There are problems with wealth taxes but avoidance, for once, isn't one of them

Taxing illiquid assets is, well, taxing.

Fraser Nelson, editor of the Spectator, has a column in today's Telegraph arguing that George Osborne needs to learn the lesson that "wealth taxes simply don't work". He writes:

The problems involved were fairly basic. Do you tax people’s worldwide wealth? If so, those much-needed businessmen will stay away. Do you tax only British wealth? Then people will move their investments abroad. The Treasury warned Healey that the proposed wealth tax was “political dynamite” – and not in a good way. At a time when Britain was in a desperate economic state, it risked dragging the country down further still. Healey gave up, saying he could not find any wealth tax that would be worth the political hassle.

This is disappointing, because Nelson is largely duelling with straw men here. It is indeed true that a tax on overall wealth could well lead to tax avoidance by the relatively simple tax planning strategy known as "keeping your cash in a Swiss bank account". The thing is, that isn't actually that much of a problem. After all, people avoid income tax as well, yet somehow we struggle on.

The measure for a tax is never "will everyone pay it rather than put their energy into avoiding it?", but "will enough people pay it to make it worth our while?" That's a different calculus, and one which Nelson doesn't address.

But the real disappointment is that, for all Nelson talks about the rising support for a wealth tax, he neglects to mention that most of that support is for taxing a very specific type of wealth: property. It's a shame, because that sort of tax – a "mansion tax", a "land value tax", or whatever form it takes – has its own set of problems which are under-discussed.

The important thing to note about property taxes do is that they completely fix the problems Nelson is concerned about when it comes to wealth taxes in general. You can keep money overseas, but a house in Britain is rather stuck where it is. To the extent that such a tax it increases the cost of living in Britain, it may keep wealthy foreigners away – but only those who haven't already been put off by the extraordinary cost of the sort of houses wealthy foreigners buy.

The thing is, land and property taxes aren't the golden bullet that many on the left like to think, for the key reason that houses aren't particularly liquid assets.

We've all heard the sob-story of the elderly pensioner who could be forced to sell the house he's lived in all his life to pay the land value tax (although we rarely hear it alongside its counterpart, the elderly pensioners who are being forced to moved out of houses they've lived in all their lives because of benefit cuts), but the key concern with such a tax is related to that problem.

If you are taxed, say, 20 per cent of your cash holdings, you pay that tax by handing 20 per cent of your cash to HMRC. If you are taxed on 20 per cent of the value of your land, you can't just hand a wing of your house over to the taxman. You either have to have the cash equivalent available, or sell your house.

Taken individually, that's not the end of the world – few will cry too hard if the odd landowner has to sell a few acres to pay the bill. The problem comes if the tax is set high enough that that sort of sale becomes commonplace.

If too many people end up trying to sell their mansions or land at the same time, then you're stuck with a sadly inevitable collapse in the price that land can go for. That's not just unfair – it means you would be taxing people on assets which are no longer worth what they were when you assessed them – it's also staggeringly inefficient. A well-designed tax should not encourage a fire-sale of assets.

These problems aren't insurmountable, by any means. But they do give pause for thought when considering the truely radical proposals like Peter Tatchell's plan to set the wealth tax rate at 20 per cent. Although back-of-the-envelope calculations suggest such a tax would generate truly staggering revenue, a more modest rate would be a better idea – at least at the start.

This mansion, in Kensington, London, was once the most expensive in the world. What'd the tax be? Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Young people want big ideas – that's why I refuse to dumb down Radio 4

My week, from finding a way through the fog to getting the quarterly audience figures.

I walk to work through Regent’s Park, when possible accompanied by my dogs, which my husband then collects on his bike ride and takes home. If there is time we have coffee together in the small hut just before the inner circle. This is a good way to listen to the Today programme, I find, as I can keep one ear in, achieve a rational, critical detachment and still enjoy the birds, and then add the other ear if a strong interview demands immersion, or take both out altogether when despair creeps up. On the subject of Today, I hope to have some fun with Sarah Sands, whom we have just appointed as the programme’s new editor; it’s good to see an experienced woman brought in at a senior level to the BBC.

 

A winter’s tale

The park through the seasons has become something of an addiction, measured out by inspired planting of appropriate annuals, the names of which I note and discuss with the gardeners when I dare interrupt them.

Memorable events occur quite frequently during this walk: I once stumbled upon a proposal of marriage involving a beautiful young woman who once had worked for me; an elderly Chinese gentleman practises t’ai chi regularly at a certain spot and I imagine talking to him about the changes he has seen in his lifetime back home. I have seen a rare green woodpecker on the grass pecking boldly in plain sight, and hopeless ducks, silent, puffed up, marooned in the fountains, unable to find their way back to the ponds, so close by.

At the start of winter, while walking home one day, I got stuck in the park, with a group of other stragglers, as the gates locked with the onset of darkness. Rather than retreating the way I had come, I accepted the offer (from a rather good-looking stranger) of a lift down from the top of the gate. The atmosphere then was alive, exhilarating, with crowds heading for the Frieze Masters marquee. How different it all is now, in 2017. There’s a new mood, a new American president, a new era.

 

Musical interlude

Recently, Roger Vignoles – the glorious pianist and a close friend – was playing, as he often does, in a lunchtime concert recorded for Radio 3 around the corner from Broadcasting House at the Wigmore Hall, with the baritone Roddy Williams. French songs: Fauré, Poulenc, Honegger, with a handful from Caplet (the latter quite new to me). All thoughts of politics fled, giving way to “L’adieu en barque”, set late one summer’s day on the river, a moment to clear the fog, both within and enveloping us that day in London.

I left an hour later in clear sunshine, feeling smug because we have commissioned Roddy’s Choral ­History of Britain for Radio 4 later this year.

 

Power trip

Waiting for coffee to brew, I was discussing Book of the Week with Gill Carter, commissioning assistant on this slot, when my drama commissioner, Jeremy Howe, put his head round the door. “Clarke Peters (yes, the one from The Wire) is here reading The Underground Railroad for Book at Bedtime.” Assured, deep tones rang out from a tiny studio on the third floor. “I have to keep stopping,” he said, as I thanked him.

Who could not be overcome by this story of slavery and bravery at this moment in American history? I am so glad to bring it to listeners this month. “Can you help?” the producer pleaded as we left. “We’re about to be thrown out of the studio.” That’s real power, I thought, as ten minutes later Jeremy had conjured up the extra time.

Clarke Peters will be back in the autumn with a series about the real history of black music in the UK which, he says, is little understood.

 

Culture and anarchy

This is the time of year when we launch the commissioning round calling for big ideas for next year. It’s a humbling thing to stand in our beloved art-deco Radio Theatre in front of hundreds of programme-makers, hoping that they will be inspired to bring “the best which has been thought and said in the world” (my guiding principle from Matthew Arnold).

I try on these occasions to lay out a little of how I see the shape of the world in the commissioning period ahead. This year the Loneliness of the Long-Distance Runner overcame me. Better perhaps simply to outline the way we commissioned the first week of 2017 to catch the mood. T S Eliot, more or less all New Year’s Day, read by the formidable Jeremy Irons, raised an echo of the Thirties, then a factual series of considerable documentaries across the week described The New World, followed by writers around the globe Imagining the New Truth.

Finally, inspired by Twelfth Night and the spirit of misrule, the comedy writer John Finnemore, one of our favourites, took over as the Lord of Misrule himself.

The imaginative world and writers have never been more needed. Whether it is truth or post-truth, I suspect that dramatic, imagined and creative truth when properly achieved is probably the nearest we can ever get to truth itself.

 

Tuning in

It’s the week of Rajar. These are quarterly audience figures for radio. In the past few months, they tell us, over 11 million people have listened each week to BBC Radio 4, setting new records. Just under half are below our average age of 56 and 1.5 million are under 35. At the moment we seem to have over two million weekly visitors to the website and roughly 20 million monthly global downloads.

Who says young people don’t want intelligent content? Who says that dumbing down is the only way to attract big audiences? We at Radio 4 try to be all about smartening up. We mark Rajar Day (whether the numbers are up or down) with cake, so I make my way to Paul for two tarts, pear and blueberry this time.

Gwyneth Williams is the controller of BBC Radio 4

This article first appeared in the 16 February 2017 issue of the New Statesman, The New Times