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CrashConnoisseur

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Posts posted by CrashConnoisseur

  1. Target Cost of HB – In June 2010 the overall cost target for the HB reforms was save 'nearly £2bn' by 2015 from the then known February 2010 figure of £20.48bn giving a Coalition 2015 target of £18.5bn.

    The latest figure of £22.6bn is therefore more than £4bn per year over the Coalition target

    That is wrong. The June 2010 savings target of "nearly £2 billion" was in the projected budget for 2015 of £25 billion (reducing it to £23 billion). It was not a cut from the February 2010 figure of £20.48 billion (that would be absurd when government policy is to raise social rents by RPI + 2% and the number of HB claimants is rising).

  2. being of a age when I can remember as a young boy our politicians being excited about 'the white heat of technology' (as a young Mr Wegwood Ben put it)...

    Actually, Harold Wilson at the Labour Party conference in Scarborough 1963 (although he didn't say "the white heat of technology").

    'Your favourite Conference Clips':

    http://news.bbc.co.uk/2/hi/programmes/the_daily_politics/6967366.stm

    In 1963, Harold Wilson addressed the Labour Party conference with what is now usually paraphrased as "the white heat of technology" speech.

    He told conference: "The Britain that is going to be forged in the white heat of this revolution will be no place for restrictive practices or for outdated methods on either side of industry."

    You can watch this famous moment in fuller context in the box on the right.

  3. Tax Credits are far more effective in helping the low-paid by making work pay.

    'Can tax cuts alone make people better off?':

    http://www.litrg.org...s/2012/tax-cuts

    Summary

    In short, it is impossible to predict whether a single tax or benefits measure will result in a household being better off or worse off overall, until it is established how that one change will interact with other parts of the tax and benefits system affecting that household's finances. It is also necessary to take account of other concurrent changes in the welfare system.

    While means tested benefits remain based on net income – a situation which is likely to continue under universal credit – and while welfare cuts are being implemented, it is unlikely that tax cuts alone will do much to improve the position of low- to middle-earning households who also claim benefits or tax credits.

    However, on a more positive note, increasing the personal allowance will at least ameliorate the extent to which benefits and tax credits claimants may lose out as a result of other measures in the welfare system.

  4. This was covered on radio sheffield as I drove to work this am. The presenter, Toby Foster was interviewing a local labour mp who was demanding a4e be offered no new contracts until the fraud issue is investigated and resolved. Foster made noises about being innocent until proven guilty...

    With A4E, it's guilty already until proven guilty again.

    'A4e forced to repay public money five times after DWP found 'irregularities'' [February 2012]:

    http://www.guardian.co.uk/politics/2012/feb/22/a4e-repay-irregularities

    A welfare-to-work company at the centre of a criminal investigation has previously had to repay public funds on five separate occasions after government investigations into fraud allegations found evidence of "irregularities", the Guardian can disclose.

    ....and referred to the a4e boss as 'emma' several times and said 'I know she listens in, we'd love to hear from her' - I'm guessing he's on 1st name terms with her socially? Just like another local lab mp one D Blunkett was back when he was a minister.

    Blunkett is now a director.

    'David Blunkett and A4E.':

    http://intensiveactivity.wordpress.com/2012/03/16/david-blunkett-and-a4e/

    March 16, 2012

    David Blunkett MP (from the latest Register of Members’ Interests).

    Adviser on business development to A4e Ltd; global public service reform. (£25,001–£30,000 per financial year) This involves some travel.

  5. Just a quick point they got their first contracts from the Major government. Emma has been a master of courting those in power ever since, both labour and tory, but the original idea of paying the private sector huge chunks of tax payers money was Thatchers Emma just jumped on the gravy train she created.

    Indeed, although my understanding is that the business was started by her father to help redundant Sheffield steel workers find jobs. Emma then took it over after her father grew tired of it and subsequently changed its name to A4E.

  6. Another interesting article from Simon Wren-Lewis...

    'The UK Budget and the Political Dangers of Inequality':

    http://mainlymacro.blogspot.co.uk/2012/03/uk-budget-and-political-dangers-of.html

    When business sees more profit in rent seeking and manipulating the state compared to investment and innovation, economic growth suffers. Which brings us finally back to the Budget and the 50p tax rate. The campaign to get rid of the 50p rate has been well organised, and has signed up many business leaders for support. The evidence that it will have a noticeable effect on UK growth in the next few years is non-existent. What UK business should have been lobbying for were changes in monetary and fiscal policies, but this has not happened in the UK or US. That the key 2012 Budget measure is a cut in the top tax rate, at a time when unemployment is rising because of demand deficiency, represents a specific macroeconomic policy failure. That the business community appears to be backing this stance perhaps represents a more general political problem.
  7. Typically insightful article from Chris Dillow...

    '45p: Power beats evidence':

    http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2012/03/45p-power-beat-evidence.html

    The key thing here is the taxable income elasticity (TIE)- the extent to which people reduce their (reported) pre-tax income in response to a cut in their after-tax income. The higher is the TIE, the less a tax rise will bring in to the Treasury - and the less a tax cut will cost.

    [...snip...]

    If we take the TIE of 0.58, the cut in the top rate to 45p will save the Treasury almost £1bn*. Mr Osborne was keen to point that out. What he didn’t say is that if we take the lower TIE, of 0.33, then the cut in the top rate to 45p will cost the Treasury not £100m but over £1bn. In other words, it would be a big giveaway to the rich.

    And the HMRC suggests a reason to believe a lower TIC....

    [...snip...]

    I don’t say all this to take a definite view on whether the cut in the top tax rate will or will not raise money. We just don’t know.

    And this is the point. The fact that Osborne was willing to take a decision based upon such flimsy evidence shows that policy-making is determined more by the interests of the rich than by the objective empirical evidence.

    This comment seems to sum the issue up...

    George Osborne is betting that cutting the tax of corporates and the wealthy will stimulate growth. This is essentially the same trickle-down concept that has been around since the 80s. As we now know, this produced rapid growth in wealth at the top end of the social scale, but growing impoverishment at the bottom end and stagnation in the middle.

    What evidence do we have that history will be different this time?

  8. Didn't the 50% tax rate give a clear indication of where the Laffer curve is.

    No. The 50% tax band was billed as a temporary measure, so it's been a relatively easy move to defer income or shelter it by using up various tax allowances (e.g. pension plan). If the tax band had been widely believed to be a permanent feature then revenue would likely have been higher (only constrained over time by the development of avoidance schemes). Research shows that the Laffer Curve for income tax peaks at over 70%...

    'The Laffer Curve Bend At 84%':

    http://www.slate.com/blogs/moneybox/2012/02/28/the_laffer_curve_bend_at_84_.html

    Christina Romer and David Romer have a new paper looking at evidence from the 1920s and 1930s and find that the revenue-maximizing rate on the highest earners is extremely high -- over eighty percent. Among the top 0.05 percent of the income distribution they find an elasticity of taxable income of 0.19 percent which implies "implies that tax revenues would be maximized with a tax rate of 84 percent; that is, you could raise taxes up to 84 percent before people’s reduced incentives to make money would compensate for the higher tax rates."

    'Raw Data: The Laffer Curve for the Rich':

    http://motherjones.com/kevin-drum/2011/11/raw-data-laffer-curve-rich

    ...Peter Diamond and Emmanuel Saez have tried to calculate the tax rate on the rich that would maximize revenue to the government.

    [...snip...]

    Using parameters based on the literature, D & S suggest that the optimal tax rate on the highest earners is in the vicinity of 70%.

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