Mansions, Bedrooms and a Tax on the Rich

This was definitely not the biggest news story this week, but a potential Mansion Tax has interested me for a while. Labour support it, the Greens support it, the Liberal Democrats did, but have since moved away from supporting it, but unsurprisingly it’s shock horror to the Tories.

I find the proposition of a mansion tax very interesting. It, apart from a high income tax on the top 1%, is one of few “in the news” policies which would significantly effect the elite, rich people (and as it happens a lot of normal people). Because of this, a plethora of misleading facts and detail has permeated the media. There is a lot of confusion over what a mansion tax would actually entail, which would be this: a tax on the value of a property above £2 million in value. As an example, a house worth £3 million would be taxed on the £1 million excess value.

In order to write this post I did a fair amount of research in order to attempt to balance my admittedly left-leaning view point that a mansion tax is a good thing. Doing so led me to this website: This website (a blog really) is at the forefront of anti-mansion tax webpages when you do a simple google search, and almost immediately attacks Labour and the Liberal Democrats (who do not support a mansion tax anymore, leading me to have less faith in this biased blog’s reliability) for supporting a tax that would place an ‘unfair property tax on 500,000 ordinary Londoners’, which is fair enough, but also leads me to ask: what about the rest of the UK? I do however, agree; there are many properties in London which I certainly would not consider mansions, and this is why I am primarily critical of the tax proposals themselves, but not the principal.

The arguments against the tax are, on the whole, fair points to make. People cannot help if their property has soared in value due to ridiculously out of control property markets. Many of these people are elderly people who have lived in their homes for the majority of their lives and are by no means rich. To saddle them with a tax that they cannot afford would be unfair (although we do not live in an inherently fair society). Consider the Daily Telegraph Article entitled Ed Miliband’s mansion tax and death duties will eat up inheritances, Treasury aide says. The article notes how ‘those who live in expensive homes but have limited means will be able to defer paying the tax until the property is sold.’ This shows how a mansion tax of which payments have been deferred for 20 years could leave bereaved family members with an unfair tax bill of £300,000. However, it is also important to consider this point in the BBC’s article How would a mansion tax work?: ‘At present, council tax bands are still based on valuations of homes made in 1991’, a time when many of the properties which at current valuation levels would be considered mansions, would not. That being said, the aforementioned Telegraph article poses more sinister questions. The article notes how the tax would be imposed ‘to help raise £1.3billion for the NHS.’ How then, could this tax be a bad thing if it is being used to fund the best part of the UK’s political and societal system? To me, this seems to be further evidence that the ultra-rich are becoming increasingly frustrated to have to pay towards everyone else’s healthcare, and if this is the sort of issue that the Telegraph wants to turn the mansion tax into, then I fully support its implementation. (For readers’ information, a similar article can be read on The Daily Mail)

Interesting as always, were some of this month’s Comment Is Free articles in the Guardian that concerned the mansion tax. This article, by Jonathan Portes immediately raised important points when it comes to an opinion on the tax, and these are points that I feel are important to raise:

Whatever one thinks of the so-called bedroom tax, there is no doubt it has led to considerable hardship for some poorer families […] as well as being an administrative burden for local authorities. It’s worth remembering that when evaluating the hysterical reaction in some quarters to the mansion tax, and in particular, the claims that it would be uniquely difficult to implement or desperately unfair to those who just want to continue living where they’ve always lived without having to pay an extra tax.

Yes, what about those who just want to continue living as they have always lived? How on earth is it fair to penalise poorer people for living in a council house with unused bedrooms (council houses that were allocated to them by the council) of which they have lived in for the majority of their lives, my grandparents as an example. It makes me angry that the rich can decry a mansion tax yet champion the mirroring tax on the poor. The seemingly fundamental hypocrisy that runs through the core of today’s domestic politics is infuriating, yet I am unsurprised to see hyperbolic mountains of comments from the public lining right wing articles that concern this issue: ‘Trouble is that with the escalating cost of benefits they have to try to find new ways to get money out of those that earn it, or have earned it, as there are not enough tax-payers around any more to pay for the feckless and the many many children that they think they are entitled to have on someone else’s dollar’. The notion that the expansion and continuation of the benefits system is the main point of a mansion tax highlights to me how little the media actually educates their readers, the tax being used to fund the UK’s biggest cost – the NHS.

I appreciate that the bedroom tax taxes the poor on homes which do not belong to them, but nevertheless, can we not tax the rich on the number of unused bedrooms in their homes? Mansions above a certain size, say of 10 bedrooms, mansions that were afforded off of the backs of the poor workers the rich utilised, mansions (if you take country manors as an isolated case) that were built on land taken from the poor that owned it, land that was given to the lucky few by those in power.

There is no one answer to the issue of unjust wealth distribution in the UK, but I feel that a mansion tax if properly imposed (on homes that are actually a mansion, or on £2 million+ properties on a case-by-case basis) would be beneficial to filling the widening social gap between rich and poor. It is true that the UK property market is by nature unfair and leaning in favour of the rich, especially on the climb up out of a recession, yet the government has a responsibility to its citizens, the 94% of which do not own a house worth over £500,000, let alone £2 million. Whatever happens, a tax on the rich that have amassed their wealth by using state funded projects, such as roads, public companies that are huge markets to privatised producers, and subsidised television (as examples), is necessary and fair, and I am completely supportive of the creation of a more level playing field for the rest of us trying to get by.