Too short for a blog post, too long for Twitter. Tends to be links, politics, rational approaches to homeopathy and Intelligent Design.
Catching Elephant is a theme by Andy Taylor
I am delighted to pass on this anecdote from Max King, global asset allocation strategist at Investec, which sets out to explain the macroeconomics of tax and spend in terms we can all understand.
Suppose that once a month, ten men go out for beer and the bill for all of them comes to £100. If they paid their bill the way we pay our taxes and claim State benefits, it would go something like this;
The first four men (the poorest) would pay nothing. The fifth would pay £1.
The sixth would pay £3.
The seventh would pay £7.
The eighth would pay £12.
The ninth would pay £18.
And the tenth man (the richest) would pay £59.
So, that’s what they decided to do. The ten men drank in the bar every month and seemed quite happy with the arrangement until, one day, the owner caused them a little problem. “Since you are all such good customers,” he said, “I’m going to reduce the cost of your weekly beer by £20.” Drinks for the ten men would now cost just £80.
The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still drink for free but what about the other six men; the paying customers? How could they divide the £20 windfall so that everyone would get his fair share? They realised that £20 divided by six is £3.33 but if they subtracted that from everybody’s share then not only would the first four men still be drinking for free but the fifth and sixth man would each end up being paid to drink his beer.
So the bar owner suggested a different system. The fifth man, like the first four, now paid nothing.
The sixth man paid £2 instead of £3 .
The seventh paid £5 instead of £7.
The eighth paid £9 instead of £12.
The ninth paid £14 instead of £18.
And the tenth man now paid £49 instead of £59.
Each of the last six was better off than before with the first four continuing to drink for free.
But, once outside the bar, the men began to compare their savings. “I only got £1 out of the £20 saving,” declared the sixth man. He pointed to the tenth man, “but he got £10!”
“Yes, that’s right,” exclaimed the fifth man. “I only saved a £1 too. It’s unfair that he got ten times more benefit than me!”
“That’s true!” shouted the seventh man. “Why should he get £10 back, when I only got £2? The rich get all the breaks!”
“Wait a minute,” yelled the first four men in unison, “we didn’t get anything at all. This new tax system exploits the poor!”
So, the nine men surrounded the tenth and beat him up. Funnily enough, the next month the tenth man didn’t show up for drinks, so the nine sat down and had their beers without him.
But when it came to pay for their drinks, they discovered something important – they didn’t have enough money between all of them to pay for even half the bill.
That’s how our tax system works. The people who already pay the highest taxes do tend to get the most benefit from tax reliefs and reductions. Tax them too much, attack them for being wealthy and they just might not show up anymore.
The firefight at Bin Laden’s compound, it now appears, pitted two or three men against a dozen or more commandos. Bin Laden didn’t engage in the firefight and used no human shield. He wasn’t even armed. We shot him dead anyway. That’s the truth. Deal with it.
… and the biggest casualty? Once again, the USA lets itself down by aggrandising the actions of their armed forces when the truth is different?
Linda Norgrove? Patrick Tillman?
Truth, justice and the American way?
Another view of the Bin Laden operation?
Let’s roll the clock back 30 years.
A fairly major Western power is being hit by a series of what they describe as terrorist outrages; civilians being killed, armed services being targeted by ever more complex weaponry.
An intelligence led operation identifies some key figures who provide funding, materiel and planning resource.
These people are living in a nominally allied country, and for whatever& reason the host country is not going to detain, arrest and extradite these “murderous savages”.
An armed operation using special forces is launched to “capture if possible, kill if resistance is shown” these individuals. It’s known that the hostcountry is either sympathetic to these individuals, or they may be tipped off. The host country is not to be told. The operation is launched; the target killed, along with some of their associates, and the wife of one of the associates.
The building is rifled, the body of the target taken and buried at sea to minimise the risks of martyr shrines and so on.
“Today, the British Prime Minister announced that in a daring raid elements of the Special Air Service and Special Boat Service had entered the residence of X, the chief organiser for Noraid, a major target. His Boston home was entered in the hours of darkness and due to his resistance he was shot with silenced weapons, along with some of his associates. A woman in the property was also killed.
Significant items of intelligence were gained, and Her Majesty’s government have the following message to the IRA and their supporters. ‘You have nowhere to hide; we will find you and bring you to justice.’
We recognise that the USA has provided some invaluable assistance in pursuing IRA terrorists, but we find it troubling that the presence of these terrorists must have been known to the USA, and they did not render them toBritish justice.”
I wonder how the US government would have felt.
How many people does it take to pay UK benefits?
Recently, a friend was talking about entitlements. He said it was unreasonable to want the unemployed or single parents to be “pushed” back to work…
I said I sympathised, but it probably took 3 people working full time to keep one single mum on benefits…
He didn’t believe me so I did some rough calculations, and I was pretty close in my estimate. He still doesn’t believe me, but at least I know he’s wrong :-)
My working out
I highlight assumptions as I go
Average salaries
A BBC Story on average Salaries - I took the median at around £25k
A tax calculator - gave the following figures for £25k earner
Gross Income £25,000.00
Tax-Free Allowance £6,475.00
Taxable Amount £18,525.00
Tax £3,705.00
National Insurance £2,120.80
Tax + NI £5825.80
( for £50k the numbers are
Gross Income £50,000.00
Tax-Free Allowance £6,475.00
Taxable Amount £43,525.00
Tax £9,930.00
National Insurance £4,259.60
Tax + NI 14189.6)
I then generated a single parent (1 boy 10-16, 1 girl 0-9) living in Manchester.
Assuming a Manchester Band C property with single person reduction they’d be paying council tax of £884.65
Using figures from Housing Benefit Update they would be entitled to 3 bedroom HB [3 bedroom (1 boy 10-16, 1 girl 0-9)] which would amount to housing benefit of £126.92
Using these figures and claiming no other income, I entered these in to the Money Saving Expert Benefit Check site
This generated the numbers below:
Entitlement per year
Means-tested income entitlements
- Tax Credits £5,662.02
- Income Support £3,529.28
Means-tested bill reductions
- Council Tax Benefit £884.67
- Housing Benefit £6,636.10
Other income entitlements
- Child Benefit £1,762.02
- Total Entitlements £18,474.09
Doing the maths, that means it does - in fact - take 3.17 people on £25k salary (or 1.3 people on £50k) their entire tax and NI take to pay for this one single parent.
Which means that the rest of us have to take up the slack for education, street cleaning, policing, health care, defence…
The comment gets to the nub of the issue, which is that the cult of overspending - which reached its apogee under Gordon Brown - didn’t just leave the country close to bankruptcy, it also made the public services in measurable ways worse. Less efficient, less user-friendly, bossier. And it’s not hard to see why. With one person fully occupied, the work gets done. With two people semi-occupied, there’s ample scope for gossip, time-wasting, messing about on facebook and blaming the other person. So the work doesn’t get done. And then there’s the sense of entitlement that comes from being part of a huge drone class sustained by compulsory taxation. There’s safety in numbers.
Tom Morris: British Library and Wikisource: copyrights and permissions
I’m writing this post to explain as best as I can the current situation regarding the legal situation over unambigulously out-of-copyright texts in the British Library and the possibility of making public domain reproductions of them for release, say, on sites like Project Gutenberg or …
Tumbled Logic: Re: BBC Online and "deleting" websites
This is a direct response to today’s post on the BBC Internet blog on the subject of “deleting” old BBC Online content. I tried to use the comments system, but it just hung when posting. Ho hum. Usual disclaimers apply:
My post last month explained that we were exploring a range of options…
NO BLASTERS!: You Don't Need to See His Identification
On November 21, 2010, I was allowed to enter the U.S. through an airport security checkpoint without being x-rayed or touched by a TSA officer. This post explains how.
Edit: Minor edits for clarity. I have uploaded the audio and it is available here.
This past Sunday, I was returning…
