Senator Jim DeMint likes to claim that Barack Obama is to the “left of Europe.” In this Daily Caller opinion piece I argue the Senator should actually acquaint himself with what is going on in Europe — and, as an example, in the UK — if he cares to be tethered to reality. While Obama wants to prolong the Bush tax cuts for all but two percent of Americans, the Conservative-Liberal Democrat Coalition in Britain is hiking taxes, fees and levies at every turn. Obama wants to cut small business taxes. In the UK small businesses are under a greater tax burden. You get the point.
But I wish Obama opponents would agree on the most appropriate epithet to hurl at the President. One moment he’s a Muslim, a Socialist, a National Socialist, a Marxist, a European-style Social Democrat, a Liberal, etc. Oh, yes, he is apparently steeped also in anti-colonial thinking! As my novelist friend Jim McKean points out, when was that a bad thing in America — I thought that was the whole point of the American Revolution.
Apparently Britain’s new Conservative (?) Prime Minister thinks owning second homes is “not necessarily a splendid investment for the whole economy” and therefore it is okay to raise Capital Gains Tax on the sale of them from the current 18 percent to possibly as much as 50 percent. This is all part of his so-called “fairness agenda” – CGT tax increases will allow the coalition government to take more people at the bottom out of tax altogether – that is to say, he will assist those who didn’t vote for him and kick in the teeth the people he did.
Aside from the electoral risk down the road of doing that – and let us leave out for the sake of this posting the fact that the Tories did not campaign on increasing CGT on second homes or shares – it is hard to fathom the “fairness” here.
About 250,000 British families own a second home and that there are one million buy-to-let properties. Many who bought a second home are not wealthy but decided after the Brown government raided private pensions that the best way to help weather their retirements with a little bit of dignity was to invest in property. After all no one can live on the old age pensions the UK supplies – that is if they want to avoid penury. So Cameron is punishing the people who are trying to ensure that they are not an increasing charge on the State.
No one doubts that Britain’s financial state is parlous but the emphasis must be on spending cuts and not tax increases — that is both a matter of fairness and good economic sense: Britain’s only hope is to grow out of the crisis.
At 50 per cent there will be a devastating effect on people who have bought buy-to-let properties as part of their pension investments.
Also as David Salusbury, the chairman of the National Landlords Association, has pointed out the CGT increase will “act as a barrier to further investment in residential property just at a time when there is an urgent need for more housing”.