You What?

Richard Murphy\’s latest idea:

I argue for a citizenship based tax – which only the US has.

So if you decide that you don\’t like the way the country is going and decide to leave (not, perhas enjoying the tyrrany of the majority) you still have to pay tax to fund the way that you don\’t like the country going. Truly, you are a slave to the State.

It gets even more interesting though. The US system also taxes you if you decide that you\’d like to give up citizenship.

Section 205 creates a new “exit tax” on all persons who give up, renounce, and/or relinquish their US citizenship or greencard.  For greencard holders, expatriation can and does happen involuntarily.  It also applies to US citizenship (though no one can force you to give up US citizenship).  You are deemed to have sold all your worldly goods on the date of expatriation.  The first $600,000 is exempt, and the rest is taxed and due within 90 days of expatriation.  There is no step-up in basis for arrival to the US, so for greencard holders this tax is also on gain incurred prior to moving to the US.  US retirement plans are deemed distributed and taxed immediately.  Taxpayers’ interests in foreign trusts are taxable, even if there is no legal access to the funds.

No, I think we\’ll not have that tax system, shall we?

This Blog\’s Reading Level

You\’ll have seen the fun little tool that\’s floating around, estimating the reading level required to be able to deal with a specific blog? I\’d thought of running it here but fortunately don\’t have to as Fabian has done it for me.

\"\"

Now of course I cannot speak for Chris, Tyler and Alex but about this blog\’s  level of language….

Speaking clearly to the masses perhaps?

Ms Bance

Sadly, terribly, terribly confused. So confused in fact that she took the post down, although of course it still exists in RSS streams.

There aren’t many prejudices I’ll admit to, but I will admit to a strong dislike, at times escalating to hatred, of private landlords and letting agents. Not the ordinary family who lets out a room, mind you – though I am dismayed when people who I thought had reasonably benign politics reveal themselves to be landlords. Particularly in high-cost housing areas like Oxford and London the buying up of homes as investments and the inevitable charging of extortionate rents are massive drivers of housing poverty and inequality; how anyone with any conscience can do it and be complicit in the biggest driver of inquality between rich and poor and between young and old in the UK today, I don’t know.

So, I detest landlords. Having moved several times in the last ten years, I’ve met quite a few, and as a councillor I’ve come into contact with a few more. I have recently had cause to look at flats in Oxford again (sigh). Most of the ones I have seen (and I’ve seen twenty or so) have one or more of the following features:

a. No cooker – “you’ll manage with a couple of rings and microwave, won’t you?”
b. No grouting between tiles (how do they stay on the wall?!)
c. A living room that’s actually a corridor
d. Damp looming balefully from the corner of the bedroom
e. Mouldy carpet
f. Enough stale cigarette smoke to develop immediate-onset asthma
g. Three different types of woodchip on one wall, peeling gently

Having walked around another badly-converted depressing draughty half-house, you get back to the hallway and the landlord or agent says cheerfully “So, that’ll be £650 / £675 / £700 / £750 / £800 per month, then, not including bills of course”. I’ve met lots of agents, too, with their refrain “that’ll be £150 non-returnable to stop us showing the place to anyone else, and £50 for keys, and £60 to prepare a tenancy agreement, and £60 to check you out when you leave, oh and we need a cheeky £2000 deposit…”

It really makes you think what little power us poor sods needing to rent somewhere to live have, when agents and landlords know that they can mess us about with such sheer impunity.

What she\’s really complaining about of course is a shortage of private landlords. That\’s why the prices are so high, the agents so extortionate and the goods supplied so shoddy.

Antonia Bance is employed full-time by Oxfam as their Policy and Communications Manager for its UK Poverty Programme, known as UKPP.

Looks like we\’ll be geting some useful policy ideas out of Oxfam then, eh?

Eh?

How does this work again?

And if anybody still thinks that health care operates in a free market, try going to a doctor and buying health care. You know, just like you go to McDonald\’s. You get your treatment (hamburger and fries) and you pay your bill. Only, you can\’t just pay your bill, you also have to pay a New York State surcharge. Why are you paying this surcharge? Because … you are ACTUALLY PAYING FOR YOUR HEALTHCARE. You must be some sort of rich person! If you were truly deserving, you would be on medicare like any sane poor person is, so NYS charges you extra for paying in cash.

??

Well, Yes…

Where would it all end if people who had risked their lives for freedom were actually allowed to have any.

Those bastard war veterans, arrogantly assuming that the liberty they risked their lives fighting for includes the right to participate in $5 cribbage games.

 

The Life of Brian

We are a very weird lot, very weird indeed:

British martial humour remains an odd but enduring weapon of war. In 1982, after HMS Sheffield was struck by an Exocet missile, her crew sang Always Look on the Bright Side of Life from Monty Python\’s Life of Brian as the vessel sank.

Absolutely, totally, bonkers in fact.

A Good Day To Bury Bad News

The miserable fuckers:

On Tuesday, when attention was on the Queen’s Speech, the Government lodged its appeal anyway.

What appeal was that then? The Chagos Islanders\’ case of course.

The legal battle began in earnest in 1998 and, in 2000, they won their first victory when the Divisional Court ruled that the deportations were unlawful and “official zeal in implementing those removal policies went beyond any proper limits”. The Government did not appeal and Robin Cook, the Foreign Secretary at the time, agreed that the islanders should be allowed to return to any of the islands except Diego Garcia.

Then came September 11, 2001. The military base of Diego Garcia – with its B52 bombers, surveillance aircraft and support facilities – became a vital launchpad for the wars in Afghanistan and Iraq. It is also where top al-Qaeda suspects are allegedly held and interrogated.

In 2004 the Government abruptly issued two Orders in Council, allowing it to bypass Parliament to negate the court ruling. In 2006 the High Court ruled that the Government’s move was unlawful and “repugnant” and, in May this year, the Court of Appeal agreed. It accused the Government of abusing its power: “The freedom to return to one’s homeland, however poor and barren the conditions of life, is one of the most fundamental liberties known to human beings.”

The Lords granted the Government leave to appeal last week, provided that it paid all costs regardless of the outcome. Supporters of the Chagossians begged the Government not to prolong the agony of the islanders. In a letter to The Times a cross-party group of MPs and peers referred to Gordon Brown’s recent speech on liberty and declared: “For the FCO to proceed with a further appeal would waste more public funds, delay justice for the Chagossians and expose the Prime Minister’s words as hollow. Can we please have a return to good sense, justice and British liberties?”

Have you ever come across a better case for post-partum abortion?

Politicians, hang them all.

Polly Today

Mmm. Just feel the width!

Is that it, eh? Let\’s just remind ourselves what the "It" was. The climate change bill makes Britain the first country in the world to introduce a legally binding target for greenhouse gas emissions, enforcing 60% cuts by 2050. No, it probably isn\’t enough, but right now that\’s still a massive promise.

Yes, quite, it\’s a massive promise. But there is no idea about how to actually get from here to there. And legally binding? Upon whom? How is this going to be enforced? Does the Treasury fine Defra if the target is not met? What?

It is, as you say, sound and fury signifying nothing.

Housing is another good promise, even if it still won\’t be enough: 3m homes in 12 years, when only 43,000 were built in 2006, means building six times more a year.

Eh? 43,000 in 2006? Err,

According to the DCLG, there were 46845 housing starts in Q2 2006 in England,

You might want to brush up on your Googling skills there m\’dear. You seem to have the quarterly figure for only one of the four countries in the Kingdom. Yes, 180,000 or so starts, 160,000 or so completions for England alone.

This is the columnist of the year, famed for her research?

As for raising the school-leaving age, some may recall Labour\’s ferocious internal rows, when raising it to 16 – under the acronym Rosla – was delayed as too expensive (Tories opposed oiks getting anything more then, too). Now it jumps up to 18 with a full programme of diplomas and apprenticeships that will improve a lot of children\’s life chances, with less truancy, fewer Neets (not in education, employment or training) and less failure.

Captives of the State for another two years: just in case the inoctrination hasn\’t taken I suppose.

Party funding, the poison in politics, will be reformed with caps on spending and donations.

Yup, State funding. Only those who pass the State tests will get it though, won\’t they?

Yes, it\’s a shocking shame that exploited agency workers still get no protection:

I beg your pardon? What do you mean "no protection". They are protected wih the full majesty of the law, just as every other person in the country is.

So would a "fair" living wage, to make up for the depression of wages that migration has caused.

Err, Polly, that is seriously misguided. We\’ve go lots of economic migrants at the moment. They come to hte UK because they can earn more than they can at home. So you\’re suggesting that the way to deal with this is to make sure that they get paid even more when they come here?

Cameron is starting to win the argument that the state wastes money and never delivers.

Quite, truth will out eventually.

Fairly standard column there, don\’t you think? Labour Party cheeleading, let\’s move left, silly logic and at least one glaring error of fact.

This has been your Polly Toynbee column for today.

 

Oh Dear, Oh Dear.

Someone\’s been letting the lefties into the trade debate again.

Sadly, both for American workers and the quality of the trade debate, the textbook has other chapters. One of them explains the Stolper-Samuelson Theorem (SST), which points out that when the US exports insurance services and aircraft while importing apparel and electronics, we are implicitly selling capital – physical and human – for labour. This exchange bids up capital\’s price (profits and high-end salaries) and bids down wages for the broad working and middle-class, leading to rising inequality and downward wage pressure for many Americans.

Note that this is not just a story about laid-off factory workers, who obviously suffer the toughest losses. Rather, all workers in the US economy who resemble import-displaced workers in terms of education, skills, and credentials are affected. Landscapers won\’t lose their jobs to imports, but their wages are lowered through competition with those import-displaced factory workers.

Indeed.

In the early 1990s a flurry of studies, driven by the Nafta debate over US trade with Mexico, examined the links between trade, wages, and inequality. Updating a standard method from that earlier debate with 2006 data shows that trade has increased wages for those with a 4-year university degree by around three per cent and lowered wages for all other workers by about four per cent.

Consider a household of two median wages earners working a combined 3,600 hours per year (the average for married couples). A four per cent wage cut for this household would cost the couple $1,800 in annual pay. And this loss is net of any gains from trade: it fully accounts for the lower priced imports and new opportunities in export industries.

Ah, and there we see the twist in the tale. It is not true to say that this median wage earning household has seen its income fall by $1,800. It is true to say that (assuming you believe the analysis, which we will for the moment) their income is $1,800 lower than it would have been without the globalisation. But it hasn\’t actually fallen, it simply hasn\’t risen as much as it might have done.

So the average American worker is not in fact geting poorer. They\’re just not getting rich as fast as they might do.

To work out whether this is a good thing or not we then need to look at who is getting rich more quickly as a result of the globalisation. That would be those hundreds of millions of South and East Asians who have, in the past generation, risen up out of $1 a day poverty into a safe and secure lifestyle.

Now traditionally lefties would look at this result and pronounce it good. The rich (and by any global standard the median US household is stinkingly rich) are getting richer more slowly than the poor, who are leaving their absolute poverty behind them.

Somewhat sad to see someone like Jared Bernstein abandoning such a moral calculus and start to think only about those already rich, the Americans.

Well, Quite.

Not much that can be argued about here:

This was Gordon Brown\’s big idea in his Queen\’s Speech. Focus groups for both parties put the work/life balance as one of their top three concerns. In his speech to the Labour Party conference, the Prime Minister told women they could have nine months\’ paid maternity leave; now he plans to extend flexible working to all parents of children under 16 and to tell companies that they must allow mothers to stay at home while their children are doing exams and during holidays.

But this is going to harm rather than help women. What company would want to employ someone who not only wanted a year off after the birth of each child, but demanded to work 9.30am to 2.30pm, took off June to revise times tables, insisted on four months a year at home for the school holidays and disappeared every time one of their children coughed? The only company I know that does this is the Treasury and that is because the taxpayer is picking up the bill.

The gender pay gap is, as we have all noted ad nauseam, actually a parent pay gap. Making parents more expensive to employ will simply make the gap larger.

Giselle Bundchen

Err, Jeff?

By contrast, the beautiful Ms Bündchen, a catwalk superstar, has a figure that turns heads and a head that turns figures. She looks like a million bucks but refuses to be paid in dollars. She has worked out that accumulating assets in a depreciating currency is a mug\’s game.

You did spot that she (or rather, her sister, who is her manager) denied the paying in euros story?

Behind the greenback\’s slide towards "toilet currency" status is a 25-year binge by US consumers and government, hell bent on spending more than they earn. Warren Buffett, the legendary investor, explains: "Our country has been behaving like an extraordinarily rich family that possesses an immense farm. In order to consume more than we produce – that\’s the trade deficit – we have, day by day, been both selling pieces of the farm and increasing the mortgage on what we still own… goodbye pleasure, hello pain."

Well, actually, no.  The chickens that are coming home to roost are the effects of the dollar being over valued for the last decade or more. That over valuation is what has caused the trade deficit. The solution is thus that the dollar should fall in value relative to other currencies. Much as I personally hate it (the majority of my income is in $) that part of what is going on, the falling dollar, is in fact the solution, the right thing to be happening.

 

Thomas Slab Murphy

Looks like they\’re getting him on the Al Capone prosecution:

Thomas "Slab" Murphy, said to be a shadowy figure within the IRA underworld, was arrested after an investigation that began 20 months ago when British and Irish police surrounded his farm on the Irish border.

In March 2006, the police found several tankers, an underground pipeline, bags of cash and laptops when they raided the property on the Co Armagh/Co Louth border. It was claimed at the time that he used an escape tunnel to evade arrest.

Murphy, 58, was arrested on Wednesday night after attending a Gaelic football match near Dundalk, the border town in the Irish Republic that was once a hideout for fugitive IRA men.

He appeared yesterday at Ardee District Court, Co Louth, in the Irish Republic, and made no reply when faced with nine charges of tax evasion alleging he owed a total of £1.74 million.

If you can\’t get Capone for murder, smuggling, theft etc, try him for tax evasion.

ID Card Costs

Again, this is hardly a surprise, is it?

The proposed ID card is likely to cost at least £100 when it is introduced in two years.

If they\’d announced the true cost at the beginning the project would never have got off the ground….which is why they didn\’t reveal the true cost at the beginning, of course.

Tony a Catholic?

Not exactly the biggest revelation of recent years, is it?

Tony Blair is to become a Roman Catholic within weeks.

Personally I\’d tell him to stuff it:

But a friend of Mr Blair said: "It is something he has wanted to do for years but knew it would be easier after he had left office. Tony and Cherie are both thrilled."

Mr Blair has rarely been seen in a church of the Anglican faith except on official occasions.

He decided to remain an Anglican because of the potential complexities of conversion while in office.

Some lawyers believe the 1829 Emancipation Act, which gave Roman Catholics full civil rights, may still prevent a Catholic from becoming prime minister.

Clauses in the Act state that no Catholic adviser to the monarch can hold civil or military office.

If you really had the faith then small things like losing your job over conversion wouldn\’t stop you now, would they?

East Coast Floods

Hmm.

Hundreds of people have been evacuated and thousands more are preparing to leave their homes as a tidal surge threatens to batter the east coast of England this morning,

Good luck to everyone, of course.

Geek points for the first sighting of someone blaming this on global warming.

Top End of the Laffer Curve

Megan McArdle:

I know I keep pounding the point that at American levels of taxation, the Laffer curve promise of higher revenue on lower rates doesn\’t apply. Well, at 55%, it\’s plausible to believe that it *does* apply. There is a limit to how much you can raise taxes on the rich.

There\’s an interesting if underappreciated point here I think. There\’s two ways in which raising tax will reduce revenues. Or, sorry, possibly could, if we engineer things to move to the right of the peak of the Laffer Curve.

1) All of the usual stuff: if the marginal tax rate is 55% or 75%, then people will simply substitute leisure. Or instead of making high risk high return investments in equity, make low risk ones (tax free municipals look pretty good at high rates of income taxation, like, say, the 98% the UK had on investment income). In short, people will stop doing productive stuff.

2) People will bugger off and do their productive stuff somewhere else. Why pay 60% in the UK when you can pay 13% in Russia or 0% in Monaco?

OK, those are actually both pretty obvious, at least from the European view. But 2) rarely comes up in US discussions of such things. Because, you see, under US tax law, you don\’t get out of paying Uncle Sam (you do get out of State taxes, but not federal) by moving to another country. Unlike most, in fact I think all, other countries in the world, you\’re taxed as a US citizen, not upon where is your residence. So as this ability of US citizens to decamp to Switzerland to avoid the taxes doesn\’t exist (except by giving up citizenship and believe me, the US makes this more difficult than any other country as well) the American debate about the peak of the Laffer Curve concentrates solely on 1).

Whereas, from what I can see, the European one concentrates on 2).

Which leads me on to a favourite annoying little point of mine. There\’s no such thing as "The Laffer Curve". There are a series of them. Depends upon the person, the tax and other bits and bobs associated with the situation. Sure, we can aggregate the population\’s responses to the level of any given tax: but if we forget, in the case of income taxes, those two different ways in which the take can fall, then we\’re going to end up with our presumed peak of the curve in the wrong places.

Now if we make the (gobsmackingly, awfully, wrong, but it\’s to clarify) assumption that the reactions to 1) are the same worldwide we are then left considering only 2). How easy is it for the high earners to flee the tax jurisdication?

For those in the UK, very simple indeed. For those in the US, near impossible. Which leads us to the fact that the peak of the Laffer Curve in the UK is shifted leftwards from the one in the US. Another way of saying the same thing is that the revenue maximising tax rate in the US is higher than it is in the UK.

Of course, I would argue that this means the UK rate should be lowered but I\’m aware that there\’s thems who would argue differently.