It's a straightforward way to tax people who have homes that are worth a lot of money. Not entirely the same as being rich.
What if you live in one of the leafier parts of the east end, where only 30 years ago you could buy a house on a blue-collar wage. Now your house is worth more than £1m. But you're retired and on a basic state pension. You don't want to move to a cheaper area because your friends and family live close to you and are able to support you.
High property taxes based on the value of your assets would force you to move away or re-mortgage. Not ideal when it comes to maintaining a sense of community or caring for the elderly.
I assume by 'proper' property taxes you mean 'the way the US does things'. I'm not sure that it would work in the UK with our different economics, system of government and geography.
So in the article they discussed a special tax break for non-residents which was resulting in much lower tax revenue from these properties.
As it happens, living in the Bay Area I'm very aware of living in a house that, I could neither afford to 'buy' again, nor pay the taxes on should my prop 13 bill revert to 'current value'. But the way the tax base evolves in California is when property turns over or is sold. So when buy a house the taxing level is reset to the current value.
My suggestion is that by normalizing the tax burden to new owners without special "non-resident" perks, you would force the cost of ownership to be the same for everyone, and that would both discourage some rich folk from moving (lowering demand a bit and helping) and increase the tax base even though the number of residents was not increasing (which increases per capita services budget).
Now the last time I looked at buying a flat in Chelsea part of the thing that confused the heck out of me was the whole 99 year lease thing. I decided that real estate in London was going to need a lot more research than I had time for. A pity though because in 2002 when I was looking at it, I could have made a nice return.
I think that the tax break the article is talking about is the fact that in the UK, if your 'main residence' is elsewhere, you only pay income tax on your UK earnings. That's different to the US where (I believe) citizens are expected to pay tax even if they are non-resident. I'm not sure why it's mentioned to be honest as income taxes are not related to just buying a house in the UK - which anyone can do whether they are a citizen, resident, or whatever.
Council tax in the UK is payable by the building owner or tenant, and is much lower than, for example, the US property tax. Council tax is supposed to just pay for municipal services. IIRC, they even break it down into bits on your bill 'Police - £xx, Fire Brigade - £xx' etc etc
I suppose my points were firstly that it is unreasonable to compare UK council tax and US property tax, and secondly that a tax directly related to a home's value can impact people disproportionately due to the crazy rise in UK house prices over the last few decades.
All that said, the idea of a property tax level resetting when a building is sold is very interesting - I didn't realise that was the case in California and it certainly makes sense. However, there is still the issue of our system of government being different - local governments can't create new taxes (and it would need to be a local tax since the problem is restricted to one geographic area), and the economics are different - people just aren't set up to pay high property taxes. Not insurmountable problems, I accept.
And yeah, 99 year leases are weird, but not uncommon. It gets weirder. For example it's not that unusual in the UK for properties to be totally surrounded by land owned by others. Also, land ownership in the UK (London especially) often has crazy disputes just due to the age of the records.
>What if you live in one of the leafier parts of the east end, where only 30 years ago you could buy a house on a blue-collar wage. Now your house is worth more than £1m. But you're retired and on a basic state pension. You don't want to move to a cheaper area because your friends and family live close to you and are able to support you.
Then you are making very inefficient use of an extremely scarce resource. Economically speaking, you should get out of the way and let someone more productive have that property.
Morally that might be wrong, but I think you should be able to argue for why we should adopt policies that sound morally right but have nasty economic consequences.
>I assume by 'proper' property taxes you mean 'the way the US does things'. I'm not sure that it would work in the UK with our different economics, system of government and geography.
What if you live in one of the leafier parts of the east end, where only 30 years ago you could buy a house on a blue-collar wage. Now your house is worth more than £1m. But you're retired and on a basic state pension. You don't want to move to a cheaper area because your friends and family live close to you and are able to support you.
High property taxes based on the value of your assets would force you to move away or re-mortgage. Not ideal when it comes to maintaining a sense of community or caring for the elderly.
I assume by 'proper' property taxes you mean 'the way the US does things'. I'm not sure that it would work in the UK with our different economics, system of government and geography.