Reality Cheque ;-)

[Wally]

Heard it on the grapevine...

This morning I heard one of those lines that's obvious when you think about it, but hadn't occurred to me before. It came from Robert Joyce, a tax expert from the Institute for Fiscal Studies, which held a briefing on the parties' manifestos.

He was talking about raising taxes for high earners.

If you have somebody currently paying the 45p tax rate, you raise that to 50p and there is no change in behaviour then the excequer gains an extra 5p in the pound.

However, if they decide to try to reduce their tax bill by saving more into their pensions, for example, or indeed decide to work fewer hours, then you lose 45p in the pound as well as some National Insurance.

So you only need one person in 10 to change their behaviour and you don't make any money from raising the tax.


Should be interesting if a certain party win the cake and get to... ?

[Harold Gough]

Re: Reality Cheque ;-)

There is a Treasury (I presume) model they use.

Harold

[Wally]

Re: Reality Cheque ;-)

Whatever the model and whatever party gets the prize... I just hope their economics doesn't involve planting even more money trees.

[pdk42]

Re: Reality Cheque ;-)

"I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle."

Churchill

Then there's the Laffer curve:

https://en.wikipedia.org/wiki/Laffer_curve

[Zuiko]

Re: Reality Cheque ;-)

There's no free lunch, someone has to pay, but we do have a choice - Scandinavian levels of taxation and public services, US levels of taxation and public services, or something in the middle.

However, it's worth noting that after 7 years of austerity the economy is ripe for expansion through increased public spending, much of which would be recouped by the Treasury through the multiplier effect, so we might get a discount on our lunch. Notwithstanding the impact of Brexit, of course, which nobody can accurately predict.

[pdk42]

Re: Reality Cheque ;-)

There's no free lunch, someone has to pay, but we do have a choice - Scandinavian levels of taxation and public services, US levels of taxation and public services, or something in the middle.

However, it's worth noting that after 7 years of austerity the economy is ripe for expansion through increased public spending, much of which would be recouped by the Treasury through the multiplier effect, so we might get a discount on our lunch. Notwithstanding the impact of Brexit, of course, which nobody can accurately predict.

Yes, I agree. Jezza's tax policy is the thing I like the least, but I think I'll still vote for him.

[Wally]

Re: Reality Cheque ;-)

... However, it's worth noting that after 7 years of austerity the economy is ripe for expansion through increased public spending, much of which would be recouped by the Treasury through the multiplier effect, so we might get a discount on our lunch. Notwithstanding the impact of Brexit, of course, which nobody can accurately predict.

I'm in agreement with this in part? Austerity didn't work in the 40's after the war(s) when we suffered for decades because of it. Germany, on the other hand, never went down the austerity road and went from strength to strength which perhaps proved just how bad the idea was. This brings me back to my original post which requires a tricky balancing act whilst walking a high wire without a safety net. An additional problem is that certain people are stuck in various grooves which are getting deeper and deeper whilst enjoying tunnel vision.

On the Brexit situation, all the grand-standing by politicians both here and the EU + the new POTUS doesn't exactly help. Recent comments from , only add more obstacles to the mix.

Should be an interesting night on TV - the big fight - at 8:30pm hopefully with the gloves off. Could certainly do with some decent entertainment.

[Naughty Nigel]

Re: Reality Cheque ;-)

If you have somebody currently paying the 45p tax rate, you raise that to 50p and there is no change in behaviour then the excequer gains an extra 5p in the pound.

However, if they decide to try to reduce their tax bill by saving more into their pensions, for example, or indeed decide to work fewer hours, then you lose 45p in the pound as well as some National Insurance.

So you only need one person in 10 to change their behaviour and you don't make any money from raising the tax.

Should be interesting if a certain party win the cake and get to... ?

That certain party has always behaved like a bunch of kids who have found the keys to a sweet shop, and they only have limited time in which to gorge themselves.

Jezza seems to be determined to do exactly the same, but on an even 'grander' scale than his predecessors.

Not that there is anything grand about any of them right now.

I'm in agreement with this in part? Austerity didn't work in the 40's after the war(s) when we suffered for decades because of it. Germany, on the other hand, never went down the austerity road and went from strength to strength which perhaps proved just how bad the idea was.

I'm not sure whether post war Germany provides an entirely fair comparison though.

I seem to remember that Britain and its allies invested heavily in Germany in the years after WWII to provide work for the Germans to keep them out of mischief. This work was seen as important at the time because the Great Depression in Germany had been a major factor in the rise of the Nazis and the start of WWII.

That investment was clearly effective, and I daresay was probably made at the expense of the British economy, which suffered as a result.

I think most people, including those who have a choice, would be happy to pay a little more tax if they felt the money was spent wisely; but few people are happy to pay more when it is clear that their hard earned money will be squandered.

A little more joined up thinking from whichever government that is in power wouldn't go amiss either.

[Wally]

Re: Reality Cheque ;-)

[QUOTE=Naughty Nigel;415719] I'm not sure whether post war Germany provides an entirely fair comparison though. {QUOTE}


@ Nigel

I'm in agreement with what you said.

My basic point was that without the austerity hit, Germany did indeed flourish. *No matter where the dosh came from it was, in the main well spent.

I seem to remember it was said by some UK politicians not long after 'susterity' was broached, that austerity was not the answer and it would prove to be the wrong decision if it were implemented. *Possibly, the point that the against crowd were trying to make but which fell on deaf ears?


[QUOTE=Naughty Nigel;415719] "A little more joined up thinking from whichever government that is in power wouldn't go amiss either." {QUOTE}

This is where I too believe where many of our ongoing problems spring from.

[Naughty Nigel]

Re: Reality Cheque ;-)

[quote=Wally;415725]

I'm not sure whether post war Germany provides an entirely fair comparison though. {QUOTE}


@ Nigel

I'm in agreement with what you said.

My basic point was that without the austerity hit, Germany did indeed flourish. *No matter where the dosh came from it was, in the main well spent.

I seem to remember it was said by some UK politicians not long after 'susterity' was broached, that austerity was not the answer and it would prove to be the wrong decision if it were implemented. *Possibly, the point that the against crowd were trying to make but which fell on deaf ears?

[quote=Wally;415725][QUOTE=Naughty Nigel;415719]

"A little more joined up thinking from whichever government that is in power wouldn't go amiss either." {QUOTE}

This is where I too believe where many of our ongoing problems spring from.

The more I think about this the more I realise that many of our problems are brought about precisely because we follow government policy.

If we take transport, for example; around a third of our railway network was closed down in the 1960's despite much public protest. Both passengers and freight were encouraged to travel by road, by a Transport Minister (Sir Ernest Marples) whose fortune was made from building roads.

Around the same time many new housing developments were built outside of towns with no public transport connections.

The end result was an explosion in road traffic which continues to this day, with associated pollution problems.

This was addressed to some degree by the mandatory fitment of catalytic converters to petrol engined cars which minimised emissions of unburnt hydrocarbons and nitrous oxides but simultaneously doubled CO2 emissions and significantly increased fuel consumption (and cost).

Concerns about rising CO2 emissions then led to the drive for diesel, encouraged by clear tax benefits. That too was a mistake so we are now being encouraged to drive electric vehicles, which are pollution free at the point of use, but create more pollution 'somewhere else'.

Some may remember that electric light bulbs were banned a few years ago because they were said to be responsible for large amounts of avoidable pollution, and CO2 emissions in particular. Just to put things into perspective, a typical electric car requires around 40 KW/Hr for a full charge, providing a range of about 200 miles. That is equivalent to burning forty of the banned 100 watt light bulbs for ten hours, every night!

We are also told that our electricity network is likely to fail unless we increase generation capacity.

Joined up thinking? I don't think so.

Just for a change, how about reducing our need to travel, rather than simply shovelling the end results of travelling under the carpet for another day?

[Harold Gough]

Re: Reality Cheque ;-)

[quote=Wally;415725]

My basic point was that without the austerity hit, Germany did indeed flourish. [I]*No matter where the dosh came from it was, in the main well spent.

Didn't it come for American GIs?

Harold

[Jim Ford]

Re: Reality Cheque ;-)

[quote=Harold Gough;415764]

Didn't it come for American GIs?

https://en.wikipedia.org/wiki/Marshall_Plan

Jim

[Wally]

Re: Reality Cheque ;-)

[quote=Harold Gough;415764] Quote:
Originally Posted by Wally
Didn't it come for American GIs?

More fake news? I'm innocent!

As for the Marshall Plan was this not a back door payoff of $millions to keep the US jobs ticking over? Plus, if memory serves, was it not the root cause of the Russians getting a little bit peeved off?

Oh, yes I also seem to remember that the UK got bent over a barrel and royally screwed, mainly by our US friends for almost 6 decades.

[Naughty Nigel]

Re: Reality Cheque ;-)

https://en.wikipedia.org/wiki/Marshall_Plan

Jim

That was it, the Marshall Plan.

Than you Jim.

As for the Marshall Plan was this not a back door payoff of $millions to keep the US jobs ticking over? Plus, if memory serves, was it not the root cause of the Russians getting a little bit peeved off?
[/I]
Oh, yes I also seem to remember that the UK got bent over a barrel and royally screwed by our US friends for more than 6 decades.

Yes I think that was correct. We were not only royally screwed over the Marshall Plan, but also for the many warships that we bought from the Yanks during WWII; most of which had to spend a disproportionate amount of time in dry-dock being repaired; such was their reliability.

(IIRC These warships also cost us several islands in the north Atlantic and Pacific that had previously been UK dependencies.)

If I remember correctly the debt was finally paid off by Gordon Brown during his time as Chancellor.

So much for the 'special relationship'.

[Zuiko]

Re: Reality Cheque ;-)

That was it, the Marshall Plan.

Than you Jim.



Yes I think that was correct. We were not only royally screwed over the Marshall Plan, but also for the many warships that we bought from the Yanks during WWII; most of which had to spend a disproportionate amount of time in dry-dock being repaired; such was their reliability.

(IIRC These warships also cost us several islands in the north Atlantic and Pacific that had previously been UK dependencies.)

If I remember correctly the debt was finally paid off by Gordon Brown during his time as Chancellor.

So much for the 'special relationship'.

Labour paying off part of the National Debt - surely not?