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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“Brexit is based on racism”: Who is protesting outside the Supreme Court and what are they fighting for?

Movement for Justice is challenging the racist potential of Brexit, as the government appeals the High Court's Article 50 decision.

Protestors from the campaign group Movement for Justice are demonstrating outside the Supreme Court for the second day running. They are against the government triggering Article 50 without asking MPs, and are protesting against the Brexit vote in general. They plan to remain outside the Supreme Court for the duration of the case, as the government appeals the recent High Court ruling in favour of Parliament.

Their banners call to "STOP the scapgoating of immigrants", to "Build the movement against austerity & FOR equality", and to "Stop Brexit Fight Racism".

The group led Saturday’s march at Yarl’s Wood Immigration Detention Centre, where a crowd of over 2,000 people stood against the government’s immigration policy, and the management of the centre, which has long been under fire for claims of abuse against detainees.  

Movement for Justice, and its 50 campaigners, were in the company yesterday of people from all walks of pro and anti-Brexit life, including the hangers-on from former Ukip leader Nigel Farage’s postponed march on the Supreme Court.

Antonia Bright, one of the campaign’s lead figures, says: “It is in the interests of our fight for freedom of movement that the Supreme Court blocks May’s attempt to rush through an anti-immigrant deal.”

This sentiment is echoed by campaigners on both sides of the referendum, many of whom believe that Parliament should be involved.

Alongside refuting the royal prerogative, the group criticises the Brexit vote in general. Bright says:

“The bottom line is that Brexit represents an anti-immigrant movement. It is based on racism, so regardless of how people intended their vote, it will still be a decision that is an attack on immigration.”

A crucial concern for the group is that the terms of the agreement will set a precedent for anti-immigrant policies that will heighten aggression against ethnic communities.

This concern isn’t entirely unfounded. The National Police Chief’s Council recorded a 58 per cent spike in hate crimes in the week following the referendum. Over the course of the month, this averaged as a 41 per cent increase, compared with the same time the following year.

The subtext of Bright's statement is not only a dissatisfaction with the result of the EU referendum, but the process of the vote itself. It voices a concern heard many times since the vote that a referendum is far too simple a process for a desicion of such momentous consequences. She also draws on the gaping hole between people's voting intentions and the policy that is implemented.

This is particularly troubling when the competitive nature of multilateral bargaining allows the government to keep its cards close to its chest on critical issues such as freedom of movement and trade agreements. Bright insists that this, “is not a democratic process at all”.

“We want to positively say that there does need to be scrutiny and transparency, and an opening up of this question, not just a rushing through on the royal prerogative,” she adds. “There needs to be transparency in everything that is being negotiated and discussed in the public realm.”

For campaigners, the use of royal prerogative is a sinister symbol of the government deciding whatever it likes, without consulting Parliament or voters, during the future Brexit negotiations. A ruling in the Supreme Court in favour of a parliamentary vote would present a small but important reassurance against these fears.