2022 mini-budget discussion

[jpaul]

So Labour would revert all these changes?

don't think they will have the competence to openly discuss alternatives at their conference, just rhetoric.
Keir's headline on increasing on/off shore wind is easy to promise, but, short term, they haven't enumerated details of a more extensive windfall tax( eg. large part of our gas from foreign waters. )

 

[Murphy]

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.

I've emphasised that as for me that's one the major things, for decades we've refused to invest in some of the pretty basic things that people and companies want / expect. It's one thing to pay high taxes if you see the result of those taxes all around you in everyday life, it's quiet another to pay high taxes and be constantly coming across pony & trap 'public' services.

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

If that were the case you'd expect the markets would've reacted when the borrowing to fund those caps were announced, not weeks later.

 

[CapitalOne]

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.

This is something I will be looking at when I am looking to "wind down", sure I won't be too old by then

 

[doodah]

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.

 

[413x]

Well I certainly want out as a middle earner.
These cuts are swinging too far and at the end of the day they are going to cause interest rates to shoot up. All of a sudden the squeezed middle can't afford anything other than their mortgages. Or maybe they can't even afford their mortgages.

You're left with what is quite a productive base unable to spend in the economy, but rather just trying to survive.

Without that large demographic spending in high employment sectors there will be more job losses.

House prices are crippling us. People are not having kids simply as cannot afford them. Even on above average incomes.


Knowing I'll have 150k of mortgage debt in 5 years and not knowing what interest rates will be isnt pleasant.

Main aim in that 5 years is to try and mitigate the impact of who knows what rates (or even emigrate)




As less people own the same impact will be felt on renting. After all landlords will just pass the cash down.



And all this time kami-kwasi is piling on that debt. Forcing that interest rate up. Adding to government debt and personal debt costs while running our currency into the ground making everything more expensive again.



So much damage to the UK in under a month. 2 years more is horrifying.

 

[Murphy]

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.

The latter would also be more likely to buy 10x cans of beans, 10x new sofa, 10x of basically everything. Personally from a business / economic perspective I'd much prefer to have 10x 'unskilled' worker move here than 1x top one percentile.

 

[delta0]

I've emphasised that as for me that's one the major things, for decades we've refused to invest in some of the pretty basic things that people and companies want / expect. It's one thing to pay high taxes if you see the result of those taxes all around you in everyday life, it's quiet another to pay high taxes and be constantly coming across pony & trap 'public' services.

If that were the case you'd expect the markets would've reacted when the borrowing to fund those caps were announced, not weeks later.

Inflation and borrowing were the causes https://uk.finance.yahoo.com/news/traders-bet-against-sterling-parity-060000193.html

Fully agree we are not investing enough in businesses but we also have the lowest private investment which is a bigger problem.

 

[Murphy]

Inflation and borrowing were the causes https://uk.finance.yahoo.com/news/traders-bet-against-sterling-parity-060000193.html

Well yea, but there's borrowing and then there's borrowing. The borrowing to fund the energy price cap was similar to what every country is currently doing and wasn't, in comparison, that much. The borrowing to fund tax cuts for the top 10% (it's more like the top 3% but statisticians don't make that distinction much) are on a whole other level with, what i assume the markets consider, to be very little economic benefit to.

Fully agree we are not investing enough in businesses but we also have the lowest private investment which is a bigger problem.

We only have low private investment because (IMO) private entities see how the government are not willing to invest.

 

[delta0]

Well yea, but there's borrowing and then there's borrowing. The borrowing to fund the energy price cap was similar to what every country is currently doing and wasn't, in comparison, that much. The borrowing to fund tax cuts for the top 10% (it's more like the top 3% but statisticians don't make that distinction much) are on a whole other level with, what i assume the markets consider, to be very little economic benefit to.

We only have low private investment because (IMO) private entities see how the government are not willing to invest.

Government investment is the same as other countries such as Germany. It sits about average. It’s the non-government funding which is very low. The business environment is not as attractive here

 

[SpeedFreak]

That's because the second and third cities come across as economic afterthoughts. London is swallowing the country but is prohibitively expensive to set up a business in.

HS2 should have started in the north for example. Linking Liverpool, Manchester and Leeds with high speed infrastructure should have been a priority.

 

[Stu999]

The latter would also be more likely to buy 10x cans of beans, 10x new sofa, 10x of basically everything. Personally from a business / economic perspective I'd much prefer to have 10x 'unskilled' worker move here than 1x top one percentile.

Plus 10x the school places, 10x traffic on the road, 10x NHS spending…

Edit - for the people worried about brain drain, how many people do you know that have left the UK citing high taxes as the main reason?

 

[Dirk Diggler]

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. 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.

Where is the evidence to back any of this up, I'm genuinely interested.

 

[Besty]

It seems you've pulled "the remaining 72% will go back up from 20% to the 33% mark" out of thin air without actually thinking about it, according to the ONS there's 2,344 households with gross incomes of more than £100k. That's a very small tax base when compared to the 27.8 million total households so if the households with £100k gross income decided to leave those taxes would be spread between the remain households. While I've not run the maths I'd be pretty shocked if the remaining households saw more than a 1% rise in taxes while also, one would assume, seeing a small rise in earnings cause by everyone moving up the pay scale due to those now vacated roles.

The top 1% finance 28% of the personal tax take, that is approximately 630k individuals on PAYE at 150k and over but, there is probably half the same number again outside of PAYE running through limited companies that earn way beyond 150k.

The argument is not about about 1% tax increases for this bunch, the argument is about a broad spectrum of tax increases (IR35 included!) that started 20 years ago and have resulted in the tax grab being enormous on this bunch which then starts to speed up the migration of skilled people abroad.

One of the biggest problems, not addressed in the budget was the year-on-year refusal to raise the tax thresholds inline with inflation which, along with all the other tax grabs of the past 15 years is doing this:

So, when you stand back and consider the overall tax take, all this budget has done is start to roll-back from where we were in 2018.

 

[Murphy]

Government investment is the same as other countries such as Germany. It sits about average. It’s the non-government funding which is very low. The business environment is not as attractive here

What would you be considering government investment to be exactly? Because the data I've just looked at disagrees with what you're suggesting.

Between 1995 and 2003, the UK was in the bottom 10th percentile of government investment in non-financial assets of all Organisation for Economic Co-operation and Development (OECD) nations; it has since climbed out of the bottom 10th percentile.

Plus 10x the school places, 10x traffic on the road, 10x NHS spending…

Edit - for the people worried about brain drain, how many people do you know that have left the UK citing high taxes as the main reason?

You say that like it's a bad thing, you do know schools employ people, spend money buying things from other companies etc, etc. The same goes for traffic on roads 10x cars, 10x people building and maintaining roads, 10x people working for the NHS all spending their wages in local businesses, etc, etc.

The top 1% finance 28% of the personal tax take, that is approximately 630k individuals on PAYE at 150k and over but, there is probably half the same number again outside of PAYE running through limited companies that earn way beyond 150k.

The argument is not about about 1% tax increases for this bunch, the argument is about a broad spectrum of tax increases (IR35 included!) that started 20 years ago and have resulted in the tax grab being enormous on this bunch which then starts to speed up the migration of skilled people abroad.

One of the biggest problems, not addressed in the budget was the year-on-year refusal to raise the tax thresholds inline with inflation which, along with all the other tax grabs of the past 15 years is doing this:

Spoiler

So, when you stand back and consider the overall tax take, all this budget has done is start to roll-back from where we were in 2018.

I'm not sure why you think what the top 1% contribute is relevant or for that matter why the number of individuals is a more relevant metric than households, neither of which seem to address the point i made that you seem to pulled your "the remaining 72% will go back up from 20% to the 33% mark" claim out of thin air. I mean if we use individuals rather than households then your "630k individuals on PAYE at 150k and over" (why you felt the need to go from £100k to £150k is anyone guess but whatever) would be distributed between 36.3 million people of working age, if we used your "here is probably half the same number again outside of PAYE running through limited companies that earn way beyond 150k" claim then it would be reasonable to assume we distribute it between the entire 68.8 million population of the UK.

Whatever way you cut the pie you're not going to reach your %13 rise in taxes for other people simply because all the people earning more £100k suddenly up sticks and leave.

If the argument is not about 1% tax increases for this bunch the why are you arguing that, why claim that if people earning more than £100k are not allowed to keep more of their earnings that they'd leave.

 

[CapitalOne]

I'll take all the silence on which regs need to go in the city as confirming it is just bluster like "trickle down" then

 

[Uther]

So far it seems like a few rich people (and wannabe's) loving it and everyone else in the country thinking 'WTF!...'

 

[Mr Badger]

So far it seems like a few rich people (and wannabe's) loving it and everyone else in the country thinking "At least it's better than Jeremy Corbyn".

^FTFY

 

[Richie]

I've already said before - the fairest tax cut would have been to keep the bandings the same and lift the basic allowance to £17,290. This is the same as the NMW for a 40 hour weekly wage (35 hour plus 1 hour unpaid break each day for 8 hour day).

This would give the lowest paid a huge lift out of poverty whilst also giving everyone else in the higher bands an equivalent monetary lift as well.

This would have been fairer than giving the chunk of a tax break to the higher paid by cutting the top rate of tax. Note that these higher and highest rate tax payers would get the same cut as their basic tax won't start till £5k later i.e. everyone benefits with the lowest benefiting more as a proportion.

Also note (as evidenced by this very thread) - more of this would end up back in the economy as the lower paid spend it rather than squirrelling it away as wealthy people do.

 

[delta0]

That's because the second and third cities come across as economic afterthoughts. London is swallowing the country but is prohibitively expensive to set up a business in.

HS2 should have started in the north for example. Linking Liverpool, Manchester and Leeds with high speed infrastructure should have been a priority.

I don’t think London has an issue. That’s where most of the investment activity is in the UK which suggests it’s not the cost.

 

[sigma]

I don’t think London has an issue. That’s where most of the investment activity is in the UK which suggests it’s not the cost.

Are you banking/saving the extra money also?