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Killer Arguments Against LVT, Not (118)

Over at Appraiser10.com they list the main arguments for LVT, and then balance this out with Criticisms/Arguments Against, which I might as well look at in turn:

One of the biggest potential problems with a Land Value Tax lies in the valuation process. (1)

Under current property tax systems, the notional value for taxation purposes is often allowed to diverge from the actual market value. (2) Some jurisdictions assess property value at a fraction (sometimes quite a small one) of actual market value, and others tax only a fraction of reasonably accurate appraisals. (3)

Different rates of assessment and/or tax for different classes of property and even different sorts of owner also abound. When such complications go too far, people may end up paying an unfairly high or low amount of tax. (4) Sudden, large changes may occur in the tax amount, owing to the politically unpopular revaluations to market occurring in a single year after long periods of no change, rather than small changes occurring every year in step with changes in the true market value. (5)

1) The valuation process is the least of our worries, we decide which taxes we'd like to replace (all of them, for example) which gives us figure A; we then work out relative land rental values in each defined area (be that each postcode sector, each local council ward, each single street) on the basis of recent selling prices as recorded by HM Land Registry, add these up to give the total tax base B; divide A and B to give the rate and we are done.

2) So revalue more regularly, each year seems about right to me, in the same way as everybody's income or profits have to be reassessed each year for income or corporation tax purposes. It seems fair enough to cap upward or downward movements at ten per cent of the previous year's bill to give people time to adjust.

3) There's nothing that can't be done wrong. That's like arguing against income tax because there are infinite different rates, exemptions, allowances and so on. This is not an argument against income tax in principle, that's an argument against how it's implemented. The real question is whether LVT is a better way of raising tax (and preventing private collection of social gains) than all the other taxes, and not which is the best kind of LVT system. Evidence shows that even the crudest LVT systems work very well.

4) Which is why it's best to publish the official tax rate for each area (in £/sq yard, so that everybody can check his own bill) and also to publish a list of which particular plots of land get exemptions or discounts - and to make it clear that everybody else is paying a slightly higher rate as a result. If 'everybody else' is happy to pay a bit more because the village church is exempt, then so be it. If the factory run by the brother-in-law of the leader of the local council is declared LVT exempt, then either people vote in a different party, or they put up with it.

5) See (2).

Central European Cow Attack Round-up - April 2011

April was a fairly quiet month, only four people ended up hospitalised. There seem to have been a lot of abortive cow escape attempts which passed off without serious injury (to humans, at least).
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Austria 1 April 2011: Tragischer Arbeitsunfall in einem Schlachtraum in St. Johann am Donnerstag: Wie schon oft in seinem Leben zerteilte Georg K. (58) einen Stier, als er mit dem Schlachtmesser ausrutschte. Dabei schlitzte er sich die Kniekehle auf. Obwohl Rettungskräfte rasch eintrafen, war der Blutverlust tödlich.

Tragic accident in slaughterhouse: a butcher accidentally stabbed himself in the leg while cutting up a beef carcass, and even though he was taken to hospital shortly afterards, he later died of blood loss.
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Bavaria, 9 April 2011: Während der Dauer des Einsatzes wurde die Fahrbahn in Richtung Oberstdorf komplett abgesperrt. Weitere Streifen machten sich ebenfalls an die Verfolgung des Vierbeiners. Die Bauern überholten schließlich den Stier und errichteten vor ihm eine Straßensperre. Kampflos wollte dieser aber nicht klein beigeben, sondern rammte noch ein Auto, das die Landwirte hinter dem Stier her gefahren hatte. Letztendlich konnte der Stier aber vom Bauern, seinem Bekannten und einem Polizeibeamten niedergerungen und gefesselt werden, womit der Samstag-Nachmittag-Ausflug beendet war.

A bullock had been running amok for several hours on the main road, which was blocked to traffic. The farmer, his helpers and some police managed to corner the animal, which charged the farmer's car. They finally managed to capture it, putting the animal's Saturday afternoon stroll to an end.
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Switzerland 14 April 2011: Bauer Marc konnte sich immer noch nicht zwischen Tirza und Sabine entscheiden. Diverse Tests sollten ihm nun als Entscheidungshilfen dienen.: Er liess die Damen im Stall helfen, Heuballen verschieben und mit wilden Kühen hantieren. Dabei kam es zu einem gefährlichen Zwischenfall. Als Tirza eine Kuh mit einem Strick über die Wiese führen sollte, rammte die Kuh ihre Hörner in Tirzas Hüfte. Sie kam mit dem Schrecken davon.

A farmer tested two potentials wives by asking them to help him with his cattle. As Tirza tried to walk a rather wild-looking animal, it suddenly attacked her with its horns. She was not seriously injured (see video, 2 minutes in. Any sane man would have taken Tirza, no questions asked).
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Hessen, 14 April 2011: Ein 79-jähriger Bauer wurde am am Donnerstagmorgen in Dittlofsroda von einem Bullen angegriffen und schwer verletzt. Laut Polizeibericht hatte er um 7.50 Uhr im Stall nach den Kühen geschaut und festgestellt, dass eine Kuh offenbar geschwächt auf dem Boden lag. Als er die Einstellbox wieder verlassen wollte, habe ihn der vierjährige Bulle attackiert. Angehörige hörten seine Hilferufe. Der Mann wurde mit gebrochenem linken Oberschenkel ins nach Bad Kissingen gebracht.

The 73-year old farmer went to check on his cattle and noticed that a cow appeared to be ill. When he tried to leave her stall, a bull attacked him and broke his thigh.
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Saxony 15 April 2011: Die seit Mitte März von einem Bauern in Frankenberg (Mittelsachsen) vermisste Kuh Elsa ist wieder da. Sie habe zusammen mit einem kleinen Kälbchen plötzlich am Weidezaun gestanden, teilte die Polizei am Freitag mit.

Das schwarz-weiß gefleckte Tier hatte sich damals auf dem Weg zu einer Koppel losgerissen und war offensichtlich aus gutem Grund ausgebüxt. Seither suchten Bauer und Polizei vergeblich nach ihm. Die Bevölkerung wurde um Mithilfe gebeten. Die Polizei-Mitteilung hatte die Überschrift „Elsa im Mutterglück“. Das Kalb wurde Else getauft.

The cow Elsa who had been missing since the middle of March turned up again at her old farm, accompanied by a new born calf which was christened Else.

Keen readers will remember the story of Else going missing from the March round-up (second story). How on earth a pregnant cow managed to evade capture for a month in a relatively densely populated area is not explained.
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Bavaria, 17 April 2011: Der Fahrer eines Kleintransporters staunte nicht schlecht, als ihm auf einer Kreisstraße bei Schnellmannskreuth im Landkreis Aichach-Friedberg eine Kuh vor den Wagen lief. Der Fahrer konnte dem Tier nicht mehr rechtzeitig ausweichen. Die Kuh wurde bei dem Zusammenstoß leicht verletzt. Am Transporter entstand laut Polizeibericht ein geringer Sachschaden. Der Fahrer blieb unverletzt.

Einem Landwirt aus Pöttmes-Schönau waren am Freitagabend einige Rinder entwischt. Während die meisten der Kühe schnell wieder eingefangen werden konnten, war eines von ihnen auf die Kreisstraße gelaufen.

Several cows had escaped from a farm. Most were quickly recaptured but one made it onto the main road. A van driver was surprised to see one walk straight in front of him. The cow was injured and the van damaged in the collision.
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Bavaria, 21 April 2011: Eine Kuh ist aus einem Schlachthof in Kempten geflohen und hat die Polizei zweieinhalb Stunden lang auf Trab gehalten... Das junge Tier ergriff am frühen Donnerstagmorgen die Flucht und wanderte zunächst durch ein Wohngebiet und mehrere Vorgärten, wie die Polizei mitteilte. Anschließend lief die Kuh im Berufsverkehr auf einer vielbefahrenen Straße stadteinwärts, bevor sie einen Elektrozaun übersprang und sich einer grasenden Kuhherde anschloss.

A cow escaped from the slaughterhouse and went on the run for two and half hours. It wandered through some front gardens, then crossed a busy roads before jumping over an electric fence and joining another herd of grazing cattle.
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Upper Austria, 21 April 2011: Etwa 6000 Zuschauer besuchten das Cup-Match. Während des Spiels soll sich im Messegelände ein rund 350 Kilogramm schweres Stierkalb losgerissen haben - es rannte Richtung Stadion. Anscheinend gelang es aber, das Tier vom Stadion wegzutreiben - "um die Besucher des Cup-Spiels gegen Sturm Graz nicht zu gefährden", berichtete orf.at.

Das Stierkalb soll jedoch aggressiv geworden und später auf den Gleisen der Zugverbindung Ried-Schärding herumgeirrt sein. Als ein Mensch von dem Jungtier noch beinahe verletzt wurde, schoss die Polizei.

Six thousand people were watching a football match when a 350 kg bullock escaped from a local market and ran towards the stadium. The bullock was directed away from the stadium to protect the fans. It became aggressive and ended up wandering around on some railway track. The police shot it after it tried to attack somebody.
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Bavaria 22 April 2011: Beim Brand eines Bauernhofes in Kempten sind in der Nacht zum Freitag sieben Menschen und sechs Kühe leicht verletzt worden. Zwei Kälber verendeten.

Wie die Polizei in Kempten mitteilte, entstand ein Schaden von etwa 250 000 Euro. Aus bisher ungeklärter Ursache fing die Scheune mit Stall Feuer und brannte komplett ab. Die Besitzer des Hofes konnten mit Helfern die etwa 60 Rinder aus dem Stall treiben. Insgesamt waren rund 100 Feuerwehrleute im Einsatz. Die Kriminalpolizei ermittelt.

Six people and seven cows were injured when a barn burned down on Friday. Two calves died. The cause of the fire is unknown and the police are investigating.
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Austria, 24 April 2011: Eine "bösartige" Kuh ist am Karsamstag in der Steiermark einem Landwirt entwischt und stundenlang auf der Flucht gewesen. Erst am Abend, nachdem die Polizei informiert worden war, rannte das Tier in Wohngebiet und stürzte in den Swimming Pool im Garten eines Einfamilienhauses. Dort konnte die Kuh eingefangen und dem 51-jährigen Landwirt wieder übergeben werden, hieß es am Sonntag seitens der Polizei.

A bad tempered cow escaped from the farm and was on the run for hours. The animal ran into a residential area and ended up falling into a swimming pool, where it was recaptured.
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Potsdam 25 April 2011: Eine Kuh hat sich am Samstag auf den Standstreifen der A10 verirrt. Autofahrer entdeckten das Tier kurz vor der Abfahrt Potsdam-Nord, wie die Polizei mitteilte. Es sei am Mittag vermutlich von einer nahen Weide ausgebüxt. Ein Tierfänger musste herbeigerufen werden, um die Kuh wieder zurückzubringen. Zu Unfällen sei es dank „umsichtiger Kraftfahrer“ nicht gekommen, sagte ein Polizeisprecher.

A cow escaped from the pasture and ended up on the hard shoulder of the A10. It was reported by passing motorists and quickly recaptured.
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Salzburg, 26 April 2011: Der Bauer wollte den Stier in den Stall treiben, dabei ging das Tier auf den 54-Jährigen los und verletzte ihn im Bereich des Brustkorbs und des Bauches, sagte ein Mitarbeiter des Roten Kreuzes Salzburg am Dienstag.

Der Landwirt war nach dem Unfall ansprechbar. Er wurde von den Hilfskräften versorgt und anschließend mit dem Hubschrauber in die Unfallchirurgie des LKH Salzburg geflogen. Warum das Tier plötzlich auf den Mann losging, ist nicht klar.

The farmer was trying to get a bull back into the stalls when it attacked him. He was knocked unconscious and taken to hospital by helicopter. It is not clear why it attacked.
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Lower Austria, 28 April 2011: In einer Tierzuchthalle in Amstetten hat am Donnerstagvormittag eine Kalbin zwei Menschen verletzt. Eine Frau (52) und ein Mann (74), beide aus dem Bezirk Amstetten, mussten ins Landesklinikum eingeliefert werden...

Laut Polizei waren in der Halle Verladearbeiten durchgeführt worden. Mehrere Rinder sollten von Anhängern auf einen Lkw umgeladen werden. Dabei dürfte die Kalbin außer Kontrolle geraten sein. Die beiden Opfer wurden per Notarzt- bzw. Rettungswagen ins Krankenhaus transportiert.

Cattle were being put on transporters. A calf went wild and attacked a man and a woman who had to be taken to hospital.

Calm down, dear! It's only an unflattering caricature.

"FPTP is unpopular"

On page 5 of their leaflet, the No to AV people claim that "AV is unpopular" because only three countries use it.

What they don't tell you of course is that "FPTP is [only] the second most widely used voting system in the world, after party lists. In crude terms, it is used in places that are, or once were, British colonies. Like America. The use of FPTP used to be even more widespread, but many countries that used to use it have since switched to something else."

So yes, FPTP has been "tried and tested" as the No to AVers say... and it has been found wanting. If we were going by "popularity" alone, we'd go for full PR and party lists, and there'd be no argument for going back to FPTP.

And maybe AV isn't the best voting system (although it's clearly much better than FPTP) but wasn't it the existing government that offered us the choice? If they think AV is so awful, why didn't they offer us a choice between FPTP and (say) FPTP-with-top-up-seats?

"The second or third best can win under FPTP"

Page 3 of the No to AV leaflet is actually headed "The second or third best can win under AV" (see below) but the example they give clearly illustrates that 57% of people prefer Candidate B to Candidate A, so by any objective measure, Candidate B must surely be the better candidate, and Candidate A (who would have won under FPTP) must be second best:

Are people really this stupid?*

According to the leaflet distributed by No to AV, the candidate you choose on "Your ballot paper" always wins! Or did 62% of the leaflets they sent out show "Your ballot paper" with the X against Candidates B, C, D or E but Candidate A still winning?

By their own admission (on the previous page of the leaflet), 57% of people preferred Candidate B to Candidate A and thus under AV, Candidate B would have won.* That's a rhetorical question by the way. Clearly they are, as they appear to be falling for this bullshit.

Outbreak Of Commonsense...

... at The Ministry for Cycling:

Transport minister Norman Baker refused to back down today after sparking a safety row by saying cyclists may be safer not wearing helmets. He cited research that drivers may go closer to cyclists with helmets than those without, which could put them at greater risk.

Mr Baker, whose role includes responsibility for cycling, said: "If your head hits the pavement you may be better off with a helmet. On the other hand it may be that drivers drive closer to you and there is more risk of an incident. It's not a one-way street in terms of safety. The jury is out."

The minister stressed that he fully backed the Department for Transport's advice that children should wear a helmet because they are likely to have less road sense and have weaker skulls. But Mr Baker, a keen cyclist who does not wear a helmet, insisted it was up to adults to choose whether they do or not, adding: "I took a conscious decision when I became cycling minister that I would not change my habits after 45 years of cycling."

Roger Geffen, the Campaigns Director of CTC, the UK's national cyclists' organisation, says cyclists who wear helmets are 14 per cent more likely to have a collision per mile than those without.

But Katharine Hartley of road safety charity Brake said: "We have extensive evidence that helmets are effective in reducing the risk of serious head injury when cycling. Wearing a helmet is a really simple step that all cyclists can take. It's highly frustrating to see our minister with responsibility for cycling taking to his bike without a helmet."

Andrew Marr

For Orphans of Liberty.

Deeply Gratifying Google Searches

Wills and Kate, currently number 2 out of 1.4 million.

"Geese scare quad bike rider into crash"

Spotted by JuliaM in The Argus:

A man drove his quad bike into a tree as he desperately attempted to flee a herd of attacking geese.

The victim, aged in his 60s, was set upon by the birds as he rode around the garden of a home in Horsham. The man was left with a broken leg after he lost control of his bike and collided with a tree as he swerved to avoid the aggressive gaggle.

The Sussex Air Ambulance and South East Coast Ambulance (SECAmb) were called and the man was treated before being driven to Worthing Hospital.

A spokeswoman from the Sussex Ornithological Society said it is not unusual for geese to react in an aggressive way.

She said in the past they had been used as the bird equivalent of guard dogs, adding: "They can be quite fierce. They used to be used as guard dogs with some saying they were more effective than guard dogs. People use them to alert them to people coming onto their property and to protect their property. They will fly at people and peck them and they will fly around cackling. They can be very large. If they were protecting their young, as they are likely to be at this time of year, they would be especially vicious."

A SECAmb spokesman confirmed they had attended an incident at a private address in Horsham. A Sussex Air Ambulance report described the incident, which took place at 9.55am on Thursday April 21, as "quad bike versus tree".

Interesting statistics in yesterday's Evening Standard

Sam Cam

Nick Clegg

As requested by Orphans of Liberty.

"Vic farmer critical after rammed by cow"

Here's one I overlooked, from 9 News:

A Victorian* dairy farmer has life-threatening injuries after being rammed against a fence by a cow.

The 56-year-old man has abdominal and chest injuries, and is in a critical condition**, an Ambulance Victoria spokeswoman said, "It looks like he went into cardiac arrest at the scene."

The farmer was rammed on a property at Inverloch in Gippsland on Tuesday. An ambulance helicopter is taking him to the Royal Melbourne Hospital.

* I assume that means "from Victoria" and not "who lived over a hundred years ago".

** Too right! I'd be highly critical too, if I'd been attacked by a cow.

Killer Arguments Against LVT, Not (117)

Over at The Cobden Centre, 'Chef' (presumably ChefDave?) does his finest and earns this:

mrg: Current has given examples in the past of how usable land isn’t necessarily inelastic in supply. Marshland can be reclaimed, trees can be planted in deserts, etc.

In general, the value of land can be increased significantly by investment. Most people in the UK could afford to buy a property in the North East, but most wouldn’t want to live there. Investment could change that.

If you tax according to the value of land, you discourage the improvement of it.

The simple, real life example of Business Rates (a tax on the rental land and buildings which falls mainly on the land element) shows that this is clearly not true. As it happens, a derelict or vacant site is not liable to Business Rates, and the liability is only triggered once buildings are built, but commercial buildings are built nonetheless.

Further, a lot of investment is carried out by the government; if they know that they can build a new road for £1 million and that this increases rental values by £200,000 a year, provided they can collect half those extra rents in tax, then the new road is worth building. In the absence of the tax, there is little incentive to build the road.

Or try this thought experiment: you inherit two identical plots of land; one to the north of Basel (in Germany) and one to the south (in Switzerland), upon either of which you could build an office building which you could rent out for the same profit of CHF 200,000 a year/EUR 155,000 a year. Happily enough, you have also inherited enough money to pay for the construction.

Germany has negligible taxes on land; Switzerland has much higher taxes on land, let's say it's EUR 100 a year on the German plot and CHF 100,000 on the Swiss plot (whether the land is developed or not); also, let's assume rental income is tax-free in Switzerland and taxed at 50% in Germany (I made up that last bit).

All things being equal, which plot would you develop first?

The answer "I would sell off the Swiss land" doesn't hold water, as you can only sell it to somebody who assumes the CHF 100,000 a year liability, so the selling price of the land is depressed accordingly.
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UPDATE 20.50: seeing as nobody has answered the question yet, here's the answer (click and highlight to reveal): The Swiss land tax of CHF 100,000 is due every year whatever you do, so it is a sunk cost and can be ignored in decision making. Your choice thus boils down to (a) build an office block in Switzerland and earn CHF 200,000 net of 0% income tax; or (b) build it in Germany and earn EUR 77,500 net of 50% income tax. CHF 200,000 > EUR 77,500, so you would build it in Switzerland.

Propaganda Fail

From the BBC:

There has been a huge rise in the proportion of home buyers paying for their new homes in cash.

Figures compiled by the Council of Mortgage Lenders (CML) show that in January 2011, nearly 40% of buyers did not need a loan to buy their home. This means the proportion of cash buyers has more then doubled since 2005, when the records began.

This in turn suggests the market is increasingly the domain of the cash-rich, with many other buyers shut out....

The number of cash buyers is actually unchanged, what the Homeys at the BBC forget to mention is that transaction numbers have halved.

And in any event, these aren't really all cash buyers, most of them are people who sold their previous home(s) to somebody else who had to take out a mortgage - and as fewer and fewer people are taking out mortgages, it stands to reason the the number of cash buyers will dwindle.

AV: Yes, No, Undecided

The results of the last opinion poll I can find, which I shall take at face value, are as follows:

Yes - 32%
No - 41%
Undecided - 22%

OK, the 'Yes' voters are most likely to turn out and vote, the 'No' voters less so and the 'Undecideds' are unlikely to vote, so that's not looking good, but if you are 'undecided' at the moment, why not cover your bets by voting 'Yes'?

IF at the next General Election you can't quite make up your mind which candidate you like best [dislike least] THEN at least you have the option of casting a 'conscience vote', a 'comedy vote' and a 'compromise vote;

ELSE IF you support one candidate, and one only THEN you still have the option of casting your first and only vote for that candidate, safe in the knowledge that this is exactly the same as casting your first, second, third etc. votes for that candidate.

ELSE IF you heartily disagree with all the candidates on offer and want to register a protest vote THEN you can look up the results of the previous election and cast your votes in reverse order of how likely they are to win, leaving the most likely candidate blank.

ENDIF.

Footnote: Even if it were the case that under AV, the BNP would grab a couple of seats in Parliament, would that be the end of the world? However little you like the BNP's policies, they are after all a political party which claims* that it wants to get into power first and then start killing people; they are not the political wing of a distinctly anti-British guerilla movement which actually has killed hundreds of people over the decades**, and the UK Parliament has had a handful of Sinn Fein MPs for years without anything terrible happening.

* I don't think their leadership, i.e. Nick Griffin, seriously imagines they ever will, it's just him and a few other cynical racists making a living off the backs of lots of little people.

** I actually agree with the Irish republican cause, but the means they have used (and the way that the USA sucks up to them) turn my stomach, and I'm not impressed with the way things are going in Northern Ireland.

Constructive criticism

By Drivebycritic (click to enlarge):

"I'm saying yes!"

More Wills & Kate Fun

From The Times:

A recent scientific study has shown that there is a particular gene, present in two out of every five men, that makes them less likely to form a lasting monogamous relationship. So, certain men are biologically predisposed to cheat. Infidelity is in their DNA...

So, if you get married to somebody whose father and mother both had affairs...

Random Adam Smith quote of the day

"Civil government, so far as it is instituted for the security of property, is, in reality, instituted for the defense of the rich against the poor, or of those who have property against those who have none at all."

The Wealth of Nations, 1776, from here.

Propaganda Fail

Lloyds Banking Group put out a press release (pdf) last weekend claiming that "Buying is £100 a month cheaper than renting", which the Home-Owner-Ist media regurgitated with glee.

They use the following assumptions:
Average house price £166,102;
Average deposit 27%;
Average interest rate 3.59%;
Plus a made up figure for those running costs which an owner-occupier pays.
They say that this all adds up to a cost of £608 a month for buying as against £708 a month for renting (which I shall take as given).

*Ho hum*

They are honest enough to include the interest you could have earned on a £44,262 deposit, which they reckon is about 1% per annum or £39 a month (this could easily double or treble, of course), which gets the total figure for mortgage repayments + other costs down to £569.

Excel tells me that the monthly repayment on a 25-year repayment mortgage of [£166,102 x 73%] @ 3.59% interest rate would be £611. If you visit their website and use their mortgage calculator for FTB mortgages with that house price/deposit combination and "tracker", it tells you £643.

Unles I've missed something, both of those figures are greater than the £569 total cost which they claim.

*/ho hum*

Arsene Wenger

As requested by Orphans of Liberty.

Fun Online Polls: Why the Tories are scared of AV and Royal Wedding Fun

On a very high turnout, the results to last week's Fun Online Poll were as follows:

The Tories are opposed to AV because they are scared of...

UKIP - 61%
Liberal Democrats - 17%
BNP - 3%
Other, please specify - 19%

Which confirms pretty much what I thought, so thanks to everybody who took part. The idea that the BNP are any sort of political or electoral threat to the Tories (or even Labour) - and hence that if you oppose the BNP you must prefer FPTP to AV - always struck me as laughable in the extreme.
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And so to this week's Fun Online Poll: if you were in London this week, which of the following would you attend:

Royal Wedding Celebrations
The Islamist demonstration
The English Defence League counter-demonstration
Peter Tatchell's counter-counter-demonstration
Other, please specify
None of the above

Vote here or use the widget in the sidebar, multiple answers allowed.

Using BEER to explain the progressive income tax system

I'm sure most of you will have seen this parable before, which illustrates that 'tax cuts for the rich' are not what they appear.

Well yes, of course, but why does the author accept that income tax is a sensible way of paying for common expenditure in the first place? If a Land Value Taxer had been asked, he would have explained that it is far better for all concerned if we scrap income tax and everybody just pays for his own drinks.

It would be fun going through all the Killer Arguments Against LVT, Not and applying them by analogy:

"That doesn't relate to ability to pay!" In that case drink less.

"People on low and fixed incomes will die of thirst!" Nope, because the bar is a parable for the government, and as it makes a profit on selling beer, it can dish out those profits as a Citizen's Dividend, so everybody will be able to afford something.

"But how will we keep track of what everybody has drunk?" It can be done, believe me.

"But the value of a drink is subjective! How will the bar manager know how to set his prices?" By trial and error, like anybody else. It's quite clear that he'll charge more for a double than a single, that high strength beer will cost more than low strength fizz, and that a glass of tap water will cost pennies. The fact that I cannot predict what prices for individual drinks will be does not mean that there isn't an answer.

"But then the evil bar manager will just screw more money out of us by hiking his prices!" In that case go drink elsewhere where the prices are more reasonable.

"But I like being able to drink for free!" You're not drinking for free, nothing is free, you're paying for it in income tax. Why does it make any difference how the bill is split up?

"Millions of people would pay more under the new system than the old system!" So what? Millions of people (high earners and/or modest drinkers) would pay less as well.

"But the richest guy will now be able to consume $59 worth of beer every day, leaving us with none!" No he won't. He'll probably drink the same as ever, maybe a bit less. In any event, it's his money and he can spend it how he likes.

And so on, you get the idea.

"Immigration to rise as benefit curbs lifted"

MBK emailed me a link to this.

UPDATE: In case that link doesn't work, it says much the same in today's Daily Mail (via VFTS).

Happy Faster!

Philip Hammond

Kate Middleton with Laser Eyes

"Farmer killed in cow attack tragedy"

From the North West Evening Mail:

AN award-winning farmer died of a heart attack minutes after being kicked by a cow.

Wilson Boow, of Corney Hall Farm, Bootle, was out with his son Stephen when the incident* happened. An ambulance was called at around 11.25am on Wednesday and the Great North Air Ambulance attended, but Mr Boow died following a heart attack...

* The article doesn't go into much detail on the actual attack.

Spotter's badge: William (in the comments to previous post).

Killer Arguments against LVT, not (116)

Another argument that people have launched against LVT is that
a) it is a tax on 'assets', and therefore
b) by implication, Land Value Taxers want to tax all 'assets', be that paintings, cars, the bricks and mortar of a building etc.

The thing fails because assumption (a) is wrong. Before we decide whether land is an 'asset' or not, let's look at the two basic types of assets:
a) Proper assets
b) Financial assets

a) A proper asset is something like a painting, a car, a building.

i. People have invested materials and effort into these, and in a freely competitive market, the selling price will be approximately equal to the cost/value of the materials and time invested in them, plus a small profit margin to cover the producer's risk element and cost of capital on the fixed assets which he needs to make the finished product.

ii These cannot be created out of thin air

iii. If they are destroyed, there is a real loss to the owners without there being a corresponding gain to anybody else.

b) A financial asset is something like a bond (or indeed a bank deposit) or an accrued pension entitlement from your employer.

i. These arise because the recipient has lent the payer money in the past, or because the pensioner has worked for that employer in the past for slightly less than a full market salary and the balance is paid out in the years after he stops working.

ii. Interestingly, financial assets/liabilities can be created out of thin air - if you bet somebody £100 that something will happen and it does, hey presto, you have a financial asset of £100 and the other party has a liability of £100, but let's ignore that for now.

iii. It is an asset from the point of view of the recipient, but is always an equal and opposite liability from the point of view of the payer, and the two by and large net off to nothing. So if you drop dead on the day your pension was due to start, your loss is your former employer's gain.
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There is no moral or economic case for taxing either of these types of assets (and it would be an administrative nightmare and open to massive evasion anyway). A tax on paintings or cars is like income tax on the person who manufactures them or like an annually recurring VAT on the purchaser; a tax on financial assets like bonds, bank deposits, pension rights is like income tax on the interest or deferred employment income.

In my view, income tax and VAT are Bad Taxes, so that rules out a tax on proper assets and financial assets.
---------------------------------------------
So we come to land, which behaves in some ways very much like a financial asset...

i. The buying or selling price of land at any location is just an estimate of the net present value of the future rental income that the owner will be entitled to collect (or enjoy himself, if he intends to occupy it himself). So by and large, the value of land goes up when interest rates go down and so on. And of course, the value of the rental payments to the owner is equal and opposite to the corresponding liability to pay those rents - the two net off to nothing. So like a financial asset, land is only an asset because it is a liability to somebody else, if you net the two off it is a big fat nothing.

ii. Can land be created out of thin air? Not really - even land reclaimed from the sea needs a sea bad - but location values very much are, i.e. if a farmer gets planning permission, the value of the land increases a hundred-fold. If the planning permission is then revised down to a lower density, the value of the land goes down again etc. And the location value of any plot is created by the actions of 'everybody else' (for example, when trouble kicked off in the Middle East recently, it was reported that demand for residences in London had gone up because all the despots were looking for somewhere safe to hide; land values in the Middle East presumably fell).

iii. Where location values differ from other financial assets is this: a financial asset arises because the lender has given the payer money in the past and they have a right to be repaid that money in future. There is reciprocity involved - it is a two-way street. For example, I lend money to the government and get a bond (an asset from my point of view) and the government has a liability (to repay me with interest). Even if I sell that bond to somebody else and the government is now liable to repay him, we can still see that it is a two-way street. (I am not making excuses for governments running up huge debts, but it is the government which runs up the debts, not the people willing to lend them money).

BUT... there is no such reciprocity with land.

The people with the liability (people who are renting or who want to buy) have never received anything from the land 'owners' with the right to collect the rent or sell the land. Land 'owners' in their capacity as land 'owners' never paid 'everybody else' for whatever it was they were doing to create those location values. For sure, there are plenty of things which happen which depress location values as well, but by and large the net overall effect is positive.

And for sure, most owner-occupiers are also income tax payers (so have paid towards a lot of the cost of publicly funded improvements) but IMHO it would be better to get rid of income tax (which forces tenants to pay for the COST of publicly funded improvements through their tax bill and for the VALUE of publicly funded improvements through their rent bill) and just have a Single Tax on the location value.

Nice bit of special pleading by Nationwide

From MoneyMarketing:

Nationwide group distribution director Matthew Wyles has called on the Government to introduce tax breaks to encourage more investors to the buy-to-let market. Speaking at the Great Housing Debate last week, Wyles said the buy-to-let sector has become hugely important to the property market...

“We would rather lend at 75 per cent loan to value on a buy-to-let to a hardened, experienced investor than to a 22-year-old plumber who wants a 95 per cent loan. (1)”

Wyles said he does not want to see the sector blighted by regulation and called on the Government to offer potential BTL investors incentives to attract more landlords.

He said: “I do not understand why new lenders are not coming to market more readily. We need to make sure our friends at the regulator (2) cut us some slack around capital weightings so we do not end up with another social need obstructed by regulatory blindness. It is something that should qualify for consideration by the Government for tax beaks. Some fiscal stimulus for the buy-to-let market, as long as it is not too distorting (3), would be welcome.”

Buy To Let Funding Services principal Geoff Laird says: “Were it not for the private landlords entering the buy-to-let sector in the last 11 or 12 years, there would be far less decent property for people to live in (4). Incentives for landlords would be much welcomed.”

1) Yes, of course the bank would rather lend 75% of the value rather than 95%. So that's not a fair comparison.

2) 'Our friends at the regulator' 'nuff said.

3) All subsidies are distorting, and the cost of the distortions always outweigh any benefits.

4) That's right. If the plumber buys the house then he's far less likely to care of it than if he's renting it from the 'hardened, experienced investors'.

Spotter's badge: Jack C at HPC.

Friday night gear change

Blast from the past. Harpo's "Movie star", a semi-tone truck driver's gear change at 1 min 11 and again at 2 min 7:

Policy Based Evidence

Right at the end of an artlcle in The Daily Mail about smoking bans in the USA:

Studies proved that bans in restaurants, bars and businesses improved air quality of air and reduced exposure to second hand smoke.

Smokers are also more likely to quit the habit in areas where the bans are in effect, while there is a potential reduction in heart attack rates in adults and rates of asthma attacks amongst children.

‘All states that have not done so already could protect the health of their residents by adopting laws that prohibit smoking in workplaces, restaurants and bars,’ the CDC report advises.

The International Agency for Research on Cancer of the World Health Organization released a study in 2002 that proved that non-smokers are exposed to the same carcinogens by tobacco smoke as active smokers...

The CDC’s report concludes that although smoking bans have put the health of Americans at less risk than in 2000, further action could be made to improve the health of non-smokers.

The report indicated that casino workers are routinely exposed to second-hand smoke, and those who live in apartments adjacent to heavy smokers are exposed.

A University of Rochester study found that up to 99% of children living in apartment buildings had a tobacco by-product in their blood, likely from second-hand smoke exposure.

Why don't we see future public sector pensions as ASSETS?

From Citywire:

The current discount rate used by the Treasury to determine unfunded public sector pension liabilities is 3.5%. This puts liabilities at £750 billion. However some pension experts have called for a rate of 1% that would raise the liability to around £1.3 trillion, they claim this is the real liability taxpayers face from public sector pensions.

Clearly, some public sector pensions are merely deferred salary, because in Olden Times public sector workers were paid less than in the private sector but were accruing better pensions, but that's all in the past - from here on in, we are looking at a straight transfer of cash from private sector taxpayers to retired public sector workers in exchange for absolutely no additional work in future.

The accepted figure for the net present value of all accrued pension rights is about £1,000 billion, for sake of argument we can call this annual pension payments of £40 billion to infinity, discounted at a rate of 4 per cent.

So private sector taxpayers see that as a £1,000 billion liability, but remember the Golden Rule - for every financial liability there is a corresponding financial asset (and vice versa); so public sector workers past and present have a financial asset worth approx. £1,000 as well and the two net off nicely to £nil. (For arcane reasons, such assets/liabilities, being akin to 'rents' depress people's net future wealth, but hey).
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On the other hand, we have something called 'land' which people tend to see as 'an asset' rather than 'a liability', but if we follow the analogy, we see that land is not really an asset at all...

Land has little or no intrinsic value, but is bought and sold for the net present value of future rental income which is generated by the location (whether paid in cash or consumed by an owner-occupier is neither here nor - the value is the same).

That stream of payments is exactly like a financial asset, and the net present value of the payments to the lucky recipients is equal and opposite to the net present value of the payments which people will have to make in future (or forego, in the case of an owner-occupier who could otherwise sell his house for cash and live off the interest).

Applying the same discount rate of 4% to a known total land value (i.e. after deducting the cost/value of the bricks and mortar) of about £2,250 billion gives us annual rental income which will be collected privately in future of £90 billion per annum (or £150 billion gross, net of Council Tax, Business Rates, SDLT of about £60 billion per annum etc).

To finish off the analogy - public sector pension payments are in return for no future work by the recipients and can be seen as 'rents'; ground rents are by definition 'rents' and are paid in exchange for absolutely no work done by the recipients in future (location rental values are created by people who live in an area, not the owners of land - if the vendor sells up and moves away, he will contribute nothing to rental values in that area in future - although clearly a lot of people are in both camps).

Something else that pensions and land rents have in common is that the capital value is only 'hope' or 'expectation' value: you might drop dead the day after you retire, in which case your pension was worth next to nothing; and they might build a motorway or sewage works behind your back garden, in which case you have no comeback against the person who sold you the house (provided he disclosed everything he could be reasonably expected to know).
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Or to put it another way, why do people get so upset about the £1,000 billion public sector pension bill (and I am one of these people) but gleefully ignore the £2,250 rental bill, both of which will have to be paid by 'everybody else' for all eternity? Will they both not act as a huge great drag on the economy?

And if you are going to go this far, why not chuck in the £400-billion plus per annum collected in taxes on incomes and capitalise that up to £10,000 billion-plus? How about tapping into the rental income (which is massively depressed by income tax) and use the proceeds to reduce or eliminate taxes on incomes?

Killer Arguments Against LVT, Not (115)

Sobers' comment on the fact that homes and gardens only take up 3.5 per cent of the UK's surface area:

And this supports your argument that housing is zero-sum, and me owning a particular house stops you from owning a similar one how precisely?

Looks to me as if there's more than enough land for everyone to have a reasonably priced house if only the government would let people build them... no need for LVT whatsoever, problem solved.

To which I responded:

S, come off it.

a) As you know perfectly well there's no point building houses out in the middle of nowhere, they are best built in or around existing towns and cities where there are jobs etc, and there is by definition a restricted amount of such land.

b) If you liberalise planning laws, then yes, at the very margin* house prices might drop but there will still be big differences between a marginal plot and land in the centre of towns and cities, near the stations, with a nice view etc (so the rationale for LVT still holds).

c) If you liberalise planning laws, then all things being equal, the total rental value of UK land goes UP (even though house prices at the margin go DOWN), therefore tax base for LVT goes UP and therefore the % rate we'd need to raise £x00 billion a year to replace all other taxes goes DOWN.

d) Thus with or without planning restrictions, all the arguments for replacing income tax with Land Value Tax still hold.

* And those people who buy a house at the margin will only pay very little LVT, but we've already got plenty of marginal housing in the UK, as Jer points out further down that thread.

Porn star outed as school secretary dons drab office clothing again... despite promising to give up her unglamorous double life

From The Daily Mail:

A porn star school secretary who promised to give up her tedious double life has donned her sensible two-piece again again after being sacked from her evening job.

Julie Gagnon, who goes by the stage name Samantha Ardente, made headlines around the world after being outed by the father of a 14-year-old pupil from her school who recognised her at the reception desk.

The young mother was finally released from her contract with Adult Productions Inc in Quebec City last week after news of her humdrum desk job reached the film producers.

Miss Gagnon, who had starred in five adult movies, had agreed to give up her day job in a desperate bid to regain her part time one, but the company's board claimed her uninspiring clerical role 'was not compatible' with any sexual positions.

Despite being hopeful of restarting her film career after launching legal action against for breach of contract, Miss Gagnon has covered all with a nice M&S two-piece with a buttoned up blouse and cardigan in the latest edition of "Office Supplies Monthly".

That's four times as much land as is used for homes and gardens...

From the DCLG:

The latest National Statistics on the estimates of the area of designated Green Belt land in local authorities in England were released under the auspices of the UK Statistics Authority on 15 April 2011. Key points from this latest release are:

The area of designated Green Belt land in England at 31st March 2011 was estimated at 1,639,540 hectares, about 13 per cent of the land area of England...

Add on the 'New Forest National Parks' etc and that's about 14 per cent. For comparison, homes and gardens take up about 3.5 per cent of the UK by surface area and farmland/forests (incl. Hallowed Green Belt) take up nearly 90 per cent.

They could just buy a big chair...

At the end of an article about changes to teachers' pensions:

Teachers at the conference also challenged the idea of having to work beyond the age of 65.

"Can you imagine being a reception teacher and trying to get on and off those little chairs at 68? I think not," said history teacher, Alice Robinson.

Men 'worried' by articles about heavy internet porn use

From the BBC:

A quarter of men aged 18-24 are worried by the amount of articles they read about the dangers of porn they are watching on the internet, new research suggests.

Frequent readers of such articles in the study were much more likely to report problems with their jobs, relationships and sex lives.

Newsbeat teamed up with doctors from the Portman Clinic for the report, the first of its kind in the UK.

"Those people spending large amounts of time reading about the dangers of online porn are not having more fun," said Dr Heather Wood [sic] "They are more worried about themselves, more worried about what they are looking at, and report more relationship problems."

Free articles about danger of online porn

One thousand and fifty seven 18-24 year olds were asked to take part in an online survey drawn up with help from Dr Wood and her colleagues at the clinic, part of the Tavistock and Portman NHS Trust.

Almost eight out of 10 men said they had read articles warning of the dangers of looking at porn on the internet compared with just over a third of women.

Free websites were by far the most popular way of getting hold of such articles, followed by file-sharing networks, mobile phones and TV.

But were they asking for it?

From The Daily Mail:

A swarm of bees attacked an elderly couple at their South Texas ranch, killing both and injuring their son, officials said.

William T. Steele, 90, was spraying insecticide on a bees' nest when the bees attacked him...

Greek Bond Haircut Fun

A lot of the papers have mentioned that Greek bond yields have risen to 20 per cent because investors fear that there will be a partial default, or "haircut" or "restructuring" or whatever you want to call it.

Does this mean that Greece is paying 20 per cent interest on its bonds? Nope, the gimmick here is that investors have priced in the probability of default and Greek bonds are being bought and sold at seventy per cent of face value.

So crudely speaking, those who invested at par a few years ago have lost 30 per cent of their investment; and if (for example) you now buy a Greek bond with three years to maturity paying nominal 10 per cent interest for 70 cents in the Euro, over three years you will receive 10 cents interest every year and 100 cents in three years' time, giving an internal rate of return of about 20 per cent (assuming no default).

In a worst case scenario, you would only receive 50 cents principal repayment in three years, giving an IRR of 4 per cent (assuming interest paid in full).

So it's the 4 per cent yield which is the relevant figure, which seems not unreasonable in today's low interest rate environment, and not the 20 per cent.

Smoke & Mirrors

From the desk of Scott Wright:

Article

Ok so he's given the "profit after expenses" back to the taxpayer, he said months ago that he would do this so a bit of a non-story really.

BUT the real issues for me are as follows:

A) He has sold it only because mortgage interest is not claimable under expenses changes and renting is, i.e. he has done it so he can continue to have a second home funded by the taxpayer

B) He has engaged in "flipping" as he has claimed SECOND HOME expenses on this property and yet there is no mention of CGT (unless he is being exempted by returning the full 100% profit that is)

C) I could in the space of half an hour easily locate him 20 suitable properties within his constituency (or within reasonable distance) with a cost FAR FAR lower than £280,000 in a "nice area" of Sheffield, he has already gone massively overboard and used taxpayers to live beyond the ordinary means an MPs salary would afford.

D) He bought it from a "friend", did Clegg pay this "friend" the going market rate for the property or was it an over inflated price because the mortgage interest was reclaimable?

Typo Of The Day

From The Metro:

Desk-bound office workers have double risk of bowl cancer

They'll probably correct it later on, but I doubt they'll change the URL.

Putting the 'sub' into 'Standard'

From the Evening Standard:

AV, if adopted, would mean the end of the first-past-the-post system that has served this country well so far (1). First-past-the-post does have shortcomings: it allows votes to pile up in many seats without directly influencing the result, and it makes it harder for smaller parties to win (2). But first-past-the-post is clear and simple: anyone can understand it; there is no doubt about the winner.(3)

AV is far more complicated. (4) Voters may name candidates in order of preference. In constituencies where one candidate gets a majority of first-preference votes, the other preferences are ignored and the result is much the same as under the existing system. (5) Where they garner fewer than half of first preferences, then second, third and other preference votes are taken into account too. As Churchill said, AV thus means elections can "be determined by the most worthless votes given for the most worthless candidates". (6)

This can and will produce perverse results. In a close-run contest, it is quite possible that the candidate who comes second or even third on first-preference votes can end up winning, having mopped up second and third preferences.(7) AV thereby encourages the most Byzantine tactical voting (8) and political fixing. (9)

1) Says who? We've no idea how things would have turned out if we'd had AV all along.

2) Exactly. Those are the arguments for AV in a nutshell, there's not much more to it than that. The notions that MPs will work harder or be less corrupt are entirely secondary and not proven either way.

3) In that case you might as well argue for electing MPs by toss of a coin: cheap, simple, clear. There will be no doubt who is the winner under AV either, so what?

4) No it's not. People loyal to one party and one party only are free to vote for that party only; but most people are capable of casting a "conscience vote" and one or two "compromise votes". Or does the ES take all its readers for morons?

5) Exactly. I doubt it will change the results much.

6) So if the pro-FPTP crowd (mainly Conservatives) think that AV is such an awful idea, why didn't they give us a choice between FPTP and something better than AV, like AV+ or whatever? It's almost as if they have rigged it to ensure we stay with FPTP. And would that be the same Churchill who said this:

The present system has clearly broken down. The results produced are not fair to any party, nor to any section of the community. In many cases they do not secure majority representation, nor do they secure an intelligent representation of minorities. All they secure is fluke representation, freak representation, capricious representation."?

7) So what? Under FPTP it is no doubt the case that a lot of MPs are elected on the basis of people's "compromise votes" and not their "conscience votes", is that not 'perverse'?

8) This is complete shite. Under AV there will be much less "tactical voting", certainly with regards to the first preference, and to the extent that MPs only made it past the post on the basis of second and third "tactical" votes, well maybe they won't be so bloody uppity in future.

9) All politics is 'fixing', all parties are in fact coalitions with as many different views on as many different issues as it has members. So what?

Spotter's badge: Sibley's B'stard Child.

Awesome bit of propaganda!

From The Daily Mail:

A single cigarette tossed from an open car window may* have started the inferno that shut the M1, causing travel mayhem and costing the economy millions**. Much of the motorway was still closed yesterday as the Highways Agency came under renewed attack for not repairing the damage more quickly. The full six lanes will not reopen before the end of next week, meaning thousands of families will face Easter travel chaos...

Terry Mirzon, the owner of Apex Metal Recycling whose scrapyard was where the fire began, said: ‘We just don’t know how this could have started – it could have been arson or it could have just been someone throwing a cigarette over the bridge when they were driving by. ‘There’s nothing in our yard that would have been flammable*** enough to cause this as the metal is not kept on site overnight to prevent it being stolen.'****

Police are also investigating two arson attacks near the yard in the early hours of Friday before the blaze started.

* As TFB likes to point out, it's "might' not "may" in that context.

** Perhaps it did, perhaps it didn't, so just knock it off the tens of billions in extra taxes which smokers pay and all the old age pensions they don't claim every year.

*** Well, obviously there was something there that can be broadly described as "Easily ignited and capable of burning rapidly; inflammable".

**** Wot? They remove all the metal from a scrapyard each night? Where do they store it then? In any event, most metals don't burn (except e.g. magnesium, but I doubt they had much of that in their scrapyard).

Australia on top form

From the BBC:

A British man is being deported to the UK from Australia, where he has lived for more than 40 years, because of his criminal record.

Clifford Tucker, 47, has been expelled after the Australian government cancelled his visa over a series of crimes, including attempted murder. Officials said the father-of-three posed an "unacceptable risk of harm". His family emigrated when he was six but he never became a citizen...

In 2008, Australia deported a serial paedophile back to the UK at the end of his 12-year jail term. Raymond Horne had reportedly moved from the UK to Queensland in 1952 aged five and started offending in the 60s.

Pro-FPTP deviousness

I have no idea how or why the Conservatives and Lib Dems agreed that there'd be a referendum on changing from FPTP to AV or which alternative voting system the Lib-Dems really wanted (which is not necessarily what they say they wanted, of course).

Nonetheless, we are to be offered a choice between FPTP and AV.

The No2AV crowd, which is basically the Conservatives and a few Labour MP dinosaurs who support FPTP, are now trying to discourage people from voting for AV on the basis that "only three other countries in the world use it" (which turns out not to be true either), and by implication that it isn't very good.

That is how devious the Conservatives are; to offer us a choice between something that is provably shit, like FPTP (which only a minority of countries use) and something which by their own admission isn't much better. So why didn't they give us a choice between FPTP and one of the other versions of Proportional Representation which is much better than AV*?

* I think multi-member constituencies is the best system, others may disagree. I'd have happily gone with whatever the Lib Dems wanted, seeing as they're in government and not me.

Fun Online Polls: Illegal immigrants and AV

On a very high turnout, the result in last week's Fun Online Poll was as follows:

Which is the least insane policy on 'illegal immigrants' in the UK?
Round them all up and deport them - 67%
Turn a blind eye, but make sure as few new ones come in as possible - 20%
Offer them all an amnesty and allow them to stay here - 14%

Hmm.

I think we can rule out the last option, but the first (and most popular) one strikes me as a bit hare brained. How do we define 'illegal immigrant'? How do we identify them? Does anybody have any idea how many there are? If we left the EU (a key part of my manifesto), would a lot of foreign workers suddenly change status from 'legal' to 'illegal'?

Sure, if foreigners commit a serious crime (including Islamism) and are arrested, by all means boot them out without any back chat (even if they are 'legal'), but what about those who have never claimed benefits, worked hard and supported themselves somehow, never committed a crime, maybe even got married and had children who are at school? How would you identify them and if so would it be politically desirable or even do-able to kick them all out?

So my preferred option, by default, would be the second one, but I'm clearly outvoted on this.
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The No2AV continue to peddle their lies*, and would appear to be gaining the upper hand.

It strikes me that the Tories are going out of their way to convince people that the BNP would somehow sneak in by the back door if we had AV; that AV would unduly favour the Lib Dems, and that the Electoral Reform Society are entirely unprincipled.

The ERS thing is just a smear. And if you think about it, there's no reason to assume that AV will give the Lib Dems an unfair advantage, it might merely cancel out the unfair disadvantage which FPTP gives them and the idea that the BNP would gain influence is laughable.

What's interesting is what the Tories aren't saying, and which is blindly obvious if you think about it, which is that it would be incredibly embarrassing for them when a large chunk (ten, twenty per cent? More?) of those they consider natural Tory voters vote "UKIP 1, Tory 2" under an AV election. It's unlikely that this would be enough to change the final result in many constituencies in the next General Election or two, but all the same, it would show how narrow their true support is.

The chances are, the Tories would then be forced to become more EU-sceptic, maybe even hold and in-out referendum, but that is exactly what they don't want to do!

So that's this week's Fun Online Poll, which party are the Tories really scared of?

Vote here or use the widget in the sidebar.

* For example, they keep saying that "Only three other countries use AV", for sure, that's because most countries have moved on a bit and use some other more proportional voting system, be that STV, AV-plus, full PR, multi-member constituencies, whatever.

Short Lists

Soviet leaders against whom a coup d'état was mounted while they were on holiday at a Black Sea resort

1. Nikita Krushchev
2. Mikhail Gorbachev

DBC Reed aced this one, and submitted his own short list:

Three products giving solace to the working-man which owe(d) their origins to the Land Tax movement.

He's emailed me the answers and if anybody manages to name even one I'll be pleasantly surprised

Wills and Kate's faces spotted in pizza

The likeness is uncanny.

Hat tip.

Killer Arguments against LVT, not (114)

Sobers again, who launches the occasional 'sophisticated' argument in favour of taxing incomes and against taxing land values...

"I think I have conclusively proved that incomes ARE intimately linked to the type, size and level of sophistication of society, and as such, IMO, are perfectly fair game for taxation."

1. Yup, it is indisputably true that "incomes ARE intimately linked to the type, size and level of sophistication of society", so seeing as taxes are raised to pay for things which are of benefit to that self-same society, would it not be nice if we could just tax (a) the extra incomes which arise because of "the type, size and level of sophistication of society", rather than taxing (b) truly 'earned income' (i.e. that which owes nothing to "the type, size and level of sophistication of society") or those incomes which are required to pay for the basic essentials (however defined)?

2. Methinks yes - it's just a question of somehow splitting gross incomes up into (a) and (b). This could easily be done on an intellectual level, but actually working out the split for each worker or businessman and each type of income would be administratively impossible and subject to far too much guesswork (how would you deal with overtime, for example?).

3. Luckily - there is absolutely no need to look at individual incomes, as the land market carries out this split for us: all (or nearly all) income in excess of (b) goes straight into higher land values, i.e. (a). We know that human beings are more or less the same in terms of innate abilities etc in all parts of the UK, and we have free movement of people within the UK, so the only explanation for the massive differential in gross incomes must be different levels of "sophistication of society" in different areas (be that transport infrastructure, or the fact that some industries have died off and others become more important, better schools in some areas than others etc).

We can easily illustrate this by looking at actual figures for average incomes and average house prices (or rents) in all local authority areas and there is a very high correlation - you can guesstimate the average price of a semi by deducting a 'personal allowance' of about £7,000 from the average wage and multiplying it by 10, for example; or if you want that expressed in terms of rental values, it's average wage minus £7,000 times forty to fifty per cent (sure, for a two earner household, the rate is twenty to twenty-five per cent).

4. Income tax (and National Insurance, and indirectly, VAT) are calculated in exactly the same manner, so people are paying two kinds of income tax; official income tax paid to the government and privately collected income tax on the extra value generated by "the type, size and level of sophistication of society".

5. So as a matter of simplification, would it not be easier to roll the two into a Single Tax on land values, which collects the same amount of money from the same people, while preventing the 'private state' from siphoning off a large chunk, by simply taxing rental values (or their close proxy, house prices), thereby reclaiming for 'society' exactly that which Sobers agrees was generated by 'society' and is thus fair game for taxation?

Bloggers Cabinet reshuffle

In the context of nothing in particular:

Chancellor of Exchequer: Scott Wright (who comments regularly, and posts occasionally, on this very 'blog). The previous incumbent is absolutely sound, but he just doesn't blog much any more.

Education: Onus Probandy (previous incumbent is a decent bloke but is not so hot on 'logic' which seems to disqualify him).

PS: My current Welfare Reform Minister is on notice because he doesn't post about Citizen's Income/Pension very much. Oh... he just did. Reprieved.

HOP

I took the kids to see this film yesterday.

It was quite good fun really, I thought it was better than Alvin & The Chipmunks (the nearest comparison), both in terms of quality of jokes and how the real life characters and the CGI characters interact. And thankfully it wasn't in 3D either.

Plot: Carlos is an overgrown chick who is the factory foreman and is 'the baddie'. He wants to be appointed 'Easter Bunny' (i.e. the boss) and so he tries to stir the little worker chicks into rebellion - instead of giving the children Easter eggs, he wants to give them baskets of bird seed and tasty worms. He temporarily grabs power by a coup d'état but is then ousted again by the original kindly Easter Bunny, who is a paternalistic Victorian-style factory owner of course.

Sub-plot: don't trust trade union leaders, they are only in it for themselves.

Killer Arguments Against LVT, Not (113)

Sobers, who appears to live in a parallel universe where the laws of economics do not apply and we just completely ignore the world the way it is:

But if the 'community' has the power to tax my property*, whatever my level of income, then they have the whip hand over me. If I'm sick and my income goes down, or business has a bad year and I make less money, does my LVT go down? Of course not. So how am I expected to pay it?

Short answer:

I'm all in favour of low taxes on turnover, wages and profits. The ideal rate would appear to be zero percent.

So let's imagine a country with zero per cent or very low income/corporation tax etc (and there are many). This of course attracts business (whether genuine on-the-ground business or offshore tomfoolery), so what happens is that rents in these countries are much higher.

A single letterbox or brass plate in a tax haven costs you hundreds of pounds a year. Rents in Monaco are much higher than in France; when the previous government hiked the top rate of income tax to 50% (actually much higher than that), rents and house prices in England (esp. London) went down and rents and house prices in the Channel Islands or Switzerland went up. And so on. This is all easily observable in real life.

All LVT does is tap into that extra rental value which is released by scrapping other taxes and does not push up the rents any further (basic economics, see here). The magic fag packet says that LVT would be up to double what Business Rates currently are, just to put it in context.

So for start-up businesses and those paying rent or a mortgage, all things considered they will be considerably better off. For sure, there are also old established owner-occupier businesses who paid off the mortgage years ago, the profitable ones will end up even more profitable and the ones who currently only survive because they use their rental income to subsidise the losses made in the actual business will now find it more profitable to become landlords and let the premises to somebody else, this is called creative destruction and I fail to see how it is A Bad Thing.

The same applies to housing. These LVT-opponents who wail on about "How am I going to pay the tax if I lose my job?" overlook that more than half of all households pay mortgages or pay rent. When people take out a mortgage they commit themselves to, er, repaying it over a twenty-five year period and somehow or other, most of them manage it, ditto tenants, why is it so much more difficult to budget for LVT than it is to budget for mortgage repayments or rent?

Hey - we might even engender a 'savings' culture, where people try and build up a bit of a cushion against this eventuality! And then there are these other bits and pieces that people have to pay for, like "food" and "utilities" and "clothing" and so on, who pays for those when you lose your job?

And, as others pointed out to him on that thread, we can safely assume that it will be up to politicians to set the LVT rate, the chances that they will go for popular appeal by reducing an in-your-face tax and sneaking in stealth-taxes again is far higher than them hiking the LVT rate; only if the LVT rate were set by economists, would it always be set at something close to the revenue maximising level. And if the rate is set 'too high' in some areas in some years, all that happens is that new development ceases in that area and existing buildings are used more efficiently - but isn't this what the NIMBYs want anyway?

No doubt Sobers will say, yet again: "Ah, but rents and prices are only so high because of planning restrictions, so if we liberalised these, rents and prices would come down." Well, I'm all in favour of liberalising planning laws, and it may well be that rents and prices would come down a bit in some areas, but so what? It stands to reason that the total rental value of all UK land would tend to go up rather than down if planning restrictions were loosened, and LVT works just as well with or without planning restrictions.

* I wish people would stop saying 'property' in this context. LVT is a tax on the rental value of land, that is quite a different concept. That's part of the genius of Home-Owner-Ist propaganda down the ages, to convince people that privately collected land rents are 'property' just the same as bricks and mortar, cars, machinery, televisions or washing machines. Even more spiteful is the notion that your wages are not your property (and hence suitable subject for taxation) or that when you take money out of the bank to spend it, one-sixth of it ceases to be your property as it has to go in VAT.

Friday night gear change

Another crock of crap from the X Factory.

The inevitable semi-tone truck driver's gear change is at 3 minutes 9 seconds.

Kate Middleton's face spotted in multi-pack of crisps

Kate Middleton's face spotted in bowl of cornflakes

Kate Middleton's face spotted on slice of toast

Hilarious AV versus FPTP debate yesterday on Channel 4 News

Spotter's badge: Neil Craig.

Kate Middleton's face spotted on jellybean

Full story at Today World News.

Killer Arguments against LVT, not (112)

An old fall back of the Faux Libertarians (who are far more sophisticated in their arguments than yer common or garden Home-Owner-Ist, but all the wronger for it) is the 'feudalism' card, e.g.
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Perry de Havilland, posted here: Yes, we are all de facto feudal tenants of the state. Let's have LVT and make it official, I mean what could possibly go wrong with that? :-)

The point of having LVT and 'making it official' is to be able to replace all the really bad taxes (income tax, VAT) with a much better tax (or at least 'far less bad' tax) and get rid of the Home-Owner-Ist elite (i.e. the new aristocracy). Nothing will go wrong, people have tried it and the results are always surprisingly positive.
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Anon, posted here: I think you've outed yourself at last, Mark. You are quite openly stating that I should pay the State a rent in order to occupy my own property.

You are, in fact, a feudalist: "everything belongs to the state, and everyone must pay". Thanks, but I'd rather remain a freeholder. Apart from being cheaper, it's one of the things that has given us freedom and the rule of law in the half-milennium or so since the late feudal system fizzled out in the aftermath of the Black Death.

Oh dear. I never said that "everything belongs to the state", I pointed out that the rental value of urban or residential land (putting farm land to one side, which is a complete red herring in all this) is created by the efforts of society as a whole and thus is fair game for taxation (unlike incomes which are the result of the efforts of each individual and thus not fair game for taxation).

Of course he'd rather remain a freeholder, because he thinks that this makes him an 'aristocrat' rather than a 'serf'. It certainly isn't cheaper in the long run or for society (or the productive economy) as a whole. And he gets marked down severely for imagining that 'feudalism' ended with the Black Death. Has he not heard of The Enclosures which happened centuries later?
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Anyway, while I was searching for other comments using the F-word, I stumbled across this corker by Lola (in a slightly different context) which bats all that aside quite admirably:

I reckon what we have today is 'new feudalism'.

The State is the King. The banks are the lords of the manor. We are the serfs and the villeins. We are in thrall to the banks through debt which permits the employers to enslave us in work. Home owning limits our ability to move to arbitrage our labour just as surely as the feudal laws tied us to the manorial lords. This all suits the State as it is then able to operate a confiscatory tax regime.

The method of enslavement is debt, rather than coercion, but it works just as well.

1. Well, add homeowners who've paid off their mortgage as 'freemen' and buy-to-let landlords as 'squires' to Lola's list and that's pretty much it - what we currently have is the worst kind of feudalism, where young people and the truly productive sector pay privately collected taxes (rents or mortgage repayments) to the 'landed gentry' and publicly collected taxes (income tax, VAT etc) to The Crown (whether this is the 'government' or 'the king').

2. The government in turn funds three groups of rent seekers; welfare and pensions claimants; the quangocracy; and the government-funded private sector; each of these groups rakes in a couple of hundred billion a year. The Home-Owner-Ist elite (banks, landowners, landlords and those who've paid off their mortgage) rake off another couple of hundred billion between them. It's difficult to say which of the four groups benefit most, so I'd call it evens.

3. So... the point about a Georgist system (i.e. LVT/Citizen's Income) is that it is indeed like a pre-Magna Carta feudal tax system (you pay ground rent on the land you want to occupy) but the upsides are

a) There are no taxes on incomes, output or profits; and more importantly

b) There is no aristocracy either. Sure, a centralised body will collect all the LVT, it will give a bit to 'the government' to run the core functions of the state (law and order, defence, major roads, refuse collection and fire brigade) and the rest gets dished out as a Citizen's Income. Instead of people living in the biggest houses being the ones who collect the most rent from the productive economy, those living in the biggest houses will be the ones who make the most money in the productive economy and are prepared to contribute the most ground rent or LVT back into the common fund.

4. What the Faux Libertarians say they want (low flat income tax, no taxes on land 'ownership') is of course far closer to post-Magna Carta feudalism, as they would like to keep the land price pyramid scheme in place for ever. Presumably, they see themselves as being fairly high up the landownership pyramid and so think of themselves as 'aristocracy' (who benefit from feudalism) rather than realising that as a matter of fact most of them are closer to the bottom (and if they aren't, then their children will be) and so really they are 'serfs' or 'villeins' like the rest of us.