Tax credits cost £171Bn over 7 years
Discussion
theaxe said:
DonkeyApple said:
But it is always relevant to recognise that recipients of welfare are spenders and not savers. Almost every penny of welfare is cash directly back into the economy. It does create employment, commercial activity and opportunity for others.
The fact is that it is actually a pretty good mechanism for putting cash into the economy as fast as possible. Money given is spent quicker than money earnt. All that money pours almost instantly into the highstreet and into employment, growth and investment into other assets.
Okay so you give away $1m and you get $900k back (assuming the other 10% goes to China or the middle East in oil/raw materials). Next year you give out that $900k, then you get $810k back, and so on... no matter how efficiently the outlay is distributed you're never going to get it all back.The fact is that it is actually a pretty good mechanism for putting cash into the economy as fast as possible. Money given is spent quicker than money earnt. All that money pours almost instantly into the highstreet and into employment, growth and investment into other assets.
However if you build a road, you not only pay the workers on the ground (who spend some of it) but also that road will pay you back over the years in increased productivity. Or you give a tax cut to a firm wanting to invest, you may only earn a few % of that money back each year but eventually you'll be in a sustained profit.
As for the spenders / savers argument, isn't that just a function of how much money they have. If you need £10 a day to feed your family and you have £10 then clearly you're not going to save. If you have a job and earn £20 a day then you may save and still contribute the same amount to the local economy. Plus, by saving you'll be reducing the burden on future generations of workers.
DonkeyApple said:
So, there is a strong argument that the best thing we could be doing now is to pump more money into the benefits system (it's infinitely more efficient than bolstering bank balance sheets as you know that every penny will bang into specific areas of the economy instantly) but at the same time, rapidly reduce the number of shop tills that divert money out of the system. And this can only be done by stimulating and favouring small business.
Don't small businesses need to borrow from banks? Not sure I follow. Banks (should at least) be good at making money available to viable businesses and ensuring a return.Edited by theaxe on Tuesday 1st January 10:50
You can't look at savers logic akin so spenders. A saver is a saver and the ratio of what they save v earn is a function of security and little else.
Re the banks you have not understood how QE is structured and intended to release M4, if at all. Contrast that to putting money direct to the spenders.
DonkeyApple said:
But it is always relevant to recognise that recipients of welfare are spenders and not savers. Almost every penny of welfare is cash directly back into the economy. It does create employment, commercial activity and opportunity for others.
The fact is that it is actually a pretty good mechanism for putting cash into the economy as fast as possible. Money given is spent quicker than money earnt. All that money pours almost instantly into the highstreet and into employment, growth and investment into other assets.
It is a moral and social issue rather than an economic one as economically it is a brilliant and efficient system to generate commerce and wealth. There isn't a better way to create a boom than handing out money to people who will hurl it back into the economy instantly. They spend it at the local crappy shops, those shop keepers and employees spend the profits in slightly less crappy shops and so on up the chain.
But the social side is that when people don't earn the money in their pocket you get a very rapid decline in social structure.
And the morality of debasing the input of the working man is clearly detrimental.
Asside from the issue of benefits for a second but why is it so many people talk of putting money into the economy by simply spending it on the high street? The profits will go to the likes of Tesco, Poundland, Benson and Hedges while the cost of goods will simply leave the country. There's the brief employment of shelf stackers and checkouts but surely this isn't the sort of economy we should encourage? Over time shops will look after themselves.The fact is that it is actually a pretty good mechanism for putting cash into the economy as fast as possible. Money given is spent quicker than money earnt. All that money pours almost instantly into the highstreet and into employment, growth and investment into other assets.
It is a moral and social issue rather than an economic one as economically it is a brilliant and efficient system to generate commerce and wealth. There isn't a better way to create a boom than handing out money to people who will hurl it back into the economy instantly. They spend it at the local crappy shops, those shop keepers and employees spend the profits in slightly less crappy shops and so on up the chain.
But the social side is that when people don't earn the money in their pocket you get a very rapid decline in social structure.
And the morality of debasing the input of the working man is clearly detrimental.
Eric Mc said:
So what is the OP's atitude to personal tax reliefs?
Does he think that the (current) personal tax relief of £8,015 is a handout that is helping to ruin the country.
No, we pay far too much tax in this country and anything to reduce the tax burden is to be welcomed. Actually, I am a very strong supporter of a flat tax system like the one advocated by the Tax Payers Alliance. A £10K personal tax relief for all, 30% (or whatever is appropriate) flat tax above that - no National Insurance and an ability for local councils to raise up to 50% of their revenues in local taxation. The overall tax burden to reduce to 33% of GDP. Reduction or abolition of a myriad of other taxes (including tax on fuel)... More hereDoes he think that the (current) personal tax relief of £8,015 is a handout that is helping to ruin the country.
http://2020tax.org/2020summary.pdf
I am also a supporter of smaller Government and that money spent centrally is often not efficient. Anything that puts spending power back in the hands of the people is a good thing. As for the Welfare budget - it is rocketing out of control and perpetuates dependency on the State, no doubt one of Gordo's motives was to make everyone dependant on HIM and his party's handouts - didn't work though.
CDP said:
DonkeyApple said:
But it is always relevant to recognise that recipients of welfare are spenders and not savers. Almost every penny of welfare is cash directly back into the economy. It does create employment, commercial activity and opportunity for others.
The fact is that it is actually a pretty good mechanism for putting cash into the economy as fast as possible. Money given is spent quicker than money earnt. All that money pours almost instantly into the highstreet and into employment, growth and investment into other assets.
It is a moral and social issue rather than an economic one as economically it is a brilliant and efficient system to generate commerce and wealth. There isn't a better way to create a boom than handing out money to people who will hurl it back into the economy instantly. They spend it at the local crappy shops, those shop keepers and employees spend the profits in slightly less crappy shops and so on up the chain.
But the social side is that when people don't earn the money in their pocket you get a very rapid decline in social structure.
And the morality of debasing the input of the working man is clearly detrimental.
Asside from the issue of benefits for a second but why is it so many people talk of putting money into the economy by simply spending it on the high street? The profits will go to the likes of Tesco, Poundland, Benson and Hedges while the cost of goods will simply leave the country. There's the brief employment of shelf stackers and checkouts but surely this isn't the sort of economy we should encourage? Over time shops will look after themselves.The fact is that it is actually a pretty good mechanism for putting cash into the economy as fast as possible. Money given is spent quicker than money earnt. All that money pours almost instantly into the highstreet and into employment, growth and investment into other assets.
It is a moral and social issue rather than an economic one as economically it is a brilliant and efficient system to generate commerce and wealth. There isn't a better way to create a boom than handing out money to people who will hurl it back into the economy instantly. They spend it at the local crappy shops, those shop keepers and employees spend the profits in slightly less crappy shops and so on up the chain.
But the social side is that when people don't earn the money in their pocket you get a very rapid decline in social structure.
And the morality of debasing the input of the working man is clearly detrimental.
The loss overseas is naturally magnified in our minds because if we pay a pound for something made in China we naturally think of most of that leaving to China but in reality almost none of it does. A few pennies at most. So the effect is much weaker than people think.
In recent decades the finance industry was seen as the mechanism to rebalance this and to bring wealth back into the system. So we ran an economy that welcomed drain through the tills and replaced it via a draw in the financial sector. As we know now this is flawed but this thread is more about mechanisms than politics.
What is really needed is a growth of domestic tills over offshore ones. It's not shopping that is bad its the imbalance of till types.
The argument over tax credits is purely semantics, a screen which covers the real issue over the correct level for taxation of the population and ultimately the size of government.
Income taxes in general should be no more than 35%.
Ideally I have that as a flat rate from 0 - 50,000
with a lower rate of 30% above 50,000
You could argue about some transitions and levels but that would broadly be my view. We need to scrap these systems and reduce overall taxation.
Income taxes in general should be no more than 35%.
Ideally I have that as a flat rate from 0 - 50,000
with a lower rate of 30% above 50,000
You could argue about some transitions and levels but that would broadly be my view. We need to scrap these systems and reduce overall taxation.
mercGLowner said:
No, we pay far too much tax in this country and anything to reduce the tax burden is to be welcomed.
For those tax credits that directly replaced an equivalent tax relief - then, what is the difference?In fact, the principle of a credit rather than a tax relief in my mind is BETTER - because often those in need of assistance may not be paying any tax - and therefore canot avail of a tax relief. A Tax Credit system is used in Canada and apparently works well there.
My argument is not against the principle of Tax Credits. It's against the manner in which they were implemented and administered by Brown and Balls.
Eric Mc said:
For those tax credits that directly replaced an equivalent tax relief - then, what is the difference?
In fact, the principle of a credit rather than a tax relief in my mind is BETTER - because often those in need of assistance may not be paying any tax - and therefore canot avail of a tax relief. A Tax Credit system is used in Canada and apparently works well there.
My argument is not against the principle of Tax Credits. It's against the manner in which they were implemented and administered by Brown and Balls.
I dont know the facts, but I suspect that Tax Credits requires an army of beauracrats/people to administer.In fact, the principle of a credit rather than a tax relief in my mind is BETTER - because often those in need of assistance may not be paying any tax - and therefore canot avail of a tax relief. A Tax Credit system is used in Canada and apparently works well there.
My argument is not against the principle of Tax Credits. It's against the manner in which they were implemented and administered by Brown and Balls.
theaxe said:
DonkeyApple said:
But it is always relevant to recognise that recipients of welfare are spenders and not savers. Almost every penny of welfare is cash directly back into the economy. It does create employment, commercial activity and opportunity for others.
The fact is that it is actually a pretty good mechanism for putting cash into the economy as fast as possible. Money given is spent quicker than money earnt. All that money pours almost instantly into the highstreet and into employment, growth and investment into other assets.
Okay so you give away $1m and you get $900k back (assuming the other 10% goes to China or the middle East in oil/raw materials). Next year you give out that $900k, then you get $810k back, and so on... no matter how efficiently the outlay is distributed you're never going to get it all back.The fact is that it is actually a pretty good mechanism for putting cash into the economy as fast as possible. Money given is spent quicker than money earnt. All that money pours almost instantly into the highstreet and into employment, growth and investment into other assets.
However if you build a road, you not only pay the workers on the ground (who spend some of it) but also that road will pay you back over the years in increased productivity. Or you give a tax cut to a firm wanting to invest, you may only earn a few % of that money back each year but eventually you'll be in a sustained profit.
As for the spenders / savers argument, isn't that just a function of how much money they have. If you need £10 a day to feed your family and you have £10 then clearly you're not going to save. If you have a job and earn £20 a day then you may save and still contribute the same amount to the local economy. Plus, by saving you'll be reducing the burden on future generations of workers.
DonkeyApple said:
So, there is a strong argument that the best thing we could be doing now is to pump more money into the benefits system (it's infinitely more efficient than bolstering bank balance sheets as you know that every penny will bang into specific areas of the economy instantly) but at the same time, rapidly reduce the number of shop tills that divert money out of the system. And this can only be done by stimulating and favouring small business.
Don't small businesses need to borrow from banks? Not sure I follow. Banks (should at least) be good at making money available to viable businesses and ensuring a return.Edited by anonymous-user on Tuesday 1st January 10:50
Handing out benefits on the basis that the will flow back into the economy is a hugely flawed argument, like bailing out 90% of the water flooding into a sinking boat. All it does is delay the point at which you go under, by which time we are all in steerage together.
What's needed is for that money to go to people and projects that add value, not just slow down the rate of failure.
It seems people like the reassurance of DA's idea that hand outs aren't a bad thing but it's mistaken. What makes it even worse is that there are economies around the world that know this and they are steadily leaving us behind. That is not coincidence.
When I was earning less and received part of my income as dividend (which was declared) they calculated a crazy Payment per month. I even rang them and they were adamant they were correct and would be paying it.
In the end I had no confidence in the system calculating correctly, so stopped claiming at all
In the end I had no confidence in the system calculating correctly, so stopped claiming at all
REALIST123 said:
Much more sensible than DA's quote.
Handing out benefits on the basis that the will flow back into the economy is a hugely flawed argument, like bailing out 90% of the water flooding into a sinking boat. All it does is delay the point at which you go under, by which time we are all in steerage together.
What's needed is for that money to go to people and projects that add value, not just slow down the rate of failure.
It seems people like the reassurance of DA's idea that hand outs aren't a bad thing but it's mistaken. What makes it even worse is that there are economies around the world that know this and they are steadily leaving us behind. That is not coincidence.
I've never said 'handouts' were a good thing. In fact, I've stated my personal opinion that they are bad. But what I have been discussing is the importance of having spending power at the base of a demographic and not via state control. Handing out benefits on the basis that the will flow back into the economy is a hugely flawed argument, like bailing out 90% of the water flooding into a sinking boat. All it does is delay the point at which you go under, by which time we are all in steerage together.
What's needed is for that money to go to people and projects that add value, not just slow down the rate of failure.
It seems people like the reassurance of DA's idea that hand outs aren't a bad thing but it's mistaken. What makes it even worse is that there are economies around the world that know this and they are steadily leaving us behind. That is not coincidence.
Not really sure just what you have been reading.
Gargamel said:
The argument over tax credits is purely semantics, a screen which covers the real issue over the correct level for taxation of the population and ultimately the size of government.
Income taxes in general should be no more than 35%.
Ideally I have that as a flat rate from 0 - 50,000
with a lower rate of 30% above 50,000
You could argue about some transitions and levels but that would broadly be my view. We need to scrap these systems and reduce overall taxation.
Correct. The rates are difficult to settle upon but what is needed is a taxation and earning solution that sees no one with a job needing welfare beyond healthcare and child education at the bottom end and a rate at the top end that halts avoidance practices. Income taxes in general should be no more than 35%.
Ideally I have that as a flat rate from 0 - 50,000
with a lower rate of 30% above 50,000
You could argue about some transitions and levels but that would broadly be my view. We need to scrap these systems and reduce overall taxation.
But this means low taxation of income and so needs a dramatic cut in expenditure by the State.
It means strong changes to favour small business growth over multinational, a move away from easy personal debt and a capital allowance for the Govt set by an independent body.
But the State will never be reigned in while most people are on benefits of one kind or another.
Eric Mc said:
There is a lot wrong with the tax credfit system - and it was a really messy disaster when it first started with lots of erroneous amounts being paid out and then having to be written off when the recovery threatened to put people into bankruptcy.
'We want to get housewives back to work' was the drivel they thrust over the television continually, some 6-8 years ago. So, my wife applied, to get child care for our daughter, so she could go to work again. The tax people were all excited to tell us we were entitled to the full amount to cover the nursery, £110 a week, but over the following two years they gradually realised they had no clue what they were doing and changed their mind continually, repeatedly, and we ended up owing them every cent we had received. We paid it back in due course over the next year.
So, my wife worked for two whole years for absolutely f
king nothing at all, for free. How much of that 171 bazillion quid was wasted due to the utter, utter weapons grade cock-ups produced by the plebiscites who operated the system???
DonkeyApple said:
We are a consumer economy in short.
That was the whole New labour problem,- Back in the day the ordinary man's role was to "produce". Stuff like coal, steel, ships, cars.
- Thatcher's "service economy" was intended to be "doing useful things" for the rest of the world. And through to the end of John Major's government that was working.
- Then New Labour changed things so the ordinary man's role was to "consume". The more money he had, the more he consumed, which was seen as a good thing. Lots more people working in shops and driving delivery lorries. It didn't matter if people were paid benefits - they just spent it back into the economy. Nor did it matter how much they borrowed - because they spent it back into the economy. Fill yer pockets lads!
Borrowing to spend is complete idiocy. Borrowing to invest is completely different.
Ozzie Osmond said:
DonkeyApple said:
We are a consumer economy in short.
That was the whole New labour problem,- Back in the day the ordinary man's role was to "produce". Stuff like coal, steel, ships, cars.
- Thatcher's "service economy" was intended to be "doing useful things" for the rest of the world. And through to the end of John Major's government that was working.
- Then New Labour changed things so the ordinary man's role was to "consume". The more money he had, the more he consumed, which was seen as a good thing. Lots more people working in shops and driving delivery lorries. It didn't matter if people were paid benefits - they just spent it back into the economy. Nor did it matter how much they borrowed - because they spent it back into the economy. Fill yer pockets lads!
Borrowing to spend is complete idiocy. Borrowing to invest is completely different.
The deregulation of consumer debt is what led to the massive boom in retail spending. Done to create synthetic growth and so tax receipts and finance an ever growing State.
What people mostly don't appreciate is that there are two debt bubbles in the UK. Personal and State. That's the real problem facing the UK now and why the zero rates are imperitave for stripping wealth from the savers to keep the spenders afloat.
As well as controlling State debt it is imperative to restrict personal debt.
DonkeyApple said:
It's not just State spending/debt though.
The deregulation of consumer debt is what led to the massive boom in retail spending. Done to create synthetic growth and so tax receipts and finance an ever growing State.
What people mostly don't appreciate is that there are two debt bubbles in the UK. Personal and State. That's the real problem facing the UK now and why the zero rates are imperitave for stripping wealth from the savers to keep the spenders afloat.
As well as controlling State debt it is imperative to restrict personal debt.
My entire adult life has been spending effectively at hand to mouth levels followed by many years of similar spending habits this time accompanied by saving at negligible returns followed by a single, massive, beyond all reasonable comprehension spending spree on credit. I, like millions of people afflicted by their unfortunate age, am "trapped" into enormous borrowing - the levels of which may retrospectively prove to be negligent. I "need" those zero rates, too. Opting out of two decades of house price inflation wasn't available to me (within my definition of reason).The deregulation of consumer debt is what led to the massive boom in retail spending. Done to create synthetic growth and so tax receipts and finance an ever growing State.
What people mostly don't appreciate is that there are two debt bubbles in the UK. Personal and State. That's the real problem facing the UK now and why the zero rates are imperitave for stripping wealth from the savers to keep the spenders afloat.
As well as controlling State debt it is imperative to restrict personal debt.
scenario8 said:
DonkeyApple said:
It's not just State spending/debt though.
The deregulation of consumer debt is what led to the massive boom in retail spending. Done to create synthetic growth and so tax receipts and finance an ever growing State.
What people mostly don't appreciate is that there are two debt bubbles in the UK. Personal and State. That's the real problem facing the UK now and why the zero rates are imperitave for stripping wealth from the savers to keep the spenders afloat.
As well as controlling State debt it is imperative to restrict personal debt.
My entire adult life has been spending effectively at hand to mouth levels followed by many years of similar spending habits this time accompanied by saving at negligible returns followed by a single, massive, beyond all reasonable comprehension spending spree on credit. I, like millions of people afflicted by their unfortunate age, am "trapped" into enormous borrowing - the levels of which may retrospectively prove to be negligent. I "need" those zero rates, too. Opting out of two decades of house price inflation wasn't available to me (within my definition of reason).The deregulation of consumer debt is what led to the massive boom in retail spending. Done to create synthetic growth and so tax receipts and finance an ever growing State.
What people mostly don't appreciate is that there are two debt bubbles in the UK. Personal and State. That's the real problem facing the UK now and why the zero rates are imperitave for stripping wealth from the savers to keep the spenders afloat.
As well as controlling State debt it is imperative to restrict personal debt.
And if personal lending had not be derestricted then the housing boom couldn't have happened to the same extent.
Rather than zero rates, allowing the property bubble to burst and have a big clear out and start again would have been the better option. But because the State was bust at the same time as the people it couldn't have been handled.
But we are straying from the original discussion as to why it is anyone's interest to have so many working Britins held as slaves to the State?
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