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"Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice" - Adam Smith

Taxation and Child Poverty

Written by Tim Worstall | Friday 28 December 2007

The Tax Justice Network have a nice little graph here . Their contention is simple: the more of GDP that the government takes in tax then the lower the rate of child poverty. We can thus justify massively higher taxes because we're doing it for the children. I questioned their US figure of 22% of children in poverty because the usual one (US Census) is 12% or so. Here's the definition of poverty that they are using:

Share of children 17 years and under living in households with equivalized disposable income less than 50% of median income; Society at a Glance: OECD Social Indicators, 2005, p.57.

This, of course, is not a measure of poverty, this is one of inequality (or relative poverty, if you prefer). As long as we remember this crucial distinction, the TJN are of course quite correct. The outcomes from the market allocation of incomes can strike some as unfair and different societies seem to have different takes on how much of this they wish to remedy. That remedying done by greater taxation on higher income earners and the single, the money being given to lower income earners with children. This lowers the number of children living in such relative poverty. All of this is, I would hope, obvious, along with the corollary that the less redistribution the closer to the market allocation of incomes we shall be.

All of which means that what the TJN graph actually shows us is that in places where you have less redistributive taxation and spending then you have less redistributive taxation and spending. Something which isn't, if I might be frank with you, a finding which is either surprising or shocking.


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Blog Review 459

Written by Netsmith | Thursday 27 December 2007

Iain Dale has a listing of those who are said to be the most influential 50 "LGB" people in British politics. Shows quite how far we've come for in the lifetimes of many listed there homosexuality was illegal. Another example of how the good old days are in fact now.

On the other hand, not everything is getting better. The bureaucrats are still getting both more stupid and vicious. 

You'll have to think very hard if you want to contribute to this project. A list of the achievements of the European Union. 

It's true that both the US and the UK had tariffs: proving that they aided growth is a great more difficult. 

Peter Luff MP is rather taken down a peg or two in this conversation culled from a comments section

So many of the things we are urged to do "for the environment" are simply symbolic acts, of no real merit at all. 

And finally, things you might not know about Bruce Schneier. This is especially good: "Bruce Schneier knows the state of Schroedinger's Cat."

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On the third day of Christmas...

Written by Dr Eamonn Butler | Thursday 27 December 2007

My true love sent to me: three french hens, which in the song apparently represent the theological virtues of faith, hope, and charity. I'm not sure there is much of any of them around today, though.

On the faith side, well, you're not allowed to show it any more - wearing a cross or having a school nativity play - in case it upsets other religions. Hope: well, I don't hold out much hope for the UK or US economies having a boom next year, so that's not exactly cheering. And charity: it's remarkable how many things that should be done through charity are in fact done through coercion as government takes money out of our pockets to do them. And then take the credit, of course.

The trouble is, that when governments intervene, private funding dries up. The Royal National Lifeboat Institution found that in the 1800s, when it started to accept government money. It found that for every £1 it took from the government, it lost £1.40 in private donations. People couldn't see why they should fund something that the government was paying for. Now the RNLI proudly refuses all government money. Bravo!

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Joke of the day

Written by Jokesmith | Thursday 27 December 2007

A guy in a bar leant over to the guy next to him and said, "Wanna hear a blonde joke?"

The guy next to him replied, "Well before you tell that joke, you
should know something. I am 6' tall, 200 lbs and I am blond. The guy
sitting next to me is 6'2, weighs 225 and he's blond. The fella next to
him is 6'5" and 250 and blond. Now, you still wanna tell that joke?"

The first guy said, "Nah, not if I'm gonna have to explain it three times."

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Jingle Mail, Jingle Mail

Written by Tim Worstall | Thursday 27 December 2007

Paul Krugman makes a point about the US mortgage market :

The WSJ reports that homeowners whose mortgages are bigger than their houses are worth are starting to walk away from their houses, even if they could afford the mortgage payments.

This will have some Brits, those with memories of the early 90s and negative equity, rather scratching their heads, for you can't walk away here. If you owe more than the house is worth and it is sold, or foreclosed upon, you still owe the bank that gap. This is something that is generally not true in the US: most mortgages are non-recourse (and thus Jingle Mail: posting the keys back to the bank and loading up the pick up truck). That is, they are secured against solely the property, there is no recourse to the general income of the borrower nor other of their assets (this is subject to a number of qualifications, it depends State by State and usually is only true for primary mortgages).

What this means in the grander scheme of things is that what happened to consumer spending in the UK in those 90s is not a good guide to what might happen to it in the US in the coming year or two as the bubble unravels. Similarly, given that it is the lender that has to eat such losses in the US, nor is what happened to the banks here. We can also take this a stage further and point out that whatever happens in the US in the coming year or two will not be a good guide to what might happen here if there is a large fall in house prices.

I agree this is a slightly geeky point but watch out for those commentators who fail to grasp it: the differences in the mortgage contracts are sufficiently large that the effects of negative equity upon consumer spending (and thus the wider economy) could be wildly different. 

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Quote of the day

Written by Wordsmith | Thursday 27 December 2007

Sir Jonathan Sacks, Britain's Chief Rabbi, in his book The Home We Build Together:

"A tolerant society is one that ignores differences and a multicultural one is one that highlights them."

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Blog Review 458

Written by Netsmith | Wednesday 26 December 2007

Not enough to do today? Caught in that Boxing Day ennui? Try Political Betting's political crossword.

Contrary to all previous advice it now seems that buying a lottery ticket is in fact an economically rational thing to do. It might make you a better investor

A romantic comedy about globalisation and outsourcing? Well, at least one review is pretty good. 

Given these massive differences in prices across the country, just why is it that we have any national pay scales at all? 

Given the lack of any trains today some motoring news. How to make driving vastly safer

Given the subsidies for biofuels as an option to replace petrol....interesting to see that petrol became the fuel of choice originally because of subsidies against ethanol. 

And finally, a word of warning to those intending to be reliant upon Russian energy supplies in the decades to come. 

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New Christmas presents

Written by Dr Madsen Pirie | Wednesday 26 December 2007

While Dr Eamonn Butler has been giving his take on the traditional presents for the twelve days of Christmas, Wired magazine and website has been looking at less traditional things. Alexis Madrigal has produced a list of the top ten new organisms of 2007. That's right, the best among organisms that didn't exist in 2006. Interestingly, only the 5 gold rings of the twelve days of Christmas list are inert. The rest, ranging from lords a-leaping to that partridge in its pear tree, are living organisms, though many of them these days are rather less useful than the new ones given Wired's accolade.

Wired picks out the Ashera GD hypoallergenic cat, modified so even those allergic to cats are relaxed in its company. This little kitty is not cheap at $27,000, but the price will come down and pretty soon we'll be able to choose the hypoallergenic option in our regular moggies.

The E­coli modified to make butanol fuel are not very efficient, but it could be a first step, and they were made by students at Atlanta U. While the students were turning bugs into fuel, a U of Central Florida team modified lettuce to produce insulin, and a Penn State team created GM mushrooms that can mass-produce vaccines.

Less cuddly than the hypoallergenic cat, though no less useful, is the South Korean cat modified to glow in the dark under UV light. The fluorescence can act as a marker to show that other modifications have worked. Doctors at Temple U also achieved glowing results with a yeast which glows green in the presence of DNT, found in TNT. This could lead to low-cost and rapid bio-sensors for dangerous materials.

The two that I liked best were the Oak Ridge trees we already reported on, the ones modified to absorb super quantities of CO2, and the Clostridium bacteria modified by Netherlands scientists to carry cancer-fighting proteins to oxygen-starved parts of cancer tumours, giving us a "seek and destroy" capability.

What's encouraging is that these are simply the best of a huge list. New organisms to serve our purposes and solve our problems are being created on a daily basis, no doubt to the chagrin of antediluvian NGOs. Next year should be better still, so have yourselves a happy and even more modified New Year.

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On the second day of Christmas...

Written by Dr Eamonn Butler | Wednesday 26 December 2007

My true love sent to me: two turtle doves. In the original it seems that the turtle doves represent the Old and New Testaments of the Bible.

Pigeon fanciers are outraged after HM Revenue & Customs (HMRC) left pigeon racing out of the official list of sports, and they are asking the Queen, who is patron of the Royal Pigeon Racing Association (RPRA), to get this ruling reversed. Why so many ruffled feathers about something apparently so trivial?

Well, it's all about money. Premises used for 'sports' are exempt from the rates, a local-authority tax. Under MHRC proposals to introduce rates on sports clubs and village halls, groups can formally apply for dispensation from HMRC for 80% relief and then to their local authority for a 20% reduction. So pigeon fanciers now face paying rates on their sheds, though officially recognized sports such as yoga, arm-wrestling and trampolining are still exempt.

Doesn't it all speak volumes about just how silly and bird-brained all these tax rules are?

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Joke of the day

Written by Jokesmith | Wednesday 26 December 2007

Why did the monkey fall out of the tree?

Because it was dead. 

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