Friday, 15 November 2019

We own land! (near a good state school. Labour wants to) give us money!

Labour wants to ban private schools. Well, not all private schools, nurseries, private tutors, and universities will still be able to charge fees, but most of them and all of those that are misleadingly called "public" schools, and especially Eton, yes, most especially Eton.

Quite apart from the fact that the main reason for doing this appears to be based on a fallacy (the same wealthy, privately educated families keep hold of the top jobs down the generations, not because they are privately educated, but because they are descended from the elite), such a measure would fail to convert what is effectively a privately collected tax, i.e. school fees, into a publicly collected one.

Much is made of "redistributing", actually confiscating, the private schools' assets, but the income derived from these forms only a tiny proportion of private schools' income, mostly because the rich schools are a very small minority of private schools, and the vast majority of the extra £3.6Bn needed to educate the 615,000 pupils currently educated by the private sector would have to come out of the state education budget.

Where would the £10.5Bn currently spent by parents each year on school fees go? The most likely answer is into higher land prices near good state schools, as parents move to be in their catchment areas. The inevitable result of such "edugentrification" would be that poorer families would be gradually priced out of these catchment areas and the "good" state schools would become publicly funded versions of the private schools they replaced.

Indeed, with some plans for the abolition of private schools proposing the subsuming of the private schools into the state sector, together with all their facilities, the new upper tier state schools could be exactly the same schools as the current private schools.

The only difference would be that the billions that went to fund education under the old system would go to fund higher land prices under the new.

"Climate change may be behind fall of ancient empire, say researchers"

From The Guardian:

The [Neo-Assyrian] empire emerged in about 912BC and grew to stretch from the Mediterranean down to Egypt and out to the Persian Gulf.

But shortly after the death of the king Ashurbanipal around 630BC, the empire began to crumble, with the grand city of Nineveh sacked in 612BC. By the end of the seventh century BC, the empire’s fall was complete. Now scientists say the reversal in the empire’s fortunes appears to coincide with a dramatic shift in its climate from wet to dry – a potentially crucial change in an empire reliant on crops...

Baldini added that the past can hold important lessons for the present – where fossil fuel use drives climate change.

That's hardly a blinding new insight. There are loads of examples of this happening in history, individual civilisations rising - and falling - as the weather became more - and then less - suitable for food production. The end of the Roman Warm Period ended the Roman Empire (probably).

Food production was the cornerstone of any empire until modern times, because if a few people can grow enough food for everybody, it frees up labour for empire-building (soldiers, administrators etc). Their downfall was usually a fall in food production in the areas they ruled over.

We note that:

a. That's not such a problem with a global economy, as it all evens out. Vikings in Greenland couldn't just export electronic components and then import food from somewhere else, they had to grow the food themselves or die.

b. The climate has always been changing, for better or for worse, independently of CO2 emissions, and we have muddled through somehow. Quite why "man-made climate change" (to the extent it even exists) is somehow worse than natural climate change (which clearly does exist) is never made clear.

c. What if it turns out - not that the Alarmists would ever admit it - that modest changes in global average temperatures have entirely natural causes, which are far beyond our control? Would it be panic over? Which strategies would scientists and economists be recommending then? Probably "muddle along and wait and see".

Thursday, 14 November 2019

Yeah, right.

From The Register:

As many as 20 per cent of UK businesses are axing contractors completely in order to ensure they are fully tax compliant ahead of IR35 changes next year, according to a survey.

Recruitment consultancy and IT outsourcer Harvey Nash interviewed 350 businesses employing a significant number of IT contractors. It also found that 83 per cent said IR35 will negatively affect their industry.

From 6 April 2020, it will be the contracting body's responsibility to determine whether the contractor should fall within the scope of the "off-payroll working" rules, IR35.

The point is that the self-employed pay much less in National Insurance contributions (basic rate 9% and higher rate 2%) and employees pay much more (basic rate 25.8% and higher rate 15.8%). The actual income tax is much the same. So businesses and workers can save themselves a lot of money by treating people as self-employed rather than as employees.

In its infinite wisdom, instead of HRMC aligning the NIC rates (and preferably phasing out NIC entirely), they are obsessed with finding employees who are being treated as self-employed, reclassifying them as employees and collecting three year's worth of PAYE, plus penalties, plus interest. All very unpleasant and messy.

Do we really expect businesses to sack all their supposedly self-employed workers and leave everything undone? Do we really expect all the contractors to become unemployed? Or do we expect that most businesses will bite the bullet and only treat people as self-employed if they really are, and if in doubt, put contractors on the payroll and pay the extra NIC..?

Major employers including Barclays and GlaxoSmithKline have reportedly already told contractors that they will only employ them as on-payroll workers.

Which is what exactly what we expect. For sure, businesses and former contractors will have to share the extra NIC, that's an absolute cost to them.

The employer will also deduct the expected cost of certain statutory rights (holiday pay, pensions, sick pay, redundancy pay and rights, as well as less measurable things like employees having a better credit rating than contractors); all these things are of approximate equal and opposite value to the contractor/employee, so in the grander scheme of things, former contractors who are now employees won't really end up much worse off (apart from the extra NIC).

What's wrong with leaving the tea bag in the cup?

Boris Johnson got grief for doing this, but as he says himself, "‘This really is how I make my tea. ‘It lets it brew and makes it stronger."

I usually pour in the milk before removing the bag so that I can see whether it looks strong enough; if  it doesn't, I leave the bag in and take it out when it does (or add more hot water and milk). I also do it if there's no spoon handy or tea bags are running low.

Putting milk in first before the hot water, now that is weird.

Tuesday, 12 November 2019

"University to be turned into student housing"

OK, The Daily Mash is exaggerating, but there is a lot of truth in this.

The student's landlord makes a lot more profit than the universities they attend, who, taken as a whole together with Student Loans Company and the taxpayer, probably make a cash loss (which is fine, as long as higher education benefits society as a whole).

The Lad is now in halls on campus (two minute walk from front door to lecture theatre or laboratory block), cost £5,000 a year rent plus £9,250 tuition fees, and I'd rather the university makes the profit (or taxpayer takes a smaller loss) than some slumlord cashing in on owning something near a university.

But the university might as well just charge an all-in-price of £14,250, like at boarding school, where the fees cover education and accommodation, and have done with it.

"Sweden's 100 explosions this year: What's going on?"

Headline by the BBC.

Everybody is totally baffled, as am I. Stumped. The whole thing is a mystery.

Monday, 11 November 2019

Classic Telegraph lies and propaganda

The Telegraph runs with the wildly misleading headline "New council income tax is best way to plug multi-billion pound gap in social care, says IFS". The Telegraph's motto is, of course, anything but Land Value Tax or reforming Council Tax. The linked IFS page says nothing of the sort, it just mentions it as a possibility.

Digging a bit further, IFS' own press release on the topic, from March this year, pokes gentle fun at their own report:

But implementation would mean overcoming some important challenges

A local income tax would raise significantly more in some areas than others. We estimate that revenues per person from a flat-rate tax across all tax bands would be more than six times higher in many richer parts of west London than in areas like Hull and Leicester.

A system to redistribute revenues between councils would be required in order to avoid this translating into huge disparities in funding for local services.

To sum up, it would end up as a 1% increase in the national rate of income tax. So not a 'local income tax'.

Income tax rates that varied across areas would be more complex for employers, taxpayers, and HMRC to deal with. Up-to-date records on where taxpayers live – which, at present, employers and HMRC don’t always have – would be needed.

Anything but a national tax hike would be administratively unworkable, in other words. Whatever the merits of a tax (and this has none), it has to be at least administratively workable. If it isn't, then that's usually a clue that it's a fundamentally terrible idea in the first place.

Other options for tax devolution come with more significant drawbacks though

Local corporation and value added or sales taxes would be much more difficult to administer and comply with. Moreover, differences in tax rates across councils would be more likely to distort taxpayers’ behaviour than they would for income tax.

Stamp duty land tax is much more unequally distributed – varying by a factor of more than twenty between richer parts of West London and places like Hartlepool and Blackpool. It is also a bad tax that should be abolished rather than entrenched via devolution.

Agreed to all that.

Substantial new powers over council tax, such as the ability to carry out local revaluations, could pose problems for the system of redistributing funding between councils...

Agreed. Drum-roll please...

It would be better to revalue and reform council tax at a national level – something which is overdue.

In other words, The Telegraph is claiming the IFS said pretty much the diametric opposite of what the IFS actually said.

Sunday, 10 November 2019

Fun With Numbers

From The Daily Mail:

Why it pays to do maths A level: Analysis shows qualification adds £6,000 to a salary in just six years compared to geography or biology

So, if a child is considering whether to do A-Levels, and if so which subject, they should choose Maths?


To a large extent, this is confusing cause and effect and ignoring self-selection.

Some people are more numerate than others; and those who are are, are more likely to earn more . Either because their job required advanced numeracy (very few jobs, if truth be told); because numerate people are more likely to be more efficient and hence be promoted; or because they are clued up enough to choose a job/career that will pay more in the long run (so they waste a few years studying or doing a low-paid apprenticeship in exchange for higher pay later on).

People who are numerate are also more likely to do a Maths A Level, obviously, even though the maths involved is insanely arcane and probably only of use in 0.1% of jobs.

So... numerate people are more likely to end up in higher paying jobs. They will be over-represented among applicants (which they would have been anyway); will be slightly better at them (as they would have been anyway); and employers will tend to prefer applicants who have done 'hard' A-Levels (however pointless, and as much as I love numbers and maths, even GCSE is way more than most people ever really need in real life).

Or to turn the question round, a child is not so numerate. Should they choose Maths A-Level and almost certainly fail? Hell no. Better to pass in something else a bit softer.

Friday, 8 November 2019

Car hits house

From, accompanied by the picture of the wreckage:

Words fail.

Thursday, 7 November 2019

Ex-HMRC head goes through revolving door; forgets everything he ever knew (or should know)

From The Guardian:

The former head of HM Revenue and Customs has called on the government to scrap a controversial tax break designed to help entrepreneurs, which he said was costing the country £2bn a year in lost tax yet provided “no incentive for real entrepreneurship”.

Sir Edward Troup, who was executive chair of HMRC from 2016 until January 2018, said whichever party won the general election on 12 December should abolish the “entrepreneurs’ relief” applied to capital gains tax (CGT).

Troup’s intervention on Wednesday came in response to a Guardian report on Tuesday showing thousands of the country’s richest people were exploiting the policy to pay as little as 10% tax on billions of pounds’ worth of capital gains...

Troup, who is now a consultant at McKinsey, said there was a “very strong case for [whichever party won the election] to ramp down entrepreneurs’ relief immediately”.

Whatever your view, gut instinct tells me that if people build up a business from scratch and sell it, such gains ought to be taxed at a lower rate (aka Entrepreneur's Relief) than straight investment gains, which of necessity mainly accrue to the already wealthy. We can argue about the finer details later on (the £10 million limit for Entrepreneur's Relief seems excessively high to me, why not go back to retirement relief and just exempt the first £1 million or so and tax the rest at full rates?).

For some reason, this ex-HMRC head is homing in on Entrepreneur's Relief while missing the obvious targets.

1. Investor's Relief, which is a 10% CGT rate for people who in subscribe for new shares in the right kind of company, and

2. SEIS, EIS and VCT reliefs, which include a 0% CGT rate on shares (among many other goodies).

It's those two items which are designed to - and do - benefit the already wealthy, not Entrepreneur's Relief.

How the heck he ended up running HMRC is a mystery to me, he'd have failed the most basic tax exam. And presumably McKinsey took him on for his other marketable skills. Maybe he knows how to unblock paper jams in printers or something?