Isaac Newton Explains The Laffer Curve

Alternatively, snail farms for the shits and giggles of 'em

One or other of those bits of maths from Isaac Newton can be put as to every action there is a reaction. So, try to tax people and they’ll react. You might get more tax than you’d expected - and yes, this really does happen - and you might get less but you’ll not, never, get what just a straight line prediction would suggest. You’ve got to be dynamic in your estimates simply because human behaviour will change.

We can, alternatively, use the Lucas Critique:

….a criticism of macroeconomic policy evaluation that states it is naive to use historical data to predict the effects of new policies. The critique argues that economic agents (individuals and firms) change their behavior and expectations in response to new policies, which alters the relationships between economic variables. Therefore, models based on past relationships are often unreliable for forecasting the impact of policy changes, which must account for people’s rational expectations.

Do stuff to people, people do different stuff. Action produces the reaction.

Or, there’s this glorious story about snail farms:

It is a drizzly October afternoon and I am sitting in a rural Lancashire pub drinking pints of Moretti with London’s leading snail farmer and a convicted member of the Naples mafia. We’re discussing the best way to stop a mollusc orgy.

The farmer, a 79-year-old former shoe salesman called Terry Ball who has made and lost multiple fortunes, has been cheerfully telling me in great detail for several hours about how he was inspired by former Conservative minister Michael Gove to use snails to cheat local councils out of tens of millions of pounds in taxes.

His method is simple. First, he sets up shell companies that breed snails in empty office blocks. Then he claims that the office block is legally, against all indications to the contrary, a farm, and therefore exempt from paying taxes.

Specifically, empty commercial property has to pay property taxes - after a period of time of being empty at least. These business rates are substantial. So, you can stick a charity shop in there on a short lease and not pay those taxes. Or those American Candy Shops that infest parts of London - they’re doing the same thing. Shell companies, occupy for a few months, pay no tax, fold the company and the big saving is that no business rates are being paid.

Thus these snail farms. Ag land doesn’t pay rates, snails are indeed molluscs, mollusc farms are ag, it works. Stick a box of breeding snails in an empty office block no rates payable.

Well, probably, maybe possibly, maybe they’ll catch you in the end. Disallow on the grounds of taking the piss and so on.

But we do have our reaction to the Brown Terror rule that empty commercial property still pays business rates - urban snail farms.

And, well, all of this is fairly well known to those who pay attention. It’s this last bit which should prompt perhaps some thinking:

Around this time Ball and his family were taken to court multiple times for attempting to evade taxes by repeatedly phoenixing companies and shuffling assets around different businesses. He was left defending himself and lost badly. Ball was declared bankrupt and banned from being a company director for nine years until 2016. This set him on a path to depriving the taxman through innovative methods: “I said you got £600,000 off me. I’m going to get £20m off you.”

Hmm.

I kept wondering why he was pushing on with his snail tax avoidance business, even though he was preparing to enter his ninth decade. Ball told me that fighting with the likes of Westminster council over tax helps stave off the boredom of old age: “All my friends who have retired, you can’t have a conversation with them, they’re just waiting to die. I’ve had a laugh. Every day, no matter what happens, I’ve had a laugh.”

That is something the planners really do have to take into account, isn’t it? Or they should at least.

Some people will avoid tax just for the shits and giggles of it.

I don’t really care what you call this, Newton, Lucas, Laffer but planning humans is difficult because, well, you know, humans?