Sunday, April 30, 2006

Abortionomics - a rogue taxcutter explores the hidden side of every PC argument

Unfortunately the TaxCutter was conned into purchasing this standard analysis of US government statistics. Why is it so lauded? My hunch is its due to the claim that abortion reduced the US crime rate but funny how that's not mentioned on the cover or the tubewide marketing blitz .

Levitt's main claim is that the reduction in US crime, especially in New York, in the mid-90s came off the Roe vs Wade case in 1973 as fewer persons likely to commit crime were born. Levitt gives some credit to the increased use of prison and greater policing. No credit however is given to Guiliani's Broken Window theory of policing, credit that Levitt says was due to legalised abortion.

Error 1 The TaxCutter reckons that crims start activities from 12 and go on to about 30 - based roughly on his former classmates. Several states had legalised abortion before 1970. States had legalised abortion post 1973, so hence crime using Levitt's own theory should have started falling between 1982 and 1985, not the mid 1990s, when the aborted future criminals would have become active.

Error 2 Levitt's claims that the number of future murderers aborted has actually saved lives when you net fewer murder victims versus aborted foetuses. This is on the assumption that 1 newborn baby = 100 foetuses (page 144 of Penguin paperback). Hang on - by my reckoning 4 out of 5 foetuses become newborn babies. If we take a foetus that is 20 weeks old, then the chances of it becoming a child are even higher than 80%. Us accountants might in cold terms discount the foetuses a bit for the fact they are on average 4.5 months further away from a productive living. But that leaves us with a far more realistic stat that 1 newborn baby = approximately 1.25 foetuses.

Contradiction - Levitt assumes that those who have abortions are more likely to have criminally inclined children because an unwanted child is neglected to it is more likely to become criminal, basically the "every child must be a wanted child" argument the TaxCutter used to hear belted out at NUS conferences. There is no evidence produced of which sort of people have abortions. When writing on education, Levitt claims that parenting is overrated - who your parents are is more important than what your parents do.

Missing analysis - Crime fell more quickly in states that legalised abortion earlier. Curiously enough, this includes states with more crime and greater urban areas in the first place.

Levitt does not examine what drives crime. The TaxCutter's police and prosecutor friends point out that about 90% of UK crime is heroin-related. For the US replace heroin with crack and its probably about the same. The early to mid-90s saw a dramatic reduction in the price of crack-cocaine in the US. The addicted criminal commits crime to get their fix. If we assume that each burglary / mugging etc has a relatively standard financial reward then what we find is that the addicted need to commit fewer crimes to find the funds to fuel their habit + hence cheaper drugs mean fewer crimes.

Don't buy this book - it will be readily available in charity shops for 50p in a couple of years time!

Friday, April 28, 2006

Will Clarke admit his errors and resign?

Its about time that Rushcliffe got a new MP

Wednesday, April 26, 2006

Tesco finest

From media, and CCHQ reaction, you would think that the British public is kidnapped and transferred en masse to Tesco stores every weekend. There can be few better signs of the media's dreadful grasp of business than the criticism Tesco receives for making profits.

Tesco, and its US counterpart, Walmart, are capitalism at their finest. By delivering what the public wants at a competitive price, they have improved life for ordinary souls, and tackled inflation, far better than any family tax credit.

Long may they live without Office of Fair Trade intervention!

Tuesday, April 25, 2006

Local Income Tax - its still Minging


It takes a certain type of political mind to create a local government policy that would screw up the National economy. And not realise despite a mountain of evidence, and 20 years, that its fundamentally flawed.

The best estimate for the Local Income Tax is an 8.5% rate. So it would increase marginal tax rates in the UK from 22% and 41% to 30.5% and 49.5%. Yet study after study shows that higher marginal tax rates reduce economic growth, even Lib Dems should have the sense to know that less reward means less effort. The inevitable consequence - less growth, hence less tax revenues - a local income tax would make the National government short of cash, let alone local authorities.

The LibDems are in the middle of a review of tax policy. If the review wants credibility, it will conclude as the OECD and IMF do that taxes should have a broad base and a low rate. Which cancels out the rate hike their local income tax would effect ......... the Clause 4 of the Orange bookers?

Monday, April 24, 2006

Q- When is £4bn worth more than £7.8bn?


The Fossil Fuel Chancellor should work out that either or both of his tax system or his forecasters are wrong. Brown has Ballsed-up his corporate tax forecasts for the last 7 years, even with 2005's oil and equity price spikes. Yet he predicts £49bn of corporate tax will be paid in 2006, an amazing £14bn more than in 2004 and £7.8bn more than in 2005. But business doesn't want to be here anymore - life's too short for the UK's tax mazes.

The unjustfiable £7.8bn rise, in a tax that is less than 10% of total government revenues, is nearly double the £4bn of total tax cuts that Letwin + co reckon cost the Tories last May. So guys, how come no digs at Brown's sums?

The manifesto tax incisions, "cuts" would be hyperbole, didn't cost us the election. Voters will vote for tax cuts when they get offered cuts substantial enough to bother thinking about, in terms they understand. Which is exactly what combined 6 times winners Dubya and Howard did

Sunday, April 23, 2006

This Tory House believes in Immigration - The proposer is?

Why do so many on the Tory right, see today's example http://observer.guardian.co.uk/politics/story/0,,1759484,00.html , insist on statist controls on people, whilst advocating minimal government intervention elsewhere.

Can you think of a major UK politician, of any hue, who has recently shouted the benefits of letting more foreigners into the UK? The BNP's poll ratings increase for the simple reason that no-one is making a convincing case for immigration. Yet many of the public want that argument to be made -ask any educated bird under 40 why she didn't even think of voting Tory last year - immigration is normally the 1st thing mentioned.

As the ITEM club shows today, http://business.timesonline.co.uk/article/0,,8209-2147467,00.html immigration brings economic benefits to the UK. Anyone prepared to leave their own country and come to a new land is far more likely to be an entrepreneurial, risk-taking type that achieve than the stay-at-home merchants. Skills are imported that fill the gap caused by the leftist education policies that all UK governments have followed since the 60s. The cultural benefits are harder to measure but substantial, just look how cuisines distant 40 years ago are now firm favourites. And please cut the crap about immigrants being scroungers - many do jobs the natives consider themselves above.

In the US, George W Bush, former governor of a border-state, often makes the case for immigration. Note, Dubya wins elections.

Saturday, April 22, 2006

Catch that on film...


Like any good socialist, Gordon Brown rarely wastes a chance to patronise. Like lecturing the IMF on the perils of protectionism.

Yet Gordon has a giant anti-free trade measure in his own 2006 Finance Bill. Despite getting £66m of lottery money, Gordon will throw the film industry tax subsidies of more than £0.5 billion a year, but only for films that have "British" content. Wouldn't knocking 0.5p off the corporate tax rate have been far more sensible?

Film is frequently listed as one of Gordon Brown's favourite interests.

Thursday, April 20, 2006

Ever seen these people together?



I dig Ann Coulter. The Connecticut Clubber got it right on tax

"Scratching their heads and babbling about long-term economic goals and short-term economic goals, liberals exasperatedly asked how a tax cut was supposed to improve people's lives. To state the manifestly obvious: People would have more money."

England's current No.1 right-wing ranter is Jeff Randall in the Torygraph business. Jeff's recent celebration of Asian immigration and savage hatchet job on Hewitt make you wonder how someone that sound and talented ever got employed at the Beeb in the first place. Check his latest piece - referring to Brown's grasp on the UK economy being as weak as a "Kaliber Shandy".

But I can't help noticing that Ann's literary style bears a remarkable similarity to Jeff 's.

Twins? The same person?

Then it strangely struck me that one other UK newspaper columnist writes in the same style?
.... I'm in the corridor of uncertainty as to their real identities



Wednesday, April 19, 2006

No Tory left behind?


Frank Luntz's panel on Newsnight identified Health and Education as the 2 biggest issues to voters. Not sure where those punters came from - none of them even mentioned Norwegian glaciers?

Yet despite public discontent on H+E, Labour constantly scores better than the Tories on these issues in polls. Why?

Well for a start - how public a presence are Andrew Lansley, pictured unusually to the right, and Two Brains Willets. Voter recognition of Ruth Kelly and Patsy Hewitt is way higher. And what are the policies - telling people that the Tories will do it the same, but better, ie cleaner hospitals, didn't, excuse me, wash.

Centralist control of Health and education has left UK schools and hospitals in a shocking, unresponsive, and near bankrupt mess. Until the party accepts that taxpayers can best choose the schooling and healthcare they require, it will lack the better alternative to Labour's Nanny State that a people empowering Tory party should offer.

PS Message to the Luntz. In your next focus group do yourself a favour and poll the chicks as to what they think of big ginger beards

Tuesday, April 18, 2006

Green tax reforms for the blue party


Dave - if you are serious about going green then here's a few tax reforms to think about. Sharing the proceeds of botanical growth, if you like. But don't use it as an excuse to forget that voters like big leafy income tax cuts most of all.

Just why is there so little tax on air transport, ie zilch tax on aviation fuel. This market distortion encourages flying compared to other cleaner highly taxed forms of transport.

And its time to revisit the way tax relief is given for capital expenditure by business in the UK. Currently certain industry sectors, eg utilities + energy companies pay less tax on their profits than financial and service companies. This is due to tax depreciation rates for their long-lasting assets, which mean that in cash terms their tax rate is considerably less than the standard 30% of their profits. This is effectively a subsidy - which if passed on to customers, means they purchase key natural resouces at a sub-market price. Giving relief for capital expenditure based on actual accounting depreciation rates will not only mean that the tax is fairer across business as a whole, it will remove a distortion that encourages anti-green behaviour.

The Irish - they deserve it

Ireland's decision to slash its corporate tax rate to 12.5% is one of the great policy decisions of post-Maggie period.

The TaxCutter says that the resultant economic growth is exactly what the Irish deserved for having the balls and brains to initiate such a free-market reform whilst the rest of Europe wasted the last decade on Blair, Berlusconi, Chirac, Schroeder etc.

So there's a letter in the FT today http://news.ft.com/cms/s/e822cab8-ce76-11da-a032-0000779e2340.html dissing tax competition. If you can get over the factual inaccuracies have a think about the issues.

What's wrong with tax competition? Any other supplier to me of goods and services has to compete on a number of grounds, including price, why should the government's provision of health, security and education services be any different.

The Tax Justice network behind the letter might also want to think about what Tax Justice should mean. How just it is that Labour have increased the number of income taxpayers in the UK by over 3.5 million, that you can pay income tax by working just 20 hours a week at the minimum wage, and that millions of people will face a big tax bill just by the misfortune of dying?

Monday, April 17, 2006

Wake up CCHQ - there's local elections on!

From 1st, 2nd and even 3rd glance you wouldn't know from the Conservative party website that there's a vital round of local elections in 2.5 weeks time. Was there even a launch? The only mention was a London-focussed press release with the scorpion poster. The campaign is of course policy-lite

Compare this to the Labour and Lib Dem websites. Especially check http://www.labour.org.uk/home for Labour's campaign for the locals. Why doesn't the Conservative Party also have a campaign weekend for the locals? Is Prescott actually talking sense for once .......

The TaxCutter is fed up with certain in the party infrastructure telling him that arguing for classic Thatcherite ideas costs votes. Labour does better not because of a national love of New Labour but because it motivates its activists, concentrates on marginals and its HQ understands the critical importance of talking to voters at local level - its simply streets ahead (literally) at fighting elections . Maybe if CCHQ staff were actually sent out canvassing next weekend

The TaxCutter will of course continue to assist the hard-working candidates fighting the key target seats in the Finchley area. The central party apparatchiks could learn much from their dedication.

Shock! EU budget target won't be met

Following the worst bit of international negotiation since the Trojans said "Oh look - we've won a horse" Tony Blair surrendered £14bn of EU rebate. The Telegraph today shows that the cost will now be £16bn

http://www.telegraph.co.uk/news/main.jhtml;jsessionid=HH0LM3PI0I4TNQFIQMFCFFWAVCBQYIV0?xml=/news/2006/04/17/weu17.xml&sSheet=/portal/2006/04/17/ixportaltop.html

as the EU Budget will be £20 billion greater than previously planned.

Question - what exactly is the £20bn going to be spent on?

That's a lot of money for an organisation with a decade of unsigned accounts .... the government didn't even chuck that much money at Rover when it was failing.

Sunday, April 16, 2006

UK favourites for 2012 Pole Vault - in council tax

Every now and then those Guardian lefties do produce a decent bit of analysis - like working out that the Olympics will cost more than £3.5bn. Any excess will be picked up by London CouncilTax payers - including The TaxCutter who live in a borough which will get none of the infrastructure.

If we assume that the London games will cost the same as Beijing's then that's an overspend of £18.5bn. If we assume that there are 3 million council tax paying homes in London - then that's £6,000 of additional Council Tax each to pay for 2 weeks of sport.

http://observer.guardian.co.uk/business/story/0,,1754488,00.html

Its worth thinking about leaving London to escape this - indeed the Culture Secretary's husband may be staying in Italy throughout the entire period. Alternatively we could stage a riot in Trafalgar Square to protest - Loony Leftie Red Ken might then get a better grasp of 1989 events

It really is The Business

Britain's only newspaper worth reading published this great article on Europe today

http://www.thebusinessonline.com/Stories.aspx?StoryId=FC7D82DA-31C3-4568-A648-7C6BCA1052CD&page=4

Friday, April 14, 2006

Why tax competition is good for people

This extract from [1] “Is harmonisation of tax policies between different EU countries a good idea?” - Stockholm Network, Kurt Wickman, Gefle College University, March 1999, page 12 - put it brilliantly

“Tax harmonisation addresses mainly one aspect of the entire choice set for EU citizens’ tax planning activities….. The problem is formulated from a government perspective – how to maximize tax revenue when economies integrate. The obvious alternative would be to formulate it from the individual citizen’s perspective: as a safeguard against government tax opportunism. Tax competition has another advantage from the government point of view: it will in a simple way inform governments on the quality of their fiscal policy – whether they are over-taxing people in their jurisdiction or not.”[1]

£5billion raid on pensions - it achieves what?

The more you look at this measure, the less economic sense it makes. My analysis of how it impacts tax revenues shows that it doesn't really raise any money - but instead produces a massive distortion in the market between debt and equity.

Removing tax credits has given people smaller pension funds.

1. People put more into their pension funds to compensate for the loss of the credit. They then get tax relief on those amounts. The bulk of the relief is at 40% as most of its goes to higher rate taxpayers. For basic rate taxpayers they get back 22%. Therefore of the £5bn hit, at least £1bn goes back to taxpayers as tax relief - but more likely about £1.5 billion.

2. People don't put more into their pension funds and simply have less pension. When this is taken out in the annuity form, the marginal income gets lost and hence is not collected through PAYE at the taxpayer's highest marginal rate. A key point given that personal allowances have gone up by only inflation and not by higher investment returns.

3. State run pension funds, which are substantial will have deficits. Which need to be funded - by the taxpayer. This means that ending Pension Tax Credits achieved the incredible feat of raising taxes in a way, that means there will have to be more tax increases at a later date.

4. Taxing pension funds on corporate profits they earn but not debt has caused a huge market distortion. This has led to a huge reduction in the proportion of UK equities held by Pension Funds from 36.5% to 29%. This distortion has meant that its more commerical to be a private equity owned, highly leveraged business than a quoted company - and the tax relief on that debt has caused corporate tax revenues to be lower than they would otherwise be.