Joensuu

The company I work for had a girl who refused to do any work. We warned her, and dismissed her by the book. She sued on grounds on racial prejudice, which frankly was never the case. The company settled out of court, as the c. £30k settlement was far cheaper than the legal cost of fighting the case. Just thought id point out that out of court doesn't always mean that the party settling is guilty.

In so much as we are both starting with a basic understanding of economics (at least I hope that is the case, but we can't be entirely certain, especially as the evidence in his own party's 'proposal' points to the contrary. And I fully agree with Pap on that point. VAT especially is a very counter intuitive tax; I'd happily see it scrapped except on products like alcohol, tobacco, gambling, fizzy drinks etc.

Really Wes? I'm actually a bit shocked that you think this is a point worthy of challenging me on. I'll point you in this direction: http://en.wikipedia.org/wiki/Laffer_curve I'll also give you a helpful scenario. At 80% tax someone earning £60k pa could easily find they save money if they hire an accountant. At 40% tax that same person would be spending more on account's fees than they could ever hope to save. As such, when you lower the tax rate, you are simultaneously increasing the amount of income you someone needs to be on before they would benefit from trying to avoid tax. As such, at a 80% tax rate, millions of people will find it worth their while to hire accountants and try to avoid tax; at 40% tax rate, only a few hundred thousand would benefit by doing the same. The problem is, as you push the top rate down much further, any savings that are made by a few thousand less people trying to avoid tax, would be dwarfed by the fact that you are asking millions of people to pay less overall. Seen as you like throwing challenges my way, can you point me to any evidence that cutting taxes below 45% can actually increase tax revenue? Examples from large mixed economies only please - and no tax havens don't count. Yes, you are right, but it is something that is being taken into account. The less money people have to spend, the higher the percentage of their income they spend. Conversely, the wealthier you are, the more you save. As such, reducing tax for the richest would see a ripple of investment (and a heck of a lot of 'assets' purchased); reducing tax for those in the middle or bottom would see a surge in spending. Of course, in your scenario, there's a magical tax cut for everyone. Which would see overall tax revenues rise (because of course in Wes-world tax revenues always increase the more they are cut eh?). Why don't we tax at 0% eh Wes? Surely in your view that would yield maximum revenues? NB, I'm finding this debate less and less interesting, primarily because you've got rather bitter in your language e.g "I understand that it is a leap of imagination too far for most of the left to make". This isn't helpful Wes. It doesn't add to the debate. It sounds suspiciously like someone lashing out in frustruation at being debated into a corner.

No, Lord D, I haven't fallen for any 'lines'. As you well know, when the tax is set far too high (say above 60%) reducing the rate will often see an increase in revenue. However, when the rate is below 50%, the incentive for tax avoiding is that much less, so reducing the rate is unlikely to see an increase in overall revenues, and will almost always lead to a fall in the total revenue. If we were talking about a 70% upper rate as opposed to a 40% one, I'd be inclined to agree with you. We're not, and reducing a 40% rate will see a fall in the overall revenue.

Wonder whether it will be Chelsea or Everton fans who are most concerned by this?

Good post Minty (as ever). Guess 'fairness' depends upon what people see as the fairer outcome. Is it fairer that everyone is taxed at the same rate, or fairer that those who can afford to contribute more pay extra to support those who can't? Irrespective, when compared to our current tax system, a flat tax would see the richest pay less. As such, either those who are poorer will need to pay more, or the total tax revenue has to be reduced. I can't see people who are already stretched at the bottom or middle of the system being able or willing to pay more, I can only conclude that a flat cap system would result in cuts to public services. Which services do people think we should cut to give the richest their 'fair' extra cash? Anyhow, here's an interesting read for anyone interested: http://www.huffingtonpost.com/mobileweb/dave-johnson/is-a-flat-tax-fair_b_1027601.html

Right, so UKIP are genuninely proposing a tax cut for all then? Sounds amazing. Everyone's a winner eh? So who pays for this? [NB, last time I challenged you with that, you suggested savings made from not being a member of the EU; which I've argued would be a loss at best. Of course I predict you'll suggested that the 20bn 'saved' will be enough to fund a tax break for all without considering the impact on the economy of leaving the EU. For sake of arguement lets go with the increadibly optimistic £20billion saved (without any knock on issues or losses scenario). If so, as Income tax levies are going down (funded by the £20billion saved from the EU), where does the money to ramp up spending on defence come from?]

Of course it is, that's why the proposal is in the UKIP policy section. As covered previously, UKIP know that they can't actually make this offical policy at it wouldn't stand up to scrutiny; but leaving it hanging in there with the policies will win them a few votes with the super wealthy. Interesting aside this one - which I don't think we've covered on here much. I know National Insurance is a fudge - it's just Income Tax by stealth. But when polled, our voters have a far more positive view of National Insurance than they do of Income Tax - hense why parties of all political persuasion have retained it. Genuinely don't know why UKIP want to scrap it - any ideas why? Right okay (did it mention what this theshold would be set at?). Fair enough, could you provide me with an accurate alternative? Who is paying more to fund the tax cut for the richest? Also, in the context of your above statement - please justifty how I'm wrong? Relative term - I'm not going to bore you with the offical definitions (happy to if you insist). In the context of this debate - UKIP's 'proposal' is it raise the basic rate of tax to 25%, while simultausly scrapping higher rates of tax. So for 'poor' you could more accurately read, anyone earning less than c. £40k pa. I guess I should have more accurately said tax cut for the c. 4million wealthiest; funded by a tax rise for the 25million least wealthy workers. Would that be fair enough?

Fair enough. I hope that in the eventuality that we leave the EU the German workers are indeed as benevolvent as you think they will be. They of course won't see it as those troublesome Brits trying to have their cake (German) and eat it will they? I'm sure their press will be urging restraint and good will to the Brits. I'm sure no citizen of mainland Europe would be even slightly miffed at Blighty whatsoever. If the shoe were on the other foot, I'm sure the Sun and Mail would be full of praise for whichever country had acted in their own self-interest and cost us a truckload wouldn't they?

Partially agree. Labour overspent, when if they were following Keynes (as the claim to) they would have been saving for the rain days. The Tories haven't been very effective - they are cutting enough to receive the public flack, and enough to kill growth; but not enough to actually be austere. They have IMO both done bad jobs. UKIP's proposal on tax would take much of the spare income away from the lower and middle paid. The wealthy would have more liquid cash; but I'm sure you'll agree, the wealthy you are the more you save, while convesly the poorer you are the more you need to spend (as a proportion of your income). In other words, if the wealthier have more of the liquid capital, how many shops will stuggle to survive as spending is reduced? I'd suggest the extra tax UKIP propose might leave our high streets even less varied (supermarkets + pawn brokers). How do you think that might effect the economy? If shops are closing, will employment stay flat? I agree that the lowest paid should be taken out of tax altogether. If nothing else it would make working vs benefits fare more economically viable. Flat taxes are used to great effect to kick start small or relatively young economies. Often, once kick-started, countries add additonal tiers to their tax system, normally because the divide between rich and poor has escalated (c.f. Iceland; Slovakia; Czech Republic). The problem with flat taxes is really quite simple. Set the bar too high and the least wealthy suffer; set it too high and govenment revenues collapse. UKIP's proposed 25% would be one of the highest flat tax rates in the world. In the UK c. 25million of our 30 million workforce would see a tax rise; only around 4 million of the top paid would see a tax cut. UKIP might argue that doing this will encourage people to innovate more; opponents will argue that the majority will have to work longer hours (if they can), or accept a drop in income. So would more entrepreneurs spawned if we make life tougher for the least wealthy? Surely if there are less people walking around with disposable cash lining their pockets, who are these entrepreneurs going to sell to? (the EU? cough?)

5% tax rise for anyone earning less than £40k pa. Who's in? Of course it's for their own good isn't it - they should look up to those who earn more money and aspire eh? All sound's very Victorian. In what way is a tax rise for people on less than £40k pa, coupled with a tax cut for anyone over £40k pa not taking from "the poor to pay the rich"? As you quite rightly say "Fairness doesn't come into it"

Irony can be a beautiful beast eh. I suggest the policy might not hold up to scrutany, and provide examples of flaws I can see; you 'defend' by dodging the points; I point this out to you; you (with examples); and you of course provide something tangible to back up your claims? Er, nope, you instead try to use comedy and attack the type of my arbitary selection of retail commodity. I have to admit, it is a successful debating style, used to great effect by such notables as Boris. Duck the tough questions with soundbytes and oblique attacks to force your opponent to defend themselves on all manner of peculiar side issues, rather than let them challenge you on the issue at hand. Good point, they shouldn't. Feel it's important to allow the 'boring, but accurate' side of the debate to get a hearing though - it so often gets overlooked by the red top papers shouting out their disgust. Okay, let's give you another tenuous example. Mr Tender is in a hospital being diagnosed; he can chose whether he would like to have him sympoms analysised by a team of experts; or throw it out the the public to see what they democratically think would be the best course for him. Who would you trust to give you the best chance of survival - the specialists; or the general public. Enjoy your homopathic treatment Wes.

German exports to UK 6.4% of c. £1000bn pa = c. £64bn pa. UK exports to Germany c. £30bn pa. So, yes, if Germany acted idependenty of the EU the impact on them would exceed the impact on us. A couple of points: 1) I am not suggesting Germany would act independent of the EU - the union would act as a whole. 2) The above numbers assume that trade would continue at the current levels - changing import duty would change the amount of trade conducted. It's impossible to substantiate, but I honestly believe the UK would have more requirement to continue importing from Germany than Germany would from the UK. Also see my response to goneawol above. Put yourself in Merkel's shoes. The UK have just caused you a massive problem. Germany has invested in the EU up to the hilt; and now someone has to make up the shortfall. How do you react? Denmark, say, are threatening similar - do you roll over and face the wrath of your angry voters, or send a message to the UK and others that you won't be messed with? I can't see a way that any German leader could possibly let us walk without some form of reprecussions. Their voters simply wouldn't stand for it. Can you see anything else that a German leader could sensibly do?

Yup. We import a lot more from the EU, than we export, so of course the EU as a whole would take a bigger hit than we would. However, the EU isn't a single federal state. Each country would be considering their own profit and loss if/when they decide to clamp down on the UK. Ireland are the only individual country that would take a bigger hit than us from our leaving the EU. The hit on say, Germany or France individually would be small compared to the hit we'd take. Of course, that isn't factoring in the potential gains French or German companies could make at the expense of (suddenly) expensive UK-based traders.

I can't think of much - but we must export $479bn worth of something. (NB, £479bn is less than 1/3 of Germany's total exports. What is wrong with our country? Are we too insular and protectionist?)

Sorry Wes, but when challenged over UKIP policy, instead of trying to defend it you've instead (bizarrely) attacked Lib Dem policy instead. When confronted over the ludicrous nature of the UKIP flat tax (aka tax cut for the rich paid for by the poor and middle), you argued that it is only a proposal an not official policy (which is a duck and weave if ever I've seen one). Now UKIP supporters (admittedly yourself excluded) are being confronted with cold economics about what is likely to happen if we quit the union, and instead of trying to think about or answer the points raised they avoid them again with ducks and dives like " no long posts, or highlighting points will change that". Looking at the evidence on this thread, one could only sensibly conclude that UKIP's policies would result in economic disaster.

See my post you quoted ("Germany exports c. £68bn to the UK per annum; we export c. £140bn to the EU per annum"). Yes, Germany would suffer, but not anywhere near as much as the UK. Do you honestly think they wouldn't want blood? Moreso, many EU products would still be purchased by UK consumers, despite the price hike (think VW, Mercedes, BMW, Bosch etc). What British products would EU consumers continue to lap up despite the extra cost? Err? Banking? Quite simply, I'm sure Germany would take a hit from slapping an Import tax on our goods; but we would take a massive chunk out of our economy overnight. Germany companies might even find they can take advantage by taking over from UK companies in exporting goods to the rest of the EU.

Will Canada have ever renegotionated, then pulled out of an commitment they've previously made with the EU - costing the union billions?

Interesting. This sounds like good solid anti-EU avoiding the question to me. "It's not our policy, it's a proposal" "yeah, but, well erm, sometimes the [insert rival party here] economics don't add up either" "The only problem with this country is all the immigants coming ere stealing our jobs; but no way am I going to work as a bus driver, bin man etc on minimum wage, can't some [insert nationality] do that for me?" "Germany wouldn't penalise us in any way, for sticking our fingers up at them and the union they have spent decades fostering" Let's face it, UKIP don't like to be scrutinised - as their egg-shellesque logic has nothing whatsover to suppot it.

So you think that they'd be happy with us leaving without removing the free trade perks? Let's face it politics can get very petty, there is no way Germany would let us leave without penalty. That penalty would be their standard 17% import tax being applied to our c. £140bn annual exports to the EU. Let's give you an example. Your run a company exporting, let's say pencil sharpeners (but it could be anything), you sell your pencil sharpeners to a German company at, say, £1 per unit. You have strong competition from rival firms in, say, Portugal and Estonia, both of whom produce a similar quality product for a similar price - but your firm manages to sell to the German company thanks to your slick marketing. UKIP pull us out of the EU, and in anger, the EU slaps a 17% levy on all our exports to the zone. Suddenly at £1.17 a unit, your pencil sharpeners aren't as attractive to your German (now ex-) customer. Let's look at it another way. Germany exports c. £68bn to the UK per annum; we export c. £140bn to the EU per annum. While overall the EU would just be spiting themselves if they introduced import tax on UK exports, each individual country would loose far less the the UK would (only exception being Ireland). Would Germany press for a penalty if we pulled out of the EU, you bet they would (how could they not?). Would they opt for a penalty that damages us more than it damaged them - of course. Let's face it, it's hard to predict the loss of trade the the UK would face; but anything greater than a 10% loss of trade would start to easily outweight any financial benefit that pulling out of the EU could potentially bring. And that's not even considering out loss of influence on the International stage (both in terms of trade and political influence) e.g. a firm in, say, Indonesia want to establish a relationship with a European importer - how could the UK compete outside the EU? A Croatian want's to fly to the States - do they transfer at Heathrow or have a lower-taxed fare via Frankfurt or Schiphol? I thought right-wingers were against protectionism and pro free trade - but yet when it comes to EU membership many seem to forget their economic principles. Does xenophobia really trump economics? (Oh yeah, that's right, some of you seriously think we can just simply up sticks and leave the EU without penalty.) So, lets pose a question to the anti-EU lobby - If it were made clear by the EU that if the UK leaves we wouldn't continue to benefit from free-trade agreements (i.e. made clear that our economy would definately suffer more than it would gain), would you still want to leave the EU? (and if so, what would be your motivation?)

Personally, I think the general public should never vote on single issue referendum. They do a reasonable job on multi issue elections, but I feel that single issue decisions need to be made by experts in that subject area. To be honest im not sure that MPs have the requisite knowledge for some of the decisions they take; a cross section of experts in a given field might be best expected to make a sensible decision on a given subject. So in the context of EU membership, a panel of economists and perhaps experts in foreign policy might reach the most appropriate solution.

Lord D, you and I both know that a referendum on EU membership would see the majority vote us out of the club. They would do so on a heady mix of xenophobia and half-baked ideas about bureaucracy, political correctness, and the 'massive' cost of our membership. This would be fueled by the overwhelmingly jingoistic press, who no doubt would also lay in to the BBC for being impartial, when Panorama hosts a non-partisan investigation of the actual facts. The net result would see our business exports take a substantial hit, as suddenly 40% of our exports would be hit with tax, and find themselves quickly unable to compete on a level pegging with competition within the EU zone. On the international circuit, we'd be held up as at best a black sheep, and at worst as somewhat of a pariah. For every pound we'd save from membership costs, at least £5 would be lost from the turnover of our exporters. The ensuing self-inflicted recession would be longer and deeper than the one we are currently struggling to overcome. That is why no party would offer a referendum, never in a month of Sundays as you so eloquently put it. Question is, if UKIP ever did get themselves into a position of real power, would they really be stupid enough to go ahead with their threats? You've got to hope that they'd find some reason to avoid pulling out once they actually start to think about the economics of the situation. One has to hope that there is some sanity within? Perhaps I hope too much. Agreed, the Tories would never see power again if they were to actually pull us out of the EU.

Nice idea Wes, but do you honestly think Germany and France are going to sit back and let us stop paying for membership, but retain the perks? Surely if we suddenly announced an end to our membership, Germany might just end the open borders and free trade that we currently thrive off of. I'd suggest that the economic disadvantages of terminating our membership payments would far outweight the relatively insignificant £15-20billion pa we are currently comitted to. Why do you think successive Tory governments have spoken a hard line about Europe, but nevet once came close to pulling the plug? The answer lies in economics, not in the vote winning rhetoric.

Strange how the UKIP supporters can't think of a way to defend their chosen party, so instead try to attack others. Why not start a thread on Lib Dem policy if you're that interested in discussing it?

Take for example this laughable part "The flat rate of 25%...". In plain English that's a tax rise of 5% for everyone earning under c. £40k pa; funded by a significant tax cut for everyone earning over c. £40pa. If that's not loopy, I don't know what is. Which part of taxing the poor more to pay for the rich to have a tax cut do you agree with in principle? Interesting avoidance tactic there Wes; can't defend the indefensible, so lets go on the attack eh? We aren't discussing Lib Dem tax policies here, even though, let's face it, they add up which UKIP's most certainly don't. Anyhow, as I'm not a Lib Dem, I'm not sure what you are attempting to achieve by constantly trying to return the debate to them. Are you suggesting that Labour or the Lib-Dems have actively opened new loopholes that weren't already there? Also, why not include the Tories in with other two? Surely they are more culpable than the Lib Dems, and at least on a par with Labour for any loopholes in the existing tax system. Not blind to the Lewis Hamilton's of this world, and feel that the very wealthy should be made to pay fair taxes. I would suggest a rule that any money earnt in the UK must pay tax in the UK, irrespective of where a company is registered or person lives. For example, a Lord pretending to live in Belize should pay UK tax rates for any money he earns within these borders. Fair? You seem confused Wes. Has it ever crossed your mind that some people hold political beliefs, but don't get into bed with a political party? I am a liberal - (lower case 'l'), this means I believe in liberal values, and has nothing to do with any political party that exists or has existed. Who I vote for depends upon which party offers the closest package to my personal values. I actually feel the Green party are closer to my values than the Lib Dems. However, as the Greens don't stand in my seat, you are generally right, I have pretty straight choice of Lib Dem or abstention at the moment. Not at all. I recognise that many people vote tactically. When I lived in the Sheffield I tactically voted Labour, and arranged online for a Lib Dem vote to be cast in my name in another seat. So I guess you could say, all parties receive tactical votes. I am under no illusions that there are enough liberals in the country to actually vote a party to power; liberals will always be in the minority, (unless some miracle cure for stupidity is discovered). Here's an interesting read if you have time to kill http://www.psychologytoday.com/blog/the-scientific-fundamentalist/201003/why-liberals-are-more-intelligent-conservatives Never going to happen. Doing so would be economic suicide. It would also mess up most of our foreign policy. The Tories might buffoon about, but they aren't daft enough to actually cut off their own nose to spite their own face. Economic common sense will prevail.