That would have been a trick question under a number of recent PMs. Blair, Brown, Cameron and Johnson all lived in the flat above no. 11. Not sure where May lived. Sunak moved back into no. 10 as PM.
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Starmer speach
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That would have been a trick question under a number of recent PMs. Blair, Brown, Cameron and Johnson all lived in the flat above no. 11. Not sure where May lived. Sunak moved back into no. 10 as PM.
So here's a question....
If you were Chancellor and borrowed £2 billion to splurge would you...
1. Subsidise the insulation of a two million homes thereby..
- Giving business to the manufacturers of insulation
- Securing work for their employees
- Boosting employment for the installers of insulation
- Providing warmer homes for a 2 million families
- Shrinking heating bills for a 2 million families
- Reducing the countries reliance on energy imports
2. Give a hedge fund manager a tax break so he can buy a new Ferrari or pad in Mayfair ?
Tricky one that.
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- Original Poster
- #45
I think there are more options than that and TBPH, I don't think there were tax breaks on offer, simply removing the cap on bisuses which was sensible.
I think I'd see the benefit of not putting up corporation tax so that AstraZenica feel they would rather expand their business in the UK rather than than put corporation tax up and make it almost impossible to attract business into the UK.
Whilst a corporation tax hike may increase the tax revenue in the immediate future, Hunt pretty much forced AstraZenica to set up in Ireland and that scenario will be repeated over and over. There is no need to spend £2bn to create employment, simply put the right conditions in place to attract business and let it thrive. What hunt did and what is being suggested by the opposition with increasing business taxes is lunacy.
I’d agree on insulation, IF there is enough capacity in the UK to manufacture it and we have an unemployment issue. I think if a few years, this may be a good policy if Labour get in as I can see there being more unemployment but to do it now, we will most likely import the insulation which pollutes and pay more for staff to install.
To do that now would create an issue, it’s what in economics terms is known as ‘crowding out’.
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5p off the top rate of tax?
Removing the bonus cap may or may not have been sensible. But it was hardly a priority.
We have quite a severe under employment issue - people working fewer hours than they would like and on lower pay. For many, training is needed to get them out of that situation.
You are also ignoring the benefits of 2 million homes using less energy and 2 million families spending lesss on energy.
But you do, obviously find the choice as set out, tricky.
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- Original Poster
- #47
You make a very good point, there is no sign of policy on anything.
By mentioning "Electricity prices being linked to gas prices" do you refer to the ridiculous incentive for renewables where the govt effectively buys all renewable generated power at the gas price. i.e. the consumer doesn't get to see any saving from renewables? The energy market had a sweet spot of working well from mid 1990s to around 2015 but since been skewed to to the point of being broken.
You sound like you understand the issue and if you haven't already, take a listen to Dieter Helm from Oxford Uni who is excellent on the subject.
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The £2 billion I referred to was the cost of the initial proposal to reduce the top level of tax.
Corporation tax is another issue but it's instructive that the CBI criticised the proposal as misdirected.
There are so many factors determining inward investment...skilled workforce, political stability, infrastructure, access to markets and so onn on but politicians focus solely on tax rates.
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Yes i meant 10.It's a good job you didn't pay as if you think someone who started uni in 2012 is now 20 years out of uni, you'd rightfully demand a refund on that university education!
Alternatively, if your doppleganger studied Quantum Physics and relativistic modelling, he got excellent value as he's used that education to master the art of time travel and he could monetise that beyond the cost of his course.
Assuming you meant 10 years, I see your point.
I too enjoyed a grant and free course fees but even at the time, I always wondered why should I expect the taxpayer to pay. I was hoping to use that education to get a bigger salary and leap frog those who were paying my fees which seemed rather absurd.
Your point on there being a danger to the economy is not relevant here as your doppelgänger may have lower surplus money, he's paying back the money that everyone else was going to pay anyway. There is not less money in the economy as a result, there is exactly the same amount, it's just paid by the guy who gets the direct benefit from the education.
The reality is, nobody is pushed to go to university, as over 18s. it's adults making adult decisions to extend there education via university and they have to make the decision if they feel they will get sufficient earning power from that education to create positive cashflows.
Again reality is that without students paying for their further education, there sill not be the number of university students and many of those university cities will have to rely of more overseas students or simply contract. That may be fine but the big university populations are in 'interesting' cities that suffered from de-industrialisation in the late 90s and through the 00s. Newcastle for instance has seen a huge industry around university which has replaced and surpassed old industry, that would go without the loan system.
As for people being 18 and not made to go to uni, i guess you don't have teenage children.
Schools are ranked partly on the % they get to uni so they heavily push that route, we still have this stupid idea >50% ought to attend university. Those decisions are made around Xmas of their upper 6th when the vast majority are 17.
All of the supporting data for the claim about how much extra graduates earn is based on tracking a cohort of 1950's graduates. When they went to uni only c5% of the country did and most of them were going into the professions so the conclusions of that study are irrelevant for graduates today.
In addition (and this is fact I have argued out with the head of careers of the local university), the figures given by every uk university for graduate salaries from their courses are rubbish. They all use the prospects today data, that is gained form an email (was letter) sent to graduates 6 months after graduation asking them
1. Are you employed
2. Is it in a role related to your degree
3. What salary are you earning (optional)
They freely admit that those who have found a job are more likely to reply and those who have found one in their chosen field are the most likely. Also mainly those who want to brag are the ones who give a salary. The local head of careers said they actually have more accurate data (different by about -10-15% on average )but if they published it the uni would look relatively worse compared to it's competitors and so they continue to use the same incorrect data source.
I manage (and have done for several years) a U18 Girls rugby team so I have a lot of contact with 6th formers and their parents, not going to uni is very much viewed as a failure unless you have a very specific other career in mind (military being one of the few i can think of being accepted as equal by the majority of parents)
People are making a decision based on incorrect and/or out of date data that persuades them that huge debt doesnt matter and will easily be covered by extra earnings.
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@Fagin2021. it is trickier than it looks actually.
You can't pick out one hedge fund manager for a tax break. If you're creating a tax break it will benefit multiple people.
I suspected, and you've now confirmed, that you're talking about the tax simplification plan Liz Truss had to remove the 45% tax bracket and charge all higher earners at 40%. But those paying 45% marginal rates are not just hedge fund managers, it includes some doctors, headteachers, small business owners!
The "buy a few Ferrari or pad in Mayfair" sounds like a typical Labour politics of envy.
The sensible approach with any proposed tax change is to examine the net effect of the change. Would rich people benefit more? In this case, obviously. But is that a good reason on its own to not implement that change (whatever the change happens to be)?
I think one needs to step back and examine the net effect of that change. We need to estimate the extent to which the tax reduction will result in higher consumer spending (even if it's with buying Ferraris - that's economic activity that pays tax, supports employment etc
). And higher employment. How much of that tax cut, putting more money in the hands of rich people, will result in investment, creation of new businesses? To what extent will these rich people use that to invest in riskier but up and coming technologies - our robotics, biosciences etc? What negative effects will it likely have in, for example, incentivising rich people to invest more in property and push up property prices?
The jury is out on whether a simplification of income tax by removing the top bracket would be a net good or net evil. There is no clear answer on that.
But we are sure that using emotive language of "hedge fund managers" and "Ferraris" displays either a lack of understanding of the issues involved or a genuine desire to whip up the masses (who don't have Ferraris).
You can't pick out one hedge fund manager for a tax break. If you're creating a tax break it will benefit multiple people.
I suspected, and you've now confirmed, that you're talking about the tax simplification plan Liz Truss had to remove the 45% tax bracket and charge all higher earners at 40%. But those paying 45% marginal rates are not just hedge fund managers, it includes some doctors, headteachers, small business owners!
The "buy a few Ferrari or pad in Mayfair" sounds like a typical Labour politics of envy.
The sensible approach with any proposed tax change is to examine the net effect of the change. Would rich people benefit more? In this case, obviously. But is that a good reason on its own to not implement that change (whatever the change happens to be)?
I think one needs to step back and examine the net effect of that change. We need to estimate the extent to which the tax reduction will result in higher consumer spending (even if it's with buying Ferraris - that's economic activity that pays tax, supports employment etc
). And higher employment. How much of that tax cut, putting more money in the hands of rich people, will result in investment, creation of new businesses? To what extent will these rich people use that to invest in riskier but up and coming technologies - our robotics, biosciences etc? What negative effects will it likely have in, for example, incentivising rich people to invest more in property and push up property prices? The jury is out on whether a simplification of income tax by removing the top bracket would be a net good or net evil. There is no clear answer on that.
But we are sure that using emotive language of "hedge fund managers" and "Ferraris" displays either a lack of understanding of the issues involved or a genuine desire to whip up the masses (who don't have Ferraris).
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- Original Poster
- #52
In the scheme of what was announced by Kwarteng, 5p off the top rate of tax would have cost very little and most likely to offer increased tax revenues quite quickly. Increases in tax rates have never delivered sustained increases in tax revenues as those with the capacity to be a high earner tend to be mobile and move. Note how many bright young things from Paris worked in London to avoid the high taxes in France until France reduced tax. A similar story in Corp tax with AZ. I’m a believer in the Laffer curve where there is a sweet spot to maximise tax whilst giving incentive to the earner.
I agree, we have an under-employment issue, I don’t think it’s people working fewer hours than they would like, rather than we have far too many economically inactive. We pay too many people to do nowt and then we are surprised at paying people to do nowt results in people producing nowt.
I’m not ignoring the benefits of 2 million homes using less energy or 2 million families spending less on energy, however, I’m asking how this can be done? There was a huge increase in the spend on insulation and installation over the last 18 months simply from private spending, with people having to wait months already to get tradesmen to do the job (I know it’s an easy DIY job too) but there is supply issue with both product and installation, this is not resolved by govt throwing £2bn at it, it simply pushes demand up and it follows, the price.
I don't find the choice as set out, tricky at all, I simply am bright enough to know there are other factors.
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Wouldn't disagree with much of that and yes, I over-simplified it with my example. The hedge-fund reference was to the Kwasi Kwarteng dinner with a group of them who congratulated him on his budget.@Fagin2021. it is trickier than it looks actually.
You can't pick out one hedge fund manager for a tax break. If you're creating a tax break it will benefit multiple people.
I suspected, and you've now confirmed, that you're talking about the tax simplification plan Liz Truss had to remove the 45% tax bracket and charge all higher earners at 40%. But those paying 45% marginal rates are not just hedge fund managers, it includes some doctors, headteachers, small business owners!
The "buy a few Ferrari or pad in Mayfair" sounds like a typical Labour politics of envy.
The sensible approach with any proposed tax change is to examine the net effect of the change. Would rich people benefit more? In this case, obviously. But is that a good reason on its own to not implement that change (whatever the change happens to be)?
I think one needs to step back and examine the net effect of that change. We need to estimate the extent to which the tax reduction will result in higher consumer spending (even if it's with buying Ferraris - that's economic activity that pays tax, supports employment etc
The jury is out on whether a simplification of income tax by removing the top bracket would be a net good or net evil. There is no clear answer on that.
But we are sure that using emotive language of "hedge fund managers" and "Ferraris" displays either a lack of understanding of the issues involved or a genuine desire to whip up the masses (who don't have Ferraris).
Having said that - I don't believe there is evidence to suggest that trickle-down economics actually works or has ever worked, or at least, is better than spending the money on alternatives.
You'd never make a good politician, because they couldn't care less about 'stepping back and examining the net effect of that change'. Political perception is everything.
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- Original Poster
- #54
I'm glad you took my joke as intended
You are right, there is a 1950s attitude about scoring schools, it's up to parents to help their kids along in this.
Schools are very myopic in their attitude, teachers have rarely had another career outside teaching and therefore only see life as school - uni - school again. It's amazing that the UK is entrepreneurial as the kids are not exposed to people who succeed in business.
However, the attitude of parents toward going to uni is their look out and if they can't steer their kids to look at alternatives is their problem.
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- Original Poster
- #55
@Fagin2021. it is trickier than it looks actually.
You can't pick out one hedge fund manager for a tax break. If you're creating a tax break it will benefit multiple people.
I suspected, and you've now confirmed, that you're talking about the tax simplification plan Liz Truss had to remove the 45% tax bracket and charge all higher earners at 40%. But those paying 45% marginal rates are not just hedge fund managers, it includes some doctors, headteachers, small business owners!
The "buy a few Ferrari or pad in Mayfair" sounds like a typical Labour politics of envy.
The sensible approach with any proposed tax change is to examine the net effect of the change. Would rich people benefit more? In this case, obviously. But is that a good reason on its own to not implement that change (whatever the change happens to be)?
I think one needs to step back and examine the net effect of that change. We need to estimate the extent to which the tax reduction will result in higher consumer spending (even if it's with buying Ferraris - that's economic activity that pays tax, supports employment etc
The jury is out on whether a simplification of income tax by removing the top bracket would be a net good or net evil. There is no clear answer on that.
But we are sure that using emotive language of "hedge fund managers" and "Ferraris" displays either a lack of understanding of the issues involved or a genuine desire to whip up the masses (who don't have Ferraris).
Excellent point, I was concentrating on the Laffer curve theory where high tax rates do not give increased tax revenues, the real upside is the point you make, allowing people to keep more of the money they earn creates demand and wealth distribution.
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- Original Poster
- #56
I'm going to have to crack on but it would be a complete misunderstanding of the economics to assume Kwarteng's reforms were "trickle-down economics".
Kristian Niemietz explains far better than i can here: https://youtu.be/Wjeg-7oTlTo
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From a pure economics view point the idea about reducing both state income and outgoings leading to a more efficient economy makes 100% total sense theoretically
BUT
As a country on average we don't want that.
It is like "cut red tape", if you ask 100 people what to cut they each name something different that stops them doing something but want to keep something else they see as a necessary protection others see as a hindrance.
Where would you cut the spending to make up for the reduced income that would be agreed by a majority. The big ticket spending items in the UK, NHS, Defence, Social care, Benefits, transport infrastructure each have massive amounts of supporters who think the others ought to take any hit - therefore costs won't be reduced and therefore you can't reduce the tax income (when we have such huge debts to service)
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Transport infrastructure though is capital spending so in theory, investment. Most of the other things are current spending (not the 40 "new" hospitals, obv).
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I read with interest regarding the number who don't pay back their University loan so asked my son. Of the 21 of his group of A level students who went to Uni, only one has not repaid his loan and that is 13 years after leaving. The one has becom a total waster and druggie.
This does not seem to compare with the alarm and despondency outlined in this thread.
This does not seem to compare with the alarm and despondency outlined in this thread.
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No it was not. It was frozen to March 2021 at 12500, then went up to 12570, where it will remain until March 2026.
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- Original Poster
- #68
It was my hillarious joke based on Gini's and bottles.
I'd agree that we generally want a level playing field but the easiest way to do this is to make everyone poor which isn't good.
I prefer to level up opportunities rather than take successful people's money and give it to those who haven't tried.
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It's not so much about level playing fields. Of course successful people should be rewarded, but a more even distribution of income increases consumption, which, in turn, IF accompanied by increased supply, makes everyone richer.
Making everyone poor isn't the only way to do it.
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It also has nothing to do with tax free allowances.
Increasing the NI threshold saves the average worker 12% of the increase.
Increasing the tax free allowance saves everyone 20% of the increase.
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As someone who is coming towards the end of their working life, the last comment made myself laugh. “Successful” people with money generally have made that money by taking advantage of others, have inherited it or stolen it. I am fortunate to have a little wealth, want for nothing and can live within my means, but am far from what many would consider monetarily wealthy.
Plenty of people who are “successful” are not necessarily wealthy, they might have more important priorities in life. Phrases such as level up opportunities, is really saying leave things as they are, after all, if they haven’t got money then they can’t have tried.
A decent society is partly judged on how they treat their poor, the disabled, the less fortunate, and those that do important work which is not necessarily paid according to the effort put in.
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- Original Poster
- #78
I hesitated in typing "unlucky" instead, but successful and haven't tried are not ends of the same stick.
The answer is I don't fully know how to come up with the prefect model that rewards effort and achievement without leaving people behind.
What we don't want to end up with is the poor guy who currently can afford 3 meals a day but is jealous of the mega-billionaire who can afford an all day banquet. It's fine taking all that away from the rich man so he only can afford 3 meals a day but if the poor guy can not feed himself, they may be more equal but the poor guy is actually worse off.
It goes back to the old Thatcher quote: "The trouble with Socialism is that eventually you run out of other people's money."
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