The fiscal watchdog assumed that 12pc of non-doms without trusts and 25pc with trusts would go. However, the OBR warned that predicting behavioural responses was difficult.
“How many?” is the important question about an awful lot of economic ideas. We can theorise about who will do what as a result of this or that change. But we only actually find out when we see how many do, in fact, do that.
This is the very base of that Laffer Curve of course. The substitution effects says some will, at some tax rate, say bugger it I’m off fishing. And the income effect means some will work more at a higher tax rate in order to make their nut before they go off fishing. The overall effect on tax collection of a higher rate is the combination of how many do each.
Empirically – counting the actual numbers – we tend to find that the reaction of the lower paid, especially pieceworkers, is domainated by the income effect. That of the richer by substitution. Which is, of course, darkly amusing. For it means that at proper high tax rates we end up shifting the tax burden from the highly paid to the lower. Because that’s how the reactions to the higher taxes change behaviour.
Most socialist and equitable, eh?
However, the OBR warned that predicting behavioural responses was difficult.
Given the OBR’s dogshit record on forecasting, it should have probably qualified its ‘assumptions’ more strongly.
It isn’t just about tax rates though. At work our little two man department had been understaffed for years and we were pretty tired of the management’s empty promises to hire more staff. Both of us flatly refused to do overtime. Firstly, both of us were in our late fifties, had got all our ducks in a row and didn’t need the money. Our time was more valuable to us. Secondly, the pair of us working extra hours on evenings and weekends would solve the understaffing problem for them and not for us.
This was all sorted out in the crucible of the 1970s
You would have thought all these PPE graduates would have been aware of the diminishing returns form taxation and the consequences of public sector bribery and incontinent government spending
I suspect the IMF has already appointed a case officer for the UK
But this time it’s different, Starfish. They have a new monetary theory which insists it’ll work, and this time, comrades, we’ll actually march to the socialist uplands. Or summat.
This is why (IMHO) Economics can only, at best, “earn” its description as “The Dismal Science”, because, despite all the fancy maths, it isn’t really a “science” as it has no genuine predictive capability. It can describe, in the same way as can sociology, but its “theories” are not what a physicist would recognise as such.
Thing is, Baron, if all it can really do is identify and formulate repeatable and reliable empirical heuristics such as the law of supply & demand that’s fair enough so long as it isn’t expected to do more. The heuristics are useful, spergs with spreadsheets somewhat less so.
Stoneyground’s story is a fantastic example of the limits of management and central planning as a consequence of lack of information. In this case: that two blokes in their late 50s might value their time more than overtime money, or being “team players”, or other corporate bollocks, and hand their problem back to management on a plate.
No doubt Commissar Spud’s solution would have been forced labour.
I’m glad I’m not the only one whose view of economists is on a par with that of a meteorologist who tell you exactly how and why it rained yesterday, but is about as accurate as a monkey with a dartboard for tomorrow’s weather forecast.
Except for Spud’s economics, which is better than all the economics that have come before it. Because he says so.
Not just how many but which ones. There’s much whooping over at the Tax Justice Network that only a small percentage of millionaires have left. But those that have are the going to be the ones with the most.
12 billionaires and 78 ‘centi-millionaires’ apparently. That’s the equivalent of 20,000 ‘mere’ millionaires.