Let me take a simple example. Over 10% of the UK’s national income is supposedly made up of rent that people like me, who own their own house, whether with a mortgage or not, pay ourselves for the right to live in our own properties month in, month out.
Let me assure you of something. I do not pay myself rent to live in my own house. Nor does anybody else I know in the entire UK economy pay rent to live in their own house.
What’s even more important is that recording a transaction between a person and themselves is about as meaningful in economic terms as shifting a £10 note from your left pocket to your right pocket. It is utterly economically inconsequential, and yet, according to our Office for National Statistics, 10% of our national income is made up of this completely made-up transaction between one person and themselves.
This is ludicrous, and that is the consequence of making up economic data that does not follow the rules of double entry.
GDP (or GNI, whatever) is not recording transactions. It is attempting at lesat to measure the value add in the economy. Or, equally, production equals consumption equals incomes. By definition. So, is someone living in a house – a capital asset – that they own consuming housing services? Sure they are. Therefore we need to have that in our GDP.
Think fora moment. Imagine rental did not exist. Everyone lived in owner occupied. Now flip the economy and all rent. No owner occupied at all. Using Spud’s measurement those two economies are of different sizes. Consumption of housing is wildly different. But the value add – everyone gets housed – is the same. So, in measuring value add we’ve got to have owner occupied housing. We simply do.
Does the same reasoning apply to cooking, cleaning and nookie?
Food prep and cooking adds value compared to raw ingredients imv (may be fresh fruit being the exception) – some people pay the restaurant or take-away and some people have it done for them by their spouse. If we’re going to include it in value add, then surely we should count imputed dinner and tea. And then the nookie.
That’s two post today going on about interest rates and housing. Is the mortgage due on Spuds mansion?
I think he fundamentally misunderstands what metrics are about. You have to have an agreed definition to allow comparisons and you have to simplify because the world is big. Nobody is claiming GPD is a perfect measure of everything are they?
Bongo
Don’t forget the “emotional labour” involved. Wages for housework now!
Nor does anybody else I know in the entire UK economy pay rent to live in their own house.
He doesn’t know me. That comes as quiter a massive relief.
Similarly, a Quaker Meeting of my aquiantance owns their Meeting House. When the Meeting uses the Meeting House for a Meeting they pay room hire to the Meeting House, exactly the same as any other group whishing to use the Meeting House. It’s quite a common arrangement, I understand the Methodists do similar. Maybe Lord Spud should ask his admin committee what they do.
His ignorance is legendary. Christ, Schedule A income tax was charged on imputed rent when I was a laddie.
Let me assure you of something. I do not pay myself rent to live in my own house. Nor does anybody else I know in the entire UK economy pay rent to live in their own house.
Try not paying council tax.
Talking of Christ, what would Jesus have said about paying Schedule A income tax on imputed rent? Renter unto Caesar …., eh?
What are the odds Spud is also in favour of land value taxes?
Jim – if it says “tax” on the tin, Spud is all for it!
@Jim – “What are the odds Spud is also in favour of land value taxes?”
Without wishing to tread in the hornets nest (he says, treading on said nest) – Our esteemed host is in favour of LVT, I think – as was Mr Wadsworth (RIP). MW made some very good points when explaining why its the least distorting and most efficient (from a collection/evasion perspective) form of taxation and is preferable to many of the shit taxes we have at the moment.
I guess Murph would want LVET as well as all the other bad taxes, which is maybe your point?
LVTs again, eh? As I understand it, the government collects taxes as money. Money is a token of exchange. Assets are not money; they turn onto money when you sell – exchange – them.
Let’s look at people who are asset-rich but cash-poor, like, I dunno, farmers, or pensioners. The farmer needs his asset – the land – to farm. The pensioner needs his paid-off house to live in. How are these people to turn part of these assets into cash to pay a LVT?
The farmer can sell, piecemeal, until his farm is so small it’s no longer viable. The pensioner? Re-mortgage, I suppose. In both of these cases the owner has to sell to pay the tax.
So can someone please explain to me why LVT is apparently a good idea? Also, how, eventually, the government doesn’t end up owning everything?
@Norman
“Let’s look at people who are asset-rich but cash-poor, like, I dunno, farmers, or pensioners. The farmer needs his asset – the land – to farm. The pensioner needs his paid-off house to live in. How are these people to turn part of these assets into cash to pay a LVT?”
MW did try to deal with all of this here https://kaalvtn.blogspot.com/p/index.html
I think the following sections cover your specific points
https://kaalvtn.blogspot.com/2013/01/a-poor-widow-bogey.html
https://kaalvtn.blogspot.com/2013/01/o-land-prices-are-real-wealth-or-capital.html
https://kaalvtn.blogspot.com/2013/01/r-farmers-will-all-go-bankrupt.html
He’s talking bollocks, because all he does is natter about sources of money, when assets are not money. He witters about how the money can be claimed. None of it is claimed from the land itself in real time. All of his taxes end up being income taxes, one way or another.
So tell me again. If LVT is an asset tax, and assets are not sold, how do you claim the money without taxing some associated (enforced) activity, which by definition then stops being an asset tax?
Jim said:
“What are the odds Spud is also in favour of land value taxes?”
I may be wronging him, but I think a land value tax is about the only tax that home-owner Murphy is not in favour of.
Murphy is, I think, in favour of taxing unrealised capital gains.
It’s tricky to see the difference between that and imputed rent, except that Murphy owns his own house and doesn’t seem to own shares.
@Norman
I’m not going to defend LVT as I’m really not qualified. I think MWs arguments were basically “if we need to tax then do it in the most efficient way” by reducing shit taxes like SDLT, IHT and VAT and other taxes on output and income to compensate for the LVT levy.
Some of his arguments seem reasonable to me. YMMV.
“I guess Murph would want LVET as well as all the other bad taxes, which is maybe your point?”
My point was that LVT is paying a rent to live in your own house, which Spud apparently doesn’t agree with today, because its Sunday. Tomorrow however……
” I think MWs arguments were basically “if we need to tax then do it in the most efficient way” by reducing shit taxes like SDLT, IHT and VAT and other taxes on output and income to compensate for the LVT levy.”
Except that no State is ever going to abolish any other taxes. They’d just put LVT on top of everything else. So anyone campaigning for LVT is just campaigning for ‘Moar tax’. You’re just doing Big State’s work for them. A useful idiot in other words.
The spammers are back.
@Bongo
Yep. GDP is a pretty poor estimate as the way it’s calculated needs to be fudged to get something useful.
The old joke was that if someone married their housekeeper it lowers GDP.
What he needs to do is think about this in a non linear way rather than insisting on rules!
Fantastic website. A lot of useful information here. I’m sending it to some friends ans also sharing in delicious.
And certainly, thanks to your sweat!
Thank you, I’ve just been looking for info approximately this subject
for a while and yours is the best I’ve came upon till now.
But, what about the bottom line? Are you sure about the source?
This is very attention-grabbing, You’re an overly skilled blogger.
I’ve joined your rss feed and look forward
to searching for extra of your great post. Additionally,
I have shared your website in my social networks
I blog frequently and I truly appreciate your content. The article has truly peakled my interest.
I will bookmark your blog and keep checking for new
information about once a week. I subscribed to your Feed too.
As someone who lives for the thrill—both in the surf
and at the slots—I’ve got to say that Australia’s online casino scene is pure gold.
Living in Gold Coast, where the sun never stops shining and the waves are always calling, I’ve come to appreciate the mix
of chill vibes and high stakes that comes with a
solid online casino session after a long surf day.
What I love about these sites is the convenience—you finish up
a sunset surf, crack open a cold one, and boom, you’re spinning reels or hitting blackjack in seconds.
As a guy who’s never been afraid of risk—hell, I’ve surfed cyclones and jumped
off cliffs—online gambling is just another way I live life on the edge.
You get everything from classic pokies to live dealer action, and the
experience is as intense as dropping into a ten-footer at Snapper Rocks.
For anyone who thrives on risk, surf, and sunshine, these sites are a no-brainer.
Want to experience the rush I’m talking about? Hit up this site and see for yourself.
Unquestionably believe that which you said.
Your favorite justification appeared to be on the internet the easiest factor to be mindful of.
I say to you, I definitely get irked even as other people consider
issues that they just don’t recognize about. You managed to hit the nail upon the highest as neatly as defined out the whole
thing without having side effect , other folks could take a signal.
Will likely be again to get more. Thank you
Comments are closed.