IMF study finds inequality is damaging to economic growth

[Ex Lion Tamer]

http://www.theguardian.com/business/2014/feb/26/imf-inequality-economic-growth

 

What say our resident forum economic experts? Will the penny finally drop that the argument against taxing the rich is an ethos propagated by the rich themselves for personal gain, rather than something that is rooted in reality?

[Sour Mash]

http://www.theguardian.com/business/2014/feb/26/imf-inequality-economic-growth

 

What say our resident forum economic experts? Will the penny finally drop that the argument against taxing the rich is an ethos propagated by the rich themselves for personal gain, rather than something that is rooted in reality?

So where do you categorise the UK? As a redistibutor or not?

[Ex Lion Tamer]

So where do you categorise the UK? As a redistibutor or not?

 

Well the UK has a high level of inequality compared to most countries, so we're obviously not redistributing enough.

 

Also this article says: "In the most controversial finding, the study concludes that redistributing wealth, largely through taxation, does not significantly impact growth unless the intervention is extreme." I don't think our tax levels would be classed as extreme.

[solentstars]

http://www.theguardian.com/business/2014/feb/26/imf-inequality-economic-growth

 

What say our resident forum economic experts? Will the penny finally drop that the argument against taxing the rich is an ethos propagated by the rich themselves for personal gain, rather than something that is rooted in reality?

no surprise to me thats why the super rich fund political partys and newspapers to propagate the view they are hard done by and rubbish like trickle down economics. from the 1950s to the late 1970s the gap was shrinking between rich and poor and it makes more sense to put money in to the bottom and middle income groups to spend rather than those who are just adding to there pot and avoiding tax all together.

[Sour Mash]

Well the UK has a high level of inequality compared to most countries, so we're obviously not redistributing enough.

 

Also this article says: "In the most controversial finding, the study concludes that redistributing wealth, largely through taxation, does not significantly impact growth unless the intervention is extreme." I don't think our tax levels would be classed as extreme.

So how much should we tax people? Why is inequality such a bad thing?

[hutch]

Well the UK has a high level of inequality compared to most countries

I see the way you slip that piece of nonsense in as if it some kind of fact.

[Barry Sanchez]

I'm all for paying higher taxes if it means better public services.

[Barry Sanchez]

I see the way you slip that piece of nonsense in as if it some kind of fact.

 

For a developed Country it certainly does, should we compare ourselves to Nepal to prove a point or a Country with similar wealth?

[Sour Mash]

I'm all for paying higher taxes if it means better public services.

How much higher?

[Barry Sanchez]

How much higher?

 

I would happily pay 30% (we pay 25% now) possibly more if it was all transparent.

[pap]

I'm in favour of a flat tax. Make it simple. Make it honest. Make tax accountants redundant. Nothing will stimulate an economy like people knowing exactly how much they have to spend.

 

It's the multi directional attacks and constant nibbling that grates with taxation.

[aintforever]

It makes sense to me, I've never got the argument that higher taxes is a disincentive to do well, you still earn more the better you do whatever the rate is. If you are that greedy that you object to paying tax then every little extra you earn after tax will be an incentive.

 

Also the idea that loads of people will move abroad if the tax rate is high is a bit fanciful, I know plenty of people in the top tax bracket and there is no way they would move abroad in a million years, their friends, family and whole life is in this country. Of course some in the city may but there can be other incentives to be here, plus these c*nts usually run rings around tax laws anyway.

[Sour Mash]

I would happily pay 30% (we pay 25% now) possibly more if it was all transparent.

So you wouldn't want to pay 35/40/45%? That's pretty understandable to be fair.

[Barry Sanchez]

So you wouldn't want to pay 35/40/45%? That's pretty understandable to be fair.

 

You asked a question and I answered it.

[Sour Mash]

You asked a question and I answered it.

Yes, thanks for answering, it is my error for assuming your first post was in support of people paying 35%+ income tax.

[Barry Sanchez]

Yes, thanks for answering, it is my error for assuming your first post was in support of people paying 35%+ income tax.

 

Of course they should over a certain amount, social duty I believe its called. If tax was more transparent and people saw what it was spent on then I believe they would not be as reluctant to pay it.

[Sour Mash]

Of course they should over a certain amount, social duty I believe its called. If tax was more transparent and people saw what it was spent on then I believe they would not be as reluctant to pay it.

So you think some should pay over 30%, but you don't want to yourself. Not very equal.

[Barry Sanchez]

So you think some should pay over 30%, but you don't want to yourself. Not very equal.

 

So you believe in a flat rate for all?

[Ex Lion Tamer]

Why is inequality such a bad thing?

 

If too much money is concentrated at the top, then the middle and working classes don't have as much to spend on goods and services, so companies are less likely to be profitable, and the economy is less likely to grow.

[Sour Mash]

So you believe in a flat rate for all?

I don't mind a small increase for those that are extremely wealthy.

[melmacian_saint]

See what I'm afraid the IMF does not mention is that fact that inequality has increased in recent years not primarily because people are earning more while others are earning less in terms of their income, but because the value of what those at the top end earn/possess has increased in value, as most have their wealth invested in funds and shares in the overinflated stock markets.

 

That is what is morally incorrect. To value something merely by the amount of loan (i.e.not owned) money a bunch of loonies pump into it. This makes any of the textbook redistributive policies void, as they do not touch one part of the economy. They focus on "real" items, while the majority of the untaxed wealth is in the credit cloud of the stock markets which no longer rely on the real economy to grow and create value, but on the self-generating capabilities (god knows how?) of its suppliers (i.e.the banks, which have effectively become slot machines).

 

Of course the IMF, allied to the big players as it is, will not admit this. We have seen increases in VAT, many troubled countries in Europe have seen their taxation increase (both directly and indirectly) with no real improvement, but the financial deregulation and its loopholes that are harming the economies in developed countries remains unchanged. Meanwhile we can keep discussing how horrible food banks are and how we should increase government spending and impose taxes on people. In the end it will only touch a majority but no THE majority.

[Barry Sanchez]

So how much should we tax people? Why is inequality such a bad thing?

 

Because equality should be one of major aspriations for us as human beings, dont confuse fairness with equality, two different things.

[Sour Mash]

If too much money is concentrated at the top, then the middle and working classes don't have as much to spend on goods and services, so companies are less likely to be profitable, and the economy is less likely to grow.

On the basis that there is an 'upper' class, they will always have more money than the middle and lower classes - do you want that wiped out?

 

If someone has worked 50% harder than you, should they not receive 50% more return?

[Sour Mash]

[/size]

 

Because equality should be one of major aspriations for us as human beings, dont confuse fairness with equality, two different things.

So one of your main aspirations in life is that every member of the human race owns and earns exactly the same?

[Barry Sanchez]

On the basis that there is an 'upper' class, they will always have more money than the middle and lower classes - do you want that wiped out?

 

If someone has worked 50% harder than you, should they not receive 50% more return?

 

Of course they should why shouldn't they? What you are saying is different though is it not? You are using money and an amount to say someone who earns more works harder which is absolute rubbish.

[pap]

Realistically, the tax burden is approaching 50% anyway, once you add everything up, especially if you drink, drive, smoke, live in a house or buy things other than food. I suspect a big reason that the government won't entertain a flat tax is because they don't want you knowing what that burden is.

 

Thing is, it'd vastly simplify stuff. Individual, corporation or whatever - the tax rate is the same. As I said before, they should just come clean, let us know what the figure is and get on with it. I used to be hugely in favour of progressive tax systems, but as I was saying to bletch earlier, I write systems - people never use them the way you intend.

[Barry Sanchez]

So one of your main aspirations in life is that every member of the human race owns and earns exactly the same?

 

No, stop thinking about money for a moment, being treated equal. The concept that we regardless of class, religion and race are all treated equally, I made no mention of money in that regard.

[Sour Mash]

Of course they should why shouldn't they? What you are saying is different though is it not? You are using money and an amount to say someone who earns more works harder which is absolute rubbish.

No I haven't said that. You keep getting confused and make things up.

[Barry Sanchez]

No I haven't said that. You keep getting confused and make things up.

 

No, no I dont think so, you asked a question and I answered it, your confusion started there:lol:

[Sour Mash]

No, no I dont think so, you asked a question and I answered it, your confusion started there:lol:

Ah yes, that more tax should be paid, just not by you.

[Sour Mash]

Realistically, the tax burden is approaching 50% anyway, once you add everything up, especially if you drink, drive, smoke, live in a house or buy things other than food. I suspect a big reason that the government won't entertain a flat tax is because they don't want you knowing what that burden is.

 

Thing is, it'd vastly simplify stuff. Individual, corporation or whatever - the tax rate is the same. As I said before, they should just come clean, let us know what the figure is and get on with it. I used to be hugely in favour of progressive tax systems, but as I was saying to bletch earlier, I write systems - people never use them the way you intend.

We pay even more tax than that - think of the price of food - how much of that cost is made up of tax? They've got no idea what the figure is.

 

Isn't there not a political argument between the merits of direct and indirect tax?

[Ex Lion Tamer]

On the basis that there is an 'upper' class, they will always have more money than the middle and lower classes - do you want that wiped out?

 

If someone has worked 50% harder than you, should they not receive 50% more return?

Its such a hilarious misconception to think that the amount people earn correlates to how hard they work. Upbringing, education, innate intelligence, luck, mental health and chosen industry are all just as important, if not more.

 

Also, your first point is confusing. No one is saying that there shouldn't be some people with more money than others - just that the gap needs to be reduced.

[Sour Mash]

Its such a hilarious misconception to think that the amount people earn correlates to how hard they work. Upbringing, education, innate intelligence, luck, mental health and chosen industry are all just as important, if not more.

 

Also, your first point is confusing. No one is saying that there shouldn't be some people with more money than others - just that the gap needs to be reduced.

What is a 'hilarious misconception' is your inability to understand or answer a basic question. I haven't once suggested that hard work is the only correlation to earning ability.

 

As for your 2nd point - so you're happy for 'inequality' to exist, you just want it to be a different amount.

[Barry Sanchez]

Ah yes, that more tax should be paid, just not by you.

 

Er where did I say that, a base rate for all could be 30% and I would be happy to pay that starting off yes if it was transparent it could work I believe.

[Barry Sanchez]

On the basis that there is an 'upper' class, they will always have more money than the middle and lower classes - do you want that wiped out?

 

If someone has worked 50% harder than you, should they not receive 50% more return?

 

Clear this up for us then as it obviously is a load of confused rubbish.

[Ex Lion Tamer]

What is a 'hilarious misconception' is your inability to understand or answer a basic question. I haven't once suggested that hard work is the only correlation to earning ability.

Your question clearly implies that you think that people should be paid 50% more for working 50% harder. But due to all the other factors, such a system is impossible. So why ask the question?

 

Also, how does someone work 50% harder than someone else? How do you measure that?

 

 

As for your 2nd point - so you're happy for 'inequality' to exist, you just want it to be a different amount.

Yes, you clearly take things very literally if you thought I wanted everyone in the UK to earn exactly the same amount of money.

Edited 27 February, 2014 by Ex Lion Tamer

[Sour Mash]

Your question clearly implies that you think that people should be paid 50% more for working 50% harder. But due to all the other factors, such a system is impossible. So why ask the question?

 

Also, how does someone work 50% harder than someone else? How do you measure that?

 

 

Yes, you clearly take things very literally if you thought I wanted everyone in the UK to earn exactly the same amount of money.

It really wasn't a difficult question

[Ex Lion Tamer]

Realistically, the tax burden is approaching 50% anyway, once you add everything up, especially if you drink, drive, smoke, live in a house or buy things other than food. I suspect a big reason that the government won't entertain a flat tax is because they don't want you knowing what that burden is.

 

Thing is, it'd vastly simplify stuff. Individual, corporation or whatever - the tax rate is the same. As I said before, they should just come clean, let us know what the figure is and get on with it. I used to be hugely in favour of progressive tax systems, but as I was saying to bletch earlier, I write systems - people never use them the way you intend.

I take the point that it would reduce tax avoidance but I can't help feeling it would nevertheless lead to either far lower total tax revenues or a far greater burden on the poor, depending what level it is set at. Willing to see any evidence otherwise

[Ex Lion Tamer]

It really wasn't a difficult question

 

Er ok, the answer to your question is yes, I do think someone who works 50% harder should get 50% more money.

 

If we could measure the amount of hard work that, for example, a nurse does, and ensure they earn the same as a investment banker who works that hard, that would be great. But such a system is literally impossible, so I don't understand why you asked the question.

[Whitey Grandad]

I'm in favour of a flat tax. Make it simple. Make it honest. Make tax accountants redundant. Nothing will stimulate an economy like people knowing exactly how much they have to spend.

 

It's the multi directional attacks and constant nibbling that grates with taxation.

 

Good grief. Pap and I are in total agreement on something.

[pap]

We pay even more tax than that - think of the price of food - how much of that cost is made up of tax? They've got no idea what the figure is.

 

Pretty much every part of that supply chain is going to involve fuel duty of some kind. That's why fuel duty is such a huge lever.

 

Isn't there not a political argument between the merits of direct and indirect tax?

 

People reckon that VAT is good because we get money from foreigners. That's not really true. Fellow EU citizens have to pay it whatever, but people from outside the EU can go to tax free outlets, buy all their stuff, and get a rebate from the HMRC.

 

There is a definite case for taxation on beer and cigarettes. If you're going to risk your health, you should bear some of the burden of maintaining it. Smokers make more money for the government than they cost.

 

I take the point that it would reduce tax avoidance but I can't help feeling it would nevertheless lead to either far lower total tax revenues or a far greater burden on the poor, depending what level it is set at. Willing to see any evidence otherwise

 

Much of the indirect taxation we have is regressive anyway, the aforementioned VAT being a good example. No-one gets away from that. Russia did very well out of implementing flat taxation:-

 

The Russian Federation is a considered a prime case of the success of a flat tax; the real revenues from its Personal Income Tax rose by 25.2% in the first year after the Federation introduced a flat tax, followed by a 24.6% increase in the second year, and a 15.2% increase in the third year.^[16] The Laffer curvepredicts such an outcome, attributing the primary reason for the greater revenue to higher levels of economic growth stemming from the introduction of the flat tax.

http://en.wikipedia.org/wiki/Flat_tax#Revenues

 

Good grief. Pap and I are in total agreement on something.

 

Happens more often than you like to admit, Whitey G. This is about the third time you've made such a pronouncement

[Ex Lion Tamer]

Much of the indirect taxation we have is regressive anyway, the aforementioned VAT being a good example. No-one gets away from that. Russia did very well out of implementing flat taxation:-

 

The Russian Federation is a considered a prime case of the success of a flat tax; the real revenues from its Personal Income Tax rose by 25.2% in the first year after the Federation introduced a flat tax, followed by a 24.6% increase in the second year, and a 15.2% increase in the third year.^[16] The Laffer curvepredicts such an outcome, attributing the primary reason for the greater revenue to higher levels of economic growth stemming from the introduction of the flat tax.

http://en.wikipedia.org/wiki/Flat_tax#Revenues

You left out the next paragraph:

 

"The Russian example is often used as proof of the validity of this analysis, despite an International Monetary Fund study in 2006 which found that there was no sign "of Laffer-type behavioral responses generating revenue increases from the tax cut elements of these reforms" in Russia or in other countries"

 

And even if there was, what was the effect on inequality and the poorest?

[Sour Mash]

Er ok, the answer to your question is yes, I do think someone who works 50% harder should get 50% more money.

So you do believe in a flat rate of income tax for everyone regardless of how much they earn.

[pap]

You left out the next paragraph:

 

"The Russian example is often used as proof of the validity of this analysis, despite an International Monetary Fund study in 2006 which found that there was no sign "of Laffer-type behavioral responses generating revenue increases from the tax cut elements of these reforms" in Russia or in other countries"

 

And even if there was, what was the effect on inequality and the poorest?

 

Yeah, and you skipped over my points about VAT being a regressive tax; lump fuel duty in with that. Whether the Laffer curve applies or not (whatever that is), the Russian tax take rose year on year.

[Ex Lion Tamer]

Yeah, and you skipped over my points about VAT being a regressive tax; lump fuel duty in with that. Whether the Laffer curve applies or not (whatever that is), the Russian tax take rose year on year.

 

I agree that VAT is a regressive tax and would reduce it, but my main point is that i wouldn't replace income tax with a flat tax. I don't know enough about the Russian example to know if that's what they did or not. I assumed they replaced all taxes.

 

Tax take could have risen for any number of reasons though, and the imf report suggests the the flat tax wasn't the cause

[angelman]

http://www.theguardian.com/business/2014/feb/26/imf-inequality-economic-growth

 

What say our resident forum economic experts? Will the penny finally drop that the argument against taxing the rich is an ethos propagated by the rich themselves for personal gain, rather than something that is rooted in reality?

 

The problem is that there are too many chippy people who don't realise who pays taxes in this country. I use the BBC article as their political stance is well known. So the top 1% of earners pay 24% and the next 9% of earners pay 29%. So what would you want the top 10% of earners pay? Is 53% not enough, or would you prefer they pay 100% and (being presumptuous that you aren't in the top 10% bracket) you pay nothing? Then to that, you might want to add that 53% of households are net recipients of State handouts (ie they get more back than the amount of tax they pay). http://www.cps.org.uk/publications/reports/the-progressivity-of-uk-taxes-and-transfers/. Are you one of these 53% - puts a bit of a different slant on things doesn't it?

 

Personally, I would look towards corporations to pay more, or at least a fair share. The first thing that I would get rid of are these ridiculous inter-company loans that multinationals undertake between their UK operations and parent in low tax countries.

Edited 27 February, 2014 by angelman

[teamsaint]

The problem is that there are too many chippy people who don't realise who pays taxes in this country. I use the BBC article as their political stance is well known. So the top 1% of earners pay 24% and the next 9% of earners pay 29%. So what would you want the top 10% of earners pay? Is 53% not enough, or would you prefer they pay 100% and (being presumptuous that you aren't in the top 10% bracket) you pay nothing? Then to that, you might want to add that 53% of households are net recipients of State handouts (ie they get more back than the amount of tax they pay). http://www.cps.org.uk/publications/reports/the-progressivity-of-uk-taxes-and-transfers/. Are you one of these 53% - puts a bit of a different slant on things doesn't it?

 

Personally, I would look towards corporations to pay more, or at least a fair share. The first thing that I would get rid of are these ridiculous inter-company loans that multinationals undertake between their UK operations and parent in low tax countries.

 

the BBC are very fond of this kind of stat, especially Nick Robinson.

However, it is completely meaningless, in terms of fairness, unless you compare the tax they pay to the income they "Earn".

 

 

Another issue of course, is what the very wealthy, (top 0.1% ?) do to move their income around and sheild it from tax altogether).

[pap]

the BBC are very fond of this kind of stat, especially Nick Robinson.

However, it is completely meaningless, in terms of fairness, unless you compare the tax they pay to the income they "Earn".

 

 

Another issue of course, is what the very wealthy, (top 0.1% ?) do to move their income around and sheild it from tax altogether).

 

And we're still very much designed to make that happen. The British Empire, as constituted today, is us and a collection of tax havens.

[holepuncture]

Realistically, the tax burden is approaching 50% anyway, once you add everything up, especially if you drink, drive, smoke, live in a house or buy things other than food.

 

We pay even more tax than that - think of the price of food - how much of that cost is made up of tax? They've got no idea what the figure is.

 

Isn't there not a political argument between the merits of direct and indirect tax?

 

I believe the target gross tax take per person is about 70% all in when VAT, fuel duty, vehicle excise and the rest are accounted for!

[buctootim]

There is also a lot of evidence that wealthy people relocate to those countries / cities where there is less obvious poverty, low crime, strong justice system, low corruption etc - and those are features of a more not less equal society.