Some of the opposition to Labour's proposed mansion tax seems to me to be confusing bugs with features.
For example, in the Times (£) Janice Turner claims the tax will hit "shabby family houses" which have soared in price because of the property explosion. But this is precisely the virtue of land taxes. London's house prices have soared for several reasons, but none of them because of the efforts of their owners. It's fair to tax people if they reap a benefit with no effort. And as for £2m being "shabby", Hugo Rifkind's tweet was right:
Anybody who says "perfectly normal houses in London now cost £2m" is welcome to buy my perfectly normal house in London anytime they like.
Similarly, Allister Heath says the tax would force people on low incomes to sell up. But this too is a feature, not a bug. Forcing such people out of their homes would free up the houses for those who need them more - families or people who need to be close to where they work.It thus ensures a more efficient use of the housing stock.
Jay Elwes objects that it would be difficult to value houses. I'm not sure. We know the price at which houses changed hands, and it should be straightforward to apply an inflation rate to those prices. I suspect this is just an example of the status quo bias - an objection to policies simply because they don't exist. Imagine if we had serious land taxes and someone proposed a tax on profits instead:
Are you mad? Do you know how difficult it is to measure profits accurately, and how easy they are to fiddle or to shift overseas? Only a fool would want to tax profits rather than land.
However, I don't want to wholly condemn the tax's opponents. When he says that the tax is "an arbitrary confiscation of wealth", Mr Heath has a point in two different senses.
First, taxes on assets should be capitalized into prices; if people expect to pay a tax on an asset, they'll pay less for it. This provides a double blow to current owners of £2m properties; they'll both have to pay tax and they'll suffer a capital loss. But it means that the future rich who'll want to buy a mansion won't suffer at all. Sure, they'll have to pay a tax on their mansion. But they'll have bought the mansion cheaper than they otherwise would because of the tax. It's a wash. In this sense, the mansion tax penalizes today's owners of expensive homes whilst leaving tomorrow's owners unscathed.
Secondly, there'll be some beneficiaries of this tax. People who own homes slightly less than £2m could see a capital gain, as buyers of £2m+ house switch to slightly cheaper properties. (Here's what sub-£2m buys near me.) I reckon that people who own houses woth around £1.8m are quite well off. On both counts, then, I sympathize with Mr Heath; this does seem arbitrary.
The solution to the second problem is straightforward (in theory!). As Ben Southwood says, council tax could be rejigged to become more progressive.
The first problem, however, remains. One solution would be to raise income tax on the rich. But that would raise far more opposition than there is to a mansion tax.