Solving The Deficit

[A_Landlord]

Hmm you would have to pay benefit in kind tax on the deemed interest of that directors loan. Since your official remuneration is so low, your probably entitled to tax credits -fill your boots :-).

I just went to the HMRC website and completed the questionnaire on Tax Credits and it says that I can get £450 ... what a crazy country!

[miko]

We have been told repeatedly by the Conservatives in the past that the way for the economy to grow is to cut taxes across the board, and that lower tax rates lead to higher taxes in total being paid.

Since growth will be by far the most important factor in reducing the deficit, why aren't the Conservatives and their orange poodles cutting taxes?

Yes agreed if that is the truth why do they not do it.

Cut taxes on employing people and cut the taxes on income . But they don't .

When Thatcher was elected they cut top rate tax from 83% down to 60% , there was also a 50% rate , and then these were both scrapped in the late 80's and the top rate was 40%. We were told that the tax take from the rich increased as they now had the incentive to earn more.

At the other end of the scale bottom rate was 33% plus 6.75% NI , at first basic rate tax was cut to 30% and over the years has been reduced down to 20% , however NI has increased to 11% and personell allowances have not kept up with inflation and earnings , people on average earnings never got much of a cut if any as what came of tax was snatched back in higher NI and lower allowances , only the top rate tax payers got the big cut's.

If it worked for the rich why not the average ?

Let's also not forget that when Thatcher came to power vat was increased over night from 8.5% to 15% in order to make the massive tax cuts at the top possible. It was then increased to 17.5% so we could all have £140 reduction in the poll tax . I am sure that since council tax came into force the £140 reduction has been snatched back without any decrease in vat. Now we are going to have 20% vat .

[Charlie The Tramp Returns]

We have been told repeatedly by the Conservatives in the past that the way for the economy to grow is to cut taxes across the board, and that lower tax rates lead to higher taxes in total being paid.

Since growth will be by far the most important factor in reducing the deficit, why aren't the Conservatives and their orange poodles cutting taxes?

Simple ( Meercat speak ) personal debt is out of control and no tax advantage would be gained cutting taxes.

In 2010 it is estimated that personal bankruptcies will hit 150k.

Speaking to a casual acquaintance a month ago whose Son and Daughter-in Law were struggling to pay their VRM now into its 4th year at 3.5%. Went to their Lender, no problem, mortgage refinanced over 40 years. These Lenders are no fools are they? The happy couple are looking forward to their holiday in The Maldives during August.

That`s the way to do it proclaimed Mr Punch in that great Punch and Judy Show now no longer politically correct.

[porca misèria]

We have been told repeatedly by the Conservatives in the past that the way for the economy to grow is to cut taxes across the board, and that lower tax rates lead to higher taxes in total being paid.

Inasmuch as it's that simple (which it isn't), that's a long-term effect. We're dealing with an acute crisis that can't wait for the long term.

But they're reducing corporation tax, and stopping Labour's latest rise in employment tax. That's what's needed to encourage investment (along with a bonfire of red tape and perverse incentives).

Since growth will be by far the most important factor in reducing the deficit, why aren't the Conservatives and their orange poodles cutting taxes?

That argument might've worked better five years ago. "Fix it by growth" becomes ever more problematic as debt grows beyond what the market is comfortable with. The day those queues appeared at Northern Rock it had gone too far, and became a game of "when in a hole, dig harder".

[aa3]

I believe cutting taxes usually increases tax take. At least when taxes are so high as now. The high taxes today stop so much economic activity from ever happening.

Part of the plan I proposed was outright getting rid of the VAT, and lowering income tax for poor and middle people. Especially the people in the middle are the real driver of the modern consumer economy. But if they have less disposable income the economy grinds down.

When actually in power its a scary and anti-intuitive thing to do though.. revenue shortfall - so actually cut taxes strongly!

[Riedquat]

When Thatcher was elected they cut top rate tax from 83% down to 60% , there was also a 50% rate , and then these were both scrapped in the late 80's and the top rate was 40%. We were told that the tax take from the rich increased as they now had the incentive to earn more.

Never believed that one (other than the "they might clear off abroad" part of it). For starters if you're earning enough to be regarded as rich then you'd better be working as hard as you can anyway - otherwise why are you getting to much, tax or no tax? More importantly it assumes that there's still some money to be made but people can't be bothered to. If you can see a way of getting a bit more then someone will do it. Anyway, the same people don't usually seem to be saying "Pay the poor more and they'll work harder."

[Authoritarian]

I believe cutting taxes usually increases tax take. At least when taxes are so high as now. The high taxes today stop so much economic activity from ever happening.

Absolutely, this is the real cost to the economy.

Not only are they taxing people out of work, but the mountains of red tape prevent capable people from starting up their own business which has the knock on effect of increasing inflation.

Calculating the loss is tricky, but the upshot is that millions of people are forced to hide their productive efforts from the state in case they fall foul of the taxation rules or other statute law. It hardly promotes an environment conducive to economic growth.

Edited July 6, 2010 by Chef

[right_freds_dead]

i think whats starting to really BUG me is how its no longer called the banking crisis, its called the deficit. almost like its 'just appeared' from nowhere land and that the money owed has vanished into thin air.

the money is there. you will find it in the banks pockets. those banks which collapsed should be closed and the shareholders take the loss. the huge losses. i like how they have been shared out with the 'deficit' and no mention of them again.

how about fred goodwin.? hes contributing to the deficit at the rate of 600k a year.

no one seems to want to cut that.

[lets get it right]

No. They were lying. It requires a degree of sophistry and a poker face to deploy a plausible argument that lowering taxes increases tax-take in the real world. Fine in opposition or when it's politically expedient to buy votes have give-away budgets, but when it comes to the crunch they know it's all just so much ********.

When the basic rate of income tax was progressively lowered from 33p to 22p - the tax take went up. Higher rates were slashed too.

[miko]

When the basic rate of income tax was progressively lowered from 33p to 22p - the tax take went up. Higher rates were slashed too.

Could that not be due to personal allowances not going up in line with earnings and inflation , thus people started paying tax at 22p in the pound where it should have been zero tax if their allowances had moved up in line with everything else.

If it is the case why did they not slash income tax more ?

Edited July 6, 2010 by miko