The whole Adele thing

Adele kicked up a bit of a fuss about having to pay 50% tax, as reported (and denigrated) by the Guardian, here: http://www.guardian.co.uk/music/musicblog/2011/may/25/adele-tax-grievances

As Tim Worstall points out, the article is not entirely accurate, but leaving that aside, I'd be very surprised if Adele did have to pay 50% tax.

The agreement that she has with the record company will say that she gets x% of the sales of her album. I've no idea what x is, but bear in mind that all CD sales are subject to VAT.  This is at 20% currently, added on to the pre-VAT price, so effectively removing 16.67% of the money long before Adele sees it.  For a given amount of sales, where Adele would have earned £100, she's now down to £83.33.

Then there's income tax and NI.  Adele mentions paying £4m in tax.  I'm not entirely sure whether she's treated as self employed or as an employee of the music company, but I'd assume the former, meaning NI is 2% and income tax is 50% on the vast majority of the income.

(Of course it'd be better if she was set up as a small company and paid herself dividends, in which case the income tax is 42.5% and I don't think there's any NI - I could be wrong though.  It's worse if she's a normal employee, because then there's Employer's NI, Employee's NI and income tax to worry about.)

This means that of the £83.33 that she would theoretically get, she'll only actually receive £40.00.  This, the actual tax rate that she's paying is more like 60%. 

The money that she will still have to spend VAT on anything she spends on "non-essentials" (and I never really understood how clothing is non essential, but books are essential?), making the effective rate for the money spent thusly 66.67%.  If she spends any money on things like cigarettes or alcohol it's considerably worse.

So there you have it - Adele's tax rate is really more like 60%

Why the Laffer Curve shouldn't matter

The Laffer curve is often cited as a reason not to raise taxes.  I think this is a disingenuous argument that rather misses the point.  Let me explain...

For those of you who don't know, the Laffer curve is a theory that says that there is a level of tax that maximises revenue.  If you raise the tax rate too high, people will be more inclined to avoid the tax, whether by using off-shore arrangements in the case of VAT, by becoming self employed and paying dividends in the case of NI and income tax, or even simply by working less (as each hour worked is worth less to the individual as the government's take rises - there comes a point when it's not worth the bother). 

Further to the above, it has been suggested that the new 50% rate of tax will not increase tax revenue as it is too high - people will work less, employ accountants to avoid the tax or leave the country to avoid paying it (and the people being taxed are those most able to do these things).

I think that this misses the point.  The whole idea behind taxes is that there are some things that we can't buy efficiently as individuals.  Taxes are levied so that government can provide us with the things that only government can provide, while inconveniencing us as little as possible (in an ideal world).

If this maxim were followed, the total size of government would be much much smaller, and thus much less tax would be required to fund it.  The Laffer curve is irrelevant because the purpose of taxation is not to raise as much money as possible, but to provide essentials only, and so we should never get anywhere near the point where we suffer from diminishing returns.

Consider the damage done to our economy by the government taking fully 50% of the fruits of our productive labour and pissing them up the wall...

That LPUK report

So, I've just read the report that was published regarding the whole furor over the post on Anna Raccoon's blog about Andrew P Withers.  It's in a few places on the web, but the version I read was here:
http://pjcjournal.files.wordpress.com/2011/05/ncc-report-final.pdf

My thoughts:

It does come across as a bit of a hand-wave.  Take point 7 for example, which is I think the thing that most people are worried about.  There's no consideration of whether the accounts have been suitably managed, and the fact that it's taken over four months since a new treasurer was appointed and the books still haven't been handed over is "far from ideal and must not be allowed to happen again."  This is something that crops up a few times in the report - things aren't ideal, mustn't happen again, but there's nothing to worry about.

The thing that really got me about point 7 was the complete indifference to the contents of the financial records.  Apparently there are two options, either "The NCC may take the view that as the Electoral Commission has given the accounts submitted to them a clean bill of health (A1 in Andrew's words), there is no more to be said and we should consider the matter closed" or they could have someone carry out audits of the accounts over a number of years (which would be costly).  The thing is, the Electoral Commission will sign off the accounts as long as they look ok, but they have no real idea what they're looking at.  If someone puts down that they took thousands of pounds of expenses that sound legitimate (which is what worries people), the Electoral Commission will likely take them at their word - they're not going to request receipts or go over the accounts with a fine-toothed comb.

At the very least, whoever did the report should have looked at the accounts.  Money in should be donations, membership subs and loans, and money out should be payments on loans and genuine expenses (and the expenses should ideally be documented with receipts on file).  Furthermore, we're always campaigning for more transparency on expenses from MPs, at the very least we should do the same with the party - is there any valid reason not to publish the money in and out?

The rest of the points in the report don't seem to actually say a lot.  For example, point 8 says something was done wrong and "should be regretted".  Point 9 says that the matter should be investigated thoroughly, "... and, if true, not allowed to be repeated. It is the antithesis of libertarianism." Similar phrases can be found throughout.

Point 10 rather misses the point.  Yes, the party should ideally have it's own address, but if the person who runs the website is the same person that deals with the post, then we'll still have the same problem.  Ideally, the whole of the NCC should have their email addresses on the site as a minimum so that people can raise concerns.  I know that people are busy, but we can't afford for one person or a small group to have a stranglehold on the communication channels.

The party is in dire need of some help.  Right now it's falling apart, and without transparency, honesty and good communication I think it's days are over.

I was a member - My membership lapsed last year.  I was planning to renew once I had a bit more money (I got married a little after becoming a member and money has been rather tight ever since) but now I don't know if I'm going to bother.

I really want there to be a Libertarian Party - problem is that the more I hear from some of the people involved in this fiasco, the less sure I am that this ever was a Libertarian party...

Equality?

I saw this story in the Guardian the other day.  Well, I say that I saw it - more accurately, it was brought to my attention.  I don't really read any dead-tree papers, and stick to the Telegraph about once a week on the interwebs - that's all the news I can take.

Anyway, the story.  A few points struck me as interesting:

Politicians came under siege as hundreds of women gathered at parliament to protest at plans to increase the state pension age more quickly.

The protest, organised by charity AgeUK, coincided with the second reading of the pensions bill, which included a revised timetable for changes to the state pension age.

 Ok, so there are some people campaigning against the changes to the pensions bill.  The country is in a proper black hole right now, as far as debt goes - where do they recommend that we find the money?  No clue - they just don't want to be personally impacted.  I can understand that.

Do any of our elected representatives have a view?

Annette Brooke, who has 1,400 female constituents who will be affected by the proposed changes, spoke against the changes at a debate in Westminster Hall last week.

She said: "Historically women have often suffered injustices in the pensions system. Whenever you have a sharp cut-off date there is an injustice. The proposed reforms will mean that women born between 1953 and 1954 will be caught out. However, it is not too late to have another look at these reforms, to ensure that once again women, and this age group in particular, do not disproportionally lose out. It is not fair to keep moving the goalposts as people get older. 

"We know this is not about a large number of people, so money could be found by the coalition government. We need to know how much it would cost to even out matters. This is an opportunity for the coalition to say, 'We really do care about giving equal treatment to the citizens of this country.'"

Right, so Annette Brook (who coincidentally has a fairly slim majority and more women in her constituency will be affected by this than make up her majority) reckons that women have suffered injustices in the pension system.  Well, I'm not saying that they didn't, 50 years ago, but nowadays things are pretty peachy for them.  In fact, as women live longer than men, any Defined Benefits that they get (such as final salary pensions or the state pension) are worth more to women than they are to men (because they get to draw them for longer).  Add to that the fact that they still have a lower state pension age than men, and we can see things are definitely not equal.

(And incidentally, that's something that annoys me.  The Barber judgement said that all pension schemes had to provide the same benefits to men and women - including giving them the same retirement age - from 17 May 1990.  This Judgement didn't apply to state schemes, for some reason - I want to know why not?)

That last sentence is the craziest - she wants the government to say: "We really do care about giving equal treatment to the citizens of this country."  Surely the best way to do that is to give all the men and women the same retirement age (just as they're planning to do) - hell they could go even further and spend the same on all men and women when they reach retirement age, so that they can buy an annuity - I doubt that Annette would approve of that though, as the women would get less per year than the men...

How much is a human life worth?

A lot of people seem to hate any discussion of costs.  You'll often hear "if it saves just one life, it will have been worth it" but this really isn't practical.  If it was, we'd all be wearing full body armour the whole time, and never driving faster than 10 mph.

I freely admit that I admire capitalism.  I think that markets provide a fantastic way of getting the most bang for your buck, and I'd like to consider how market-based thinking can be used to save more lives.

Consider this completely made up example - you have a hundred people who are ill.  50 of them have illness A and 50 have illness B.  Illness A reduces your average lifespan to 5 years and costs £100,000 to treat, whereas illness B reduces average lifespan to 10 years and costs £50,000 to treat.  Suppose that the average lifespan for one of these people who had no illness would be 40 more years, what is the cost of a life?

Treating Illness A gives you an extra 35 years, for a cost of £100,000 - or £2,857.14 per year.  Treating Illness B gives you an extra 30 years, for a cost of £50,000 - or £1,666.67 per year.

Thus, Illness B should surely get funding before Illness A.

The reason being that the money we spend on healthcare is limited.  It comes from somewhere (the taxpayer's pocket) and there isn't an infinite supply.  In an ideal world (one with infinite energy and resources perhaps) we'd treat everyone that's ill, but in our world we have limited money, and spending money treating Illness A costs 70% more than treating Illness B for the same result.

What I'd like to see is a proper evaluation carried out on the various things that we do, looking at (among other things) quality of life, cost/benefit ratio, success rates, recurrence rates, etc.  Then we can build a picture of what it really costs to treat the various problems that people have, and we can figure out how to spend our healthcare money most efficiently.

Pros: More lives saved for less money spent
Cons: Might lead to bad press

One big problem I can see.  If the system is taken to extremes and every case looked at on it's merit, treatment for the elderly would be seen as considerably more expensive than treatment for anyone else (largely because you don't get that many extra years from successful treatment).  This could be offset either by not breaking it down at an individual level (which is sort of against the whole point of this) or by the government funding part of the treatment (well, if you had Illness B we'd pay for it and that costs £50k to treat, so we'll put £50k towards the cost of your treatment if you can pay the rest).  This would likely encourage private topup insurance.

Appearances

There's a woman in the office where I work who's almost completely deaf.  She's very friendly, always has a lovely smile for you when you come in, and can just about get by with lip reading - but when she speaks, her voice is very slurred and can be hard to understand.

I've never really had a lot to do with her (we're in completely different departments) but recently she had a problem with her computer and I had a look and fixed it.  She sent me several files by email, and re-reading them now, I'm struck by how differently she sounds in the email and in person.  Her emails almost sound as if they could have come from my mum, but talking in person it's such a job for her to understand me and for me to understand her that any sort of additional content is dropped.

I know I shouldn't find it surprising, but it just really struck me that an awful lot of the time we define people by the things that make them different and don't look through to the things that make them the same as us, or those we love.

In an attempt to keep this vaguely related to the normal topics of the blog (such as they are), I was wondering how this could be applied to politics, but it didn't work so well:

Don't view Labour as statist control-freaks, rather see them as the folks who introduced FOI (and now regret it), and who were at least partly in favour of AV...

Hmmm - not sure that really works...

The people have spoken - now they'll have to live with it

So, the results are in, and the people have said No to AV.  As predicted, a number of people are viewing this as Yes to FPTP.

'David Cameron ... said the referendum had delivered a "resounding answer that settles the question" over electoral change and people now wanted the government to get on with governing in the national interest.

'The director of the No campaign, Matthew Elliott, said he had been "astonished" at the scale of the No victory: "I personally believe that this result will settle the debate over changing our electoral system for the next generation."'

Oh well - I guess I might get a chance to get proper PR one more time before I die...

Why I'm Voting Yes

I suspect most people will have already cast their vote before reading this, but figured it was worth putting out there anyway, if only to show how I think.

I'm voting Yes to AV.

Democracy - which we like to believe that we have here in the UK - relies upon the will of the people.  The people often don't really know what they want, and only get to express their will every 4 years, but what the hell - we'll accept this idea that the will of the people determines who governs us. 

But we don't look at the will of the country overall - that sounds far too much like PR, and would mean that the BNP and UKIP would get seats.  No - we look at it on a constituency basis.  In each constituency, the people are asked who they want to rule, and they collectively decide.

Now, we're accepting here that the people have a collective will, and that it can be measured.  Then what we want to do is measure it as accurately as possible, in order to represent them as accurately as possible.

Consider an election with only two people running.  We'll call them A and B.  Now, suppose that A gets more votes that B.  We know that the people would rather have A running things than B.  Under FPTP and AV, the result is the same as there are only two candidates.

Now, consider what happens if a third candidate is introduced (and we'll call them C, just to keep it simple). As this is a thought exercise, let's suppose also that C is not very well liked and will get less votes than either A or B, but will get some votes. If C has policies that are closer to As than Bs, then more of the A voters will change from A to C.  In this way, it's possible for B to win under FPTP, thanks to the extra candidate - despite the fact that we know the voters prefer A to B.  Under AV, C would be eliminated and the votes redistributed to the people's second choice, leaving us with the A vs B situation again. 

Another way of thinking about it would be to consider a seat under our current system.  In the last election, the constituency that I'm in (Croydon Central) returned a conservative.  The Conservative had 19,657 votes, and the next best was Labour with 16,688.  For the sake of brevity, I'm disregarding everyone else except those who voted for these two (not least because we have no way of knowing where the second choice votes would have gone). Imagine if noone changed their opinion of which party to vote for, and the election were run again, but the conservatives (for some reason - miscommunication perhaps?) ran two candidates.  They'd get about 10,000 votes each, but the Labour candidate would still have 16,688, and Labour would win with twice the majority that the Conservatives currently have, despite the people still preferring the Conservatives overall.  With AV, the 10,000 votes each would most likely have the other conservative candidate as the second choice, so as soon as whichever one gets least votes is removed, the other wins, and the collective will of the people is once more triumphant.

That's why I'm voting Yes.

Transferrable allowances?

I was reading a post on Tim Worstall's site that started out as an indictment of the taxation system but some interesting points came up in the comments.  People were talking about making the tax free allowance transferable within a household - if one person works and supports another who doesn't, then why shouldn't they be able to share their tax free allowance.

It's something that I've considered before, but I'd take it further.  Why stop at household level?  Why not make the tax free allowance saleable?

Consider: If I pay 20% tax and my tax free allowance of £6750 (or whatever it is these days), then that allowance is worth 20% x 6750 = £1,350 to me.  To someone paying 40% tax, it would be worth £2,700 - so if I sold it for £2k, I'd be £650 better off, and the purchaser would be £700 better off.  Everyone wins (except the state - but the state needs cutting back massively anyway).

Now, there's only so many people earning enough to put them at the 40% rate of tax, and it may well be that the total allowances from everyone in the country is enough to reduce all of their incomes below the 40% level - in which case those people who didn't get off their backsides and sell their allowance quickly would lose out.  So why not just scrap the higher rate tax and the tax free allowance altogether and dish out some sort of citizen's income (while taxing all other income) instead.  If you made it big enough, you could even wipe out most of the welfare state.

So - transferable allowances could lead to flat rate taxation and citizen's income - what's not to like?  :D

(do please note that hte proposed merger of NI and Income tax would change the numbers significantly, but don't change the argument)