming back to the State in extra tax revenue. and if it doesn't all come back, that may be perfectly OK: public debt will have risen, but so will GDP, hence the debt-to-GDP ratio may even have fallen.

an important qualification is that this wouldn't work if the economy were already operating at full capacity. in that case, if we wanted to spend more on some things, we'd have to spend less on others, either by directly cutting other areas of public spending, or by raising taxes (which would cause households to cut their spending). but there is every reason (from under-employment, precarious employment, and low productivity growth) to think we're nowhere near that point.

i'm sure the general idea in many people's minds is: isn't this getting something for nothing? well, no: it's getting something by getting people to work for more of the time (i.e. not zero-hours, or part-time when they want full-time) and more productively.

so, whilst i (like some other posters) would be happy to pay higher taxes to get better public services, i don't believe it's necessary at the moment.

if you consider this process in reverse, you can see why austerity has failed to meet every target which osborne set for cutting the deficit (not that these were sensible targets, anyway: the point is just that it failed, even on its own terms). cutting public expenditure has made GDP lower than it would otherwise have been, which has cut tax revenue.

4) there is a need to tax the better off more, but this is more to counter the growing disparities in wealth, and the related tendency for the richest to capture the political process. but can the rich just fiddle their way out of any tax rises?

i think there is some agreement that the best way to tackle that is via international co-operation. this has been a slow process, but it's certainly not over (despite trump).

there is a lot that can be done more locally. e.g. it will only take 1 major economy to declare that global country-by-country reporting has to go on public record (for any company/corporate group that does business in that major economy) for it to happen. the EU may well do this. the UK could do it (the current government has blocked it so far, though, to be fair, some tory backbenchers have supported it).

the UK government could also, if it wanted to, force the UK crown dependencies and overseas territories to cease to be secrecy jurisdictions (i.e. providing a veil of secrecy which undermines the enforcement of laws in other jurisdictions). that would make a big difference: that covers a substantial proportion (perhaps 1/3?) of secrecy jurisdictions globally.

i didn't say the tories were evil (as somebody suggested): i made a specific claim that i don't believe they are genuine about cracking down on tax dodging. (and that i believe labour under corbyn & mcdonnell - unlike labour under blair & brown, incidentally - are genuine on this.)

does anybody believe the tories are genuine about tax avoidance? they are substantially funded by tax dodgers (e.g. lord ashcroft). all the right-wing newspapers who rabidly back them are owned by tax dodgers. they have introduced such laughable "anti-avoidance" measures as the "google tax" ... which turned out not to apply to google! that is pretty much self-satirizing.

cracking down on tax cheating effectively may not be easy. but there is no good alternative path of cutting tax rates and expecting businesses to move to the UK as a result.

the results of cutting corporation tax show that clearly. there was some argument about the graph i referenced earlier in the thread. the graph showed that all the rise in CT collected was in the tax from smaller companies, so it's nothing to do with companies relocating (which would be big companies). the exact trend in CT collected from big companies looked like a shallow fall, but in case it showed little change; which makes sense, since corporate profits (unlike earnings) have risen, while CT rates have been cut; so those effects roughly offset one another. there is no sign of corporations relocating profits to the UK due to lower rates.

and it would be very strange if they did. if they are relocating for low corporation tax rates, why come to the UK with 20% or 18%, when there are countries with 0%? the fact is: they can't always just relocate profits at will, though there has been a lot of fiddling going on. but companies know that country-by-country reporting is likely to be on public record some time soon, so it is very unlikely that they will be stepping up their dodgy profit-shifting now. they may even be (and as a shareholder, i certainly hope they are) becoming less aggressive about tax avoidance, now that they suspect the end of that road is near.

5) but do rich people just leave the country when taxes rise?

if we're now talking about people with very high earnings (i.e. ordinarily wealthy people), as opposed to the super-rich (i.e. people who make money from their capital), then no. almost nobody leaves due to higher taxes.

consider doctors. if they were going to leave because of higher taxes, then why haven't they gone to the USA already, where they could earn a lot more (before tax)? that fact is: people (and this applies to doctors more than most occupations) are not just motivated by money. and it's very far from simple to move to another country and get an equivalent job there. and people have family ties, and other reasons, to stay.

i'm not at all convinced that the higher tax on large pension pots is causing doctors to retire. at most, it might be an additional factor for some doctors. the much bigger reasons are that being a doctor can be a difficult, stressful job at the best of times; and that the strain the government is putting the NHS under is making that worse; and in any case, some people want/need to retire from many jobs before the usual retirement age. all these are factors which affect older doctors, which is why there's some chance that it might combine with the pension issue. but a general rise in tax on higher earners isn't going to drive younger doctors away.

6) re the IFS: this is a bit of a distraction. but if you want a critique of their methods of assessing the manifestos, see: http://www.primeeconomics.org/articles/assessing-the-manifestos-the-ifs-fails-the-test

7) examples of a successful socialist government? the nearest example to home is the 1945-51 labour government.

dividendhero

Best way to Corbyn proof your wealth is same as way to Brexit proof it - move your money abroad, my own preference is Far East with funds such as SOI.

Not at all unlikely that there could be a double whammy of Brexit and Corbyn in a couple of years time...