Wednesday, August 24, 2011

Poor Widows, Cat Food & Property Taxes

Whenever proposals to tax wealth rather than income are made there is invariably a backlash as the spectre of poor widows being evicted from their homes is brought up, as the Economist's Bagehot does here:
But here is my other worry. You could also name such a tax a "force Home Counties widows to sell their homes and downsize tax". This is a blog posting, not a finished print article, so I do not have hard and fast numbers for this, but a fair number of the people living in "mansions" are certain to be pensioners on relatively low incomes. Charge them several thousand pounds a year to stay in their homes, and many would simply have to move out.
This is an emotive point of course even if it isn't rational- the current system compels people to choose to live where they don't want to as well- I wonder if the effect on the "poor widows" is not actually positive.

Anyone unable to pay a tax of 0.5% on the value of a house is likely to be having to be very careful with what they spend. Let's say a 75 year old mansion dwelling widow's budget is a mere £70 a week and it is currently spend like this:
  • £40 Food
  • £14 Heating
  • £16 Cat food.
Now she has to move out of her £800 000 house into a more modest £300 000 property. Using this windfall she now lets herself spend £250 a week- so she now spends it like this:
  • £40 Food
  • £10 Heating (smaller house)
  • £150 Cat food.
  • £40 Bingo
  • £10 Holiday fund.
As you can see her lifestyle has improved considerably as she now gets to go out and meet people and enjoy life and has more well fed cats.

A property or land tax will shift wealth that is currently tied up in houses into the general economy- and  it will be the poor widows who reap the initial dividend. And then cat food manufacturers.


Mark Wadsworth said...

Agreed. Of course.

Laban said...

But it's her house, where she and her husband raised their family. She's lived there 40-odd years. She's paid for it. Why should she move ?

Ross said...

Well some people always will be compelled to move under any tax regime.

A 30 ish couple whose income is cut through a rise in income tax or VAT could be forced to move. It's regrettable when that happens but I don't see why elderly people are should be specially protected.

tolkein said...

There's also the likelihood that the move will kill her. Uprooting at 75 will be traumatic in a way it won't be for someone in their 30s.

Anonymous said...

I agree with a land value tax.
However of course it MUST go hand in hand with a reform of social housing. Otherwise we will see pensioner x having to sell their house because of tax and pensioner y staying in their council house and paying a laughably low rent and young person x paying 3 times as much rent for a little flat down the street.

JuliaM said...

I agree with Laban. Why should she have to move? Her quiet of life could go down, as well as up!

James Higham said...

I'd imagine the Bingo allocation would remain constant, whatever the circumstances.

Anonymous said...

I see, you want the government to butt out of YOUR lives but not other people's.
Two faced shower of tw@ts.
It's her/their money, they can do what the fuck they like with it.
Butt out.

Ross said...

Abusive Anon- If I've ever advocated an anarchist state, show me where.

Any state has to be paid for somehow, so the question then moves on to how.

Property & land taxes are far less intrusive than income taxes because they have to keep records of who own what anyway.

James- Perhaps, although cat food is the higher priority.

Tolkien & Julia- You could go for the approach Mark has suggested of allowing pensioners to pay after they die. Or they could borrow on the value of their homes.

Nice Anon- Personally I would get rid of council housing entirely, it is inherently unfair, pay people who the council determine should receive free housing the rent money.

Hexe Froschbein said...

Why does she even need a house? Why does *anyone* need a house?

We could warehouse people in general, Japanese style in rental container beds, now that would free up lotsa money and probably pay off the national debt in no time.

Think of all those marriages saved(no more DIY, no more arguing who cleans the non-existent kitchen)
and the green live style that results from streamlining human use of resources this way.

And imagine the space for nature that we could gain!

I think you should write this great idea up properly, how about calling it a 'modest proposal'?


Ps.: check this out:

Ross said...

Hexe- good points.

My most read post ever, on Passive Masturbation, was a conscious attempt on my part to emulate "A Modest Proposal" to a degree.

Anonymous said...

"any state has to be paid for" - why?
So sell pensioners houses to buy top hats for council workers. after all pensioners are weak and expendible under this blog's concept.

Ross said...

No Anon, you are being ridiculous.

At the moment the tax system goes to ludicrous lengths to coddle pensioners by barely taxing wealth at all but taxing income a lot.

Stopping coddling a particular group does not equal tjem being "expendable".