03 March 2012

No relief for 'those with the broadest shoulders'

A recent article from the Daily Mail on the Government's plans for pensions tax relief:

Higher earners should lose higher rate tax relief on pension savings, Treasury Chief Secretary Danny Alexander believes. The Lib Dem Cabinet Minister says the Government cannot afford to keep paying such a generous allowance on retirement investments. The changes, which could be included in next month’s Budget, would affect those who pay the 40p higher rate of tax, which kicks in at around £43,000. Currently, of every £1 they save in a pension, the Government contributes 40p in tax relief. That would fall to 20p in line with the basic rate of income tax.

The raid could cost middle-class pensioners up to £7billion a year, and discourage many from saving towards their retirement. If the cut was restricted to those earning over £100,000 a year, it would still save the Treasury £3.6billion. Mr Alexander told the Daily Telegraph: ‘If you look at the amount of money that we spend on pensions tax relief, which is very significant, the majority of that money goes to paying tax relief at the higher rate.

‘It's very important that in these difficult times we are asking those with the broadest shoulders to bear the greatest share of the burden.’ Mr Alexander also repeated his aspiration to raise the threshold at which people start paying income tax...

Lib Dem demands are expected to be raised at a meeting on the Budget next week between David Cameron, Nick Clegg, George Osbourne and Mr Alexander. The raid on pension tax relief may meet resistance from Mr Osbourne, who has stressed the need to avoid raids on the wealthy because they could deter successful businessmen from living in the UK. (Daily Mail, 11 February 2012)

The plight of pensioners is a constant focus of attention, although it is difficult to believe that the increases in life expectancy and cost of living can be a major factor in the constant rise in public spending. It is, surely, the increases in expenditure in favoured areas which make it impossible to ‘afford’ state pensions at a level commensurate with the cost of living. In fact, pensions were hit by the retrospective introduction of means-testing, and also by years of ‘withering on the vine’ with rises per annum which were inadequate to match the real rises in the cost of living, let alone in the cost of things which pensioners were more likely than others to need on a socially recognised basis, such as live-in housekeepers and attendants.

We may be sure that there is no real sympathy with this population, with an above-average IQ and a limited voting life ahead of it. Attention to its problems and claims that ‘something must be done’ are actually designed to justify new forms of taxation, the need for which is predominantly created by expenditure on increasing populations with IQs below the general average.

The objective is to justify additional taxation of this above-average population. In the extract quoted above there is one explicit proposal for how this might be done, although the additional taxation is presented as withdrawal of a tax relief, and it is pointed out that the ‘tax relief’ saved will be mainly at the expense of the population of those with the highest incomes, which is also (very likely) a population with a higher average IQ than other pensioners.

Those with ‘the broadest shoulders’ (the highest average IQs) should bear the greatest share of the burden which results from an ever-increasing transfer of resources to populations with below-average IQs.

The following is a re-blogging of part of an earlier post. In light of the article above, I have felt it necessary to reiterate the key underlying issues.

Further misdirection of attention is in asserting that it is not ‘fair’ that those who go into ‘care homes’ should have to sell their houses (if they have them) to pay for the ‘care’ they receive. This, of course, will lead to families being deprived of their inheritance.

Families are said to be ‘betrayed’ by care home funding, which leads to many pensioners being forced to sell their homes. This is described as a ‘scandal’, and it is hoped that a ‘fairer’ system can be devised. This rhetoric in itself should make one aware that a misdirection of attention is involved.

The population of those who reach pensionable age, and have homes to sell, are a population with an above-average IQ; so will their offspring be. So surely the modern mind can see nothing ‘unfair’ in a relatively high-IQ population being deprived of the inheritance it might have had from its parents, also with (statistically) above-average IQs. It is the obtaining of advantages from a previous generation of above-average people which is regarded as unfair, surely? How can ‘fairness’ be increased by transferring assets from one relatively high-IQ population to another?

And so we infer that these expressions of concern that homes will be lost to some of those who might have inherited them must have an ulterior motive. What is presumably aimed at is justification for an additional tax of some kind, resulting in the usual transfer of resources to a relatively low-IQ population.

It is suggested that what a pensioner pays towards his care home fees should be ‘capped’ with ‘the state stepping in’ to pay the rest. That means taxpayers stepping in to pay the rest, including pensioners who do not go into care homes. ‘In a further blow Health Secretary Andrew Lansley refused to rule out a pensioner tax to pay for old age care.’ Aha! This idea - an extra tax on those above retirement age, mooted in the Dilnot Report - approaches more closely the principle of transferring assets from the relatively high to relatively low IQs.

The population of pensioners who do not go into care homes at all may be expected to have higher average IQs than those who do go into them and have homes they might be required to sell, because the former are likely to have better genetic constitutions, have lived more prudently and/or successfully, or because they have devoted relatives, which are all factors likely to be correlated with high IQs.

So it may be seen as ‘fair’ that those pensioners who do not go into care homes should be taxed in order to transfer assets to those who do go into them.

This is no doubt the real reason for blaming the rise in life expectancy of pensioners for the increasing costs of the NHS, so that as usual a population of people with above-average IQs can be penalised for the benefit of a population with below-average IQs.

As for changing demographics, figures for life expectancy are usually quoted in relation to specific ages. E.g. people who are 50 now have a life expectancy of so much. But by the ages one sees quoted, the majority of those with a low life expectancy at birth are likely to have died off, although not before being a considerable drain on the NHS, state education (with ‘special needs’ tutors?), etc. Clearly these are an important part of the real demography, usually left out of the discussion. Those who are still alive at pensionable age (a population with a relatively high average IQ) are certainly not responsible for the rise in the costs of the NHS caused by the genetically dysfunctional (a population with a low average IQ).