The Conservative Party

[Henkeman]

Question for @SWP's back and others. Is this wealth flight in response to taxes supported by research? To what degree? Any usable metrics for it?



It's the same logic used by austerity. I have a similar problem with both.

I cannot for the life of me understand how the Government reducing investment is going to make others want to invest in the private sector. That's mental. If the Government aren't investing then they don't have faith in their economy and if the guys running it don't have faith then why should I?

Yes, there's tons of research on this, the Laffer Curve is the shorthand for it. This one is nicely balanced when talking about some of our recent changes: https://fullfact.org/economy/did-higher-taxes-lead-reduced-revenue-rich/

Equally, the cut of the top rate from 50p to 45p certainly didn't have a negative effect, even if the amount raised is open to debate. https://fullfact.org/economy/did-cutting-50p-rate-tax-raise-8-billion/

What makes it difficult to assess completely is that tax cuts tend to happen when an economy is doing well, so you'd expect the revenue raised to be higher then anyway, and that is why when some point to examples as being self-evidently the case, it's not as simple as that. What I would say is the small differentials around our 45% top rate suggests that we're pretty much at the optimal level for the tax take, and there's not that much advantage in either raising or lowering it.

On the second part of your question, businesses invest more if they have more to invest, i.e. if the government takes less money off them. The worst kind of taxation isn't corporation tax, it's things like employers' national insurance - it's quite literally a tax on job creation.

 

[Fame Monster]

It's because people think it's free money. Make the rich pay more and the rest of us can pay less. And you know what? If that worked, I'd be all in favour of it. I'd be leading the calls for it to happen, because bloody hell, they really can afford it. If we could increase spending, lower the marginal rate of tax for the poorest, increase it for the richest, bring in vast amounts of money for the Treasury and spend it on the common good, I'd be at the front of those marches. It would be fantastic.

Trouble is, it doesn't work.

It does work though. Lots of countries now, and in history, have come up with ways of reducing budget deficits without hammering those who are least able to afford it. Take the French for example. They have a lower GDP than us yet they spend enormous amounts more on public services (around £300billion more) and still have a lower deficit as a proportion of GDP. When can we see you and @Chippy_boy on the next march?

 

[Henkeman]

It does work though. Lots of countries now, and in history, have come up with ways of reducing budget deficits without hammering those who are least able to afford it. Take the French for example. They have a lower GDP than us yet they spend enormous amounts more on public services (around £300billion more) and still have a lower deficit as a proportion of GDP. When can we see you and @Chippy_boy on the next march?

Well, yes - and the reasons why are pretty obvious. France doesn't have remotely as large a financial sector and didn't have to bail out the banks 10 years ago to anything like the same extent. They also tax people far higher. Perhaps that lower GDP might even be explained by that?

Incidentally, France is currently cutting about €300billion from its spending at the moment, because it needs to get its finances in order. Cutting. Not rising more slowly like us, cutting. Turns out that isn't going to be enough, so they're going to be cutting some more.

They also have a far higher debt than we do, which they are seriously worried about as it closes in on 100% of GDP, a deficit that stubbornly refuses to fall and will actually rise this year, and are looking to cut corporation tax over the next five years because of the damage being done currently.

Are you sure you want to use France as your example?

 

[Fame Monster]

Well, yes - and the reasons why are pretty obvious. France doesn't have remotely as large a financial sector and didn't have to bail out the banks 10 years ago to anything like the same extent. They also tax people far higher. Perhaps that lower GDP might even be explained by that?

Incidentally, France is currently cutting about €300billion from its spending at the moment, because it needs to get its finances in order. Cutting. Not rising more slowly like us, cutting. Turns out that isn't going to be enough, so they're going to be cutting some more.

They also have a far higher debt than we do, which they are seriously worried about as it closes in on 100% of GDP, a deficit that stubbornly refuses to fall and will actually rise this year, and are looking to cut corporation tax over the next five years because of the damage being done currently.

Are you sure you want to use France as your example?

Yeah France is the best example of any country in the world to use which is why I mentioned them. They have a near identical population to the UK, near identical culture and geography to the U.K., and their GDP is near identical to the U.K.. Yet they still spend hundreds of billions more than the U.K. and they could do continue to do so (to a lesser extent but still in the hundreds of billions) while at the same time running a budget surplus. The fact is, you can do all of the things you stated to be unworkable in your first post and simultaneously reduce the national debt. There is a choice: higher taxes and better public services or; lower taxes and more poverty, illness, and crime.

P.S. Do you have a source for the claim that the French are cutting £300billion because I struggle to believe they are cutting anymore than about a sixth of that figure? Nevertheless that’s not really relevant neither is their national debt. The fact is they have a better balanced budget now while spending hundreds of billions more in public money.

 

[Henkeman]

Yeah France is the best example of any country in the world to use which is why I mentioned them. They have a near identical population to the UK, near identical culture and geography to the U.K., and their GDP is near identical to the U.K.. Yet they still spend hundreds of billions more than the U.K. and they could do continue to do so (to a lesser extent but still in the hundreds of billions) while at the same time running a budget surplus. The fact is, you can do all of the things you stated to be unworkable in your first post and simultaneously reduce the national debt. There is a choice: higher taxes and better public services or; lower taxes and more poverty, illness, and crime.

P.S. Do you have a source for the claim that the French is cutting £300billion because I struggle to believe they are cutting anymore than about a sixth of that figure? Nevertheless that’s not really relevant neither is their national debt. The fact is they have a better balanced budget now while spending hundreds of billions more in public money.

Yes, France is a comparable country, which is why it's such a bad one to point to as being better. France is in quite a lot of trouble at the moment, exacerbated by being in the euro.

Some points to take issue with:

They are NOT running a budget surplus, they are still in deficit, and while it has narrowed in recent years, it's a major problem which is why they're cutting spending.

Nor are they reducing their national debt. It continues to rise, as is inevitable when you run a deficit. Why do you imagine they're having to cut?

On the £300bn Edit: I got duff info here - will research. Further edit - yes, that was completely wrong. It is much smaller than that, apologies.

Their national debt is extremely important, because servicing it takes up a big chunk of public spending. Servicing ours takes up 8% of public spending. If you have high debt, more of your money goes on that. To suggest it isn't important is economic illiteracy.

Because France are in some difficulties, they are cutting public spending. Cutting. This is entirely at odds with what you seem to want - they don't even have room to maintain their current spending, they have to reduce it. This is exactly what happens when you overspend. Where they are not remotely comparable is in their spending, France are a real outlier, and they're in trouble as a result of it. Why would you want us to follow them?

 

[Chippy_boy]

Labour's policies are pretty simple.

Tax and batter companies so they don't employ people, said companies then leave or don't bother.

Everyone ends up on the dole so industry production and distribution is taken into the arms of the state who then employs people, gives them a house etc.

And there you have it, the classic implementation of socialism.

(By the way, the people telling you to do all this will lap it up and remain in their nice houses in their roles on £100k a year sending themselves and their children to private schools (Abbott, Thornberry) etc. etc.).

I'm pretty darned certain the above is core John McDonnell strategy. Corbyn may be too dim to realise it, but bringing the country to its knees would actually be a good thing in McDonnell's eyes I suspect.

 

[Chippy_boy]

It does work though. Lots of countries now, and in history, have come up with ways of reducing budget deficits without hammering those who are least able to afford it. Take the French for example. They have a lower GDP than us yet they spend enormous amounts more on public services (around £300billion more) and still have a lower deficit as a proportion of GDP. When can we see you and @Chippy_boy on the next march?

You seriously want to use France as an example to which we should aspire?

They have lower GDP per capita than us, higher debt, higher debt as % of GDP, higher deficit, lower defence spending, lower education spending, and twice as many people out of work. Incidentally they have twice as many homicides as well, but I suppose that's a peripheral point.

And those in work earn 20% less than we do. And their top tax rate is higher.

 

[Fame Monster]

Yes, France is a comparable country, which is why it's such a bad one to point to as being better. France is in quite a lot of trouble at the moment, exacerbated by being in the euro.

In many respects (especially in relation to poverty, health, many types of crime), the French are doing better than us. In some respects, the French are doing worse than us (national debt as a proportion of GDP). But my point is in relation to which country has a more balanced budget, which is France despite spending hundreds of billions more than the U.K. Yes, they need to cut some more or tax some more to create a surplus but at the minute, their deficit as a proportion of GDP (as of 2017) is lower than ours.

Some points to take issue with:

They are NOT running a budget surplus, they are still in deficit, and while it has narrowed in recent years, it's a major problem which is why they're cutting spending.

I never said that. I said they could still spend hundreds of billions more than the U.K. and run a surplus.

Nor are they reducing their national debt. It continues to rise, as is inevitable when you run a deficit. Why do you imagine they're having to cut?

I never said that either.

On the £300bn - apologies, I typed far too fast, they were cutting spending TO that figure. They are cutting it again this year. They do not spend hundreds of billions more than we do.

I don't know where you're getting your information from but the French spend a lot more than £300bn a year and they will continue to do so for as long as the French state exists. Your last point is wrong too.

Their national debt is extremely important, because servicing it takes up a big chunk of public spending. Servicing ours takes up 8% of public spending. If you have high debt, more of your money goes on that. To suggest it isn't important is economic illiteracy.

It's important in a general sense - absolutely, but not strictly relevant to this debate.

Because France are in some difficulties, they are cutting public spending. Cutting. This is entirely at odds with what you seem to want - they don't even have room to maintain their current spending, they have to reduce it. This is exactly what happens when you overspend.

No. I'm saying you can spend more than what we are doing in this country - and not overspend as long as the tax revenue is very close to state spending, and that borrowing is used when sensible.

 

[Chippy_boy]

In many respects (especially in relation to poverty, health, many types of crime), the French are doing better than us. In some respects, the French are doing worse than us (national debt as a proportion of GDP). But my point is in relation to which country has a more balanced budget, which is France despite spending hundreds of billions more than the U.K. Yes, they need to cut some more or tax some more to create a surplus but at the minute, their deficit as a proportion of GDP (as of 2017) is lower than ours.

I don't know where you're getting your figures from but the latest I saw were:

Debt (%GDP) [+] 2017 UK 87.70% France 97.00%

Deficit (%GDP) [+] 2017 UK -1.90% France -2.60%

And I note you didn't mention unemployment.

Unemployment Rate [+] August 2018 UK 4.0% France 9.3%

 

[Henkeman]

In many respects (especially in relation to poverty, health, many types of crime), the French are doing better than us. In some respects, the French are doing worse than us (national debt as a proportion of GDP). But my point is in relation to which country has a more balanced budget, which is France despite spending hundreds of billions more than the U.K. Yes, they need to cut some more or tax some more to create a surplus but at the minute, their deficit as a proportion of GDP (as of 2017) is lower than ours.

No it isn't, it's higher. Our budget is far more balanced than theirs, not just as a snapshot but in terms of reducing debt as forecast.

I never said that. I said they could still spend hundreds of billions more than the U.K. and run a surplus.

Ok, it was misleading, I'll accept what you meant. Yes, they can do that, but having a much higher rate of tax. Are you proposing that?

I don't know where you're getting your information from but the French spend a lot more than £300bn a year and they will continue to do so for as long as the French state exists. Your last point is wrong too.

Had already edited and acknowledged that

It's important in a general sense - absolutely, but not strictly relevant to this debate.

No, it's vital. It's the reason they have to cut. The exact reason.

No. I'm saying you can spend more than what we are doing in this country - and not overspend as long as the tax revenue is very close to state spending, and that borrowing is used when sensible.

By putting up taxes hugely. With the problems that entails.

 

[Fame Monster]

I don't know where you're getting your figures from but the latest I saw were:

Debt (%GDP) [+] 2017 UK 87.70% France 97.00%

Deficit (%GDP) [+] 2017 UK -1.90% France -2.60%

And I note you didn't mention unemployment.

Unemployment Rate [+] August 2018 UK 4.0% France 9.3%

Tbf, I should have been specific about the deficit figures I quoted. In 2017Q2, France had a lower deficit as proportion of GDP. You are right about the UK now having a lower figure but the picture is constantly changing with every policy announcement. I never disputed the national debt figures.

 

[Henkeman]

I don't know where you're getting your figures from but the latest I saw were:

Debt (%GDP) [+] 2017 UK 87.70% France 97.00%

Deficit (%GDP) [+] 2017 UK -1.90% France -2.60%

And I note you didn't mention unemployment.

Unemployment Rate [+] August 2018 UK 4.0% France 9.3%

Uk deficit is forecast for 2018/19 to be 0.3%, France 2.6%

UK debt forecast at 85.6%, France 97.5%

UK public debt to be falling from next year, France still rising.

 

[dave_blue12]

Someone seems to think that certain Tories belong behind bars.

 

[Fame Monster]

Uk deficit is forecast for 2018/19 to be 0.3%, France 2.6%

UK debt forecast at 85.6%, France 97.5%

UK public debt to be falling from next year, France still rising.

I was midway writing a response to chippyboy, but I want to make some points on this first.

1. That projection will definitely not hold up this time next week, I suspect.

2. Running a 2.6% isn't in itself better than a 0.3% deficit, it depends on a myriad of things.

3. The national debt figure is, once more, secondary in relation to a debate on the way the countries are currently run and could be run in the future.

My main point is you can have a high tax and high spend country that has a population, budget (in terms of balance) and economy that's indistinguishable from a lower tax and lower spend country but with better social outcomes. It really depends on what you care about. But to say it is unworkable is definitely false, proven not just by France but a plethora of other Western European countries too.

 

[Henkeman]

I was midway writing a response to chippyboy, but I want to make some points on this first.

1. That projection will definitely not hold up this time next week, I suspect.

2. Running a 2.6% isn't in itself better than a 0.3% deficit, it depends on a myriad of things.

3. The national debt figure is, once more, secondary in relation to a debate on the way the countries are currently run and could be run in the future.

My main point is you can have a high tax and high spend country that has a population, budget (in terms of balance) and economy that's indistinguishable from a lower tax and lower spend country but with better social outcomes. It really depends on what you care about. But to say it is unworkable is definitely false, proven not just by France but a plethora of other Western European countries too.

I'm guessing on point 2 you meant worse? No, it's not bad in itself, except when you've been running heavy structural deficits for a decade and the public debt is at its limit. Then it is, and hence the rather desperate need to get it down. France hasn't run a surplus in decades, and now it needs to, precisely because debt is so high. It cannot be left at 100% for years on end. Point 1, yes it will. Tax receipts have been strong this year.

3 no, that's not true. In the normal scheme of things it doesn't matter much. When it is very high it absolutely becomes important, not for the figure itself, but for the prospect of bringing it down. See Italy.

On the last point, yes a nation can do so. And when it does it tends to find it has little wriggle room when things go wrong. You can advocate a high tax/high spend economy if you wish, and that's fine - except that I'm not seeing you specifically advocate the considerably higher taxes for everyone that would be required.

 

[Fame Monster]

I'm guessing on point 2 you meant worse? No, it's not bad in itself, except when you've been running heavy structural deficits for a decade and the public debt is at its limit. Then it is, and hence the rather desperate need to get it down. France hasn't run a surplus in decades, and now it needs to, precisely because debt is so high. It cannot be left at 100% for years on end. Point 1, yes it will. Tax receipts have been strong this year.

3 no, that's not true. In the normal scheme of things it doesn't matter much. When it is very high it absolutely becomes important, not for the figure itself, but for the prospect of bringing it down. See Italy.

On the last point, yes a nation can do so. And when it does it tends to find it has little wriggle room when things go wrong. You can advocate a high tax/high spend economy if you wish, and that's fine - except that I'm not seeing you specifically advocate the considerably higher taxes for everyone that would be required.

On point 2, yeah I meant worse and more often than not, it is bad in the circumstances you describe although there are exceptions even if you haven't run a surplus in a decade (too complicated to go into and beside the point).

On point 1, we will see what spending plans are announced.

On point 3, in terms of the actual present political picture then yes, its important. But my point is more conceptual than that.

On the last point - my main point, you can run a high tax, high spend economy and run a surplus so it's not true to say there's no wiggle room. I am advocating higher taxes for most people (myself included). As I say, it depends on what you care about.

 

[Henkeman]

On point 2, yeah I meant worse and more often than not, it is bad in the circumstances you describe although there are exceptions even if you haven't run a surplus in a decade (too complicated to go into and beside the point).

On point 1, we will see what spending plans are announced.

On point 3, in terms of the actual present political picture then yes, its important. But my point is more conceptual than that.

On the last point - my main point, you can run a high tax, high spend economy and run a surplus so it's not true to say there's no wiggle room. I am advocating higher taxes for most people (myself included). As I say, it depends on what you care about.

Well, if you want to do the comparison for France, then France is what is going to be talked about. And for them, it's really not good at all. If it was the UK circa 2004 it's not a problem. If it was France at the same time it's not a problem. Now it is. And this is rather the point - you can't point to France as being the example without acknowledging they're in some quite severe difficulties. When you have the French PM talking about dancing on a debt volcano, this is hardly something to aspire to.

Ok, so take your main point. In order to bring UK spending up to French levels on the same basis, that is approaching a 50% rise in the tax take needed.

 

[Fame Monster]

Well, if you want to do the comparison for France, then France is what is going to be talked about. And for them, it's really not good at all. If it was the UK circa 2004 it's not a problem. If it was France at the same time it's not a problem. Now it is. And this is rather the point - you can't point to France as being the example without acknowledging they're in some quite severe difficulties. When you have the French PM talking about dancing on a debt volcano, this is hardly something to aspire to.

Ok, so take your main point. In order to bring UK spending up to French levels on the same basis, that is approaching a 50% rise in the tax take needed.

I have no problem talking about France but France was an example I talked about to illustrate a wider point. Focusing on marginal differences in quarterly deficit ratios (or national debt) detracts from the wider point I'm trying to make. On which, a rise in spending isn't an end in itself. I don't aspire to spend what France spends: I admire a lot of their outcomes and I reckon they could be achieved by the U.K. spending money different to how it is currently spent although realistically, a rise in tax would be needed in addition to that.

 

[Henkeman]

I have no problem talking about France but France was an example I talked about to illustrate a wider point. Focusing on marginal differences in quarterly deficit ratios (or national debt) detracts from the wider point I'm trying to make. On which, a rise in spending isn't an end in itself. I don't aspire to spend what France spends: I admire a lot of their outcomes and I reckon they could be achieved by the U.K. spending money different to how it is currently spent although realistically, a rise in tax would be needed in addition to that.

I'm not talking about quarterly deficits, I'm referring solely to annual figures. Quarterly has little relevance because it's seasonal.

Ok, so again, take it back to the basics. How much do you want it to go up? How much do you want tax to go up? Do you accept that in order to trigger a major increase in tax revenue, it has to fall on the middle classes? How do you intend to persuade people to vote for that? Are you (I don't expect you to answer this - it's a totally private matter, this one is rhetorical entirely) really saying that other people should be paying?

 

[Fame Monster]

I'm not talking about quarterly deficits, I'm referring solely to annual figures. Quarterly has little relevance because it's seasonal.

Ok, so again, take it back to the basics. How much do you want it to go up? How much do you want tax to go up? Do you accept that in order to trigger a major increase in tax revenue, it has to fall on the middle classes? How do you intend to persuade people to vote for that? Are you (I don't expect you to answer this - it's a totally private matter, this one is rhetorical entirely) really saying that other people should be paying?

'How much do I want it to go up by?' isn't the approach I would take. I would look at what the country needs in order to provide a decent safety net whereby, if you fell out of work or were a drug addict or ill, you wouldn't have to live on the streets, you'd be helped, and have enough to eat, drink, and not freeze to death. I'd also pay for police, judges, an army, prisons and so on and whatever the cost was, I'd say it was a price worth paying for a civilised society. So those who can pay more would pay more - so yes, everyone would have to pay, including the middle class. How do I persuade people to vote for it? Tell them about all the other examples in the West and how they consistently rank the highest in almost all metrics on happiness, education and welfare, and suggest it might not be a bad idea to follow.