Afternoon roundup

The afternoon's closing of the browser tabs:

• Markets in everything: pretending to be other people so they can have a vax pass and you can have eight shots. Some people are willing to pay $200 to have a 60x increase in their odds of real bad stuff when they catch Covid. FFS. 
• The TVA is getting back into nuclear power. One of these units, the BWRX-300, looks to have a generation cost around NZD $75/MWh. That's getting into viable-in-NZ territory. 
• With zero notice, Statistics New Zealand killed NZ.Stat: the interface for access HES and a few other datasets. Infoshare is thankfully still available. I'm talking with other folks about setting up an external mirror of Infoshare, in case SNZ does this kind of thing again. Crazy. Will be writing my Newsroom column next week on it. Statistics New Zealand found however many millions of dollars it took to run a roadshow across the country on whether and how they should be measuring spiritual wellbeing, but wound up five versions behind on core systems. Priorities man. 
• RBNZ running inflation at 5.9% lets Labour claim generosity with a 6% minimum wage hike.
• Councils that like to plead poverty oughtn't put resource into this kind of thing. 
• Superb piece by James Graham summarising the lit on rent control. I expect to point to it a lot in future. 
• Shutting down immigration did not kickstart the Oz economy: Grattan institute.
• More evidence that moderate alcohol consumption is associated with higher wellbeing later in life. 
• UK rules mean Reddit and Twitter will either have to block adult content in the UK entirely, or come up with an age verification setup. Couldn't they just answer some simple questions that only adults can answer instead?

Tax Spikes

I lost this past weekend to a crazy fever. Fortunately, the reader mailbag brings me up to speed. Here's Canterbury golden-era Honours grad (now NYU econ PhD student) James Graham:

Anyway, just a quick note to ask whether you'd seen this?

(There's a better figure of the data here)

I can't believe James Shaw is trying to make out high income earners as the bad guys when tax avoidance at every level is right there, staring you in the face: at $14000 the second marginal tax rate kicks in,  $23,000 is the maximum amount for a Family Tax Credit top-up via WFF, $48,000 is where the third marginal income tax rate kicks in, and at $70,000 the top marginal tax rate kicks in.

I can't figure out the spike around $18,000, though. Any ideas? (It's not student allowance, that abates at around $10000 a year, and it's not minimum wage earners, who should be on around $30,000 with full time work).

Anyway, thought you might enjoy fisking this one, talking about incentives, etc - you know, the stuff you do so well :-) 

Well, he didn't really leave me much room for adding more fisking, since it seems already done. Bunching at all the boundaries, not just at the top one.

The spike around $18k is almost certainly the $16,698 that each of a married couple both on NZ Super would receive, Bryce Wilkinson kindly tells me.

Some folks getting up to the $70k threshold, particularly second earners, won't bother putting in extra hours because the return to work is lower. More of the action would probably be owner-operators paying themselves a salary just up to the threshold, and building equity in the firm past that. It isn't immediately obvious to me that the proportion of taxable income in the spike is bigger now than in the prior two years either.

I'd be more worried by the bunching at the $23k threshold than at the $70k threshold as it's more likely showing something real rather than something accounting.

If you retain earnings in a company and then buy yourself a car for the company, there's FBT hassles and having to prove that you need it for company use and paperwork for what part of it is privately used and then paying FBT on the private part. But maybe you've found it worth that hassle. You consequently have a slight distortion in consumption choices shifting towards things that are plausibly business expenses and away from things that are not 'dual use'.

If you decide to stop working more hours because WFF abatement rates are too high for part of the range and effective marginal tax rates are consequently really high, that seems a bigger distortion.

James also points to this Saez piece that failed to find much kink-point bunching in US tax data.

Afternoon roundup

Stories hitting today's mark:

• Can't it be both? NZTA shut down a website offering $20 sober driver services via Facebook. Apparently it's cool to catch a ride with anybody you meet at the bar, but if you want to charge $20 for it, it's illegal because safety. Anyway, taxi driver David Buckingham comments "People thought [closing the page] was anti-competition. The reality is that actually it's pro-safety.". Sounds like the great "More taste" vs "less filling" debates of the 1980s. It's definitely anti-competitive. And maybe it's pro-safety, if people catch a ride in a cab as alternative. If they drive home drunk or catch a ride with a random stranger they met at the pub, perhaps less so. The "More taste" part of the older debate was always pretty dubious too.


• James Moore points to one part of Christchurch's continued insanity: the SimCity precincts. 

  Last month's revelation that the Government - which appears to have taken over the project from the Christchurch City Council for reasons unexplained - is lobbying cinema operators for an on-site art- house cinema appeared to reveal a mood of increasing desperation and unreality.

  Not only would such a development place pressure on what is a confined site, it fails to recognise that when the neighbouring Isaac Theatre Royal reopens next month, it will contain state of the art cinema facilities.

  Two film theatres within yards of each other? Oh please.

  With no firm indications about The Court Theatre's possible return to the precinct and criticisms about the proposed rentals in the music building, the performing arts precinct in its existing form is flopping around the stage like an ageing ballerina attempting a final performance of The Dying Swan.

  Indeed. If investors want to run a second cinema near an existing one, I'd be the last person to complain. But where the government's lobbying them to do it... I'm glad I left. Too much of Christchurch is still the Inside of the Asylum. 


• The University of Canterbury continues to be gifted wonderful headlines about on-campus racism. There really isn't anything new in the story but for this excellent photo of James Graham from 2007, which I'm sure somebody somewhere will somehow find offensive.