Wednesday, 31 August 2016

That Apple tax bill raises all sorts of interesting topics...

1. Apple's $200 billion "offshore" cash pile is largely money which they have magicked offshore tax-free and dare not touch because it will trigger a US tax bill if they repatriate it to the USA, for example in order to pay dividends.

2. For clarity, Apple's accounts show that the cash pile has not been lent back to other companies, it is invested in "marketable securities".

3. The Faux Lib fuckwits from the TPA/City AM axis have a bizarre notion that it would be better to get rid of corporation tax entirely and replace it with a tax on distributions. This would be full of loopholes; administratively unworkable; overlooks the basic point that corporation tax does not really touch reinvested profits (reinvested profits are called expenses, FFS, so they come off profits before they are taxed, duh); as well defeating the whole object. This is what Apple already have - the result being they do not make distributions out of this spare $200 billion at all (and the tax advisers, lawyers and corrupt politicians make a handsome turn), so from the shareholders' point of view, that money might as well not exist in practical terms.

3. The accounts also show that Apple's net profit margin is a startling 25% of net sales (after VAT and so on). This is five times higher than a normal manufacturing business, as Apple are protected by patents. Also, although computer hardware is a competitive, low margin business, software is a natural monopoly even if not protected by patents and Apple sells hardware and software as a bundle. This was IBM's big mistake of course, they should have taken on Bill Gates and his little friends as employees, or at least insisting on an exclusive licence, rather than just using Microsoft software and allowing Microsoft to sell it to all and sundry. That way, IBM would still be world number 1 in computers (like they were twenty or thirty years ago).

4. Such a high profit margin is evidence of quasi-rental income. As we know, rental income can be taxed at very high rates to no ill effect. Seeing as Apple can pay the EU's back tax demand out of this spare cash, it won't actually make any difference to them.

5. Apple are wailing that the tax bill "will have a profound and harmful effect on investment and job creation in Europe." This is complete nonsense. Payroll taxes have a harmful effect on jobs; taxes on investment have a harmful effect on investment (and the UK actually only has one tax on investment, and that is the element of Business Rates that relates to the building). A tax on super-profits i.e. rents has no particular effect at all.

6. What is strange is that the EU says that Apple should repay Ireland €13 billion avoided tax. That 'tax' was never Ireland's in the first place. If Ireland hadn't come up with their stupid rules, Apple would not have channelled so much money through there in the first place. Assuming it hadn't channelled it through some other tax haven instead, Apple would have either paid higher taxes in the various European countries (where products are sold), in the USA (where products are designed) or in China (where products are manufactured).

7. So while €13 billion seems reasonable, compared to the $9 bn "fine" which the USA imposed on BNP Paribas for some trumped up charge or compared to the likely corporation tax on the European notional share of the $200 billion untaxed money, that €13 billion ought to be divvied by between each European country, the USA and China (i.e. where the tax would have been paid absent the Irish shenanigans) in some rough and ready ratio.

8. Finally, while I am a Brexiteer and je ne Bregrette rien, I have often said fair play to the EU (or any national government) for taking a firm line with large multi-nationals who take the piss on tax, despite what Newsthump says.There's no point even trying to draft clever tax laws, they will always circumvent them. So we might as well just ask them for regular large payments and have done with it, call it a 'market access fee' in EU-speak

Monday, 29 August 2016

Fun Online Polls: Team GB & applying for asylum in the UK while still in France

The results to last week's Fun Online Poll were as follows:

Team GB managed to come second in the Olympics medal table…

I was absolutely delighted - 10%
I was quietly pleased, despite myself - 40%
Not bothered either way - 28%
Bah humbug! - 8%
Oh, I didn't know that - 3%
What's "the Olympics"? - 8%
Other, please specify - 3%

I am relieved about that, as I was "quietly pleased" but was worried that I was in a tiny minority.
The French have come up with another cunning plan for getting their own back on us for voting Brexit.

From the BBC:

Migrants in Calais seeking asylum in the UK should be allowed to lodge their claim in France, the president of the region has told the BBC.

Xavier Bertrand said people living in the camp known as the Jungle should be able to apply at a "hotspot" in France rather than waiting to reach Britain…

The Home Office said "those in need of protection should seek asylum in the first safe country they enter". Mr Bertrand said under his plan anyone rejected by the UK would then be deported directly to their country of origin.

Sounds like a great idea to me; we can just reject all such applications out of hand and then it's the French's job to deport them. No doubt the 'refugees' will be able to work out this logic for themselves, so none will be daft enough to apply for asylum in the UK, thus preserving the status quo ante.

So that's this week Fun Online Poll, is this a good idea or a bad idea?

Vote here or use the widget in the sidebar.

Sunday, 28 August 2016

Proof that the Bank of England has absolutely no F*****g Clue...


What an utter twat.

Update: 13:25

Proof that he's a twat. (Well, one proof factor in a whole range of factors).


And this section is always worth a laugh for its endless contradictory news items.


synthetic fuels vs electric battery cars

If carbon neutral synthetic fuels can be produced cheaply enough, are the considerable costs of turning our transport system over to battery powered one worth it? And as batteries are powered by the grid,  this isn't going to be carbon neural  for the foreseeable future.

There are many methods for producing synthetic fuels, I think those using sea water look most interesting, so we'll use those as an example.

"The U.S. Navy estimates that 100 megawatts of electricity can produce 41,000 gallons of jet fuel per day and shipboard production from nuclear power would cost about $6 per gallon."

"In 2012, Willauer estimated that jet fuel could be synthesized from seawater in quantities up to 100,000 US gal (380,000 L) per day, at a cost of three to six U.S. dollars per gallon."

So, that basically means that the wholesale electricity cost of 41,000 US gallons (155201L) is 2400mw/h x £40(today's wholesale per mw/h) = 61p per Litre.

Internal combustion engine(ICE) cars are now edging towards achieving 100 mpg. There are new engine technologies hoping to improve this, such as

Hybridisation using batteries, flywheels or compressed gas can improve efficiency still further by regeneration energy lost under braking.

Point is, if we can get the cost of a 100 mile journey using ICEs to £2.77 (61x4.55) that is also carbon neutral, is it worth pursuing an expensive transition to battery only powered cars? Where a 100 mile journey, which is not CO2 neutral, costs around 30kw/h at 12p per kw(retail), adding up to £3.60

Of course I am not comparing like for like ie wholesale vs retail. But then a large manufacturer of synthetic fuels would probably have their own plant or negotiate low prices. Maybe it would be worth building a dedicated nuclear power plant for the job?

The UK currently uses 45 billion litres of petrol/diesel every year. If continuing efficiency can half this we'd need  around 45gw of extra electric generation to make the equivalent in synfuel. 

That's roughly the equivalent of 12 Hinkley Point C, to end our dependency on petrol and diesel imports, and reducing net CO2 emissions by 120 million tonnes per year.  

Hybrid cars may be a good idea. What may not be a good idea is to replace the internal combustion engine and all the infrastructure created for it, with a technology that is more expensive,  less convenient,  and will require an massive and expensive upgrade in infrastructure. 

Saturday, 27 August 2016

"Book your Xmas party today!"

Friday, 26 August 2016

Tory councillor channels Prince Philip

From The Daily Mail:

A veteran Tory councillor has been accused of making racist and sexist comments when he was introduced to a black fireman.

Andrew Dransfield, vice-chairman of Buckinghamshire and Milton Keynes fire authority, made onlookers wince as he shook the firefighter’s hand and declared “You’re the first one I’ve seen.”

The crewman looked embarrassed and stayed silent following the remark from the councillor, who was on an official visit to Great Holm fire station in Milton Keynes. Undeterred, the councillor tried to clarify things by ploughing on with “You know....ethnic minority.”

The black firefighter, who hasn’t been named, did not respond but, according to witnesses, looked furious as Mr Dransfield added: "Now all we need is a woman. Are there any here?”

Just as truth is a defence to a defamation claim, why can't it be a defence to this sort of accusation? If, as a matter of fact that was the first black fireman the councillor had seen, why should he not be allowed to point it out? And, assuming no woman firefighter was present, who was there to take offence at the second comment?

Some people are way too sensitive! When I worked in Germany I was the first English tax advisor that most clients had ever met, and I got bored silly with clients mentioning it, but never did I feel offended, and even if I had done, I would have kept my mouth shut. Did nobody ever ask Thatcher what it was like being the first female English Prime Minister? As boring as it must have been for her, it's the sort of thing which she had to accept.

Plus, as a matter of fact, his comments were mildly amusing in a Prince Philip sort of fashion, you are laughing at him as much as with him. Doesn't that count in his defence as well? At least he didn't keep going and ask if they employed any disabled fire fighters, maybe a visually impaired driver or something...

Killer Arguments Against LVT, Not (404)

Returning to the KLN from #403...

Sam Bowman of the Adam Smith (is turning over in his grave) Institute had his KLN-fest of a year or two ago republished here this week, even though the commenters tore it to shreds on its original outing.

KLN #1: ... Land owners already have an incentive to do something with the land – opportunity cost. In other words, if I have an acre of land that I’m doing nothing with, but that I could profitably let a bunch of houses be built on, the cost to me of doing nothing is that house profit. An LVT would just add to this.

We covered the fact that whatever the notional/opportunity holding cost (lost interest or rent), this is more than cancelled out by anticipated capital gains, so there is an 'opportunity profit' (if such a term exists). If this were not so, then the land bankers would not be hoarding half a million plots with planning. As Kj pointed out in the comments, if land bankers own farm land with planning, then they are likely to be renting it out anyway; they are unlikely to be renting out smaller patches of urban land (except possibly for car parking?). So there is little or no lost rent on these sites until they are developed and SB's analogy fails anyway.

But in refuting this feeble argument, maybe I missed the more important one...

The flip side of the owner's opportunity cost is the external cost borne by 'everybody else'. If half a million houses could be built, then society as a whole is losing the benefit of half a million additional or more conveniently sited homes (and construction workers are going without the extra income etc). If indeed farm land is being held out of use, then society as a whole is losing out because less food is being grown (and farmers are going without the extra income etc).

The LVT is primarily there to compensate 'everybody else' for the external costs imposed on them. Mathematically it is equal to the opportunity cost borne by the owner (like all rent, it nets off to zero), so as a bonus, LVT turns an easy-to-ignore notional/opportunity cost into a real cash cost for those imposing it and provides compensation to the whole of society who have to do without the additional homes, additional food, car parking spaces, whatever.

That's either a crap translation or a tautology.

Question 6 in the BBC's Quiz: How well would you have done at GCSE? is as follows:

FRENCH: Read this extract from a letter to a local newspaper. What point is the writer making? Choose the correct phrase to complete the sentence.
"Pour réduire le nombre d’accidents dans le centre-ville, le conseil municipal propose d’agrandir la zone piétonne."
The writer tells us that the council wants to ...

A - Reduce pedestrian-only areas in the town centre.
B - Make the town centre safer for pedestrians.
C - Increase fines for motorists who cause accidents in the town centre.

You don't need to be a genius to guess that the council proposes to enlarge the pedestrianized area. But that option is not on there, so what do you do? We can rule out A and C (clearly incorrect), so that leaves you with B (which happens to be the correct answer) but that is not a literal translation and is stating the blindingly obvious anyway: "They are going to reduce the number of accidents by making it safer, duh". You could argue that increasing motoring fines or reducing the pedestrian-only areas also reduce the number of accidents (maybe it's cyclist vs pedestrian accidents).

The answer is as follows:

Literally, the sentence means: "To reduce the number of accidents in the town centre, the local council is proposing to expand the pedestrian area."

Well why didn't you fucking offer that as choice B?
Question 4 is a load of shit as well:

State the denary representation of the binary number 10111010

A - 157
B - 143
C - 186

It takes you a split second to realise that a binary number ending in -0 must be an even number and there's only one even number on the list. FFS.
The history question blows as well - Dido was a pop singer in the 1990s, not a queen in some ancient fable.

Thursday, 25 August 2016

Internet Bullshit* Of The Day, Probably.

Emailed in by James Higham from The Register:

If you worry the Internet of Things is bollocks and that the industry's just milking an old idea, think again: research outfit Arcluster has declared that the “Connected Cow and Farm” market will become a US$10.75 billion concern in 2021, a rather nice jump from today's $1.27 billion.

Byte-blowing bovines are going to drive most of the growth, says Arcluster's research director Arun Nirmal, who says “the intersection of highly sophisticated automation and M2M technologies combined with the application of Industrial Internet of Things in this space is set to disrupt the industry over the next decade."

How will cows be disrupted?

The Connected Cow market apparently comprises seven sub-markets, namely:
•Health Monitoring
•Mating Management
•Herd Management
•Automated Milking
•Comfort and Cleaning
•Automated Feeding

* In the context, more accurately "cowshit".

Killer Arguments Against LVT, Not (403)

Sam Bowman of the Adam Smith (is turning over in his grave) Institute had his KLN-fest of a year or two ago republished here this week, even though the commenters tore it to shreds on its original outing.

KLN #1: LVT supporters say that an LVT would encourage more productive use of land. But is this desirable? Land owners already have an incentive to do something with the land – opportunity cost. In other words, if I have an acre of land that I’m doing nothing with, but that I could profitably let a bunch of houses be built on, the cost to me of doing nothing is that house profit. An LVT would just add to this.

The first sentence is a misquote. In the first instance, LVT would promote the more efficient use of already developed land i.e. buildings, which by and large is the most valuable land i.e. urban land. In other words, Poor Widows In Mansions swap places with large families in small flats or groups of younger people sharing. I fail to see how that is A Bad Thing, so yes, it is desirable. PWIMs are like German tourists who get up early to put beach towels on sun-loungers and then go back to bed.

As to 'opportunity costs', I've heard this crap before from people who know a bit of economics jargon but don't understand the concept or how it applies in real life (this exchange from Twitter):

Mark Wadsworth: If land prices are increasing by 3% and interest rates are 1%, then there is no opportunity cost of owning idle land

Sam Bowman: The opportunity cost is the foregone profit from not using the land productively.

Mark Wadsworth: OK, so why are the land bankers aka developers leaving half a million plots with planning idle? Would LVT not change their behaviour?

He is of course jumbling two separate topics - the annual rental value and the capital gain; if interest rates are 1% and the potential profit on building a house is increasing by 3% a year, it is worth while deferring that as far into the future as possible, but let us fight him on his own turf.

We know that the land bankers release just enough land onto the market to maximise income without depressing prices or pulling up their own input costs, it is a fairly fixed ratio of one new home completed for every nine existing homes being bought and sold. The UK government in its stupidity (or venality) says that if they grant more planning that more homes will be built. Nonsense, real life tells us that construction levels are decided by other factors and any planning granted in excess of that just means that land bankers will hoard ever more land.

From the point of view of the land bankers, this is the optimal outcome. From the point of view of people who'd like prices to come down or construction workers who want more work/better wages, this is a bad outcome. The land bankers are just driving a wedge between the two and collecting the resulting rent.

So his original point was, a shift to LVT would make no difference to people's behaviour. Of course it would. Development triggers huge tax bills - CGT and SDLT when the landowner sells to a developer; 'planning fees', roof taxes like CIL and s106 agreements when construction starts, another layer of SDLT when the finished units are sold. Clearly, these discourage construction activity.

It is difficult to track down existing figures for these taxes for the whole of the UK, but let's call it £5 billion a year for sake of argument. Why not get rid of all that and just levy an average charge of £1,000 on each such plot (i.e. roughly the same as Council Tax)? That would push the land banker's decision towards developing rather than hoarding. It would discourage land banking, full stop, thus giving smaller builders who don't want to buy more land than they can expect to develop in the next year or two a look in.

I suppose the next KLN is "Yeah but, once the land banks are used up, where are you going to get the tax from?" Answer: from the homes that have been built, duh.