2022 mini-budget discussion

Freakbro · 25 Sep 2022 at 10:20

The irony about @Besty 's posts defending the ideology of these cuts, which are well thought out and reasoned (the posts not the cuts

) is that even after these, he's still off to Spain - so that worked well then!

Yes, the even lower tax system being proposed has been a motivator for him but he acknowledged that the deciding factor is house prices.

Devilman · 25 Sep 2022 at 10:21

delta0 said:
The top rate of tax was an absolute killer back in the 70s. It caused a huge brain drain and ultimately finished off the UK (a lot of my family and others moved abroad). The fix back then was to reduce this to make the UK competitive again which is what happened.

So what's the excuse for lowering them this time? It's already been discussed several times already but in case you missed it.....

Freakbro said:
But they aren't high, and weren't high before these cuts. Our overall tax take was still below the average of the G7 and OECD and its not like all there's been a flight of all the high earners from the Countries with higher taxes either. Its almost like a few % here and there isn't the overriding decision of where people want to live and work.

delta0 · 25 Sep 2022 at 10:22

Freakbro said:
But they aren't high, and weren't high before these cuts. Our overall tax take was still below the average of the G7 and OECD and its not like all there's been a flight of all the high earners from the Countries with higher taxes either. Its almost like a few % here and there isn't the overriding decision of where people want to live and work.

Despite having some of the highest taxes we take below average. That’s worrying.

Freakbro · 25 Sep 2022 at 10:27

delta0 said:
Despite having some of the highest taxes we take below average. That’s worrying.

When I say tax take I wasn't meaning in actual terms, but as a % of GDP where we are below average. So no, we don't have high taxes compared to other countries.

delta0 · 25 Sep 2022 at 10:34

Freakbro said:
When I say tax take I wasn't meaning in actual terms, but as a % of GDP where we are below average. So no, we don't have high taxes compared to other countries.

We have very high taxes compared to our historical numbers (70 year high) and higher than other economies like the US. We also have a growth problem here and pulling taxes down will help address that.

The Laffer Curve Wreaks Havoc in the United Kingdom

VideoBack in 2010, I excoriated the new Prime Minister of the United Kingdom, noting that David Cameron was increasing tax rates and expanding the burden of government spending (including an increase in the capital gains tax!). I also criticized Cameron for leaving in place the 50 percent income...

www.forbes.com

Murphy · 25 Sep 2022 at 10:41

delta0 said:
We have very high taxes compared to our historical numbers (70 year high) and higher than other economies like the US. We also have a growth problem here and pulling taxes down will help address that.

The Laffer Curve Wreaks Havoc in the United Kingdom

VideoBack in 2010, I excoriated the new Prime Minister of the United Kingdom, noting that David Cameron was increasing tax rates and expanding the burden of government spending (including an increase in the capital gains tax!). I also criticized Cameron for leaving in place the 50 percent income...

www.forbes.com

If that were true then why do countries like France, Germany, Austria, and Norway have higher taxes per capita than us and higher or similar total tax revenue as share of GDP.
(Source)

jpaul · 25 Sep 2022 at 10:43

Murphy said:
Honestly i find it surprising that some people still hold onto the idea that if we tax the rich more they'll leave because if you spend more than 5min thinking about it it's so obviously not true and even if it was why would anyone care. If we apply the same logic to everyone, the logic that less money will dissuade people from working in this country,

Lizzy now couched relaxing immigration (sleeper remainer, a double agent?) which should help, more, attracting well off people to live (long term placements) ,
just have to ensure there are some industry here they are attracted to work for ~~NHS wages, university research funding, high-tech(eg arm), cars/battery industry,~~ pharma(Moderna)

Hedge · 25 Sep 2022 at 10:48

This whole thing has just made me go from feeling my pay was OK to now feeling my pay is crap and I want a new job like some of these ballers!

delta0 · 25 Sep 2022 at 10:51

Murphy said:
If that were true then why do countries like France, Germany, Austria, and Norway have higher taxes per capita than us and higher or similar total tax revenue as share of GDP.
(Source)

The laffer curve is different for every country. We suffer here from extremely low investment and very sudden high taxes which disincentivise economic activity. As soon as earning cross a certain amount we see more people from our company request transfers to Switzerland, US or Singapore. We need those people here paying taxes and we need news ones to come here to do that.

delta0 · 25 Sep 2022 at 10:53

jpaul said:
Lizzy now couched relaxing immigration (sleeper remainer, a double agent?) which should help, more, attracting well off people to live (long term placements) ,
just have to ensure there are some industry here they are attracted to work for ~~NHS wages, university research funding, high-tech(eg arm), cars/battery industry,~~ pharma(Moderna)

Funny you mention those professions. That’s getting addressed in the next budget. A lot of NHS and other high pension sectors are retiring early due to crossing the max lifetime tax free limit for pension contributions. Tech is also going to be boosted by these tax changes and any other high value, high growth areas.

Devilman · 25 Sep 2022 at 10:53

delta0 said:
The laffer curve is different for every country. We suffer here from extremely low investment and very sudden high taxes which disincentivise economic activity. As soon as earning cross a certain amount we see more people from our company request transfers to Switzerland, US or Singapore. We need those people here paying taxes and we need news ones to come here to do that.

Surely if this is the problem, then the market response to the "mini-budget" would have been positive, as it would surely have incentivised economic activity?

However, the markets very clearly showed what they thought of the plan and it most certainly was not positive.

delta0 · 25 Sep 2022 at 10:55

Devilman said:
Surely if this is the problem, then the market response to the "mini-budget" would have been positive, as it would surely have incentivised economic activity?

However, the markets very clearly showed what they thought of the plan and it most certainly was not positive.

It’s not the tax changes it’s the borrowing to cap energy costs they are worrying about.

Devilman · 25 Sep 2022 at 10:58

delta0 said:
It’s not the tax changes it’s the borrowing to cap energy costs they are worrying about.

You seem to be overlooking the fact that by reducing tax intake, they will have to borrow EVEN MORE to make up for that lost tax revenue.

So while it's true, the cap to energy prices had some effect - that has been known about for weeks now and only when the "mini-budget" was announced with it's tax cuts (and therefore additional borrowing required to offset the lost tax revenue) did the market respond in such a negative manner.

delta0 · 25 Sep 2022 at 11:00

Devilman said:
You seem to be overlooking the fact that by reducing tax intake, they will have to borrow EVEN MORE to make up for that lost tax revenue.

So while it's true, the cap to energy prices had some effect - that has been known about for weeks now and only when the "mini-budget" was announced with it's tax cuts (and therefore additional borrowing required to offset the lost tax revenue) did the market respond in such a negative manner.

They would be borrowing that money regardless of the tax changes. A. They are not immediate and B. Anyone that does tax returns knows that an April 2023/24 tax return is due by 31 Jan 25 so it’s for the 25/26 tax year that these tax changes impact budgets.

n111ck · 25 Sep 2022 at 11:01

So Labour would revert all these changes?

Devilman · 25 Sep 2022 at 11:04

delta0 said:
They would be borrowing that money regardless of the tax changes. A. They are not immediate and B. Anyone that does tax returns knows that an April 2023/24 tax return is due by 31 Jan 25 so it’s for the 25/26 tax year that these tax changes impact budgets.

Lowering taxes directly lowers the money they have to spend, as such it directly increases the money they now have to borrow up to make up that lost tax revenue.

If I used to give you £10 a month and your energy cap require you to borrow £20 a month, then I start paying you only £5 a month, you're going to have to borrow £25 from now on.. which is still borrowing MORE than you would have before the cut, regardless of the energy cap.

delta0 · 25 Sep 2022 at 11:07

Devilman said:
Lowering taxes directly lowers the money they have to spend, as such it directly increases the money they now have to borrow up to make up that lost tax revenue.

If I used to give you £10 a month and your energy cap require you to borrow £20 a month, then I start paying you only £5 a month, you're going to have to borrow £25 from now on.. MORE than you would have before, regardless of the energy cap.

Not necessarily, tax avoidance can reduce, declaration of taxes in the UK and investments can increase. Also this is about the longer term so the growth part of the laffer curve which we have moved slightly towards.

chroniclard · 25 Sep 2022 at 11:07

n111ck said:
So Labour would revert all these changes?

All no, some yes.

delta0 · 25 Sep 2022 at 11:12

Freakbro said:
When I say tax take I wasn't meaning in actual terms, but as a % of GDP where we are below average. So no, we don't have high taxes compared to other countries.

Did some poking around to see what the UK actually takes and it was 26.2% in June 22 so we have a lot of people not paying tax here. https://www.ceicdata.com/en/indicator/united-kingdom/tax-revenue--of-gdp

That is a big problem.

Chojin · 25 Sep 2022 at 11:12

delta0 said:
People are even more mobile today because of technology so the loss of talent coming to the UK and leaving the UK as they begin to earn more is significantly impacting tax intake.

With the increase of countries adopting digital nomad visas then there is competition for skilled immigrants. Europe has an ageing population and countries are going to be advertising for new people before long.

Then it comes down to who would you rather have come into your country. 1x top one percenter or 10x unskilled worker. With the former you put less strain on infrastructure and supply chains, and any children they may have are more likely to be skilled themselves. The latter will be doing jobs that could be replaced by automation in the coming years.