levant parties and co-operation. I entirely agree that trust is important, but the operation of bodies like the Scottish Fiscal Commission, who in my mind is primary purpose, is to help to protect and engender that trust in how the system works, that trust of public, that the public has in how the system works. Again, I think that the key ingredients of that are transparency around how it works and as much transparency as possible, the assurance role that the SFC will have over that and the scrutiny process that goes on alongside all of that. I think that those are key ingredients to that trust. Would you agree too that sometimes we, to try and legislate for everything, can really introduce suspicion almost rather than if you're trying to come at me to a certain extent should we assume a culture of trust? When we are looking at the bill. I think that we're into deep water here, but the whole operation of the United Kingdom post referendum, it's not going to work if the thing is seen as opposing factions, not trusting one another, not co-operating. If we want it to work reasonably, there has to be a goodwill. How one achieves that necessary goodwill to make the system work, while at the same time politicians have quite legitimately different and inconsistent political aspirations, I don't know. I think that there is a major problem there, but unfortunately the people who are liable to suffer is Scotland. If there isn't openness about how these funding things are working, they're not going to be properly debated, they're not going to work equitably, they're not going to be evolved in the proper fashion. I mean, there are real dangers in here, I think. Thank you. That has concluded our questions. Panelists want to make any further comments before we wind up the session. Anything else you want to add that's not being covered? Okay, well thank you very much for your evidence today. That concluding that session, I'll now have another short break until I change over what this is and give members a natural break. I shall reconvene the session. Our third item of business is to take evidence on the Scottish rate of income tax from Professor David Bell. I'd like to welcome a former adviser Professor Bell to the meeting and invite him to make a short opening statement. David. Thank you. I'd just like to start off by saying that I think that the session of the finance committee and the associated papers are important because it will place on record the simple point that what you think you may get if you increase Scotland's income tax by 5 per cent, say, is not necessarily what you will actually get. Multipling the average additional tax liability by the number of Scottish taxpayers gives an arithmetic estimate of the extra revenue. The outcome may be quite different because this simple calculation does not take account of how taxpayers' behaviour may change if tax rates change. Changes in taxpayers' behaviour are difficult to predict. That is because it is really difficult to establish what we call the counterfactual. What would have happened had rates not changed. One finding on which there is agreement is that increases in taxes lead to reductions in taxable income. That could take a number of forms. Taxpayers may reduce their hours, drop out of the labour market, retire or even emigrate. All of those responses lead to lower tax receipts on other taxes, as well as income tax. That might have implications for the second no-detriment clause. Alternatively, taxpayers may reduce their effort at their workplace or negotiate higher wages to offset the higher taxes. That will lead to lower company profits. Finally, they may seek to avoid tax by reclassifying their income as, for example, profits. That would lead to a transfer of tax receipts from Scotland to the rest of the UK. The group that is most likely to change their behaviours is the very highly paid group. Scotland gets about 20 per cent of its total income tax revenues from the top 1 per cent of earners. That means that it faces considerable revenue risk if the group alters its behaviour. To me, that suggests that the Scottish Government has to proceed cautiously, call canny, when considering significant changes to the structure of income tax in Scotland. It is also worth bearing in mind that the perception of Scotland as a high-tax jurisdiction not only might affect the behaviour of Scottish taxpayers, but it will also scale migrants who might come to Scotland and have the potential to boost the Scottish economy. That is it. I think that a couple of words that were used there were significant and perception. It is the definition of what is significant. For example, the committee had a two-day study visit to Basque country last week, and one of the first things asked the Minister of Finance was given the fact that taxes are a lot higher in the Basque country, what impact that actually had. He looked at it bewildedly and said, well, not really anything that they have been able to discern. The Basque country has a level of GDP 22 per cent per captor, above the Spanish average. It has productivity 28.5 per cent above the Spanish average, a human development index higher than Norway, Sweden, Finland, etc. The committee said, well, it is only 35 minutes by plane to Madrid, incidentally, from Bilbaus, so it is even closer than London is to us. However, it did not seem to have had any adverse effect, and that was certainly their view. For them, it was, and I quote, not an issue. Basque country raises all its taxes more or less and pays 6.24 per cent of all of Spain's taxes, so there is much higher level of devolution than we have or are likely to have in the foreseeable future. That is why the issue is—I know that Labour's elasticity is covered in your paper quite substantially—where does it become significant? One could argue in the super-rich that even a marginal increase could deter someone, but, ultimately, if you are looking to increase revenue, where is the XY axis occur in your view in the UK context? We have quite a strange structure so that you pay 20 per cent on income between about 10,000 and 42,000, and then 40 per cent up to 150,000. The big action, it seems to me, is more likely to be down towards the lower end of the income tax schedule. If you want to raise a lot of money, I think that we raised around £700 million out of £11 billion from the additional rate, so even if you increase the additional rate a lot and there is no behavioural response, you are not going to get a huge amount of extra revenue. If you move the additional rate and have it kick in at £120,000, that would make a pretty significant difference. You have to think about both bands and rates. Rates in terms of your good point around perception. People see rates as the key issue, but bands are as important. For example, in the Scandinavian case, what used to be the case in the UK was that there was much more stepped. The band widths, if you can describe them as that, were smaller, and then you moved up steps in a smoother fashion than is currently the case. It is at lower incomes that you would have a big impact on tax revenues that has its political costs, potentially. What I think is good in your paper is the fact that you have included national insurance, so people can look at the real rate of income tax. People often forget that it is 10 per cent on a 20 per cent increase, but I think that one of the things that you have talked about in Gavin McEwen and his excellent paper covers the issue of migration. The flow of migrants into Scotland could be reduced if the higher tax rates, in addition to the social and psychological costs, deter immigrants. Professor McEwen says, and I quote in paragraph 4, in a 2014 paper, a nukebaer tea of spice surveyed the evidence for tax-induced migration in Switzerland. Obviously, Switzerland and Sweden are not areas where you would expect, for example, to be an issue in attracting migrants, if we look at very high migrant populations. He says, while there is a federal income tax in Switzerland, it is relatively low in cantons and communities of considerable taxing powers, including the rates of tax income. She reports that two studies she consulted found evidence of high-income taxpayers taking a level of taxation into account and choosing the place of residence. One found little such evidence. There seems to be quite a divergence of views on this particular issue. Professor McEwen talks about the diversity of taxation throughout the United States, with a whole plethora of corporation tax, sales tax, etc. He says that there is undoubtedly competition between authorities and influence of migration as a result, but diversity has been remarkably stable and even tended to increase somewhat. If we look at pure economic factors and taxation, it is quite clear that taxes go up and migration would expect to decrease, but what impact do you think the expenditure of those taxes actually has? For example, if I am thinking of moving the wife-and-wains to somewhere, I am not just thinking about a marginal tax rate, I am thinking about what the schools are going to be like, what the public realm is going to be like, what the levels of crime are going to be like, what the relative cost of housing is going to be. How impactful are those marginal rates? If Scotland, for example, had higher tax rates, which seems to be your assumption, in one comparison to perhaps folk looking at Scotland, is just being a higher-quality life place in which to live? That is a very fair point. One that I tried to cover in my paper a bit by discussing the forces that cause people to migrate or maybe not migrate, and a typical pattern would be that it is the young who migrate and the reason that they migrate is that they gain the benefits of taxation over the rest of migration over the rest of their lifetime. It tends to be the better-off higher earners who migrate because the costs of moving mean less to them than they would to lower-income people. The costs of moving are not just the economic costs, they are the psychological costs, the social costs associated with moving from somewhere where your children are established in school, where your wife or your husband has settled social pattern with groups of friends and so on. All of that, if you are thinking of giving that up just to get a lower tax rate, it is not obvious that the lower tax rate would make the big difference. I think that the evidence around migration is very mixed. There is one study that I would refer to where tax rates have been used as a specific policy to attract migrants into a jurisdiction. The policy has been successful, and that is in Denmark. The paper there is clever et al. What happened was that, for a specific group of high earners, tax rates were lowered, and there was an increase of high-income earning migrants into Denmark following the introduction of that policy. Quite a good counterfactual was established with earners who earn slightly less than the threshold at which the lower tax rates kicked in. Their numbers did not change, but there was a big influx of the very high earners. There are a number of reasons why one might be sceptical about applying that argument to Scotland. I think that it is a specific policy in a way that is aimed at attracting migrants. I am not clear how that would—I do not think that, under the powers of the Scotland bill that is currently constituted, Scotland could offer a lower rate of tax to people migrating into Scotland and keep the same tax rates for residents. My understanding is that that would not be a potential policy. Given that that may well not be applicable to Scotland, given that the situation in Denmark is somewhat different from Scotland, it is not clear that that lesson would necessarily apply. Just one thing at one point that I would make is that, in general, it is true that the costs of migration probably have fallen in the last two or three decades, mainly because of the ease of international travel, and the way that the labour market has become much more an international labour market than simply a regional labour market. Obviously, migration is a key issue. You have said that, for example, in the page 3 paragraph at the end of that long section 2, during the period 1950 to 2000, Scotland experienced net immigration of around 900,000. Obviously, that legendary union dividend is coming into play again. When you go down to London, house prices are phenomenally higher, so younger people who want to go have to try and get on the housing ladder somehow. My understanding is that schools are not exactly top-notch for most people. Everything is more expensive. Surely, if we can deliver assuming that there are higher tax in Scotland, there is a reasonable quality of life and a higher level of employment, more equality, all the things that we all want to have. Again, the Basque Country has a very high level of index of equality, much better than anywhere else in Spain above the EU average. We did not deter migration on tax grounds. Incidentally, 29 per cent of the Basque Country's population are immigrants, mostly from other parts of Spain, not from developing countries or wherever. Surely, it is about what you do with the resources that you have, all else being equal? I think that, probably, at the moment, the cost of housing in London, for example, is a big or deter's potential immigrants from, let's say, the financial sector in Scotland to Downsouth. On the other hand, if you are established in the London housing market, having a higher tax rate in Scotland might actually be a negative for moving up. People could adopt different strategies around that. I don't want to say that that would necessarily overcome the lack of migrants going down, but, although it is probably true that, for most people, the costs of emigration exceed the benefits, we have to be careful around even losing, well, it seems to me, a small number of high earners. You can take the view, well, that's it, but if the top 1 per cent is paying 20 per cent of total revenues, I think that you have to be careful. Let's look at it from the other point of view. Say, for example, that to everyone's election next year decides, you know something, we're really worried about the effect of higher taxes. We're really worried about losing some of those higher earners. What we're going to do is reduce taxation. What would be the benefit to Scotland, would you say, of that? Obviously, we'll lose tax revenue and that will have an impact on our public services. What would be the economic impact? In other words, what I'm trying to ask you is, is it an equal relationship? Are people as likely to flow into Scotland if we reduce taxes as to leave Scotland if we significantly raise taxes? Is there any what being done on that? No, not that I know of. What you would get is less of a fall in revenue than you would expect if you just did the arithmetic cost of... You never get as much. What you would lose less income tax revenue than you would expect, you might gain a bit of VAT revenue, but, of course, increased national insurance, the other part of VAT and most other taxes would... If their value is increased, then that money would just go to HMRC. It is also important because to think about, well, where are these people going to come from? If they're coming from outside the UK, then that's a benefit to Scotland and to the UK taxpayer. If they're coming from other parts of the UK, then their increased VAT spend in Scotland, say, is mirrored by the reduction in VAT south of the border, so HMRC isn't actually better off or worse off as a result. If, for example, we reduced the higher rate by five pence or something like that, because the suggestion seems to be that, if it weren't 5P, it would have a detrimental impact on people effectively classing themselves as Scottish taxpayers where they have a domicile in both locations. What I'm trying to say was, if we were reduced at 5P, would the amount we gained offset the amount we lost? The argument seems to be that we wouldn't gain much by putting it up by 5P, but we would gain a lot by putting it down by 5P as a random figure, so to speak. That seems to be a figure that is considered to have an impact. Two or three per cent doesn't seem to have quite the same level of impact that it's perceived. Maybe I can refer to Manning's paper on his view on the increase proposed by the Labour party at the last election from 45 to 50. The arithmetic number was that UK tax revenues would increase by £3.3 billion. His analysis, based on behavioural responses and effects on other tax revenues, was that there would be a range of between £2.8 billion at the top, depending on the elasticities, the most optimistic outcome and a loss of £0.7 billion was the most pessimistic outcome. You expect 3.3 billion if you just do the arithmetic, but, in fact, there's a wide range because of the uncertainty, and the numbers are between minus £0.8 billion and plus £2.8 billion in terms of the effect. I have no reason to believe that it wouldn't be symmetric if you went in the other direction, so that you would probably gain, what's that, about four-fifths of the, sorry, you'd lose about four-fifths of the tax revenue that you expected to lose if you cut the Scottish rate from 50 to, sorry, from 45 to 40, say? £400 million in 2018-19 is the rough prediction SRIT. If we cut it with 5p, what you're basically saying is, obviously the higher rate is much less, but I'm just looking at for arithmetic, but I realise, what's the problem, about £70 million or £80 million for those high-tech, but what you're saying is, if we cut it with 5p, you would lose 80%. You would still gain five-fifth of the money that you lost, say you lost £100 million or whatever the figure was. You would gain £20 million back, so the net loss would be over £80 million in terms of overall revenues. It's really, really difficult to say. I think that, at the UK level, migration hasn't really been an issue, but what has really been an issue is people avoiding tax. Manning, for example, shows how, in terms of self-employed directors, there's a huge bunching of their earnings at around just below £150,000, and then they're taking the rest as profits. There's no reason that that reaction wouldn't happen in Scotland if you bumped rates up and the reverse reaction might happen if you knocked rates down. Of course, that affects the division of moneys as between the rest of the UK, which will take its share of taxes on profits, and Scotland, which will be gaining only on the income tax. A couple of points to finish off before I let colleagues in. One is the fact that it's clearly the case that the lower-yard down-income spectrum, because of lack of mobility, the easier it is to raise or cut your taxes with the assurity of what the financial impact will be. Very few, at a magic basic rate, taxpayers would leave if their tax went up. They might not be happy about it, but they couldn't do anything about it. That money would stay within the Scottish economy and be similar for probably people in the middle spectrum. Would that not be the case? If it was lost, there would be very little beneficial impact in terms of increased revenue. What are we going to move to Scotland because of the basic rates falling? No reason, is that right? Certainly, migration wouldn't be an issue. It's then around basic work incentives. On the question of how people respond in terms of the traditional supply responses, like do they keep up their hours or do some people drop out? Where you would then be raising questions would be around would people take retirement at a bit different time? Would married women drop out, because they have been shown in the past to be quite sensitive to tax rates? Of course, you get into the question of what kinds of rates are being applied to the lowest earners, the people who currently are getting tax credits. You have to do quite a complicated calculation to find out what rates they are actually facing and therefore what rates they might face depending on what happens to tax credits in the first place, but also what would happen if Scotland changed its tax rate. I think that it is the case that migration is not an issue for that group, but you would have to be careful about changes in hours and possible withdrawal for the labour market as well. I should say that there is an article in the Financial Times the other day by Martin Wolff about the problems of the US labour market. It has a much higher drop-out rate than the UK. At the moment, the UK is at a very high level of participation in the labour market, even though a lot of people are earning at relatively low amounts, but the US has really not registered the same benefits in terms of increased participation post the recession that the UK has. Scotland, at the moment, has its highest level of employment ever because participation rates are high. You want to be sure that changes that you might make towards the bottom end of the spectrum still give people an incentive to participate in the labour market. The first question is, as you have said in your last paragraph, as a strong case for moving cautiously when considering changes to the higher rates of income tax in Scotland, even though there may be no evidence that it has a detrimental effect on rates of economic growth in the long run, which I find quite interesting. It is almost if saying that the economy will grow or not grow whether those people are here paying taxes, they are not, which I find quite astonishing. Is there a optimum level of taxation for higher-rate payers, if you like? If the economy can grow, we can obtain optimised revenue without people fleeing the country, so to speak? There has been a huge literature on the optimal rate of tax, which was started by a member of the Council of Economic Advisers, Jim Merleys. I think that it was on the basis of that work that he won the Nobel Prize. There is a huge amount of work on that issue. I thought that I might attempt to do some of the work on that particular question for this paper, but I did not really get round to it. Yes, there is. There are recent estimates that I can send to the committee that are quite a bit higher than some of the rates that are being levied at the moment in the UK. One thing that I would say is that looking at the long-run performance of economies, my last statement, the one to which you referred in your question. I was thinking about Scandinavia and the fact that the Scandinavian economies have had very high rates of income tax for a very long time, but have not significantly fallen behind the rest of Europe in terms of economic growth. Boyd talked to us about how Denmark, across the board, has got 12 or 13 per cent higher levels of taxes, and that is borne by the population. Surely, when the reason that it is borne by the population of Scandinavia is that the disposable income that they have left after that, because their incomes tend to be generally higher, the purchasing power parity, leaves them with a reasonable amount of money in terms of their disposable incomes. Yes, that is true, but they also have a very high level of public services, and people buy into that notion that this is part of the deal. It is perhaps a somewhat different culture from one in which you do not particularly value public services and you are much more concerned about your personal consumption. That is really a cultural issue. I think that it is difficult to prejudge how that might work in the UK, but, certainly, it does not appear to me that countries such as Denmark have significantly suffered from having higher rates over the long run. You might get a reaction in the short run. Thank you very much. A number of people want to ask questions. First, I would like to ask Richard Dipp, to be followed by Deputy convener. Thank you, convener. First of all, I remember being on a Scotland Bill Committee much earlier in this Parliament when we discussed the implications of full devolution of income tax, and then there was quite a discussion about the potential for predatory tax policy to cut the rates of taxes gotten to attract high-income earners and whether they would need to be there for a policy agreement between the Treasury and the UK Government, the Scottish Government, to ensure that there were no agreements that that kind of policy would not be pursued. The fact that there has not been that agreement or not been those kind of tax treaties that exist sometimes between states in America does not indicate that the received wisdom, if you like, is that migration just is not going to be an issue. It is going to be marginal, as a convener indicated, if it is going to be an issue at all. Or is it, you think, actually that these matters would be covered by the no detriment policy that has been outlined in the current Scotland Bill? I am not clear how the no detriment will cover all the ramifications of the effects on the other taxes that I mentioned, the national insurance, VAT, corporation tax and excise duty, fuel duty, if you like. I think that we are all guessing here. Where I would be most concerned is around, in the long run, the effect of not having people migrate to Scotland rather than people emigrating from Scotland. That would be my particular concern. What matters, I think, is perception. If Scotland is, it may be a general perception rather than the detail of the additional rate being 47p rather than 45p. If the perception is that Scotland is a high tax jurisdiction and that the public benefits do not offset the fact that taxes are high, then there could be a negative effect, but I really think that it is very difficult to predict. I accept that, but is it also the case in terms of the European context that we went to 47p, for example, rather than 45p? It would still be behind France, Germany, Denmark, Sweden and others. In a sense, there would be a very marginal impact on perception and talking about things such as European migration, which has been very important for Scotland in the past few years. It is also true that, if you went to 47p, you would not raise the heck of a lot of revenue. That might well be the case, but if you are going to change the amounts of revenue that is coming in through the Scottish income tax, it seems to me that you have to probably look a bit further down the income spectrum to make big hits. Finally, on the convener, I think that the answer to most of the questions and predictions of what will happen if we do X on taxes would be, or we do not know, really. Having said that, do you think that there is enough modelling going on about the potential impacts of various tax changes? Is there any modelling? Is there one question, really? Or could there be more modelling to inform not just Government policy in this issue but public debate and parliamentary debate? That is a good question. Let me just say a little bit about this kind of modelling. The organisation that mostly does this kind of modelling is the Institute for Fiscal Studies. We are actually doing some work with them just now, but, mostly, they talk about short-run changes and focus on the arithmetic effect of changes in taxes. That is reasonable. If they are analysing the budget—they are going to say that 3 million people are worse off or better off or whatever—in the short run, the behavioural effects do not really kick in. If you are thinking about next year, it is not the case that everybody will emigrate before next year. It takes longer. There is work on behavioural responses. We have done a little, but what we have done has been around a general area if we applied the Danish rates to Scotland.  Anything that you would give as a result certainly could be debated, but I would have to qualify it a lot by saying, is it applicable in the Scottish context to use it? I think that there is a very good argument for doing more work just so that this kind of issue can be debated, but there is another issue that, if you are focusing on the very top earners—this harks back to your previous evidence session—there is not much information on this group. There are about 11,000 additional ratepayers in Scotland, and surveys just do not tend to pick them up, so doing the arithmetic calculations of the impact of taxes is difficult enough, adding to that a behavioural response as a further layer of difficulty. I am not saying that it would not be a good idea to try some of this, but it would have to be heavily qualified in terms of the results. On page 2 of your paper, you talk about elasticity of labour supply, and I was struggling a little bit to get my head round this. I was just wondering if you could explain if you increase income tax, real wages fall by 1 per cent, workers reduce their hours by 0.5 per cent, therefore elasticity of labour is 0.5? It is just the ratio of how much the amount of labour supplied. What is the percentage change in the amount of labour supplied to the percentage change in the after-tax income of the individual? It is a ratio, so it is just a number. It does not have any dimension. Small numbers mean that there is not much of a response. Large numbers mean high elasticity, marked response to changes in the tax rate. We are saying that, if you increase income tax, you are always going to get less work done. I quote a guy called Manskey, who is a guru on economic policy in all kinds of areas. He says that there is no consistency on the estimates of the elasticity that I have just been describing, except that there is an agreement that, if you increase tax rates, you will reduce taxable income. Some individual people, in order to maintain their income, will do more work. Absolutely. Theory says that that is a perfectly plausible response to changes in tax rates. If you want to keep your real income up, if that is what you really value, or your income, you will increase your hours of work. Some people will do that, but on average the findings have been that people will reduce their income. Of course, you can do that at what is called the intensive margin, which is hours of work, so you work less hours, or the extensive margin, where you just drop out, so you do not supply any labour at all. In page 10, in a slightly different context, it says that cultural acceptance of tax rate differences is probably country-specific. Are you arguing that there is quite a lot of differences between how people in one country—for example, Denmark—and another country behave? You can see that there are pretty significant differences across the US. There are pretty significant differences across Canada, Switzerland and Denmark. Of course, this harks back to earlier remarks about what people in those countries might be getting in return for their higher tax rates, and maybe they just take the view well. There is a compensating differential in terms of the public services that are being offered. I guess what I am saying is that we do not know the detail of that, so it is pretty difficult to take lessons from any of those countries and necessarily be able to apply them to Scotland. However, it is worth noting that having differences in tax rates would not make Scotland an unusual part of the set of developed countries in the world, because differences in income tax rates are relatively common. People's behaviour is not logical in one sense, or at least it is a different logic in different places. There are differences in costs and benefits in different places. What other taxes do they face? What is their response to differences in indirect taxes? It does not necessarily prove that they are illogical, but they may respond to incentives in different ways, and they may be facing other considerations such as differences in indirect taxes and differences in the public services that are available to them. It struck me that the bag tax is a separate area, but five p and yet an 80 per cent drop in the use of bags was illogical. Most people are paying £40 or £50 for their supermarket shopping, but they do not want to pay five p for a bag. In the scheme of things, that does seem illogical, but sometimes people react quite strongly to very small things, and I suppose that would be the risk here. Yes. There are two modes of thought in economics. The second has maybe got the appreciation that it deserves, but the first is that people act logically all the time. The second is that it comes from the area of behavioural economics. People are influenced by all kinds of things and may not act in what seems to be their best interests all the time. That is behavioural economics in which Stirling University is particularly strong. I am not trying to suggest that people will behave logically or in their own best interests at every juncture. I am just saying that that adds further to the complication of trying to interpret what we see happening in other countries. People may have a culture of working hard, and that supersedes the effect of changes in tax rates. One of the things that Manning finds is that, on the intensive margin, high earners do not change their hours of work much in response to changes in tax rates. If someone is earning £500,000 a year and the tax rate goes up by 5 per cent, then that person will still put in the same amount of effort in their job, but they will spend more effort finding ways to avoid paying the higher tax. They will also put in some effort into that particular pursuit. That might not seem a logical thing for them to do, but they maintain their work effort. That is a fairly uniform finding. I am finding it increasingly difficult to try to predict what might happen, but you said that you would proceed cautiously, and that is probably good advice. I mean, could we pin that down? If I was to say, well, let's increase the rates to P next March, April and see what happens, would that be proceeding cautiously? I guess that that would be true. There is also the issue of signalling. You might say, well, we are going to increase it by 5 per cent over five years. I think that that kind of behaviour would precipitate action around the tax avoidance behaviour, because I think that that was one of the things that happened in response to the announcement that the 50p rate would be taken down to 45p was the announcement of the tax. Itself had an effect on behaviour, but… No, it would be different to say, well, we are going to raise it to P in April, and then we will leave it sitting there for five years before we do anything else. We would be different from saying, well, we will increase it by 1 per cent every year for five years. Thank you for that. Mark, to the floor, by Jean. Thank you very much, convener. Professor Bell, you mentioned about where people have moved income into profit or dividend income in order to avoid paying income tax on that income. You said that a change in the tax rate, for example, might encourage or discourage that behaviour, but presumably that is only going to be true if the tax that is then paid on that income is lower or the same as they would pay on that if it were dividend income. How far do you need to go in order to encourage that kind of behaviour? People who are probably in a position where that matters are high earners who can pay for tax advice. As I said earlier, if you look at the survey of personal income and you look at self-employed directors and where their pay is bunched, it tends to be bunched just below the £150,000 additional rate cut-off point. I take from that that people earning that kind of money are taking advice and they have opted for the incorporation tax on their remainder of their income, whatever that might be. Of course, as soon as the two rates were the same, there would be no incentive to do that. You would not see the bunching happening. How much the difference has to be, well, you are offsetting the cost of your tax advisor that you have to pay to give you the advice about what to do. As long as you are ahead on the game, which I guess if you are earning half a million, it is quite possibly worth your while to do that. It is both the difference in the rates between incorporation tax and the top rate of income tax, but also how much above the top band, the £150,000, your income actually is. If you are at £151,000, it does not matter. One of the other ways that tax behaviour could exist is at the other end, because, obviously, although the personal allowance is not going to be devolved, there is talk of the Scottish Government having the ability to set a zero rate. That is another way in which—I am not saying one way or the other—that that would be what happens, but that is another way in which tax behaviour can be manipulated for one of a better term. That is true, and I think that that raises an interesting point. Even if you just do the arithmetic calculations, the IFS reaction to the budget kind of calculations, it is worth really doing those, because if your concern is around poverty or inequality, say, then changing the personal allowance may not necessarily have as big of an effect as you might expect. That is partly because we usually look at issues such as poverty or inequality not on an individual basis, but on a household basis, because it is households that are faced with the difficulty of putting food on the table or whatever. Then what matters is whether there are two people in the household who would benefit from the increase in the personal allowance, or is there one person working, one person not working, different combinations, all of those kinds of things are possible. You need to do a very detailed calculation to see whether that would benefit people, as opposed to reintroducing tax credits or compensating people for the loss of tax credits. Even without adding the behaviour, that kind of calculation is worth doing, because it gives you the picture as far as the household is concerned. Are we moving people above the poverty line, which is 60 per cent of median household income—it is not individual income, it is median household income—as a result of changing the personal allowance? I am not saying one way or the other that it is not a good idea. How people will react to the change in the personal allowance? I am sure that there are studies out there, but again there is always the problem of finding what the counterfactual is and what would have happened if people did not weren't subject to an increase in the personal allowance. I guess that the other question that I had was that we have spoken about the potential migratory impacts. The question is, in a population of just over 5 million, what qualifies as significant in terms of behavioural impact? From my perspective, if only a small number of people are behaviourally impacted either positively or negatively, is that really a significant impact or are we talking about where those people are in terms of the amount of tax that they pay has to be looked at in terms of the significance? In terms of where people are, clearly that is important. It is for HMRC to be able to accurately determine where people are in relation to their tax liabilities. From the news this morning, it is not clear that HMRC has been all that effective, for example, in pursuing people who apparently have been evading tax. In terms of migration, the short-run impact may not be all that much. If additional rate payers pay in total at the additional rate that contributes about 700 million to the Scottish revenues, it might not seem to necessarily be all that negative to lose some top earners. You have to be careful, because those people may also be entrepreneurs the fact that they move might have impacts on other parts of the economy. One of my big concerns about the last 20 years of the Scottish economy is the loss of decision-making power at the top end within Scotland. The number of FTSE 100 companies that are located in Scotland has fallen over the years, so I am fairly concerned about that issue. In terms of the longer-run migration, one of the main differences to why the Scottish population will grow more slowly than the rest of the UK over the next 20 or 30 years is that we are forecast to have a lower level of net in migration. Over time that builds up. Around 900,000 people were lost in the 1970s and 1980s. It is massive in terms of what effect it has had on the Scottish population. I am not saying that a change in the tax rates is going to reverse what has been a trend towards in-migration in Scotland in the last 12 or so years, particularly since 2004. Migration is something that we have to be concerned about, but I do not think that taxes are by any means the major issue around what determines the overall flows of migrants. It is more things like public services and quality of life and so on. I guess that the point that I was trying to drive at was that if you were to take the view that using the tax levels that you levy would attract people to Scotland or flip side drive people out of Scotland, at what point are the effects of that significant? How many people would you need to take in for you to say that the policy had a significant effect or vice versa? Is there a model that you can look at that would say that if you attract 10,000 people on the basis of this or you lose 10,000 people on the basis of this, that has a significant impact? I do not know that we have a model that does that. It would depend on what kind of people they were in terms of what their average income was and therefore what kind of tax contribution they were making. Clearly, if the Scottish economy is growing itself, then irrespective, it seems to me, of tax rates, migrants will be attracted into Scotland just because there will be employment opportunities in Scotland and there are plenty of people around Europe who already have taken advantage of the employment opportunities that are available in Scotland and have moved in in the last decade or so. Again, whether changes in tax rates would affect the overall pattern of migration is not entirely clear because we will not be able to do what the Danes have done and offer a specific rate to people coming in. However, it seems to me that you have to be careful about losing or not gaining a group of high earners within the overall pattern of migration. There is movement that gross migration flows, significant flows each year to Scotland and from Scotland. The net difference around 10,000 to 15,000 a year is roughly where we are with migration. It is unlikely that differences in tax rates would make a huge difference to that overall net flow, but you have to be concerned about whether the tax base or the tax revenues, whichever way you want to look at it, is disproportionately affected by the migrant flow. On how long you would need to look at this to accurately judge the impact, one of the criticisms that has been levied around looking at the 50p rate the way that it was applied is that, because it was only applied for effectively one year, you could not really judge the long-term behavioural impact of that. You can only really forestall the first year that something comes into effect, but that maybe would not affect those people who move towards profit. How long a period do you need to assess a tax change or a tax policy before you can accurately judge its impact? You need at least three to five years, I would think. Partly at least because you are not actually getting the information around the revenues, the overall revenues, until about 18 months after the year end, if we are talking to a large extent about the self-employed, they complete their tax returns in January after the end of the tax year, then there is a bit of debate, so the accounts are not finished. Some of the debate around the 50p rate was actually being done in the dark because they did not even have that information available to them. I think that you are right that it is going to take what I would call a medium-term perspective before you really know what is happening, what effect is changing taxes on that. I have a very quick question. It is around the evidence when something has already happened, but in the early 80s we were paying 33p in the pound and, due to political philosophy at the time or policies, that was changed over the next few years until the present 22 or 23p in the pound that we pay now. What evidence is there? Can you refer us to anything about that or me? In a sense, that is hard evidence of what happens when, for whatever reason, approved of or not, but when you reduce income tax. I know that there is taxes went all sorts of other places and there were changes elsewhere. However, nonetheless it did happen, and since then there has been a real nervousness by every Government to change that. There was a considerable shift in tax policy in the 80s. That is why looking at income tax on its own is only giving you a partial view of what was happening. High marginal tax rates were cut. Tax revenues did not fall all that much. What did happen was that there was an increase in indirect taxes, VAT in particular. The overall tax burden fell a bit, but not massively, for the UK's economies at all. What has happened since then is that Governments have continued to rely more on indirect taxes than on direct taxes. That is partly because it is easier to collect indirect taxes than it is to collect direct taxes. By indirect taxes, VAT, excise duty, fuel duty and a few others have a distributional impact, because most people buy goods that are subject to VAT. Most people pay fuel duty, and most people will pay excise duty and cigarette duty and so on. In terms of real income, that tended to favour the rich relative to the poor, that shift towards direct taxes. Partly because it did not just happen in the UK, it was partly driven by the fact that it was easier to collect indirect taxes than direct taxes. Of course, in the UK, it seems to me—and this is a difficulty for the Scottish Government—that income tax has become sacrosanct and increases in direct taxes in the last couple of decades have not really come through income tax at all. They have all come through national insurance. Of course, Scotland does not have the power to vary national insurance. There have been reviews of what has happened, notably the Institute for Fiscal Studies, which has done that kind of work. I am happy to give the reference for that. That is a small point, but on the basis that the increase in tax rates people work less. On that basis, is there any evidence, again, going back to the 80s to the 90s, where the tax was reducing? Is the convert also true, but it is not? Well, whether things work in reverse is difficult to assess. The evidence, for example, on married women's participation, mostly comes from the 1980s and the big changes in income tax rates that happened over that time. The argument is that what evidence is out there, and it is all subject to qualification, is that full-time males tend not to vary their labour input, working time very much in relation to tax rates. The same is true of single females. Married females are a bit more doubtful, but that might have changed. The rules that might have applied in the 1980s or the observations that we might have from the 1980s may no longer apply now, because the nature of work has changed so much—the ability to work at home, for example—so that you can put in your hours at home. I guess that I'm just saying that this is all quite difficult. A couple of very brief ones. Professor Bell, you gave us the example of Denmark using tax rates to attract migrants. I think that Cleven was the name of the study. Do you have some idea of the magnitude of tax change that was used in that case? I've forgotten, but it was fairly considerable, but the response was also pretty considerable. I know that the elasticity was about 1.52, which is very high, but I've forgotten what the initial change was, and I'll send that to you. The question of the 45p to 50p rate has been raised a few times in your paper. You're quoting somebody else, but in your paper you basically say that it's not possible to measure how much extra tax would be collected. I think that what we know for sure is that the static costing will be wrong. That won't happen in practice, but surely having seen it happen and then having seen it being removed once in each direction, we must have some idea of the behavioural response that we would expect if it were to happen again? I think that we should know that very soon. I was quite surprised that Manning's paper, which was produced just before the election, didn't actually have the numbers for what actually happened in terms of how much additional rate was collected, but that must be available. Last, I just want to, just for clarity, the point that you made in response to Mark McDonald, you're talking about being slightly cautious about playing about with tax rates too much too quickly. In terms of migration, you said that the flows could remain the same in each direction, so you could end up with net migration being exactly the same with a change tax rate, but your point was that the composition of those flows could change. Let's say that you put tax rates up dramatically. Are you saying that the overall numbers of people might remain broadly similar if lots of people who are high-rate taxpayers are leaving a lot of people coming in who are not high-rate taxpayers and the impact on the public finances would be? The current pattern is that, for example, the average age of migrants out of Scotland tends to be lower than the average age of immigrants. The young leave Scotland and a bit older people on average are coming back, so that will be made up of quite a lot of young migrants coming to Scotland but also people retiring into Scotland. As you say, what proportion of that group are responding to the changes in tax rates is quite important because it will affect the demands for public services and the level of revenues that the Scottish Government is collecting. Just one final point from you for the wind-up minutes. It is looking at a Gavins paper in paragraph 7 that refers to a study by McGuire and Rubin. It says that how spending is corresponding to reduced matters, thus tax cuts leading to reduced spending on services, impact on businesses such as education, may have an offsetting effect on business location and economic growth. Again, the Government is on in paragraph 11 to say that the general conclusion is that states wishing to foster entrepreneurship should focus on creating a stronger business climate and economic growth, rather than on tax policies. If tax is reduced, it can have a detrimental effect, but the tax is, again, referring to the point that you made in the last paragraph of your submission. Does that not necessarily affect overall long-term economic growth? I think that that is probably true. Tax is one consideration among many when you are thinking about locating your business. I have a small amount of evidence that suggests that companies think carefully about, for example, moving people around. If they are an international organisation, they have people working for them in different parts of the world. Already, some companies are thinking about how they might compensate employees if higher rates of taxes were paid in Scotland or, I guess, pay them less if taxes were lower in Scotland. That kind of tax planning, I think, is some of them are thinking of that. In terms of locating a business, the company itself will make an assessment of how important it is for their particular type of employee to have a lower or higher rate of tax and may make compensating adjustments, but then we will look at all the other costs and benefits associated with the jurisdiction that they are thinking of moving to. Of course, in Scotland's case, that would be free education, free health and all the public services. Any further points before we end up the session? Thank you very much for your responses and indeed for your paper. Thank you very much. Also thank you to Gavin for the excellent paper that he also produced. The committee previously agreed to take the next item in private. I therefore like to close the public part of the meeting. Just have a short two-minute break and then we'll get on with the rest of our agenda.


What is up guys? Joe Holland here. I am coming to you from possibly Canada, possibly the U.S. I don't really know where the divisive line is on this lake but I am on Grand Lake of the East. East Grand Lake in down East Maine I call it. Nearest town I think is Danville. Staying at the famous cowgirls, cottages, resorts, camps I guess it's called with my good buddy Sean. Might have a couple special guests coming to stay with us. Definitely going to have a couple of special guests coming out to stay in this little tiny ice shack over here as you see it. That is Brandon and the boys ice shack. They'll be out later this week once their wives give them permission to leave home. But we are here on East Grand Lake my first time ever. One of the greatest ice fishing lakes in the state of Maine. I don't know how I've always avoided it but I've avoided it. This lake is really well known for big toad. In Maine we have a lot of toad but we don't have a lot of great big great toad fisheries and this is known as one of those. The other thing it has is big cusk and it does have salmon, it does have whitefish, it does have smallmouth bass. I'm going to have a really hard time deciding what I want to fish for each day if I want to go for big toad or if I want to go for cusk. I think what I'm going to do is put down we're about five lines per person here in Maine. I don't know about Canada. We're going by Maine laws for this trip and I think what I'm going to do is I'm going to keep one line just for jigging. I'm going to take two lines for lake trout aka toad and then I'm going to keep the other two lines per cusk aka bourbon because I heard there's some mega cusk or excellent cusk fishing in here too. So Shawn and I are going to set up kind of similar. I think he's leaning a little harder towards lake trout. He's had some really good success in years past here for lake trout and we're going to see if we can get like a double digit lake trout on the ice. How cool would that be? And it would be even cooler I think if we got a double digit cusk on the ice but we need to do a cusk feed this week with some cusk nuggets. So we will be harvesting any cusk over probably three pounds range and we'll probably be releasing most of the lake trout. So stick along guys. I think it's going to be a great day here on East Grand. You have to start. I got viewers that have never seen them auger that you got to pull on the cord. Oh oh I see the problem with it. It's got like a bottle connected to it. Propane baby. Yeah I didn't see one of them in years. Nice. Now he's cutting with gas. All right we're going to go cut with electric. What's that one? Oh my god. I ain't seen one of them in years. Really?  Yep. Yeah you got you got a permit to run that thing? That's what the future looks like. That's a little better. Oh I got a high flyer. Just went up my trap sideways. That ain't good. And then my flag sat back down. That's bad. He can't be cooking. I don't know if he's still on there. She was flying when I got up. For real? Yeah. I don't even know if I got a hookah. I'll probably need some water. Well guys this is the first one I've ever had the bandaid on it. Big headaches. The only kind of kowski. Oh there we got some weight right there. Found him? Yep. He might be burned in. Pretty sure he's burned in. Do you want to just grab that shovel or a scoop? Wow. Yeah eventually. We got something here fellas. Hopefully that battery stays going. That's a head shake and a half. I can't do much here. It's not fighting like a dog though. It's weird. I just hit bottom marker. I don't need it now sir. Sorry we hit bottom.  He's got huge head shakes. Whoa. Whoa. Whoa. Probably three four pounder with the head shakes like that. Toad? Yeah. I think that's screened pretty decent actually. We're at a leader. Yes sir. Right there. That's an east grand special right there.  Not a bad way to start the morning. He got that pretty deep. What do you think of that one fellas? I need a picture of him. I'm going to take a picture of him. Oh the hook's right there if anybody's not interested. Mine's in my jacket. Oh I guess my jacket's back. I ran my jacket over. If anybody's got something. I mean I don't care about the hook but it's right there. Barely even in there.  That is a beautiful fish. Oh my goodness. That's what we're after. Yeah. That makes the whole trip worth it. It does for me. That reel is cooking. He broke the band. So he should be over eight because those bands are eight pound test. Yeah it was good to see that. All right 11 pounds. All right guys that's my biggest lake trail ever in Maine. He's got to be. Geez I didn't realize how big he is this way. That's an ice fish. Wow. I saw that head hit that hole.  He's 11 pounds. All right we're going to free that spider guy so we get bigger for the next guy and we're going to recycle that smile because I got one heck of a smile out of it for him. So there he goes. We're going to let him go. Oh yeah he's fine. See you later big gator. All right. Good way to start up fellas. East Grand. East Grand first time here. First flag ever on East Grand. There it is. I watched that flag go up. I'll tell the guys at home. So I watched that flag go up and I had that sucker banded. I was using a big sucker. It's right here. Probably like a six plus inch sucker and the flag went up and I had a band on it probably like I gave him like 40 feet and he ripped the trap sideways. He must have broke that band and Sean got here or Sean looked at it first and said it was just making power and gave me a wicked nice fight. You just play those nice and smooth.  Was it a smelt? We got some activity now. Oh he's got a fish. You got a fish? This is not East Grand. I think he flashed it. Oh really? Yeah I wonder if I lost it. No he's there. He's there. He's there. Is he off? He's keeper? On the top? On a friggin salmon trap?  No you can't even put this guy's trap on camera. I have two sets. I have a pink set too. Man we missed him. Matt I want to get you on the channel but I can't put you on if you're missing fit. Guys I just I just walked Matt through catching one from 45 feet away on the live scope. Sean's getting his live scope set up. Didn't have it set up yet. And who's rod is this? On my jig. He was just coming back. All right Matt. Oh yeah. Salmon.  Wow nice salmon. Holy cow. What's he doing? Yeah he came flying it. What is he doing down there? He was at like 70 foot and came straight to your jig. Wow. Wow how does that make you feel bud? Hey I set him up. Yep you did.  Pick the right colors. You got the right colors. Wow nice salmon Matt. On a jig rod. You don't see that very often. He's over 20. Kind of thin but over 20. Yeah a little thin. Yep. Well we can have poached salmon now. Yeah I'd like to try that. Literally poached salmon. That was too big. Is it? That'll work. Yeah put it back. Wicked. That's awesome. I should be able to get that number. When we talk about poached salmon guys we're not talking about poaching them from the law buck. They actually cook it. One of their buddies taught them how to cook a poached salmon that they said is absolutely delicious. So we might do that today like a catch and cook. Yeah let's look at that baby. It's got a lot of gold on them. Yeah he does. Yeah Good fish. Is that your best salmon jigging? It is my best salmon jigging. You never catch a jigging. No not at all. Have you ever caught one? I've only caught one. I've never caught Have you ever caught a fish jigging? Oh yeah. Nice good one buddy. Nice cast. Look at the size of that cast nugget huh. See that was like average. Really? 10 years ago. He's still leader of the cast. He goes why do you think he got his on?  All right we're gonna cook poached salmon. So you just cut the tail off and cut these. You don't want to give me a sharp knife though. That thing is sharp trust me. Throw it in boiling water. Really? This is the first time for me. I've never poached a fish. I always catch mine legally. Next to 10 minutes flip the cover upside down and put butter in it. You have it just like lobster. That'll work. Yeah. Nice in here fellas. Small pretty good isn't it? Yeah. Quick is. Oh yeah. What do you think of that back? I think it looks like you know it's a salmon. Put the butter back on. Eating it outside or inside? Actually probably just do it right here. Yeah. Do it right in the light. Is this our part? Moment of truth. I got a feeling it's hot. Pet it off. It looks done. Yeah. See it just sides out off the bone. That's the best part of the tail. Yeah. It probably is better a little undercooked anyways isn't it? I think the difference is the it comes off the bone better. Yeah. That's cooked more. You probably just grab the bone. Yeah see it's sticking. Background music. Background music. Yeah this looks decent. Yeah there it is. Right into the plate she goes. Wow that looks good. Take a piece. Dip it in the butter. Crushed man salmon. Pretty not bad. Pretty not bad. Let's try it. Oh wow. Does it dip it right in that butter huh? Hmm. Oh good. Wow.  It's fantastic. It's way better. That is definitely how you eat salmon. Poach salmon. Poach more than one way. Dip it in the butter and then dip it right in your gillet. Wow that's good. Good. Yeah. Wow. Can you get another one? We need to. Holy cow that's good. He just takes it and actually dumps it right in there. Yeah why not? You just pick it out of there. Do it. That's what burning does? Yep. Yeah he stirs it around, soaks it in. Serious. That's the best way to eat salmon. It is. I would have never thought of it. So brook trout, tog, white fish and all that. They just go to mush. Salmon's the only. Oh really? The only fish so far we've found that stays firm. Wow. Don't really eat a lot of salmon but I eat that. Beepin. Oh no that means it's recording. Yeah isn't that good huh?  No. Isn't that good? Yeah. It's not like salmon. No it's no fishy.  Did you hit the bam? Yeah. Didn't hit it very hard. They feel so big at 90 foot deep. It's like when you're out ocean fishing jigging in 200-300 meters. Five pound fish or like 15. At 90 feet he feels pretty big. Feels the same as the last one. He just got a little bigger. I might have to come over here with this. Yeah jig some cast right here. Yeah. Big walks. He's probably, now he feels three pounds. Oh he just twitched. He felt a little bigger. I think all those head shakes, oh there he is. He's a log. That's a good one. Yeah. What a dog. I jigged these all day. They're lively as ever.  He's pooping. He's pooping them right out. All right guys another good cast. That's probably four and a half, five pounder.  There you go. That'll be some cuss nuggets. Something good. You got something good on for a four five pound smallmouth. I don't know. We're into some cuss over here. It came flying in. It might be a leaker. Big smally. He's not hung up in my line right? Probably should have reeled better. All right what are you into here? First fish of the day? Leaker. All right little guy. That's an eater right there. Good eater. He came flying in. Yes he did. Is that another one there on my lure? Yeah there's one on my lure. There is. Oh shoot. Oh man. Yeah hold that. Yeah I got some. I'll hand it. You got some. Let me know if you bite. You got a cusco in here fellas. Two pounds. Three pounds. Yadding. Yadding. All right we've moved inside. It's gotten pretty rotten outside. We're in about 89 foot of water and jigging on the live scope with the XD62 transducer. The super deep transducer from Garmin. And I just got our first burb bite. Burbs are finally starting to move in as it's getting dark. So doesn't feel giant but it doesn't feel too small either. Sean's getting nibble. Oh shoot. I missed it. All right I got this guy within 20. He's fighting now. Well well might be bigger than I thought. I don't know how you land a big one through these holes but we're gonna find out. Yank him. Yank him. Oh flip him. Oh yeah oh geez. That's a lot. A little bit smaller of those biggest ones today but not. You got a bite? Nice burb. Sean's hooked up guys. We got a double. We got a double. Double burb. All right I'm going to point you guys to Sean. I'll show you my burb right there. He just slapped me in the face. Nice three and a half pounder probably. Not very big. Mine feels a bit narrow. It's going up fast. There's Sean. He doesn't look huge on the camera. Yeah he looks small on camera. I mean I'm not bad. Oh yeah nice. Nice burb. There we go. All right buddy. Double that. Double it up like twins. That's cool. So yeah so Cossack feed at night better than during the day but some bodies of water they will feed during the day so I was fortunate enough to put three top side during the day today on a trap that I'd set for Cossack and now we're in here jigging and I finally caught a fish. Sean got his first fish of the day. He gets to make an appearance on today's video. Nice twins. Twinning. We're getting there.  I don't need them. Yeah. Let's put them back. Let's give them the release. Lots of the grease. There's a gal. That big maple layer and this big maple and the one over there were here when I was a kid. Oh there he is. And there used to be two more up here and one more down here. Used to be like six trees here but these are rock maple here. Sugar maples and I don't offer warm enough for the staff to be running. Yattie. Lily, what do you think it is? I think it's a small rabbit. They fight pretty hard right about there. Nicely small. Man, he's fat.  Something pretty good. Might be a decent bourbon. Fished down the night on. Nice big burb right there guys. I don't know if you can see it. I'm pretty sure you can. Fatty. They are getting big. All right. What do you think of dinner so far? I don't know yet. All right, we're in from the lake and awesome day fishing. Got my biggest lake trout I've ever caught in Maine so I'm pretty stoked about that and some really nice cask and have a great day with the guys. And it's dinner time now. It's late.  I've been slaving over this thing for a long time. Look at this brisket. Brisket smoking all day long. We're pretty excited to mow on that thing. We got some mashed potatoes, a hand mashed, and then some green beans, a hand gross. It's all a handy meal but I think it's going to be pretty good. I'm pretty excited about this brisket. Look at that. I got a feeling we'll be eating some brisket sandwich because I don't think we can eat all that tonight. And we're pounding, this is what we're pounding, yu-hu and a can. Dig right in, Bob. Let the folks at home know how it tastes. I'm pretty excited about it. I hope it's warm. It's good.  It's a little cold. Yeah, that's kind of cold. I got half cold, half hot. Oh, get some out of the water. That's, yeah, if you want more. It's got a good taste to it, doesn't it? Yeah, that's good flavor. So I'm super stoked. My buddy Matt's here. Matt hit me up like two days ago and was like, hey, what are you doing the next blah, blah, blah days? And I was like, ah, can't do anything. I'm already going fishing. He's like, yeah, I am too. I was like, where are you going? He goes, he's grand. I go, I am too. I said, where are you staying? He goes, cowgirls. I said, I am too. So we're staying next to him and he's got his crew and I got my crew. My crew's a little bit smaller but it's about to get bigger. So awesome day of fishing, awesome meal, awesome time with friends. Thanks for tuning in guys. We'll see you tomorrow. Tomorrow's going to be a good day. What are we going for tomorrow fellas? Same recipe. Same stuff, different day. Same stuff, different day and different hero tomorrow.


The reality of improving your life is that it can be very hard.  But that feeling of the gap that is between where you are and where you want to be, sometimes it's just too big to actually take any action. So in this video, I thought I would share five personal lessons I've learned from 10 years of self growth. Hey guys, it's Alex Hein over at Modern Health Monk. Before we jump into this video, make sure to check out the link right below because I've put together a free journaling worksheet, something that will help you figure out what to do with your life, how to get it together, and how to make a ridiculously good future. My first and maybe biggest lesson is that change usually only comes when life is painful. I think a lot about Arnold Schwarzenegger and I was recently watching his little docu-series and he tells the story of his father who was a very strict man. And he said his father came back from World War II and I think he was a general or he was in the military and he was someone who came back altered. And he became the stereotypical alcoholic, miserable, would come home in the middle of the night and would fight with his mom and scream and hit her. You know, Arnold has this interesting anecdote where he says, what is interesting about his life is that his miserable home life is what pushed him to leave Austria and to go study bodybuilding and dedicate his life to this craft in America. But that's what gave him the fuel. Now, the sad part of the story is that at the same time, his older brother, who was probably, Arnold describes him as being more sensitive and more fragile. You know, one day his brother was drunk driving and he killed himself, right? He drove into something. And Arnold has this little bittersweet PS where he says, you know, my brother was very sensitive so he couldn't take the same kind of stress at home. And the same thing that gave me the drive to be successful is what killed my brother. I don't think what Arnold said was necessarily true. I think in reality, his older brother felt more of a need to protect his mother. And his older brother was the one who felt he couldn't leave home because who would be left with his mother? And so he internalized all of that negative energy in that home life by drinking. And in one night, he killed himself by driving. So one thing I see in people's lives is that usually most big life change comes from life not going the way you want. But the thing is, you have to actually decide to change in a positive way and not self-destruct. The second thing I've learned is that 1% better is usually the fastest path to a better life. You know, the other day I was in the gym and these three young high school boys were in there chatting and talking about their workouts together, et cetera. And I was fascinated to see how many pills, powders and protein shakes and pre-workouts these young kids were taking. And I was standing next to them looking a lot more fit and a lot more in shape after 18 years of going to the gym four days a week with very few breaks in that time. Someone who doesn't take anything related to fitness, supplements, right, just food and workouts. Isn't it funny that most of the time it's the beginners, the people who haven't spent the time doing the work, the people who are not dedicated of the long run to fail, who are the ones that buy into the gimmicks the most. And that gimmick may be a get rich quick scheme to build your YouTube channel or to build your business faster. That may be a book in a box sort of service to help you become like a published writer and outsource all the writing to the Philippines. That may be some cheesy pickup line to find love rather than the much harder reality of working on yourself to be someone that's rare in the marketplace. I think a lot of us want to look for these quantum leaps, but in reality, how do you build an incredible body or incredible health? It's making one good dietary decision every day. It's going to the gym today and not putting it off for three more days. If you want to write that book, it's writing today and not expecting that someday down the line to magically write this book, right? We often future pace and say, oh, when I'm 20 years older and I'm 40 and I'm getting married, by then I'll have done these things. But you know what happens to most people? They reach that age and they haven't done those things because it's a false promise. You think that when you get to a certain age, it's just going to be natural. But in reality, it's usually not any easier for anyone else, but they actually did the work. The third realization for me is that it often takes one to three years to completely reinvent yourself. You know, when I think back even to my own life about around 26 getting interested in personal development and in my late 20s really starting to build my first business, it takes one to three years to truly reinvent yourself. I remember talking to a guy who went through a really serious divorce and he had lost his son to sudden, I think it's called SIDS, Sudden Infant Death Syndrome. And after that, he just collapsed, right? He and his wife, he gained over 100 pounds in body weight because he just laid on a couch all day and he couldn't work, he was so depressed. Obviously he started taking multiple antidepressants. Eventually he and his wife divorced because they both became so dysfunctional from that loss. So here he was a year ago and he had a job and he had a wife and he had a child. And now a year later, had no child, was divorced, was 100 pounds overweight and had no job, right?  He had multiple quadrants of his life, not just one that was very dysfunctional. And so as a result, he was really in the trough of sorrow, right, deep into the negative, not just starting from zero, but deep into the negative. Debt, 100 pounds overweight, divorced on multiple antidepressants. When I talked to him about how long it took him to rebuild his life, he said, you know, well, even on a physical material level it took me about a year to lose a bulk of that 100 pounds I gained and another year to lose remaining 20 pounds and a third year to begin looking somewhat in shape again. It took about a year to heal to some degree, mentally and spiritually, psychically, right, of the psyche. It took a second year to get off one antidepressant and took a third year to get off the second and he was still on the third one. When I asked him about rebuilding his social circle, he moved cross-country, right, moved to Los Angeles. And he said, you know, for about a year he was just miserable, depressed and alone. After another year, he had started to make some friends and after a third year he felt like he finally had a community. So now he was healthy, he was happy, he was in shape again and he had a community. For a lot of us we think that if we're not making six figures right out of college something has gone wrong. Or if we're uploading YouTube videos if we don't have 100,000 followers in a year something's gone wrong. If that first book doesn't work out, if that first video isn't a banger, if the first thing I try doesn't work, it doesn't turn to gold, I just don't have what it takes. But that's not true because most of the time you've been doing it right but just not for enough time. The fourth thing I've realized is to do the opposite of what you see everyone else doing. You know, when I think of why people have mid-life crises the number one thing I think of is that, you know, they have this in their early 40s because they didn't do what they wanted to do before their early 40s. And so as a result, what does that mean?  If I statistically lived to be 79 years old in America I'm now 42, I never traveled. I never did the work I wanted.  I'm suddenly in the second half of life and I lived half a lifetime, not living deliberately at all. I never did anything I wanted to do in my life and now suddenly it's half over. And that is a terrifying thought for the right kind of person. Why did we do that, right? Usually we did that because we were listening to what other people said or the voices of society. We weren't doing what we determined we wanted to do in our gut. So my opinion, you should do the opposite of what you see everyone else doing. Do you see your friends dedicating their weekends to their goals and their dreams? No, do the opposite. You see that guy approaching the girl in the bar, hey baby, can I buy you a drink? Did that work? No, do the opposite. You see all of these people talking about all the things they're gonna do. So certain that they're gonna do that. But are they doing anything today or this week or this month or this year? No, so don't do that. You see all your friends living their lives on autopilot every day complaining about the same damn things, but taking no action, don't do that. The easiest way to change your life is to do the opposite of what the average person does. Think about that. My fifth piece of advice is that you can decide to change anytime. You know, the most powerful question is that a year from now, you will be a year older. Do you want to be living the same way this year has been? Do you want your life to look the same? Now if that question scares you, then you should do something about it now.  But the one thing they're not doing is taking any action on a day-to-day basis to ensure that a year from now their life is different. So many of us don't realize that life can change at any time. Most of the time we will wait until we are sick and tired of the way they're going, of being single or always dating messed up people or the same guy or girl, always struggling financially or never being able to travel or always hating your job.  So you can change your life at any time, but will you? That'll make the difference. I'll leave you there, guys. Check out that journaling worksheet down below, and I'll see you soon.


What are promoted listings and why do I need to know about them? Today we're going to cover what promoted listings are, how they can benefit you if used right. Whether you're aware of them or have no idea, there are a lot of things to learn from this video. So stay tuned to the end and expand your understanding to improve your sales. So let's begin. What are promoted listings? eBay promoted listings is a paid advertising platform that allows sellers to promote their listings to more buyers. When a seller creates a promoted listings campaign, their listings can appear in more prominent placements on the eBay website, such as higher in search results and on product pages. Sellers only pay when a buyer clicks on their promoted listing and buys it. Promoted listings can be a very effective way to increase sales and visibility on eBay. However, it is important to use it wisely. Sellers should carefully select the listings they want to promote and they should monitor their performance closely to make sure they are getting a good return on their investment. So what are the benefits of using promoted listings? Well, there's increased visibility. Promoted listings can appear in more prominent places on the eBay website, which can help them get seen by more buyers. Increase sales. By increasing visibility, promoted listings can help sellers increase their sales. Control over the budget and bids. Sellers can set their own budget and bids for their promoted listings campaigns, which gives them control over how much they spend. Detailed reporting. eBay provides detailed reporting on promoted listing campaigns, so sellers can track their performance and make adjustments as needed. So there are three types of campaigns. You have standard campaigns, automated campaigns and promoted listings advanced. So we'll cover these in a bit more detail. So let's take standard campaigns. Promoted listing standard is a simple and cost effective way to promote your eBay listings. It's available to above standard and top rated sellers with enough account activity. With promoted listing standards, you can choose to promote your listings in search results on product pages and in other eBay placements. You only pay when the buyer clicks on your product and buys and you can set your own budget. Promoted listing standard is a great way to get started with eBay advertising. It's easy to use and could be very effective in increasing visibility and sales. There's automated campaigns. Now with promoted listing automated campaigns, it's a new feature from eBay that allows sellers to automate their promoted listing campaigns, which means sellers can set the rules to determine which listings are promoted and what add rates. eBay will automatically manage the campaign for you. Promoted listing automated is a great way for sellers to save time and effort and to ensure that their promoted listing campaigns are always running effectively. It is also a good option for sellers who are new to promoted listings as it can help them get started quickly and easily. Promoted listings advanced. Now with this one, it's the most powerful, customizable, promoted listing campaign available on eBay. It gives sellers the most control over their campaigns, including targeting, bidding and reporting. With promoted listing campaigns, they can be used to promote listings in search results on product pages and on other eBay placements. Sellers can target their ads to specific buyers based on their search terms, browsing history and other factors. Sellers can also set custom bids for their ads and track their performance in detail. Promoted listings advanced is a good option for sellers who are serious about increasing their visibility and sales on eBay. It is also a good option for sellers who have experience with eBay advertising. So let's cover some tips for success. When choosing which listings to promote, you should consider the following factors. Profitability. Choosing listings that are profitable means that you can make a good profit on each sale. This will help you ensure that you are getting a good return on your investment in promoted listings. Competition. Choosing listings that are competitive, meaning that they are in a high demand and have a relatively few sellers. This will help you get your listings seen by more buyers. Complimentary products. Choosing listings that are complementary to each other, meaning that buyers are likely to purchase multiple listings from you. This can help you increase your average order value. Seasonality. Choosing listings that are in season, meaning that they are in high demand at the current time. Feedback. Choosing listings that have positive feedback from previous buyers. This will help you increase buyer confidence and encourage them to click on your listings. In addition to the above factors, you may also want to consider the following. New listings. You may want to promote new listings to help them get more visibility. Slow moving listings. You may want to promote slow moving listings to help them sell more quickly. Unique listings. You may want to promote unique listings that are not available from other sellers. High value listings. These listings that can help you increase your average order value. You can experiment with different listings and budgets to see what works best for your business. You can also use eBase Promoted Listings tools to help you choose the right listings to promote. Experiment with different settings. Monitor your performance closely and make adjustments as needed. Use advanced features to target your ads to the right buyers. So in conclusion, the key benefits of using Promoted Listings on eBay are increased visibility. Promoted Listings can help your listings get seen by more buyers by placing them in more prominent placements on the eBay website. Increased Sales. By increasing visibility, Promoted Listings can help you to increase your sales. Control over the budget and bids. You can set your own budget and bid for Promoted Listing campaigns which gives you control over how much you spend and how much profit margin you have remaining. Detailed Reporting. eBay provides detailed reporting on Promoted Listing campaigns so you can track your performance and make adjustments as needed. In addition to these general benefits, Promoted Listings can also offer the following benefits. Save time and effort. Promoted Listings automated can automatically manage your Promoted Listing campaigns for you so you save time and focus on other aspects of your business. Ensure efficiency. Promoted Listings automated uses eBay's data and algorithms to ensure that your campaigns are always running efficiently. Get started quickly and easily. Promoted Listings automated is a good option for sellers who are new to Promoted Listings as it can help them get started quickly and easily. More control and targeting options. Promoted Listings advanced gives you the most control over your campaigns including targeting, bidding and reporting. You can also target your apps to specific buyers based on their search terms, browsing history and other factors. Overall Promoted Listings is a powerful tool that can help eBay sellers to increase visibility, sales and efficiency. If you have any questions about Promoted Listings drop it in the comments below and I'll be happy to answer. I hope this gives you a good starting point for your Promoted Listings journey. Good luck.