* Posts by Tim Worstal

821 posts • joined 12 Feb 2008

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Reckon YOU can write better headlines than us? Great – apply within

Tim Worstal
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Re: Pay?

Bay area pay plus European holidays is a pretty neat mixture actually.....now if only I would be allowed to do it remotely from Portugal so thus be paying Portuguese rents.....

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Bloody TECH GIANTS... all they do is WASTE investors' MONEY

Tim Worstal
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Re: Err ...

Yes, "business sense" here means "where's the cash coming from"?

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Didn't the Left once want the WORKERS to get all the dosh?

Tim Worstal
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Yes, a distinct similarity there.

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Tim Worstal
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Re: Stupid

"Marxian", meaning using certain strands of Marx's analysis to illustrate certain subjects has a great deal of value. While he didn't actually use the word he was spot on about the dangers of monopsony purchasers of labour just as one example (and I used exactly that analysis when looking at the Valley wage restraint cartel).

"Marxist" as a detailed set of rules about how to run an economy or society. Well, we ran that experiment, we generally call it the 20th century. Given the outcome of that experiment I don't think "stupid" is really all that strong as a description.

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Vodafone didn't have a £6bn tax bill. Sort yourselves out, Lefties

Tim Worstal
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A small hint

The one part of this piece the author of it was not responsible for is the headline......

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Tim Worstal
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Re: Yes, but

"That is, if you don't accept tax avoidance as a legitimate reason."

Well, I do accept tax avoidance as a legitimate reason. That some people will manipulate so as to reduce their tax bills lowers the tax bills of the rest of us.

Yes, *lowers*. Because it puts an upper limit on how much the political class can screw out of the populace. And agreed, tax evasion is by definition not legal but I'd also argue that it's legitimate in a different sense. In that it similarly reduces the impositions on the rest of us.

True, this is arguing from a very cynical standpoint, that of Mancur Olson. Who argued that the political system is just a stationary bandit (rather than a roving one, he arguing that it was better to have a stationary one as they would farm the population rather than just hunt it) out for whatever can be squeezed from us all. So, people willing to rebel, to disobey, reduce what can be squeezed.

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Tim Worstal
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Re: What a load of rubbish...

Well, you can try that. But HMRC would like to have tax on your worldwide income if you reside in the UK (unless you're a non-dom). So, assuming they find out about it, they will charge you tax on that life of Riley abroad. And jail you if you don't pay it.

Of course, you could move abroad and then enjoy it. But then you won't be resident in the UK and won't be subject to the UK tax system anyway.

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Tim Worstal
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I've written about the Goldman case elsewhere (back at the time) and I agree that that one is at least more arguable that Hartnett screwed up. They probably should have been forced to pay the interest on the bill they delayed paying. About £10 million as I recall....

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Tim Worstal
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Re: What a load of rubbish...

Sure you can do that. It's just that you can't get the money out of the company and into your hands without paying tax. Because you've got to either:

a) bring the money back from offshore to your UK company, at which point you pay UK tax

or

b) Pay it to yourself but you live in the UK so you pay UK tax.

So you're in exactly the same position as all these other companies. Tehy only delay tax until they try to take the cash back into America to give it to hte shareholders. At which point they pay the full whack.....sa e-Bay did about 6 months ago.

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Tim Worstal
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Re Amazon

Two bits of law.

1) EU law says that any EU based company can sell anywhere in the EU and pay corporation tax in hte country where it is based. That's what "single market" means. Except, if there's a "permanent establishment" in the country of sales. Then tax on he profit from those sales will be paid in hte country of the sales.

2) UK Luxembourg tax treaty (and this is the standard OECD treaty) is here:

http://www.hmrc.gov.uk/taxtreaties/in-force/l.htm

Which says:

(3) The term "permanent establishment" shall not be deemed to include:

(a) The use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;

(b) The maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;

(c) The maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;

(d) The maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or for collecting information, for the enterprise;

(e) The maintenance of a fixed place of business solely for the purpose of advertising, for the supply of information, for scientific research or for similar activities which have a preparatory or auxiliary character, for the enterprise.

Or: warehouses are specifically excluded from creating a permanent establishment.

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Tim Worstal
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Re: Tim, get real.

"and that Starbucks Trading is in Switzerland as it has the greatest crop of coffee beans"

Strangely, Switzerland is the world's leading centre of coffee bean trading. Dunno why myself, might just be historical happenstance like Holland running the cut flower market. But if you were going to set up a coffee bean trading arm for Europe then Switzerland is pretty much where you would put it. Like doing diamonds in Hatton Garden rather than Vauxhall, that's just where you do it.

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Tim Worstal
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Re: "Branch" line

Standard part of common law is that you "don't pierce the corporate veil". Google UK and Google Eire can both be owned by Google Inc and UK is doing engineering and Eire is selling and you think, hah! but they're the same company really! But the law says they ain't. You can't look through that corporate front to decide otherwise.

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Tim Worstal
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Re: What a load of rubbish...

Starbucks and Luxembourg. That's a royalty payment, yes. For they are using the Starbucks name. And that has a value. So, under the transfer pricing rules, there should be a payment for the use of the name.

Starbucks does, in some countries, have franchises. And HMRC (as did the EU more recently) had a look at this. And the rate that Starbucks charges Starbucks UK is the same as it charges franchises, ie unrelated companies.

It's fine.

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Tim Worstal
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Re: If the political parties were genuinely interested in addressing the cause

The Fair Tax won't work. It's a sales tax (once only, at the point of retail) and needs to be 25% or so to raise the revenue. And a sales tax at 25% will have horrendous avoidance (or evasion) issues. To get a consumption tax up to that rate you need a VAT, a little bit being added each step down the supply chain.

But the people who want the Fair Tax are dead set against a VAT. Go figure.

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Tim Worstal
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Re: Grossly mileading and innacurate

http://www.dorsey.com/london_tax_may26/

Not quite. HMRC won on one technical point: that the CFC rules could possibly be applied under certain circumstances in the EU. Cadbury showed that Vodafone almost certainly met the requirements that CFC did not apply.

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It's not easy being Green. But WHY insist we knit our own ties?

Tim Worstal
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Re: So, in other words...

"So is Tim saying that the economy is worse off because I didn't go down to the pub or to the cinema and spend money in my own spare time?"

No, not at all. The argument is coming from entirely the other end of things. If people who specialise in making bread make the bread then I will be able to consume more bread. I will thus be better off from the division and specialisation of labour. And the same goes for everything else, too.

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Tim Worstal
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Re: The problem with markets

That's rather good. So, Tim Worstall needs to elect another humanity to become worthy of the free market, eh?

Didn't Brecht get there first?

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Tim Worstal
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Re: Specialization and Corporatism

Both Smith and Marx made exactly this point and warned against it too. So true, but not exactly new.

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Tim Worstal
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Re: Let me get this right:

"To value 'free time' is a category error: all you can say for such a value is that you might prefer to do one free time activity than another during it."

Quite. And a synonym for "prefer" is "value more highly".

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SWINGBELLIES! Take heed AGAIN: Booze shortens your life

Tim Worstal
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Sadly

The paper is bollocks. Statistical cherrypicking at its worst.

http://velvetgloveironfist.blogspot.cz/2015/02/dont-worry-drinking-is-still-good-for.html

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Skin colour's irrelevant. Just hire competent folk on their merits, FFS

Tim Worstal
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Gary Becker's answer to this was interesting. He asserted that Jim Crow (the actual laws about it) existed precisely because in the absence of such laws then the market would gradually sort it out. Thus the racists passed the laws to make sure the market couldn't sort it out.

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Basic minimum income is a BRILLIANT idea. Small problem: it doesn't work as planned

Tim Worstal
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Yes, and in hte first few paras they make clear that the effect upon the labour response should be the same under either system, negative income tax or ubi.

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Tim Worstal
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Yes, but in hte effects on labour provision they should be the same thing. Different in other aspects, but not this one.

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Tim Worstal
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From Twitter, a paper examining that labour response.

http://www.widerquist.com/karl/Articles--scholarly/Failure2communicate.pdf …

Not as bad as it was painted to be apparently.

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Tim Worstal
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The negative income tax (from Milton Friedman) is similar in intent but still different. Because it's conditional. You don't get it if your income is above the baseline. That makes it a great deal cheaper, of course, but you've then got those incentive effects.

It was that negative income tax which eventually led to the EITC (in English, working tax credits)

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Tim Worstal
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There were some US experiments, Minnesota maybe? Worked out a little worse.

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Google gets my data, I get search and email and that. Help help, I'm being REPRESSED!

Tim Worstal
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Re: The transaction is not symmetrical ...

Umm, please, try reading an article, by me, on this site, about the emh. This week or last, "worstall" in the search box will get you to it.

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Tim Worstal
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Re: Ideological note

Of course.

It's possible (well, certain perhaps) that we will disagree about *when* but the basic idea, sure.

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Tim Worstal
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Re: Indolent Wretch Not so fast

Roughly speaking, roughly you understand, you've just described Walmart. Their integration of what wsa selling at the tills v what they should be shipping from the depots and what they should be ordering from the suppliers was, for decades, well ahead of their competitors.

It may not be true today (no idea) but really Walmart under Sam was an IT business.

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Tim Worstal
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Re: The transaction is not symmetrical ...

Yes, but your knowledge of teh value of your data *to you* is informationally complete, sa is your knowledge of the value of Google's services *to you*. Google also doesn't know what the value of their services are to you, do they?

In fact no seller does. That's why they try things like market segmentation and so on. Because they know there's a consumer surplus out there and they want that cash. But they're not able to identify who is getting a big fat consumer curplus and thus charge them for it.

Efficient and or free markets do not depend upon compete information. Because in just about no market is there that comlete information.

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Tim Worstal
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Re: Coding Prowess

So that's why he teaches about the ethics of coding is it, rather than even teaching coding?

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Chipotle insider trading: Disproving the efficient markets hypothesis

Tim Worstal
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Re: May I remind you...

Don't forget: emh doesn't depend upon anyone having perfect information. It depends upon people trading upon the information they do have. The net sum of that trading will be the prices in the market. Thus market prices (might be!) informationally complete while no one individual has perfect information.

This is obviously very close to Hayek's point, that as no one can have perfect information with which to plan the economy then we've only got those markets to crunch through all the information that is available.

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Tim Worstal
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Re: non sequitur

Socialism is the price fixing bit where there's no bog roll for anyone. Redistributing money to the poor might be described as charity?

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Tim Worstal
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Re: Oxfam

"Piketty argues that the present financial system is designed to produce ever greater inequality, and that this is a bad thing;"

Err, no, no he doesn't. He does say that a side ewffect of r>g is that wealth will become more concentrated but he's absolutely certain that's not because of design. Indeed, he seems to think it a natural part of capitalism, one that we've got to insert a design against.

As to hte Worstall Relevancy test, it was you who actually used my name in your question, no?

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Tim Worstal
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Re: Oxfam

" Once the initial emergency phase of a disaster is dealt with, the way to fix famine is to give people money. Then, the entrepreneurs will find ways to get them the food."

Absolutely correct. And it doesn't come from Oxfam but from Amartya Sen who won his Nobel in large part for pointing this out. In the modern era famines aren't about lack of supply but a lack of effective demand. The answer is thus to add to that effectuive demand by giving broke people money with which to purchase food.

I wrote my first article about this over a decade ago when George Bush was trying to change the way that the US provides famine relief. Amazingly, Shrub was actually trying to change that system the right way, to providing cash on the ground, not shipping food from the US. I'm not entirely sure but 2004 might well have been before Oxfam's change of heart on this.

As to what this has to do with Piketty, well, that's anyones' guess.

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Uber isn't limited by the taxi market: It's limited by the Electronic Thumb market

Tim Worstal
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In my defence

"arguably"

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Tim Worstal
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Re: Economy

"What each person "produces" is the difference between what they add and how much of that which is thrown away never to be used again."

No, really, it isn't. At least not in the manner that an economist talks about value. Value is simply whatever subjective value a consumer puts on something. And so production is the production of that value.

" If they're digging stuff up out of the ground or growing it, they're maybe a net producer. I say maybe; you can't eat gold or diamonds, they're just pretty."

People value just pretty. Thus producing just pretty creates value.

The same is true of anything else that people value. Produce value and you're, umm, producing value.

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Why so tax-shy, big tech firms? – Bank of England governor

Tim Worstal
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Re: Common Tax Delusions

"Except corporations are "people" now"

Err, no.

Companies have always been "legal persons". Because that's what a company is, a legal person. Some fiction that can sue and be sued.

A human being on the other hand is a "natural person".

All that malarkey in the US courts about companies being people was in fact a discussion of which rights of being a natural person also apply to legal persons. And it was decided that free speech, and thus the ability to contribute to election expenses, was a right that legal persons did enjoy as did all natural ones.

None of which changes the fact that all taxes are ultimately paid by natural persons. A tax simply must mean that the wallet of some live human being gets lighter. There's no one else out there who could possibly pay taxes.

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Facebook worth more than Portugal? Hell, it's worth a LOT more than THAT

Tim Worstal
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Re: Wasting twice the time

and any gain in utility (let alone something more concrete) is marginal at best.

Well......there must be a gain otherwise no one would have switched.

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SCIENTIFIC CONSENSUS that 2014 was record HOTTEST year? NO

Tim Worstal
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How excellent

"This in spades. With a flat population and more efficient tech needing less resources, we could contract the economy whilst improving the standard of living."

Because that's just what economists are predicting. In fact, in one of the economic models that is the start of the entire IPCC process that tells us about global warming they predict that in 2100 global population will be about what it is now (rising to 2050, falling back after) tech marches on and the planet's 6 times richer then than it is now.

That's what we want. And that's the model that assumes more globalisation and capitalism of course....

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Amazon's tax deal in Luxembourg BROKE the LAW, says EU

Tim Worstal
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Well,

They've not quite called it illegal yet. They've said we think it might be and can we have some more evidence please?

There's also no problem at all with paying a royalty for brand and technology licensing. The argument is only over how the price was worked out. And, of course, if Amazon has to pay more tax in Lux then it just claims a credit against US tax bills. Moves money around a bit but not much more than that.

"It's not Luxemburg nor the UK that takes a look at Amazon, it's the EU and they should as well have a look at some islands in British waters as the Brits will be the last to do it."

Well, yes, except those islands aren't actually in the EU.

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What will happen to the oil price? Look to the PC for clues

Tim Worstal
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"Shale Oil is economic at >= USD $95/barrel."

The article you link to actually says $60-$80. And it's old numbers too. There's at least one company in the Bakken saying they're fine at $42.

This is rather the point that is being made. Shale is like manufacturing in the sense that we're getting the usual sort of productivity increases that we do get in manufacturing.

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Tim Worstal
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Re: Fracking

Piece in the WSJ today saying some producers profitable (10% return on capital) at $40. And going lower.

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Tim Worstal
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Umm, but

"No matter if you have 10 fracking wells or 1,000 - you will not reduce your per unit extraction costs."

The last 20 years of fracking is the very issue of having reduced unit extraction costs. That's rather what we mean by having moved to a "manufacturing model".

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Tim Worstal
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"No one who actually knows anything about the economics of fracking can claim that it's not capital intensive. In fact it's the opposite - it requires huge and constant injections of capital, because it's very tough on machinery."

You can drill a fracking well for $5-$10 million. You can't even survey a traditional reserve for that sum.

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Tax Systems: The good, the bad and the completely toot toot ding-dong loopy

Tim Worstal
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Re: Piketty

"Please note the article's racist/xenophobic remark: "Obviously he's wrong, for he is a Frenchman"."

Eh?

Taking the piss out of the French? I don't call that being xenophobic or racist.

I call it being English.

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Tim Worstal
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Re: Yeah, but...

" I hoped Tim would go into detail, throw some facts and figures around and point out the blindingly obvious hole in the logic that I can't seem to find. Instead all we got was "1.5 trillion lol" and that was pretty much it."

1.5 trillion lol was really a comment on hte point that they don't seem to have thought it through.

However, you can indeed piece together something from the rest of he piece.

Transactions taxes are a bad idea because:

1) Bad efficacy, too easy to dodge.

2) Bad efficiency, they have higher deadweight costs than other taxes.

3) Bad equity. As we can't track the incidence we don't know who is really carrying the burden. so we've no idea whether the rich are paying a higher portion of their income than the poor.

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Tim Worstal
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Re: I wonder @LucreLout

823 billion dollars

Err, 82 billion dollars. it's 0.7%, or x0.007.

"2) Efficiency. This one is my favorite. If the transaction tax was levied at every sale, from every till, every credit card or paypal transaction and every bank transfer and then instantly pushed into the state's bank account, much goodness could arise."

That's not the meaning of efficiency we're using. Rather, we want to know how much of other stuff would levying the tax in this manner screw up.

"On Jan 2 2015, the NYSE had a total trade volume of 33,253,336,431 USD.

Taxed at 0.7 %, that would collect 2,327,733,550 USD in tax for just ONE DAY (YES, 2.3 BEELION dollars). I think this will help cover the shortfall nicely, but someone else should check because I am getting RSI now."

The EU estimated that a Tobin Tax of 0.1% (and 0.01% on derivatives) would shrink the economy by something like 1%. So we've just decided to reduce the collective incomes of all americans by 7% just by and only by, applying this tax to hte NYSE.

It's not a great recommendation for it.

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Tim Worstal
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Re: I wonder - North London commuters

You might want to try a switch over the economic commentary. I wrote this piece in Portugal and am adding comments from the Czech Republic.......

:-)

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Tim Worstal
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Re: Loved this article (especially placing Land Value Taxation first)

Severance tax can also be called resource tax, or resource rent tax. And yes, entirely right that there should be whacking great taxes on such things. I make that argument somewhere around here actually on the spectrum auctions. The value of something simply existing (oil, copper, spectrum) should be entirely taxed away while the value added to that something should remain private profit.

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