When did the left jump the shark?
Was it when they started talking about helicopter drops? Or perhaps the point where the LA labor unions asked to be exempted from the new minimum wage law? Maybe, but I vote for this gem from The Guardian, which (believe it or not) is actually considered one of the UK’s respectable newspapers:
Landlords are allowed to deduct a wide range of expenses, on top of mortgage interest costs, before they have to pay tax on their rental income. These allowable expenses include the cost of insurance, maintenance and repairs, utility bills, cleaning and gardening, and legal fees. Ordinary homeowners are not entitled to similar privileges.
Tim Worstall and Britmouse beat me to it.
People sometimes ask me why I consider The Economist to be the best newspaper. Here’s one reason—can you even imagine a paragraph that idiotic in The Economist?
PS. Full disclosure; I’m one of those “privileged” landlords.
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31. May 2015 at 17:05
I’d say it was considerably earlier than that…
31. May 2015 at 17:10
The icing on the cake is that the incidence of the tax likely falls mostly on renters, who are disproportionately low income compared to homeowners (not that I imagine the left has any love for the poor).
31. May 2015 at 17:16
Wow, practically every single paragraph in that article is a goldmine.
The anti-homelessness charity Shelter called for an urgent review of the tax treatment of landlords in response to the figures. Campbell Robb, Shelter’s chief executive, said: “In the context of looming welfare cuts and a dramatic shortage of homes, all those struggling to keep up with sky-high housing costs will be shocked to hear that a massive £14bn has been given in tax breaks for landlords in just a year.”
Yes, because taxing landlords more aggressively will of COURSE cause more apartments to come on the market.
Seb Klier, policy manager of Generation Rent, which campaigns for the rights of those privately renting, said: “When you get a taxpayer subsidy to borrow money, it’s no surprise that more people are choosing to invest in property instead of, say, buying shares in companies, which actually create jobs.
I didn’t know they disallowed interest deductions for all businesses in the UK! How strange…
“We need to stop subsidising property investment and use that money to build more homes instead.”
Britmouse said it best:
“We need to stop subsidising investment in property… so we can invest more in property? A cunning plan.”
31. May 2015 at 17:31
It’s hard to believe this wasn’t something from the Onion, or some kind of spoof. But it seems to be an actual article, unless I’ve been scammed.
You sort of wonder about the thought process of these people.
31. May 2015 at 17:36
Guardian already jumped the shark with this one: http://www.theguardian.com/commentisfree/2014/dec/08/who-is-jackie-rolling-stone-rape-story
31. May 2015 at 17:51
Steve, Good one, but that’s cheating. You’d have a hard time finding any story about race, sex or gender in the US/UK media that wasn’t idiotic. Ever read Salon?
31. May 2015 at 18:48
I’m pretty sure I’ve seen a tax proposal from this White House that treated depletion as a corporate tax give away for oil companies. They also treat the difference between us corporate tax rates and the actual taxes they pay on foreign profit as a corporate tax give away, since the us has the highest corporate tax rate in the world. By that logic, our high corporate tax is a tax give away, and the higher we raise it, the more of a tax break they get.
31. May 2015 at 18:52
After the Guardian is done blowing this whole landlord privilege scam right out of the water, they should move on to wildlife privilege. Did you know not a single animal has ever been prosecuted for homicide? And then they should set their sights on dihydrogen monoxide, which is barely regulated despite being the deadliest chemical in the world, especially in its molten state — and it’s used by virtually every corporation in the world. Coincidence?
My sense has always been about half of Britain is embarrassed by the Guardian.
31. May 2015 at 19:59
The Guardian has a very tiny readership (about 200k people), a very small percentage of people in the UK. It is kept alive by the proceeds from the Scott trust, founded in 1936 and also by the fact that most public sector jobs in the UK are advertised in it, for some reason. So there is no reason for it to present logical or sane analysis, better for them to pander to their readership. Best to ignore it.
31. May 2015 at 21:21
The left has a very odd understanding of business and economics.
They tend to think it’s zero sum.
31. May 2015 at 22:10
Back to being contra Scott Sumner–whew, that’s a relief!
What Sumner fails to mention is that the anti-landlord movement is in response to Piketty’s claim that capital is getting a larger share of national income (or will get a larger share going forward), and that land owners are the biggest beneficiary of this movement. Hence “Henry George” type proposals to tax landlords disproportionately. It actually makes sense.
Full disclosure: my family owns DC area real estate, about a half dozen properties. Ironically the well-to-do Sumner is against the wealth holders of this country with his hare-brained, inflationary “NGDPLT” scheme, like Keynes, Roosevelt and other members of the privileged classes who ended up sabotaging their own class.
31. May 2015 at 22:20
Ordinary homeowners should be allowed to deduct those expenses too.
31. May 2015 at 22:28
The Guardian is one of the worst for sure (a lot of it is driven by their “Comment is Free” section, for which writers are generally not paid).
But journalistic understanding of economics is so generally low as to prevent them doing their job at all. See this unchallenged comment in The Telegraph:
“Another group of Conservative MPs want the tax to be levied on sellers rather than buyers.”
(http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/10459281/Stamp-duty-how-it-has-risen-and-why-it-could-rise-much-further.html)
This could be the set up for a 1st term econ undergrad question on tax incidence.
31. May 2015 at 22:30
@Ray Lopez. You are talking about a wealth tax. The Guardian are suggesting a revenue tax. These are utterly different ideas.
And in fact, UK landlords do pay a tax on the value of the property, it’s called “Council Tax”.
1. June 2015 at 00:03
Well… Not quite sure on this one. In the past Scott Sumner has declared that housing is an investment not a consumption. And he has convincingly argued that position, based upon the extreme durability of housing and the fact that workers need housing to be workers.
So if workers are providing their own housing, is that not a business investment and should not expenses related to that business investment be deductible?
1. June 2015 at 00:14
TallDave, http://www.theguardian.com/us-news/2015/may/27/chimpanzee-animals-rights-new-york-court
Chris – the sad thing really is that this argument is being pushed by anti-poverty charities like Shelter who specifically campaign for “more housing”.
1. June 2015 at 01:16
Benjamin: That is the point, the owner-occupied housing already have all the “tax brakes” and “privileges” that landlords supposedly have (no tax from maintenance, repair, utility bills etc.). But on top of that they don’t pay tax for renting the place to themselves. It is homeowners who are privileged.
1. June 2015 at 03:44
How is unions wanting to negotiate wages and working conditons “jumping the shark”? Is it completely outside the realm of possibility that the membership might trade higher wages for some other non-wage condion? Better scheduling perhaps or even just not being laid off?
1. June 2015 at 04:28
Unfortunately, The Grauniad has influence beyond its tiny, and falling, readership. Britain’s chatterati rely on it for their arguments, so the nonsense it spreads gets repeated, amplified, and treated as fact. Thus, the nation’s state broadcaster (yes, really, still) takes its cues from Guardian, with predictable results.
1. June 2015 at 04:52
KenB, those are literally some of the arguments against minimum wage laws. The union wants to bar non-union workers from using wage bids as a bargaining tool, but they want to reserve that right for its own members.
1. June 2015 at 04:53
KenB, those are literally some of the arguments against minimum wage laws. The union wants to bar non-union workers from using wage bids as a bargaining tool, but they want to reserve that right for their own members. It begs the question of why something bad becomes good because of unionization.
1. June 2015 at 04:58
@Chuck:
“Ordinary homeowners should be allowed to deduct those expenses too.”
Sure, let’s do that the second that we tax ordinary homeowners for “imputed rent,” as Britmouse points out. Compared to landlords and tenant, homeowners are renting from themselves but not paying tax on it the way that the transaction between landlord and tenants is taxed.
Consider that in the USA deduction of rental losses is pretty strictly limited as well (and phases out completely with income.) Landlords can deduct all those things, but only against rental income that owner-occupiers aren’t even taxed on.
1. June 2015 at 05:00
Kevin, I wonder if the economists in the administration have any influence. Beyond TPP I don’t see any signs.
Ray, I also “failed to mention” that Janet Yellen is Chair of the Fed.
Chuck, Yes, from their tax on rental equivalent. 🙂
Ben, I was laughing at the notion that ordinary homeowners don’t get the same “privilege.”
Ken, “Trade-offs”? There aren’t any trade-offs in life. I know that because the Dems assure me that doubling the minimum wage won’t cost jobs. The unions should ask for both.
Blue Eyes. Yes, the BBC. Their radio show makes NPR seem conservative.
1. June 2015 at 05:30
I actually like the Guardian, it’s my UK daily of choice.
It has its loony bits, the comment is free section should be called “Comment is free of logic” and is arguably damaging to their brand. But it also has good reporting and is sometimes admirably willing to go against the biases of its readers in ways that other newspapers do not.
(It’s not in the same league as The Economist, of course.)
*
Speaking of the loony left, in San Francisco, certain neighborhoods are imposing a moratorium on new housing to make housing cheaper (https://medium.com/@Scott_Wiener/more-affordable-housing-not-a-housing-moratorium-is-what-we-need-in-san-francisco-15df3ce5b7cd & https://mobile.twitter.com/davidcampossf/status/595464017398792192). Because nothing makes for cheaper housing like stopping new construction.
1. June 2015 at 05:50
Before you talk about how great the Economist is, you should note it just published a front page piece calling for the elimination of the deduction for interest by corporations (as well as homeowner interest), complete with a history of the deduction. Completely absent from the discussion is the notion that the income tax is imposed on “net” income, any accounting definition of which would allow interest to be deductible. Also absent is how it would massively distort investment, favoring riskier investment like tech, will discouraging safer and slower growth investment like infrastructure.
1. June 2015 at 07:38
Michael, I agree that interest should not be deductible. I’d like to see the deduction ended, and the tax rates on capital lowered so that the change is revenue neutral. No reason to tax equity financed investments at a higher rate than debt financed investments.
1. June 2015 at 07:38
Jessica Valenti works for The Guardian. That’s all that needs to be said.
1. June 2015 at 09:08
John Thacker: in the UK mortgage interest did use to be tax deductible, but imputed rent was taxed. Both were abolished in the 1980s, presumably for simplification purposes.
1. June 2015 at 10:24
“Sure, let’s do that the second that we tax ordinary homeowners for “imputed rent,” as Britmouse points out.”
Nah. Just increase deductions not taxes.
1. June 2015 at 11:23
Luis, I had a post on that today.
http://idiosyncraticwhisk.blogspot.com/2015/06/housing-tax-policy-series-part-36-we.html
2. June 2015 at 08:35
Blue eyes, Why don’t we simplify corporate bond interest in the same way?
2. June 2015 at 12:41
Presumably homeowners in the UK cannot deduct mortgage interest because the income generated by the borrowed capital is not recognized for tax purposes.