the economy.

[Mike D]

Well, tax cuts aren't the same as a grant, but I take your point.

This is in keeping with their ideology though. A large portion of their cut was around capex. This is designed to stimulate investment and create projects, hopefully jobs etc

The theory was that by cutting tax you stimulate growth through business investing more and thus the tax cuts pay for themselves. Where in actual fact we have had some stimulation in growth but not enough to compensate the amounts lost in revenue from corporation tax. The logical thing to do would be to raise corporation to the point where you don't hurt growth but you don't lose any revenue from corporation (cost neutral).

Its a bit like this Bill is having a hard time in his carpet shop the economy is doing bad and no one can afford to buy carpets.

Bill decides to cut his prices but he only sells a few more carpets.

So he cuts it again and again until he's selling more carpets than he was a few years ago and Bill is pleased with himself.

His accountant Mike comes in says Bill if you keep selling these carpets at this low price you won't be able to pay your bills basically you're fucked Bill,

What does Bill do the carpets are flying out (because he's practically giving them away) but he's not making enough to cover the bills on shop, his 4 holidays a year,his holiday homes, and of course his beloved jag?

Your analogy is wrong mate.

Bill is selling carpets that no-one can afford. Bill's only sells hand made carpets and his supplier is based in London and not the cheapest around so Bill looks for a cheaper supplier for the same quality. Bill scans the globe for a new supplier and comes across one in China who can provide the same carpet, delivered for 20% cheaper than the guy in London. Bill buys his carpets from China, reduces his costs and has a full order book, the carpet maker in London goes out of business. Bills profit is uneffected. Now lets suppose Sunderland is classed as a special trade area (or whatever the term is where government tries to encourage business to less afluent parts of the country) and benefits from a reduced corporation tax because of this the carpet maker in London now sets up in Sunderland and they are able to supply carpets to Bill for the same price as he can get them from China so Bill changes supplier back to his original without effecting his cost or profit base. The carpet maker in Sunderland now employs more people, they are skilled, they are able to compete internationally, this provides inflows of foreign cash to the economy (vital), they contribute to the economy. Put simply 20% of £n is better than a 100% of £0.

That's what they use corporation tax breaks for. Obviously having a low standard corporation tax encourages business to setup there, we saw that with Ireland, but it is using it to retain and develop skilled staff in this country where it really shines.

As we are constantly being told we're skint running a deficit and racking up more debt in one parliament than any other government £1.3 trillion to date. So it seems ilogical to join the race to the bottom is hardly in terms of corporation tax. Surely it makes more sense in our circumstances to balance the economy by raising corporation tax to a level that doesn't cost us. My analogy wasn't so good but you're right cutting tax brings in more set up but it all sets you up for predators buying up your country's best company's and using you as a tax haven. You only have to look over that bit off water called the Irish Sea (a path I tread regular) to see the damage that this type of stuff can cause. The Irish people are being screwed and the government is in hot water over its bribes paid to Apple and the like.

The biggest problem is that we aren't developing or retaining skilled people especially when you are pushing up university degrees. Then when you factor is the tightening up of immigration it stops universities bringing those lovely overseas students who are prepared to pay over the odds for an education over here. We should be protecting our company's from the vultures and playing to our strengths by selling our service sector i.e. bringing in more foreign students (that doesn't mean opening the floodgates to bogus colleges etc)

 

[sniff]

Actually, Bill's shop is a better analogy. A few years ago, before the recession, let's say he employs 4 lads full time as the business is busy enough for him to need that. Those lads spend money on stuff like cars, white goods, going out, etc.

Then times get hard and the business can't support 4 lads full time. So Bill says, "Look guys, I can only justify one other person full time because we aren't doing enough." In the past, his options would have been to shut down completely or sack three of them. That means 3 to 5 people on the dole. But this time he says "If three of you want to go self employed then I'll throw whatever work I get your way but there's no guarantees." Now, no one is unemployed but they're all on less money. Then business picks up and instead of working 40% of the time they're up to 75%. Bill's doing better and so are they but not as good as before the recession so they're still not spending as much.
Eventually they're picking up work elsewhere but business is so good that Bill needs them all the time. So he either pays them more than others are offering or takes them on as employees again. Then their spending gets back to pre-recession levels.

I think we're about the 75/80% level at the moment.

Is that whats passing as sound theory in the finacial world ? Im sure in a classroom or office that makes perfect sense.

However add the real worl in the mix and it falls on its face, along with the people involved. No one's inemployed because they have gone self employed, again thats a theory that makes no sense. All that means is, three people who in everything but name are out of work, since to go self employed would involve some form of up front capital and equipment costs etc that would have been met by employer. Also next to no, or very irregular income almost certainly leads to the bank not giving them an inch of wiggle room, never mind a loan.. so whilst they are earning next to nothing they fall behind on bills and lose a house.. all of that tab is them picked up by the goverment anyway so they make a loss.

If in the very best case of that scenario, they all find lots of work. It will be in similar area you would expect. That would just mean one company splits into three and the ensuing price battle drives prices down, so in real terms how can they offer higher wages. ?

I dont see how that can be a sound practice to anyone. Surely they would be better off supporting the employees, cutting the insane costs of business rates for companies that struggle.. not giving tax incentives to other industries that are in profit, almost as a bribe.. would the scenario you propose not increase a persons dependence on the walfare system ?

 

[Prestwich_Blue]

Actually, Bill's shop is a better analogy. A few years ago, before the recession, let's say he employs 4 lads full time as the business is busy enough for him to need that. Those lads spend money on stuff like cars, white goods, going out, etc.

Then times get hard and the business can't support 4 lads full time. So Bill says, "Look guys, I can only justify one other person full time because we aren't doing enough." In the past, his options would have been to shut down completely or sack three of them. That means 3 to 5 people on the dole. But this time he says "If three of you want to go self employed then I'll throw whatever work I get your way but there's no guarantees." Now, no one is unemployed but they're all on less money. Then business picks up and instead of working 40% of the time they're up to 75%. Bill's doing better and so are they but not as good as before the recession so they're still not spending as much.
Eventually they're picking up work elsewhere but business is so good that Bill needs them all the time. So he either pays them more than others are offering or takes them on as employees again. Then their spending gets back to pre-recession levels.

I think we're about the 75/80% level at the moment.

Is that whats passing as sound theory in the finacial world ? Im sure in a classroom or office that makes perfect sense.

However add the real worl in the mix and it falls on its face, along with the people involved. No one's inemployed because they have gone self employed, again thats a theory that makes no sense. All that means is, three people who in everything but name are out of work, since to go self employed would involve some form of up front capital and equipment costs etc that would have been met by employer. Also next to no, or very irregular income almost certainly leads to the bank not giving them an inch of wiggle room, never mind a loan.. so whilst they are earning next to nothing they fall behind on bills and lose a house.. all of that tab is them picked up by the goverment anyway so they make a loss.

If in the very best case of that scenario, they all find lots of work. It will be in similar area you would expect. That would just mean one company splits into three and the ensuing price battle drives prices down, so in real terms how can they offer higher wages. ?

I dont see how that can be a sound practice to anyone. Surely they would be better off supporting the employees, cutting the insane costs of business rates for companies that struggle.. not giving tax incentives to other industries that are in profit, almost as a bribe.. would the scenario you propose not increase a persons dependence on the walfare system ?

I said it was an analogy but that's largely the way the economy has behaved over the last few years. If you're self-employed then you're not, by definition, unemployed, regardless of how much or little you are earning. And those who are employed aren't getting real increases in their wages, more like decreases in the real level of earnings as prices go up faster than wages. And yes, that's increased reliance on the welfare state. So our national debt goes up despite the fact we're supposedly "growing". That's why people are still feeling the pinch.

When you talk about one company splitting into three, you've clearly not understood the point. If demand for labour increases, then the price of that labour should go up. If 3 or 4 carpet shops are chasing 3 fitters with more and more work, then the fitters will the the ones who benefit as they'll go to the shop that pays them the highest price. That may push up prices to consumers, hence why some level of inflation is healthy in a growing economy.

 

[Mike D]

Bills just works his tripe off and prices the carpets as best he can. he actually has little cash in his bin after paying everyone but at least he's still around which during the last government was well iffy. the only good thing is if it goes tits up again he could sell the shop and work from home. or get a job which would be well funny.

"where's Bill" er he's off sick again gaffer, always is between august and may :)

Then Bill discovers that his good old mate Dave has got us out of the EU and abolished the human rights bil in one foul swoopl. He grows a beard like Saddam Hussain/ Keane and then starts off a Morcambe cockle picking style regime paying his workers £1 an hour and then deducts board and lodgings for living in his shed and feeds them all on off cuts from his carpets. Happy Days!!!

 

[Carstairs]

This Bill fella sounds like a right shady operator.

I think I'll go elsewhere for my carpets, thanks very much.

 

[Prestwich_Blue]

This Bill fella sounds like a right shady operator.

He is but he's also a big Tory party donor so it's soon to be Lord Bill of Denton, in recognition of his service to the Flooring industry.

 

[Rascal]

its kicked on since i started this thread, we have got busier and busier. we are a year on and its been great, how long it lasts nobody knows, might get even better. i do know one thing, if there is a change of government in may it will all be undone in a matter of months.

i'll never take this for granted.

Looking at the Economy from your own perspective is of course your right pal.


But taking into account the effects of the economy on many of potential potential customers of yours is mine.


If the economy as it is doing is rewarding the few SMEs like yours as it is they will never reach their full potential as the poverty of your potential customers is a barrier to your growth.

Now you maybe happy with your lot at the moment, but in a fairer more equal society you could grow your business muh more.

define fairer and more equal. I see it as you pay in and you take out. yes?

Thats a very simplistic defining principle but one i doubt anybody would disagree with.

But you totally missed my point. Poverty is not just about being out of work. More people that even are facing in work poverty and more is spent on housing benefit for those in work that not. Poverty wages mean hardworking families, your potential customers, might have to make the carpet they have last another 2 years, they may decide that the bedroom doesnt need carpetting at all. This poverty is very real and its happening now but still tax credits are cut which will reduce incomes of the lowest paid again.

My cousin works damn hard at a special school in Runcorn. Her boys are big lads. The eldest despite graduating with an MA is currently working for free in a charity shop, her middle son despite trying and trying and trying just cannot find a job, her youngest has just started as an apprentice barber and gets paid peanuts. At the end of the week after she has paid her bills she has £37 to feed her family on. My mum sends her and the boys food parcels.

Despite doing the right thing they arnt going to be new customers of yours mate as they simply have no money.

 

[mancityvstoke]

If you're self employed can you claim working tax credits etc?

 

[mackenzie]

If you're self employed can you claim working tax credits etc?

Yes.

 

[Rascal]

If you're self employed can you claim working tax credits etc?

Yes.

Its behind the bizarre unexplained rise of the self employed in my opinion.

Its created a situation where a number of hours irregular work qualify you for tax credits without having to enter the world of the welfare sanctioning JSA. Basically its creating an underpaid underclass who live from week to week. The threats of workfare of sanctions are so severe that some of the poorest most in need of work and those on zero hour contracts rely on tax credits to keep there head aboue water.

Without the prospect of a proper decent paid job, they are trapped in the very welfare dependency that that fucking insane monster IDS promised to dismantle.