Celebrating humanity's flourishing through the spread of capitalism and the rule of law
03 Jun 2016 Leave a comment
in economics, economics of bureaucracy, economics of regulation, income redistribution, law and economics, property rights, Public Choice, public economics, rentseeking Tags: congestion charges, housing affordability, land supply, NIMBYs, RMA, road pricing, zoning
Morgan Foundation wants the National party-led government to take on NIMBYs not only with more high-rises and urban intensification but congestion charges too! There is only so much courage you can expect in one term of government. Relaxing the Auckland urban limit, which will hopefully cause housing prices to stop rising in Auckland was not enough.
No softly softly catchy monkey here. No concept of winning the battles you can win.
02 Jun 2016 Leave a comment
in applied price theory, politics - Australia, politics - New Zealand, public economics Tags: Australia, company tax, international tax competition, tax incidents, taxation and entrepreneurship, taxation and investment
28 May 2016 Leave a comment
in economic growth, economic history, labour economics, labour supply, macroeconomics, politics - Australia, politics - New Zealand, politics - USA, public economics Tags: Australia, British economy, Canada, Eurosclerosis, France, Germany, Japan, labour productivity, measurement error, taxation and labour supply
This data tells more of a story than I expected. Firstly, New Zealand has not been catching up with the USA. Japan stopped catching up with the USA in 1990. Canada has been drifting away from the USA for a good 30 years now in labour productivity.
Data extracted on 28 May 2016 05:15 UTC (GMT) from OECD.Stat from OECD Compendium of Productivity Indicators 2016 – en – OECD.
Australia has not been catching up with the USA much at all since 1970. It has maintained a pretty consistent gap with New Zealand despite all the talk of a resource boom in the Australia; you cannot spot it in this date are here.
Germany and France caught up pretty much with the USA by 1990. Oddly, Eurosclerosis applied from then on terms of growth in income per capita.
European labour productivity data is hard to assess because their high taxes lead to a smaller services sector where the services can be do-it-yourself. This pumps up European labour productivity because of smaller sectors with low productivity growth.
28 May 2016 Leave a comment
in economic history, financial economics, politics - USA, public economics Tags: company tax, Leftover Left, pension fund socialism, Peter Drucker, tax havens, taxation and entrepreneurship, taxation and investment, Twitter left
Peter Drucker first pointed out in the 70s that the retirement savings of ordinary workers will end up opening the majority of public listed companies. That day has come much to the disappointment of the Leftover Left ranging from Thomas Piketty to Max Rashbrooke.
Source: CONVERSABLE ECONOMIST: US Corporate Stock: The Transition in Who Owns It.
Any call for higher taxes on investment incomes and capital and even tax havens is an attack on the retirement savings of ordinary workers.
24 May 2016 Leave a comment
in politics - Australia, politics - New Zealand, public economics Tags: bracket creep, growth of government, size of government, taxation and inflation
21 May 2016 Leave a comment
in applied price theory, applied welfare economics, public economics Tags: taxation and investment, taxation and labour supply
Figure 1. Evidence on switchers: The percentage of people who switched right (conservative), and previously did not vote conservative, after a lottery win
Source: Money makes people right-wing and inegalitarian | VOX, CEPR’s Policy Portal.
21 May 2016 Leave a comment
in financial economics, industrial organisation, public economics Tags: Panama papers, tax savings
20 May 2016 Leave a comment
in politics - Australia, public economics Tags: 2016 Australian federal election
19 May 2016 Leave a comment
in politics - Australia, politics - New Zealand, politics - USA, public economics Tags: company tax rate, Ireland, race to the bottom, tax competition, tax harmonisation, taxation and investment
The Australia Institute has been running the line that cutting the Australian company tax rate just means more tax revenue for offshore tax departments. They will tax the larger after-tax Australian dividends in the home country of the foreign investor if Australia were to cut its company tax rate.
Source: David Richardson, Company tax cuts: An Australian gift to the US Internal Revenue Service How a cut to the Australian company tax rate would result in a windfall for the United States Treasury. Australia Institute (May 2015).
The Australia Institute obviously has not picked up on the relentless bullying that Ireland was subject to by the rest of the European Union over its 12.5% company tax.
The Irish company tax rate of 12.5% was initially on export profits. To finesse European Union member state complaints about that 12.5% company tax rate on discrimination grounds, the Irish government extended that low rate to all companies in 1995.
I am yet to see a minister of finance welcoming a company tax cut in a competing jurisdiction, rubbing his hands in anticipation of greater tax revenues on the foreign profits of companies headquartered in his country.
If there is no race to the bottom in company tax rates, you must wonder why there is substantial efforts within the European Union on tax harmonisation regarding company tax?
France and Germany are pushing plans to introduce a minimum corporation tax rate across the continent, it was reported today, in a move that could result in higher taxes on British companies.
European officials will debate plans to set a EU-wide floor on corporation tax in order to crack down on tax havens such as Ireland and Luxembourg, it emerged.
If there is an ounce of sense in what the Australia Institute said about foreign taxmen benefiting from low company taxes in Australia, high corporate tax rate countries such as Germany, France and the USA should welcome low company tax rates in destination countries for foreign investment originating in those countries but they do not. Rather than seek tax harmonisation, high tax country should welcome low company taxes in competing investment destinations but they do not.
About $2 trillion in profits is held offshore by American businesses because they do not pay company tax in the USA until they actually repatriate the profits to the USA. This is common. You wonder what the purpose of tax havens is if a company tax rate cut in Australia is so easily captured by the IRS?
Studies of the company tax in the USA suggest that a cut in that company tax would lead to large inflows of foreign investment into the USA boosting wages significantly.
17 May 2016 Leave a comment
in politics - New Zealand, public economics Tags: 2017 New Zealand election
On morning radio on Monday, Prime Minister John Key said "We are not ruling that out for 2017 or campaigning on it for a fourth term in 2017, but having a bigger one, to be blunt, than $1 billion." Asked how much was needed to deliver meaningful tax cuts, he said: "$3 billion, I reckon."
The table below uses the Treasury scoring of how much tax cuts can be delivered through $3 billion if they include changes in the income tax thresholds as well. That scoring is static. That is, no behavioural changes are assumed as the result of the tax cuts on labour supply, investment or entrepreneurship.
Source: computed from Revenue Effect of Changes to Key Tax Rates, Bases & Thresholds for 2015/16 — The Treasury – New Zealand.
16 May 2016 Leave a comment
in politics - USA, public economics Tags: 2017 New Zealand election
On morning radio this morning, Prime Minister John Key said "We are not ruling that out for 2017 or campaigning on it for a fourth term in 2017, but having a bigger one, to be blunt, than $1 billion." Asked how much was needed to deliver meaningful tax cuts, he said: "$3 billion, I reckon."
The table below uses the Treasury scoring of how much tax cuts can be delivered through $3 billion. That scoring is static. That is, no behavioural changes are assumed as the result of the tax cuts on labour supply, investment or entrepreneurship.
Source: computed from Revenue Effect of Changes to Key Tax Rates, Bases & Thresholds for 2015/16 — The Treasury – New Zealand.
The big sensitivity is how the company tax rate cut scoring treats offsets for dividend imputation credits. If there is no change in the other tax rates, a cut in the company tax forgoes $225 million a year per percentage point because some of it is clawed back through dividend imputation. The costing of the company tax cut by the Treasury when the other income tax rates are changed is assumed to be $350 million per percentage point. When calculating the dividend imputation offset, the Treasury assumes that shareholders are on an average tax rate of 30%.
If the Prime Minister chooses not to match the company tax rate announced by the Liberal National party government in Australia ahead of their election, there is certainly more room for individual income tax cuts.
13 May 2016 Leave a comment
in politics - USA, public economics Tags: 2016 presidential election, Bernie Sanders, expressive voting, Left-wing hypocrisy, rational ignorance, rational irrationality
66 percent of Sanders supporters are unwilling to pay more than $1,000 in higher taxes for universal health care. This includes the 8 percent of Sanders supporters who aren’t willing to pay anything more!
Source: Most Bernie Sanders supporters aren’t willing to pay for his revolution – Vox.
Sanders supporters want free public college tuition but 14 percent said they don’t want to pay additional taxes for it; another half said they would only pay up to $1,000 a year!
Source: Most Bernie Sanders supporters aren’t willing to pay for his revolution – Vox.
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