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Strange, having spent decades moving from a 'capital' based economy to one based on 'credit' they think tinkering with taxes is going to create growth. We are now encouraged to just pass the costs be they taxes or whatever to the next generation. The political classes have neither the stomach nor idea of the mess they've created. We need to get back to capital and start rewarding efficiency not profligacy.

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I've seen this film before.

They cut the taxes on the rich and those nasty unfair BTL taxes that the now discredited towel folder introduced.

But somehow parliament will too busy dealing with the fallout of Brexit to get around to introducing a tax on land use or reforming payroll taxes.

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Jeez - the Laffer curve.

When I was doing my economics degree we were taught this as unquestionable fact.

I thought it was simplistic even then, when 14 years of schooling had lead me to never question anything. 

The basic premise is wrong too. If a 100% tax rate leads to 0 tax return because there is no incentive to work then you fundamentally misunderstand the system that would be in place in a regime where a government could impose 100% tax levels.

Then there is the maths of the whole concept. If we imagine that all tax raised is through income tax collected in a flat tax system (and economists often do things like this that make no sense) and total economic output is £100b a year. Then at 50% collected income the government raises £50b each year. A 10% cut in tax rates, would, if nothing changes lead to £10b less being collected. So in order to match previous levels of government tax collection the economy would have to grow to £125b. We'd need 25% more hours worked at the same efficiency to make up for the tax cut. Or government spending to be reduced by 20% (from £50b to £40b).

The fact it is peddled by some think tank in a widely read newspaper in 2016 is pathetic.

 

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The Laffer Curve? An ideological abstraction illegitimately drawn through a terrible scatter of points that in reality cannot be represented by a curve at all. It's hardly surprising to see the Thatcherite goons at the IEA still pushing their discredited neolib agenda but you'd have thought they could come up with something a bit more current by way of justification.

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12 hours ago, interestrateripoff said:

And when the tax cuts run out of steam what then? The idea is to boost growth but I suspect it would merely manage further decline.

slash the red tape and over-regulation.

works way more effectively than tax cuts.

both frankly is a bonus, but I would much rather ply my trade in a place where I can be a bit "creative" ,than a place where I must follow every jot and tittle of an industrial(or employment law) specification to the letter.

it doesn't mean I'm trying to exploit prospective employees, it means that if I didn't have to pay for endless inspections,audits and so on to get a pretty little bit of paper with a nice pattern on, I could actually afford to pay the employees better than they presently are.

 

ultimately that should be a question for the market to decide.

will your business be:

1)totally gold standard for everything,but cost a fortune so only a small clique of people will be able to buy

2)total shite with no quality control,but you get what you pay for

3)"it's fairly decent" quality control,for a reasonable price that most people who express a desire can purchase,and does the job expected

 

sort of, ok is it rolls royce,skoda or bmw for you??

 

this is where britain has fallen down over the past few decades.

a hundred years ago, we did very good,world renowned products of decent quality for the 50%

now we do ultra gold standard for the 1%, and now even struggle to get "austin allegro" quality for the rest......UK companies need to reflect on this.

 

this is the laffer curve of quality versus volume.

Edited by oracle

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