Wednesday, 25 April 2018

Killer Arguments Against Citizen's Income, Not (13)

Chris Goulden at the Joseph Rowntree Foundation betrays his deliberate lack of understanding.

He lists the main pro's and then plucks some con's out of thin air:

A citizen’s income would require two big principles to be accepted and supported by the public, namely that:

1. Everyone should get a baseline level of state financial support, even if they choose not to do anything to try to earn money for themselves.

2. The basic marginal tax rate should be much higher than it is now, otherwise almost everybody’s net income from the state would rise, and there is no obvious way to finance this. (Some do not assume UBI must be paid for through income tax and suggest a wealth / carbon tax instead, or bigger cuts to state spending elsewhere, for example. None of these are easy options either).

Most politicians in the UK (or in England at least) are likely to regard both of the above as unacceptable to voters - a view supported by long-standing evidence on public attitudes to welfare.

3. A third objection relates to support for housing (and other) costs. For UBI to achieve its goal of removing the complexity and disincentives involved in means-testing, it would also need to replace support for housing costs. But with largely market-based rents, it would not be easy to include a simple rent element in a UBI payment without creating shortfalls for some or large surpluses for others. The same applies to means-tested childcare support. This counter-argument is strong – arguably public attitudes towards benefits and taxation could change but differing needs will not.

4. So, a central problem is that advocates of UBI either unconsciously or wilfully fail to acknowledge that the current system is designed to provide specific payments for people in specific circumstances (e.g. caring, disability, high housing costs, high childcare costs). If you sweep all of that away, you either have to level up, giving a massive boost to people without those specific needs (at huge cost), or you create a fall in income for those with them. Neither is remotely acceptable in any real world.

1. Agreed.

2. Is complete crap. The actual effective tax rate for claimants (i.e. about half the population, if you include Tax Credits) i.e. the total of PAYE deducted AND means tested benefit withdrawal is stupendously high would fall considerably. There is no need to increase tax rates at all, and certainly not the basic rate of tax, that's basic maths.

As to "unacceptable" to voters, this is not an argument AGAINST simplifying and harmonising welfare and tax systems, it is an argument FOR educating voters. He is simply providing the brain dead with ammunition.

3. Housing related welfare can be kept running in parallel for the time being. Welfare for landowners is bad; means testing is bad, but needs must. Saying that "we have to means testing housing relating welfare, therefore we must also means-test non-housing related welfare" is just crap logic, you might as well go on to say we should means test non-cash benefits (state schools, NHS, the right to vote or use a public library etc).

He clearly knows bugger all about "means-tested childcare support". There's the savagely means tested Childcare element of Tax Credits (progressive) and the equal and opposite, weird and wonderful tax breaks for employer payments (regressive); as well as Free Early Education vouchers and kids who get a 'free' Kindergarten place at a state school (flat rate and non-means tested). These all the actual cash amount/value that most parents get - regardless of the scheme(s) they benefit from - is pretty close to £90 per week per child, plus or minus £10.

4. He then lists things which Citizen's Income proponents have always said should be left completely outside the system and continue to run in parallel. Disability payments should be transferred to the NHS budget anyway. . We dealt with housing and childcare costs above; he mentions them twice just to make his list appear longer. He clearly doesn't know about "caring" either. I assume he means "Carer's Allowance" which is just another reason for paying people a lower rate of Income Support by another name, so recipients thereof would be better off with a Citizen's Income (which would be pitched at the same £ amount as Income Support to start off with)

This whole Windrush generation fiasco - questions

Background here.

So some people grew up and lived here all their lives on the reasonable assumption that they were British citizens (for most things, being permanently resident here is good enough), even though technically they weren't.

What strikes me, is that only UK and Commonwealth citizens are entitled to vote at most elections (different for EU Parliament elections, which we won't need to worry about any more).

So, with the benefit of hindsight, either all their votes were invalid; they were de facto accepted as British citizens (in which case the matter is settled); or there is some leap of bureaucratic logic that says they were notionally citizens of their [parents'] country of origin (most likely a Commonwealth country), despite that country probably having no record of them?

I also wonder why this wasn't noticed decades ago, at the latest when they were old enough to need their own (British) passport to go abroad on holiday, which surely plenty of them must have done.


Tuesday, 24 April 2018

"An early warning sign to help spot struggling UK retailers"

I spotted the headline in City AM and thought, oh dear, this will just be some puff piece about getting the right product mix, and glosses over the fact that landlords aren't dropping the rent fast enough, but no, she nails it:

The metric we use to assess this aspect of a retail business is called ‘fixed charge cover’.

If you felt moved to calculate this yourself, it is a company’s ‘EBITDAR’ (earnings before interest, depreciation, amortisation and rent) divided by total debt service costs (net interest and rental expenses).

At its heart, however, this ratio illustrates the ability of a business to service its debt and rental obligations. Our rule of thumb is that when a fixed charge cover [drops to] 2x or 2.5x, serious alarms bells start to ring.

Take a look at the following chart, which ranks a dozen of the UK’s household-name retailers by their fixed charge cover and also shows the total returns on their share prices over the last six and 12 months.

As you can see, there is a huge correlation here. All the companies with a fixed charge cover of less than two times have seen their share price fall by a half or more over the last 12 (and the last six) months.

Monday, 23 April 2018

Killer Arguments Against LVT, Not (438)

I've not done one of these for a while as I hardly see any I haven't already done. There was a mildly original one from the comments at LibDem Voice last month.

He warms up with a couple of standard-fare KLNs...

William Fowler: Any tax not based on personal income or company revenue is going to be unfair, if you want to get at wealth an inheritance tax levy and sales tax on property/land/leases would surely do it.

1. Land Value Tax is not about "getting at wealth", it is about, er, taxing land values. that's why it's called "land value tax" and not "wealth tax". The clue is in the name.
2. We already have IHT, CGT and SDLT, which are pretty much at the top of their own Laffer Curves, and between them, they capture less than one-tenth of the annual rental value of UK land - in a very cumbersome and economically damaging fashion.

Council tax makes up a small part of the council’s income and if you are going to replace government money with local taxes then does this mean a massive increase in taxes for the home owner or is all the burden going to be on companies with business rates replaced by LDV. Neither of which will have a very nice outcome.

Ah, the glorious double- if not treble-think.

Local councils are "government" just as much as the central government; both raise taxes and spend money. But miraculously, he does a diagonal comparison; comparing "government money" (good) with "local taxes" (bad) rather than acknowledging what most LVT supporters want - lower taxes on incomes ("government money") and higher taxes on land values ("local taxes"). So there would would be a massive reduction in the former to offset the "massive increase" in the latter.

And clearly, if you replace the worst taxes (list above) with LVT, home owners who are still working will see net large reductions in their tax bills. The same goes for the total taxes paid by businesses and their commercial landlords (how they share the spoils remains to be seen).
... and then launches the Exocet of Home-Owner-Ism hypocrisy:

As Liberals, who believe in freedom of the individual, surely putting a huge burden on home owners, making them slave away at work forever or go on benefits to avoid it, would not produce much liberty?

As mentioned, working home-owners will be the group which would benefit most (insulated as they are from rent increases) if Council Tax, SDLT, VAT and NIC were replaced with LVT, that's just a mathematical fact. And clearly, for pensioners there would be a deferment option.

So presumably he is talking about the semi-retired people in fairly valuable homes who do not wish to contribute to society, neither by working nor by paying taxes.

So we could fire this back at him:

As Liberals, who believe in freedom of the individual, surely allowing the semi-retired in valuable homes to opt out of working and paying tax puts a huge burden on 'everybody else', making them slave away at work forever, as well as paying all the taxes to support the lifestyles of the self-same semi-retired, would not produce much liberty?

Thursday, 19 April 2018

Cattle news

From The Soaraway Sun:

IN THE MOOOOOOD Hilarious moment horny bull sneaks up behind female moped driver and tries to hump her

From the BBC:

Escaped cows herded into Darlington front garden

Car hits house - with a bad ending

From The Bristol Post:

A woman has died and residents have been evacuated after a car crashed into a house in Clevedon.

The woman who was killed was in the house and the occupants of the vehicle, a man and a woman, have been arrested and are currently in police custody.

The incident took place shortly before 8.30pm last night (Wednesday, April 18), on Yeolands Drive.

I've not tracked down the house on Google Maps yet, but I guess that like in most of these cases, the house is at the top of a T-junction or similar.

Top tips:
- don't buy a house at the top of a T-junction;
- if you own one, replace your front garden wall with concrete blocks;
- town planners and developers, please don't put houses at the top of T-junctions.

Wednesday, 18 April 2018

Stats confirm, don't build houses if you want to increase incomes.

In response to Ian Mulheirn's thorough de-bunking of the supply shortage narrative of the housing crisis, Capex has let John Myers, aka London YIMBY, have yet more publicity to rally the troops against the dissenting voices.

The article is just a re-heat of the same old tosh, however one thing that did catch my eye was this graph from the Resolution Foundation showing the relationship between rises in house prices and the increase in housing stock per capita. Myers comments "... the think tank’s report also contained the encouraging — and unsurprising — revelation that countries building plenty of homes have generally not seen huge price rises, despite low interest rates and a big banking sector."

Myers goes on "Accounting for changes in incomes would likely make the picture even clearer, as the government’s own numbers to justify the Housing Minister’s comments on immigration showed last week, because rising incomes greatly boost demand for bigger and better homes"

Leaving to one side that in Myers' articles, it's never location that is the biggest factor in the differences in prices across the UK, the point he raises is obvious. So for a bit of fun, let's correlate changes in incomes within countries during the same period(OECD data) with changes in housing stock:

What this shows is that an increase in housing stock per capita correlates with lower increases in incomes within countries at 0.61, which is probably about as strong as the scatter plot for price increases vs stock. It's interesting how Ireland is the outlier, probably due to their over supply on the run up to the crash.

On the face of it, it appears that if you want to enjoy bigger increases in incomes, the last thing you want to be doing is build loads of housing.

Of course, this is wrong. But my point is, without putting things into their proper context, all sorts of misleading conclusions can be drawn. I'm afraid that's why the current policy of blaming planning and under supply for housing issues is wrong. It's being pushed by those with a very narrow field of vision.

For the record, I think a land value tax would result in a huge amount of redevelopment. Only it would then be property facilitated and directed by planners with the right incentives i.e. to maximise aggregated land rents. Instead, in large part due to the supply side fanatics, we'll yet again end up with the worst of both worlds i.e. more crap and not much/no improvement in affordability.

Tuesday, 17 April 2018

Most employees pay far more National Insurance than Income Tax

The 'earnings threshold' for NIC is lower than the personal allowance for income tax; and for basic rate taxpayers, total NIC is 25.8% of earnings above the threshold but income tax is only 20% of earnings above the personal allowance.

At the top of the basic rate band, it's £9,786 NIC and £6,900 income tax.

Above that, it flips over, NIC is 'only' 15.8% of earnings but income tax is 40%.

The break-even point at which you pay the same amount of NIC as you do income tax is about £58,300, which you can check here, so only the top few per cent of employees actually pay more income tax than they do NIC.

VAT raises approx. the same amount as National Insurance, meaning that a majority of employees probably pay more in VAT than they do in income tax as well.

Just sayin'.

Monday, 16 April 2018

Daily Mail surpassing itself today

Sabrina Kouider, 35, and boyfriend Ouissem Medouni, 40, tortured Sophie Lionnet in their £900,000 Wimbledon home before killing her on 18 September last year.

Daily Mail on top form

Man is arrested after woman in her 30s is stabbed to death in south London road where houses sell for £1.3m