How times changeth

With the 31 January self assessment deadline looming, a campaign group has highlighted statistics showing the ongoing unfair tax advantage available to self-employed business owners.

Figures from the Institute for Fiscal Studies (IFS) show that an employee earning £40,000 a year will pay £12,262 in tax. This is £4,556 more than a self-employed person who earns the same but has opted to incorporate as a self-employed company manager/owner. The overall rate of tax paid by self-employed manager/owners can be as low as 19%, far less than the 32% rate likely to be paid by an employee earning the same salary.

Ritchie’s gone from promoting such ideas in The Observer to condemning them now.

He used the system for far longer than he publicly approved of it, of course. In fact, he used until after he’d been paid to condemn it. Funny that.

The assurance of the ignorance is really quite remarkable

But Murphy said it would be hard for the UK to replicate the Singapore model. “More than 80% of people live in government-owned housing so it does not need to tax people, it just charges rent. And many of its largest companies are also state-owned so, again, local taxes on profits do not matter as much as they do in the UK, because the government gets a large chuck of local profits anyway. It can offer low taxes and not have its revenues threatened. This is fundamentally different to the UK, where the government is dependent on tax.”

Amazingly, rent on public housing does not appear as a source of revenue in this estimation of Singapore’s income. The expenditure side of the budget shows significant appropriations to build the flats too. Oh, and Singapore doesn’t charge for the value of the underlying land in its state housing prices.

How much can you charge – or perhaps how much profit can be made – from rental housing if you’re not charging that land value? Not a lot I think is the answer, no? So public housing in Singapore is contributing how much to the general budget? If it’s not in fact a drain on it?


So this is the plan:

For the sake of full disclosure I should note that I have formed a new company limited by guarantee called Corporate Accountability Network Limited. It was going to be called Accounting Standards Network Limited but the word standards is regulated and so a different name was chosen.

The company is not trading as yet.

It will be partaking in research grant applications and so might do so in future.


Teddies, Prams

I have resigned from those organisations I have been linked with that promote modern monetary theory.

I have done so without regret.

I remain convinced by the core argument of MMT as I see it, as explained here.

I have no time for being told this leads to one inevitable course of action that is the only available option if one wants to be theoretically compliant with the prescriptions of MMT.

I will say in future in response to that claim what I often think when faced with academic nonsense, which is that I live my life in practice and not in theory.

How long before there are no organisations left that he has even a modicum of agreement with?

Might be true

Britain’s wealthiest business people are fleeing abroad amid mounting complications over tax, the country’s richest man has warned.

Amid a growing political crisis over the UK’s future relationship with the EU, Gopichand Hinduja, whose family controls a £20.6bn industrial fortune, told The Sunday Telegraph many of the country’s wealthiest people have ­already quietly left Britain for Dubai, Singapore and other financial centres.

But what are those tax campaigners going to say about it?

Good riddance? We didn’t want their money anyway? Huzzah London house prices will fall?

Or just do a Spud and insist people don’t move for tax reasons?


With Hinckley Point also in doubt, the UK’s future energy policy is in tatters: the nuclear option is dead because it is technically and financially not feasible.

If ever there was a moment for us to be focussing on what is important in politics to announce a Green New Deal to solve this problem this would be it.

Now show that the Green New Deal is cheaper than nuclear.

A difficult task given that the GND will be funded by the issuance of new money – and how much would nuclear cost us if we did that?

Umm, well….

This is simply wrong. It is not true that we are outright losers from exports, and it is unambiguously not true that we are the only winners from imports, at entire cost of those who export to us.

At which point he bumbles off to talk about money being used in settlement.

But imports are the point of trade, they’re the work of others that we get to consume. Exports are a cost to us, they’re our work that others gain by consuming. Tracking pieces of government issued paper doesn’t change that.


The difficulty with Brexit is twofold. This is not a micro issue. It is a macro one. And if there was a chance to move on that still might not matter, but what that chance is, and who might supply it in a world that is finite and the possibilities are decidedly limited, and when none are readily apparent or on offer, is hard to tell. I could leave jobs and a marriage without knowing what was next, confident options were available. Brexit has no such expectation attached to it. Instead it feels like, as Cardiff City football manager Neil Warnock said at the weekend, a chance to say ‘to hell with the rest of the world’ without once considering the consequences. Or the responsibilities we have.

So my sense of resignation is inappropriate and I want to chastise myself for it and yet I still cannot. After all, I must have some responsibility for this.

Was I, and others like me, irresponsible for turning my back on party politics as a much younger man in pursuit of career and single issue campaigning?

Was I also, again as a conscious act, irresponsible to stand by and see neoliberalism tear our society to pieces and tut tut but not actually do more to prevent it at the time?

And could it be that the fact that we have such dire politicians, when the generation of which I am a part is overall able, through our collective fault for failing to value government, politics and the processes that drive it enough?

Am I actually, therefore, resigned to my own failure and accepting that I have a part in the collective act of harm that is, inevitably, befalling the country?

Britain should have bendy bananas again because Richard Murphy?

Dangerous statement given the source

Not understanding money and government finances should be a disqualification from offering economic commentary

So, is it ignorance that is the disqualification? Or not agreeing with Ritchie?

So The Guardian is employing a commentator who does not understand that governments have to spend before they can tax, or the money to be taxed does not exist.

And who does not understand as a result that the spending pays for the tax.

Or that there is such a thing as a fiscal multiplier, and that it is very large in the case of the NHS, meaning that this spend may well recover more tax than it costs.

It’s a dangerous thing for Ritchie to say, certainly. Really, the fiscal multiplier on health care spending is such that it fully recovers he revenue? Sirsly?

And should be a disqualification from commenting on economics. But apparently isn’t.


Now here actually is a good idea from the Senior Lecturer

It’s more difficult to get an appointment to see the GP in a poor area than a rich one.

I might perhaps suggest that GPs, who are paid well, don’t like living in poor areas. Fancy that, eh? People who can afford not to live in grot prefer not to live in grot.


Ritchie suggests:

As I would also add, based on personal knowledge, once the second trend is in place it becomes increasingly hard to recruit because workloads are so much higher for those GPs who do work in such places.

What to do?

Differential pay would be a start. I can see no reason why not.

Well, other than that the TUC, every union up to and including the BMA would kill you for suggesting it. Because if there are no longer national pay scales then there’s no point in national pay bargaining, is there?

Why, we might even move to market determination of wages, how much do we need to pay to fill this job in this place? Expect this idea to be backtracked upon.

Interesting thought

2019 risks
The collapse of effective government in the UK
The risk of unrest given almost any outcome
The possibility of economic turmoil, created by choice, which is unprecedented
The absence of effective political leadership
The risk of the U.K. breaking up into two and maybe three parts
The choice not to govern in the USA and indifference to the rule of law
The act of looking to extremes for solutions
German drift
French floundering
Elections and growing extremes
Hungary and the fall of democracy
Italy and the rise of the right

Etc, etc, cont pg 94.

Every one of his risks leading to 2019 being horrid is political really. And yet this is the man who insist that more of life must be run by the political.

All belongs to us

The tax policy gap is the tax not paid in a country as a result of the decision made by a government not to tax a potential tax base, such as wealth. Additionally it is the value of the tax reliefs, allowances and exemptions given by a government for offset against a source of income that might otherwise be taxable.

Seriously? A potential tax base is all incomes of everyone. Not taxing all incomes at 100% is therefore a tax policy gap?

The definition of tax avoidance has also changed, no?

Tax avoidance is taxpayer determined behaviour where the taxpayer decides to submit a tax return and declare their tax liabilities based on an interpretation of the applicable law of the jurisdiction that the taxpayer knows may be unacceptable to the tax authority of that country. They do so knowing that the risk of their potential misinterpretation of the law being discovered is limited and so the chance of appearing to reduce their liability in ways they claim to be legal, whether that is true or not, is sufficiently high for them to justify the risk of doing so. The scale of this issue is related to the complexity of the tax system and the degree of uncertainty that might exist as to the proper interpretation of the tax rules that it creates.

No, that’s an attempt at tax evasion.

I stress that tax avoidance does not ever include making use of tax reliefs and allowances provided by the law of a country: the cost of these is included in the tax policy gap.

Therefore Vodafone wasn’t avoiding tax, was it? Because the law in place at the time specifically stated that the money piling up in Luxembourg was not taxable in the UK.

He’s changed his definitions. Which means that his numbers or the tax gap should be much lower. But will they be?

In that case not agreeing with a tax authority’s interpretation of tax law is not wrong. Disagreement can be honest.

Well, yes, Vodafone, Boots, Starbucks…..

Does tax avoidance dishonestly appropriate property belonging to another? I would suggest not. I would say it knowingly exploits uncertainty in the law to secure a pecuniary advantage, but that most of those doing it will have secured an opinion from a professional adviser before doing so that the action in question was legal, even if it had an uncertain consequence. And those opinions (which will not be publicly available, but which will be in the possession of the tax avoiding taxpayer) will be more than enough to show that the tax avoider had no intention of being dishonest, precisely because they had gone out of the way to make sure that they had an opinion to say they were acting legally, even if with dubious ethical intention.

And ain’t that a change? It wasn’t long ago that asking for a legal opinion was proof perfect of avoidance. For why ask if you’re not trying to avoid?

Logic failure

But what does this mean? I suggest three things.

The first is in economics. This subject still assumes, and so teaches, that businesses profit maximise. They don’t. Because they can’t. Because they don’t have the data to do so. And because the truth is they know that this is the surest way to destroy long term value. So they have other goals instead. Like growth. Or product innovation. Or stability. Or customer satisfaction. But never profit maximisation. So it is time economics stopped teaching soemthing that is false. Not just wrong. But false.

Sigh. Profit maximisation is the goal. The strategy. Quite what the tactic is to gain this is is arguable. But that’s still the goal.

Which is what economics currently teaches. Peeps try to maximise, now, how do they do this, let’s go have a look, shall we?

This calls for Peoples’ Quantitative Easing!

The crisis-hit Crossrail project has been delayed indefinitely as bosses warn that the project could require an extra £1.7bn funding injection, according to transport executives and politicians.

The flagship new Elizabeth Line that will run east-west through London was originally due to open this month. Now the company has admitted it does not know when it will open.

“It has now become clear that more work is required than had been envisaged to complete the infrastructure and then commence the extensive testing necessary to ensure the railway opens safely and reliably,” Crossrail said in a statement.

The financial services company KPMG, which was called in by the Mayor of London Sadiq Khan to…


The bit Ritchie and the like really don’t get being that where the money comes from isn’t the point. It’s whether we should have the State running engineering projects.

Umm, no.


And what we know is private capital has ceased to be available for active investment it is now almost solely directed to rent seeking. In that case it is only state created funding that can create this process of change.


Main points
Gross fixed capital formation (GFCF), in volume terms, was estimated to have fallen by 0.5% to £85.2 billion in Quarter 2 (Apr to June) 2018 from £85.6 billion in Quarter 1 (Jan to Mar) 2018.

Business investment was estimated to have fallen by 0.7% to £47.5 billion between Quarter 1 2018 and Quarter 2 2018.

Between Quarter 2 2017 and Quarter 2 2018, GFCF was estimated to have fallen by 0.6% from £85.8 billion; business investment was estimated to have fallen by 0.2% from £47.6 billion.

The sectors that contributed to the 0.5% GFCF fall between Quarter 1 2018 and Quarter 2 2018 were public corporations’ dwellings, business investment and private sector transfer costs.

The asset that contributed most to the decrease in GFCF over the same period was transport equipment.

Back to table of contents
2. Things you need to know about this release
The estimates in this release are short-term indicators of investment in non-financial assets in the UK, such as dwellings (residential buildings), transport equipment (planes, trains and automobiles), machinery (electrical equipment), buildings (non-residential buildings and roads) and intellectual property products (assets without physical properties – formerly known as intangibles). This release covers not only business investment, but asset and sector breakdowns of total gross fixed capital formation (GFCF), of which business investment is one component.

Business investment is net investment by private and public corporations. These include investments in transport, information and communication technology (ICT) equipment, other machinery and equipment, cultivated assets (such as livestock and vineyards), intellectual property products (IPP, which includes investment in software, research and development, artistic originals and mineral exploration), and other buildings and structures.

Business investment does not include investment by central or local government, investment in dwellings, or the costs associated with the transfer of non-produced assets (such as land).

£50 billion a quarter. £200 billion a year, maybe 10% of GDP. Private capital has ceased to be available for active investment. Hmm.