Is tax Britain’s problem? No – it’s housing

In obsessing over the mansion tax we risk ignoring the real issue.

Amid talk of mansion and jewelry taxes, it’s interesting to reflect on The New York Times’ recent piece "The Myth of the Rich Who Flee From Taxes".

Rather than moving to avoid tax, the paper reports that:

A large majority of people move for far more compelling reasons, like jobs, the cost of housing, family ties or a warmer climate. At least three recent academic studies have demonstrated that the number of people who move for tax reasons is negligible, even among the wealthy.

One of those studies, "Tax Flight Is a Myth", is particularly notable. It finds that, although there are huge discrepancies between tax rates in different US states, under a third of US citizens change their state of residence over their lifetime.

Some people certainly do move for financial reasons – only not the ones that we might assume. New Jersey introduced an annual additional tax on those with incomes over $500,000 in 2004; by the end of 2007, no more than 70 tax filers had left the state and New Jersey was a net $3.75bn better off than under the old tax system.

It is property prices that are much more important. Consider the case of Florida: with no state income tax, you might expect the state to be flooded with those wishing to escape taxes. Except, in the late 2000s, Florida’s population actually declined. Lack of state income taxation might have been appealing, but it couldn’t make up for Florida’s rapidly rising housing prices.

What can the UK learn from these studies? Retaining the 50p tax rate probably wouldn’t have led to the wealth exodus that George Osborne feared. And for something labelled “socialist” the proposed mansion tax is striking in its caution: someone with a house worth £3m would pay only £10,000 extra a year. It wouldn’t raise the redistributive sums the left hopes, and nor would it punish successful businessmen as the right fears.

In obsessing over the mansion tax we risk ignoring the real issue. As in the case of Florida, Britain’s economy is undermined by the exorbitant cost of housing. According to Halifax, the average age of first-time house buyers is now 30, and it is 32 in London (pdf). Rather than debate the morals of taxing houses, we need to focus on how to make housing more affordable.

Taxing homes like this wouldn't have the impact either the left or right predict Photograph: Getty Images

Tim Wigmore is a contributing writer to the New Statesman and the author of Second XI: Cricket In Its Outposts.

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Q&A: What happened at Barnet's polling stations this morning?

Eager democrats who arrived early in the morning to vote in the London elections were turned away. 

What’s going on?

When polls first opened at Barnet’s 155 polling stations at 7 this morning, many registered voters found that they were not on the station’s voting lists, meaning they were unable to cast their vote. Many reports suggested that the overwhelming majority were turned away. Rules were later relaxed in some, but not all, polling stations to allow those who arrived with their polling cards (which explicitly state they are not needed to cast a vote) to vote.

Why is this happening?

It is, needless to say, unclear. But some reports have suggested that polling station staff only had the updates to the electoral register (that is, those who have newly-registered) rather than the entire register itself. Which makes you wonder why nobody realised before 7am that there might be rather more people wanting to vote in Barnet than the lists suggested.

Is this a conspiracy?

No, of course it’s not. And if you think it is, take the tinfoil hat off and stop watching Russia Today. Barnet is a Tory-led council. If this mess harms any party it is likely to be the Conservatives. We don’t know how Barnet voted for mayor in 2012, but we do know the votes of Barnet plus predominantly Labour-supporting Camden: Boris Johnson got 82,839 first preference votes while Ken Livingstone received 58,354. But remember London’s not just electing a mayor today. It is also electing the members of the Greater London Assembly – and one of them represents the constituency of Barnet and Camden. The incumbent, Andrew Dismore, is from the Labour Party, and is running for reelection. He won fairly comfortably in 2012, far outperforming Ken Livingstone. But Tory campaigners have been talking up the possibility of defeating Dismore, especially in recent days after Labour’s anti-semitism ructions (Barnet has London’s largest Jewish population). Again, if there are voters who failed to vote this morning and cannot to do so later, then that will hurt the Conservatives and help Dismore.

Is it the fault of nasty outsourcers?

Seemingly not. As we’ve written before, Barnet Council is famous for outsourcing vast proportions of its services to private contractors – births and deaths in the borough are now registered elsewhere, for example. But though postal votes and other areas of electoral administration have been outsourced by Barnet, voter registration is performed in-house. This one’s on the council and nobody else.

What has Barnet done about it?

The council initially issued a statement saying that it was “aware of problems with our voter registration lists” and admitting that “a number of people who had not brought their polling card with them were unable to vote”. Which was a bit peculiar given the polling cards say that you don’t need to bring them to vote and there were plenty of reports of people who had polling cards also being denied their democratic rights.

As of 10.40am, the council said that: “All the updated electoral registers are now in place and people can vote as normal.” There appear to be no plans to extend voting hours – and it is not possible to reopen polling tomorrow morning for the frustrated early birds to return.

What does this mean for the result?

It’s very hard to form even a vaguely accurate picture of how many voters who would otherwise have voted will not vote because of this error. But if the margin of victory in the mayoral election or the relevant GLA contest is especially slim, expect calls for a re-run. Frustrated voters could in theory achieve that via the arcane procedure of an election petition, which would then be heard by a special election court, as when Lutfur Rahman’s election as Mayor of Tower Hamlets was declared void in April 2015.

Some have suggested that this may delay the eventual result, but remember that counting for the London elections was not due to begin until Friday morning anyway.

Is there a dodgier barnet than this Barnet?

Yes.

 

Henry Zeffman writes about politics and is the winner of the Anthony Howard Award 2015.