Downsizing in situ (©)

Earlier this week I was delighted to hear this phrase used for exactly what I meant when I came up with it in a post on my local Forum, June 30 2013.  It was in a response on a thread which had become predictable bad tempered, (and now in a part of the Forum which requires registration) since it had started with my expression of sympathy for Lewisham Mayor Steve Bullock with his plans to redevelop a large prefab estate.

Here’s my subsequent post

Tim, if you feel so strongly that people should give up their homes, why don’t you start the ball rolling yourself? Maybe if you gave your home away, or sold it and moved to a small flat, a couple of young families could move in. What you’re advocating is social engineering and it should be voluntary. Please don’t confuse it with socialism. It’s the socialism of Stalin and his ilk.

What I might one day want to do is to ‘downsize in situ’ (©). It’s what a near neighbour did when his elderly mother died a few years ago. Having previously divided the former family house into two flats, and had her live downstairs, now he has tenants on the ground floor. I think this is a very sensible way to proceed, and means that family and neighbourhood links are maintained. However, such conversions are inevitably opposed by the usual suspects.

Possible solutions
• Housing suitable for family occupation should be retained not subdivided into units not suitable for families.

I think the social engineers round here are those who insist on houses being retained for families, as they imagine them, while the use of ‘voluntary’ by those who want to control what people do with their own homes suggests that the word means them having their way, not anyone else.

© Original coinage, as far as I’m aware. Happy for anyone else to use it …

Since housing is, economically, a luxury good, why not tax it more?

An exchange in comments on a recent blog by Jolyon Maugham about the difficulties of structuring a sin tax

SOME TENTATIVE THOUGHTS ON A SUGAR TAX

reminded me of a posting I made in June 2014 on my local forum, but which is now only visible to registered users.  Jolyon’s blog showed the normal regressive pattern for indirect taxes of the two UK taxes most usually considered as being on sin

taking his numbers from an ONS spreadsheet.

As someone who can be quite moralistic about burning fossil fuels, and imagining that richer people might spend more on them in proportion to their income, I wondered whether the pattern would be different.  In fact it isn’t –  ‘Duty on hydrocarbon oils & Vehicle Excise Duty’ behaves by income quintile much like alcohol duties, but raising about twice as much.

So let’s drop the moralising, and ask what are luxury goods in the sense that

demand increases more than proportionally as income rises, and is a contrast to a “necessity good”, for which demand increases proportionally less than income

Source Wikipedia

That ONS spreadsheet has a detailed breakdown of income by quintiles, but nothing about expenditure, other than forms of expenditure with special taxes, such as alcohol.  It would be interesting to see such a cross-sectional study, but my local Forum posting I referred to commented on a longitudinal study for the US

written up in The Atlantic

How America Spends Money: 100 Years in the Life of the Family Budget

At the time I wrote

… this chart shows food as a necessity, and entertainment as a luxury – which is what you’d expect. Spending on healthcare as a proportion of income has increased a bit with the explosion of prosperity of the last 100 years, so counts as a luxury on this definition too – but that will be mainly just expenditure in the last few years of life, Overwhelmingly, however, it’s housing which has become the major apparently luxury expenditure item. Partly this will be because much spending on housing really is luxury, as economists understand it – if most of us have a bit more money, we probably will spend it on making our houses nicer. Even so, it feels too much to me, and I suspect reflects the unnecessary expense of housing as people have moved to cities where excessive constraints have been put on the expansion of the housing supply, so pushing up prices.

but in the context of tax policy, if there have to be indirect taxes, only those on property taxes can be significant and progressive.