Tax and Welfare - a new way that PHers may approve of.

[Mr Snap]

DSM2 said:

Recent statistics seem to indicate that the majority acquire their disability through choice, actually

Would you care to supply references for these statistics and supply sources?
Recent research would tend to suggest that they seem to be misread straight from the Daily Mail.

[HundredthIdiot]

DonkeyApple said:

They wouldn't have paid it off though. Under the scheme only a moron would pay down any securitised debt. No one would own property, simply take out 25 year variable leases.

Someone has to own the property.

I believe the idea behind asset taxes (putting aside sensitivities about property-is-theft agendas) is to improve utilisation of assets, thereby making for a more efficient economy.

For instance, empty properties would be returned to the market more quickly, thus reducing housing costs and freeing up money for the coke-and-hookers sector.

[DonkeyApple]

HundredthIdiot said:

DonkeyApple said:

They wouldn't have paid it off though. Under the scheme only a moron would pay down any securitised debt. No one would own property, simply take out 25 year variable leases.

Someone has to own the property.

I believe the idea behind asset taxes (putting aside sensitivities about property-is-theft agendas) is to improve utilisation of assets, thereby making for a more efficient economy.

For instance, empty properties would be returned to the market more quickly, thus reducing housing costs and freeing up money for the coke-and-hookers sector.

Correct, but only if the tax is levied against the market value, or say the purchase cost with an enforced re-valuation every 3rd year etc.

What this chap is proposing is that the tax is levied on the equity of the asset, not the value.

Ergo, to avoid the tax you ensure you have a 100% mortgage in perpetuity, which is, in essence, a 25 year leese of the asset to all intents and purposes.

That in turn will lead to a halt in purchasing private property as there is no advantage over renting. But then the landlord only makes a return if he has the asset 100% geared and his rental income well exceeds the leverage cost, so even that model tends to break down as we have seen in recent years.

His article seems interesting but on closer inspection it seems to just be a communist manifesto based on property ownership being theft

And all because he makes the very cunning distinction between taxing the value v taxing the margin.

[HundredthIdiot]

DonkeyApple said:

Correct, but only if the tax is levied against the market value, or say the purchase cost with an enforced re-valuation every 3rd year etc.

What this chap is proposing is that the tax is levied on the equity of the asset, not the value.

Ergo, to avoid the tax you ensure you have a 100% mortgage in perpetuity, which is, in essence, a 25 year leese of the asset to all intents and purposes.

Right, but if you have zero equity then the bank has 100%, in which case the bank pays the tax and passes on the cost one way or another.

Asset taxes (specifically a land tax) have been mooted in Ireland as a way to prevent future asset bubbles (horse, stable door, etc), and I don't think the proponents are socialists.

[DonkeyApple]

HundredthIdiot said:

DonkeyApple said:

Correct, but only if the tax is levied against the market value, or say the purchase cost with an enforced re-valuation every 3rd year etc.

What this chap is proposing is that the tax is levied on the equity of the asset, not the value.

Ergo, to avoid the tax you ensure you have a 100% mortgage in perpetuity, which is, in essence, a 25 year leese of the asset to all intents and purposes.

Right, but if you have zero equity then the bank has 100%, in which case the bank pays the tax and passes on the cost one way or another.

Asset taxes (specifically a land tax) have been mooted in Ireland as a way to prevent future asset bubbles (horse, stable door, etc), and I don't think the proponents are socialists.

Vince's mansion tax (advised to him by a chap who made a small fortune accidentally in the City and has it hidden away) has some merits. Primarily it raises revenue from a group who can afford it and when they can't it makes downsizing an easier option, thus freeing up liquidity. It will also target overseas investment ownership of assets.

I can't see too much wrong with the concept.

I'm not sure he was including asset taxes on corporate holdings because if that were the case then why make the split between margin and value when it is irrelevant?