Ritchie: Pah, I Spit on Your Nobel Laureate

And replace it with my own feelings! So there!

Take some examples:

– This morning’s headline that 50p tax does not work, when there is no evidence to prove that case: this is just far right promotion of the Laffer curve by Mirrlees

Sir James tells us:

‘It is not clear whether the 50% rate will raise any revenue at all. There are numerous ways in which people might reduce their taxable incomes in response to higher tax rates; at some point, increasing tax rates starts to cost money instead of raising it. The question is, where is that point? Brewer, Saez, and Shephard (2010) addressed precisely this question for the highest-income 1%. Their central estimate is that the taxable income elasticity for this group is 0.46, which implies a revenue-maximizing tax rate on earned income of 56%.29 This in turn (accounting for NICs and indirect taxes) corresponds to an income tax rate of 40%. So, according to these estimates, the introduction of the 50% rate would actually reduce revenue.

So a Nobel Laureate quotes one of the best empirical papers on the subject and this is all just \”far right promotion\” is it? Sir J goes on to say that:

Whatever the precise revenue-maximizing tax rate, it seems unlikely that much additional revenue can be raised simply by increasing the income tax rate for the very highest earners. But it is important to realize that this is not the only tool available for extracting money from this group. Widening the income tax base—removing reliefs and clamping down on avoidance—not only raises money directly but also reduces the scope for shifting income into tax-free forms and thereby makes tax rate increases more effective revenue-raisers.

The thing is, you see, Ritchie\’s own work on how to get more tax out of the highly paid works on exactly this point. If you pay UK tax anywhere in the world you live then you cannot escape the higher taxes by moving. If you restrict pension relief to lower rate tax then you cannot escape it by dumping cash into your pension. All of the things which Ritchie himself recommends are based on this very damn point which he\’s now rejecting as \”far right promotion\”.

Wouldn\’t it be lovely if Ritchie could actually understand the interconnections between his own views and reality? You know, had enough foundation in theory to understand what it is that he himself is saying?

Our Man:

The promotion of much higher VAT

Yes, because the OECD tells us that a VAT has lower deadweight costs than corporation tax or capital taxation for the same amount of revenue raised.

The suggestion that corporation tax should be abolished to be replaced by yet mo0re VAT

No, they don\’t. They suggest that the normal rate of return, on either interest or corporate profits, should not be taxed. Only excess returns should be. The aim here is to lessen the current tax system\’s bias towards debt finance: something that Ritchie himself has been known to worry about.

The suggestion that taxes on savings should be reduced

No, the idea is that taxes on returns to savings should be reduced. See OECD above.

The idea that NIC should be abolished shifting the burden from employer to employee

And we have another Ritchiebollocks on tax incidence here. For even Ritchie has been known to agree that so called employers\’ NI actually falls upon the worker in the form of lower wages. Thus there is no transfer of incidence here, there is simply the taking away of a potential misunderstanding.

It was Ritchie a couple of days ago stating that taxes must be visible for democratic participation reasons, wasn\’t it?

I\’m sorry to have to break this news to you: Mr. Murphy is simply ignorant on the points about which he opines.

17 thoughts on “Ritchie: Pah, I Spit on Your Nobel Laureate”

  1. But you have to admit. He is a grade A source of entertainment. Sort of like a court jester. I think he would look quite fetching in a pair of spandex leggings and a dunce hat. It’s not like anything could make him look dimmer.

  2. “Wouldn’t it be lovely if Ritchie could actually understand the interconnections between his own views and reality?”

    If he did he wouldn’t be Ritchie, now would he?

  3. so Mirrlees says the revenue maximizing rate is probably higher than 50% and goes on to talk about other ways of extracting money from the rich, and Richie calls his a right-wing what?

  4. Murphy calling Mirrlees far-right is just priceless. To get away with calling a mainstream economists like Mirrlees ‘far-right’, he would have to be far-left himself. While being strongly scarlet in political hue, he really isn’t so left-wing as to be able to stand up a claim, from his point of view, that Mirrlees is far-right.

    At least, he currently isn’t as left-wing as all that. But he does appear to be letting his own rhetoric frog-march him into some odd places. If he carries on in this vein, he’ll probably end up painting himself into roughly the same corner as Stalin. I would enjoy watching that.

  5. “Philip Walker // Sep 14, 2011 at 3:41 pm

    Murphy calling Mirrlees far-right is just priceless. To get away with calling a mainstream economists like Mirrlees ‘far-right’, he would have to be far-left himself. While being strongly scarlet in political hue, he really isn’t so left-wing as to be able to stand up a claim, from his point of view, that Mirrlees is far-right.”
    Far-right is just a term people use to denigrate their opponents when they want to stop discussing what is best for the country and want to start insulting them. It doesn’t really have any meaning.
    It is a bit like calling the EDL far right – why?
    They are anti Islamsim which is not in itself far right.

  6. If you annoy enough people you can achieve the honourable distinction of being described as both “far-right” and “hard left”. I have done this, and from it I conclude that both terms are meaningless except as terms of abuse. G Orwell has it right.

  7. I like it when a comments of mock approbation sneaks past him:

    Gary says:

    You are just not ‘getting’ how well developed the Global NeoCon Conspiracy actually is. They have also infected the OECD. Read this from the OECD Tax Policy unit:

    .
    .
    .

    Mirlees, IFS, Nobel Laureates and now even OECD. Is there nobody they can’t get to?

  8. “I stand up next to a mountain; I knock it down with the edge of my hand”

    Richie dispatches the Mirrless report, like so!

  9. Mr Potarto,
    I resemble that remark!

    I mean, really, think about it. Either there is a compelling body of real evidence accumulated from a range of impeccable sources that refute Righteous Murphy, or the Global NeoCon Conspiracy have been taking more and more funds from the Bilderbeck Group to infiltrate to fabricate all this evidence from all these people.

    Once you have eliminated the impossible (option 1), then what remains, however improbable, must be true. And hence it becomes a legitimate comment at TaxResearch…

  10. Luis Enrique – “Richie dispatches the Mirrless report, like so!”

    I have to say I never expected Richie to be compared with Jimi Hendrix.

  11. SMFS, I’m not so sure. Surely he must be whacked out of his gourd on something pretty spectacular to come up with his stream of self-contradictory bullshit? Although he’s so unhip he probably thinks Voodoo Chile comes con Carne.

  12. Brilliant! on the same thread, ‘JayPee’ basically calls me a nutter for implicating OECD in the conspiracy, but Righteous steps in to back me up!

  13. Tim, I must disagree with you here. Calling Richard Murphy’s ignorance “simple” is like calling the Grand Canyon “small”. The word is just totally inappropriate.
    Admittedly, the words “twisted” and “vast” are also inadequate to their respective tasks, but at least the sentiment is a bit more in line with the reality.

Leave a Reply

Your email address will not be published. Required fields are marked *