I wrote these thoughts on my Facebook page yesterday, and I have taken a few elements out and added others. Anyway, let me know what you think:
The State’s share of the total economy continues to rise, putting even more pressure on those who are still here, working, building business, etc. There are one or two decent elements in it (stamp duty suspended on new share listings in London) but the general direction is bad. Unfortunately, given the reluctance of backbench Labour MPs to accept any meaningful welfare reforms, the total public spending bill will continue to rise. So next year we could have more of the same. That means more emigration of young, ambitious people to lower-tax places such as Dubai, Australia (relatively), etc. The tax base will contract.
One element in particular – the so-called “mansion tax” levy on high-value properties – bothers me not just because of the specifics (it will gum up the real estate market, and thresholds are bound to be frozen, drawing in more over time), but because of a principle.
If I own something that is valuable, why should I pay tax on it purely for that reason? Does the imposition of such a levy equate to the State acting as a landlord, demanding a rent? I can understand the point that a property that is valuable partly because of state action should therefore bear some tax (this is the argument for land value taxes or even council taxes, although LVT is problematic); there is also some sense in taxing property owners to pay for local services (back in the 19th C, only freeholders could vote in elections, which meant they had a vested interest in frugal government).
But taxing something that is worth X, and purely for that reason, is punitive. It also means that the asset-rich/cash-poor issue arises. Some people will need to sell, or at least downsize earlier than they perhaps wanted. Some folk might rent out a room to a tenant, or take out a second mortgage to find the cash. That could have a cascade impact on property prices, perhaps undermining the point of the tax. But maybe that is the point of this tax: it is designed to push property values down. And ironically, that will mean that on death of the owner (s), the haul in inheritance tax will be lower than otherwise.
If you own your home – you have paid for it fair and square, then it is yours. Period. A tax puts the State in the position of a sort of supreme landlord.
I realise that some people will say that there is a generational wealth injustice issue here, because lots of younger adults cannot afford to buy or even rent a decent place. That’s a genuine issue. The solution, broadly, is to free up the planning system, and control net immigration. Another factor is that we must stop artificially holding down interest rates, which has enriched some people with large homes, particularly if they are leveraged.
In some ways, the situation today is the long-drawn out consequence of the 2008 financial bust and a decade-plus of very low interest rates.
I saw a few people on other social media forums saying that objectors should stop bellyaching and pay up. Apart from the oafishness of this sort of response (“do what you are told!”), it ignores the principle of absolute property ownership. Another objection I’ve seen is that lots of people have to downsize, so those affected can do so. However, this is not that easy. Who’s going to buy, particularly when stamp duties are high and taxes in general are crimping growth? Underlying liquidity in the UK housing market is weak and unlikely to improve fast, although it might pick up a bit. Some owners might rent out part of their home to make a bit of cash to cover the tax, but not all such homes are easily changeable for that purpose, and rental income is now taxed anyway. Even so, I would expect some of this to happen in the years before the measure is hopefully repealed. The new tax will not come in immediately – and might get snarled up as the general election nears (it must be held by July 2029).
Of course, people downsize their property for various reasons: their children flee the nest; people want a smaller place to look after, unlock value and buy a holiday home, travel, invest in a business or hobby, etc. it’s natural and normal. But it’s not the State’s role to force the pace on this, to create a sense of duress.
The levy on high-value homes is a form of wealth tax. Even someone who is generally favourable towards the UK government, Dan Neidle, says they are a really bad idea.
Of course, I don’t need to spell it out to the sensible Samizdata regulars that what is wanted are taxes that are as low, flat and simple as possible.
Final random thought: property taxes could be defended in the past when only freeholders could vote in elections, and they tended to have an incentive to vote for stuff that would protect the value of what they had, such as sewage, water supply, electrification, parks, amenities, law enforcement of various kinds, and so on. I sometimes hope, however, naively, that we could bring such an approach back. Voting ought to involve some beneficial ownership “buy-in” to one’s neighbourhood.
The idea that the state knows better than ordinary people is very old – it goes back (at the very least) to Plato.
Governor William Bradford of the New Plymouth Colony in the 1620s mentions Plato – but he also mentions shows that the bitter experience of trying Collectivism (and egalitarianism) and watching it collapse into starvation, shows how Plato was wrong. Sadly people today have forgotten (have been made to forget) what “Thanksgiving” originally meant – Thanksgiving for the good harvest produced by private property and voluntary trade (that is not what the modern establishment wish people to be told).
As for Britain, the fallacies of the 16th century come to mind – people such as John Hales (not a fringe figure – he was an important government adviser) claiming that inflation was nothing to do with debasement of the coinage – and was, instead, caused by “greed”, by “greedy” landowners and tradesmen, by “profits”.
Today people (I meet them in my own town) claim that high energy costs are nothing to do with Green taxes and regulations – no it is “greed” that is to blame, it is “profits” that is to blame.
But then in the late 1700s many “educated” people in Britain were first in love with the wild statism of Frederick the Great and then with the wild statism of the French Revolution (endless fiat money inflation, and the mass confiscation of property, not just from the Church, from anyone who fell out with whatever faction was in power).
Edmund Burke, that great defender of private property based society, never fell for the Cult of Frederick the Great (indeed his “Annual Register” is one of the few English language sources to condemn the policies of Prussia – an ally of Britain) – and, famously, he never fell for the French Revolution either – understanding from the start that most of its victims (victims of plundering and murder) would be quite ordinary people – in the Provinces.
The British establishment has long been a bit potty – even in the 1830s “intellectual” political life was dominated by people such as Lord Russell (who seems to have had idea for a new state intervention almost every other week) and his friend Lord Stanley (later the Earl of Derby – he was in both political parties of the time) – J.S. Mill said that the political thought of Stanley-Derby could be summed up in one word “Liberticide” – and Mr Mill was correct about that. Disraeli was attracted to Derby like flies are to excrement – they had similar philosophies of endless state interventions.
However, the state only started to increase as a proportion of the economy from the 1870s onwards – and the state was still not very big when my father was born (1913), although unions were starting to go crazy – thanks to the Acts of 1875 (legalizing paramilitary tactics such as “picket lines”) and (even worse) the Act of 1906. If you had some money to invest in industry after 1906 and you had a choice of investing in British industry or American industry you would have been a fool to invest in Britain – the Acts of 1875 and 1906 led to that.
Nor has it been a one direction of travel history – for example Britain was a much free place in 1964 than it had been in 1951, there was a real roll back of the state.
Britain was also a much more free place in 1990 than it had been in 1980 – the state was rather smaller as a proportion of the economy.
But since Margaret Thatcher (by no means without faults – we all have faults, terrible faults) was betrayed in 1990 it has been a grim decline – no real rays of anti statism in Britain, the vote for independence from the European Union in 2016 was betrayed (we got “Brexit”, which we never voted for – because it is meaningless, NOT independence – “international community” policies continued to be followed, just at they are by the European Union).
As for now…..
Britain is often said to be like California, with its degree of statism, but with worse weather.
But I think the situation is worse – Britain is, I believe, more like New Jersey than California.
Even higher taxes on PROPERTY (although I believe that New Jersey does not apply its Property Taxes at full force to farmers – but I could be mistaken about that) and even more debt than California – and no great computer companies.
Would you invest in New Jersey? Or New York? How about that Debt-Black-Hole – Chicago Illinois?
No? Well the same logic applies to Britain.
Indeed the situation is worse in Britain.
Endless unions, now being given more power (“workers rights” – i.e. UNEMPLOYMENT), and most people dependent on the state for all or part of their income.
I used to work for Wicksteed Park, collecting money at the gate, and various other things – these days the park does not think it has to be run like a business, as it can always get “grants” – I am NOT attacking Wicksteed, because that is how MOST people think in modern Britain.
And that will not work – a society can not properly function if most people are dependent on the state for their daily bread.
Here in the US the property taxes levied are almost always based on the value of the property. While some states are blatantly extortionate (Minnesota as one example) most of them keep their graft to a tolerable level, shearing the sheep rather than skinning them. The problem is that the property taxes are mostly spent being throw down the black hole of government indoctrination centers (aka, “public schools”) which not only do the damage of inculcating into children the basics of collectivism, but also completely fail in their purported (not real) purpose of education. The millions of property tax dollars spent to “educate” (i.e., indoctrinate) the children results in innumerate, illiterate “graduates” who have literally been taught to NOT be able to think rationally, but only to “feel”.
Here in the States we no longer own our property, but are vassal renters from the state in which we live. Don’t want to pay your taxes and refuse to do so? If you go down that path sooner or later men with guns will come to either collect the rewards of their fiefdom or kill you.
Blackwing1 – yes it is a double attack, the Property Taxes (New Jersey being the worst, Alabama perhaps the least bad) are one side of the attack, but the “services” are the other side of the attack – notably the education system that is dominated by ideas that are meant to undermine (actively undermine) society.
In the 19th century the legend took hold that the “common schools” were necessary for liberty – first in Massachusetts, but eventually in every State, and the regulations (teacher qualifications) and getting into a “good university” and a “good” job, requires going on with this world-view.
The true creator of the education system was not Horace Mann – he just copied it, the true creator was Frederick the Great of Prussia – a century before.
The legend that Frederick the Great was pro liberty is the first great-myth that has undermined liberty.
Wars of conquest and plunder, crushing statism, serfdom, a truly vile legal code (look it up), this was no friend of liberty.
By copying Frederick the Great’s system of education Horace Mann showed that, even back in the mid 19th century, a lot of American “intellectuals” were not true friends of liberty either.
True the bizarre “Critical Theory” Marxism that now dominates the education system was NOT an idea of Frederick the Great or Horace Mann (it is much more recent) – but they created the perfect system for it to take over.
What evils cannot be effectively opposed must either be endured or fled. Peoples’ toleration for tyranny varies over groups of people, but eventually the rising level of tyranny will cross what one can tolerate. With resistance out of the picture, that leaves fleeing. Human history [especially in Europe in the last century or so] would seem to teach that the levels will and do rise, and that it is best and wisest to be in the early waves of those who flee. Part of the wisdom is choosing someplace with both economic freedom and a confirmed right to defend oneself politically and physically from a repeat of what you are fleeing.
Subotai Bahadur
Likely why Musk is so hyped for Mars colonization. Nowhere left here. 😉
Paul,
I accidentally found this recently. I think you might find it interesting.
The truly twisted thing is that in my native North East England there have been at least two failed attempts, spearheaded by Our Glorious Windmill Czar, Eduardo The Millipedious to get refining the metals need for wind turbines and high-end batteries. Why, failed? The companies cannot afford the electricity. You’d need a head of stone not to laugh because that means in a nutshell we can’t hit net-zero by going net-zero. Instead we shall have to import from China which is perfectly happy to promoulgate net-zero for everyone else whilst burning coal to make the net-zero things. But that’s OK because we can self-righteously say “Not us, Guv!” even though this is allegedly global warming. We are off-shoring our guilt along with our industry. And, yes, Paul, we are doing this on our flexible friend.
But back to the map. OK, Hawaii is an outlier in evey sense but look at California! And then Nevada next door. Now making things needs electricity. It is a major cost to industry. Even to “green” industries so if you were planning a factory in the Western USA I suspect paying nearly three times as high a lecky bill might make you think NV, not CA. Or indeed other states.
In all practical senses, yes it does. So does Council Tax.
(I’ll come back to how I square that statement with my support for LVT later)
I *do* own my house and the land it sits on, 100% fair and square, as much as it is possible to do so. It’s freehold, and I paid “cash” for it (as in I don’t have a mortgage, I paid it off a couple of decades ago)
But I still have to come up with £239 in coin of the realm every single month, for the legal right to continue to reside there.
Even in the (yes, vanishingly unrealistic) scenario that I somehow managed to power my house “off-grid” using solar/wind/coal/whatever, somehow managed to grow/barter etc for my food, and used non-sterling currency (LETs, crypto, whatever) for everything else I needed or desired, I still have to come up with £239 sterling every single month.
So on one hand, absolutely yes: in all practical senses, the state is acting as landlord by insisting, on pain of imprisonment (eventually), on payment to allow me to live in my own house. Sure, I get some benefits – waste removal, road maintenance, fire and rescue, libraries etc etc etc. For most of these, whilst I may or may not take advantage of them myself, I don’t cry myself to sleep over them. I’m “happy” enough to do my bit, for sure – but the fact remains that it’s involuntary and I have little to no say over how that money is spent.
The other thing, and this is more important to me personally, is that taxes force people into the cash nexus – going back to my statement about “no matter how ‘off-grid’ I live, I have to come up with £239 per month”. I have no choice in this, which means that I have to interact in some way with wage labour, or accept payment in sterling (which realistically means forcing others into wage labour – not everyone can realistically own their own business, after all). This is very much by design – taxes were, in many places, historically imposed to force people into interacting with the cash nexus.
To me, that’s more problematic (or maybe “as” problematic) than the state acting as landlord – it’s that the state is forcing me into a particular way of surviving.
—-
So why do I support LVT? Isn’t that contradictory?
Sort of, yeah.
I don’t support LVT full-throatedly and with my whole chest. If I were to sit down and design a new system, compulsory taxation would not exist, because taxation is theft.
BUT. I do not believe, at all, that a world without taxation is going to come about in my lifetime. So, in a world where my only option is “Which form of taxation would you support?” then I go for the “least bad”, which, in my opinion, is LVT.
I’m not hugely against Fraser’s “flat sales tax”, but it’s regressive under current extant circumstances (as in, the poorer pay more proportionally), which is my main concern.
LVT is not, per se, and goes some way to peacefully resolving a very, very huge issue, which is that land ownership as it actually exists today does not meet any reasonable criteria for “just acquisition” – be that Lockean, Lockean Proviso, Georgian, Tucker, Ingalls or any other of the various forms of “just acquisition” that I’m aware of.
I cannot accept that the “mansion tax” equates to the State acting as a landlord. Currently we have 8 council tax bands with the top 2 bands being G properties £160,000 to £320,000 and H properties more than £320,000. These are 1991 values; today they would be G ££832,000 to £1,664,000 H more than £1,664,000. Now H would be £1,664,000 to £2,000,000 and I more than £2,000,000.
The reason the State likes a tax on properties is that they are fixed and visible; artwork, antiques, gems and other valuables are not.
Unlike an income tax or transaction tax or taxes on realised assets, there is no ability to pay baked into the tax as the taxed unsold asset has not generated anything, which makes it a rent on ownership. It is a tax on the mere possession of an asset. You are literally paying the state for the right to remain in your home which you supposedly own as a freeholder… in the same manner as a tenant pays their landlord for the right remain in the apartment they rent from them.
NickM – yes they (the regime) are self defeating, IF their policies have any good aim at all. Indeed it may be (perhaps) that their aim, their objective, is to cause harm – in which case they are succeeding.
Perry – yes your move to Prague is looking wiser by the day, London is a place to be avoided, but then even little Kettering is going the same way.
On the way home from the art shop I look after (unpaid), I spotted some police officers in a van – so I pointed out the terrorist (“shutthesystem.is”) sticker (one of so many in the town) that was a few feet away from them.
“I am from the Bedfordshire police” said a WPC – the person seemed a bit nervous, although how I, a 60 year old man with COPD and prostrate “problems” (let us not use the “C word”), could be a threat to three police officers, was not explained.
Another lady (not a police officer) spoke to me – “there are criminals next to where I live – but the police will not do anything” the lady said in despair.
But then I am part of the problem – as I did NOT offer to go with the lady and help her, because I know I am too weak to be of any use.
The world would be better off without me in it.
Certainly not true. Moreover don’t give the statist bastards the thrill of seeing despair. The pendulum will swing back, the tide will turn, and I’m much inclined to think retribution is coming as the establishment’s alarm is palpable.
Rick Deckard.
I respectfully disagree Sir.
Although I was amused by “I am from Bedfordshire police” being the reply to me pointing out a terrorist sticker here in Kettering Northamptonshire – “shutthesystem.is” stickers are all over the town. If Northamptonshire police are so overwhelmed (the police station in town closed years ago – they now live in a building somewhere on the outskirts, a building members of the public are not allowed to enter as it is a “Police HQ” not a police station) that they need help from Bedfordshire – what relevance has that got to terrorist recruitment stickers – is not a police officer a police officer?
Whether it is little things like litter (“rubbish is everywhere – apart from in the bins”) or big things like terrorist groups (which are directly linked to the “Greens” who control the town) – I do not see any hope.
And, given my personal circumstances (the fact that I do not perform any role that is of use – or income), there is no reason for me to go on.
I have had enough.
I’ve found your insights invaluable over the years & I’m sure I’m not the only one. I’ve gone down the research rabbit hole after many of your comments.
Remember that the Monarch of this land has more in common, in aims – if NOT in tactics, with the “shutthesystem.is” “Green” terrorists than he has in common with most people here. And he also has more in common with the “refugees are welcome” (the “refugees” NOT being refugees) types, than he has with most people here – as the Gentleman made clear in his Christmas broadcast of 2024. A broadcast that destroyed the last hopes ordinary people had concerning the Crown. There is no chance at all that the Gentleman will stand with the British people against the increasing Islamic population – and other hostile groups. The Crown, the various advisers and so on, has made its choice – and it has chosen the other side (perhaps out of a mistaken view that what this is about is a few persecuted foreigners who nasty bigots treat badly – such a view ignores the changing demography of so many British cities and towns, and the behaviour of the growing populations). The hope that the exposure of the “Grooming” RAPE (industrial scale rape) Gangs would change the opinion of the establishment has proved to be false hope. I am reminded of President Bush in 2001 – whose reaction to 9/11 was to make a speech, a couple of days later, saying how wonderful Islam was (the “war on terror” was lost at that moment).
Parliament is the same, and so is the Church, and so is everything else. Every institution – public and private.
Not “my depression” – the above are the basic facts.
Rick Deckard – thank you Sir.
If I have led a few people to look into things for themselves – then my life has not been totally wasted.