ZOMBIE THREAD ALERT: This thread hasn't been posted on for a while.
David Cameron's conference speech - live stream from 11.15am today(221 Posts)
David Cameron's conservative party conference speech will be live streamed here at 11.15am today, if you're interested in taking a look:
how the heck do you know how many hours I have to put in at the weekend, sunflowers?
And don't lecture me to get a grip. I already deal with severe mental illness (which I didn't make up to get benefits, as I do not receive any), two kids (alone) and a full time job. I've got a grip, thanks. A very hard one.
Hi Sunflowers, thanks for your reply. First off, I'm not an economics student - I did a bit at A level, but my degrees are in Psychology and Theology. But I read widely, discuss frequently, and Google is my friend.
My specific argument was trying to take on the point that there are some who put in more than they take out, and others who take out more than they put in. I was trying to show that what we "get out" of society is more than just direct payments we receive from government (whether benefits or wages), or even the services we directly use (such as our schooling or going to the doctor). We also receive indirectly by the benefits to society as a whole which we all need to thrive, and are needed particularly by those who receive the highest pay. I am a self employed sole trader, and I know exactly what I am worth - what I earn. But if I were the head of a multinational and earning millions it is more complex, and my pay would only be possible because the state has educated my workers, kept them healthy, given me infrastructure, etc. My million pound plus salary would not just be down to my hard work, but how I could make the most of the hard work of others. So those who make money through employing others and needing a large customer base are receiving a lot more indirectly from the state than a low earning sole trader like myself. But it is common, particularly by those who feel they contribute more than they receive, to overlook these essential indirect benefits, and assume that government should be shrunk to the size of only those services we personally use. But we indirectly use services all the time - for example, if I am served in a shop, unless the assistant was privately educated, my taxes have contributed to the fact they have been taught to read and add up. Which is why I want everyone to pay their fair share of tax - as you and I do and as many large companies and multi millionaires don't.
As mentioned before, Amazon UK pays virtually no corporation tax even though they have annual sales of £3.3 billion, and Lakshmi Mittal (the UKs richest resident) only pays tax at 0.14%. But Amazon and Mr Mittal can only make money in the UK because of all the infrastructure and services that you and I have paid for. Which is why, for me, they are worse than benefit scroungers - because they take far more out of the system than anyone cheating the benefits system. Not that I approve of benefit cheats, but I would rather be cheated out of £30K by a benefit fraudster than £250 million by a corporate tax dodger - personally I'd rather neither happened!
I also don't think that everyone should be paid the same, and I don't think I said that. There should be rewards for people who work hard, or are creative, or inventive, or who take some risks. I'm self employed and the link between my pay and how much I put in is very clear to me. But the ratio between the average wage and the highest wages seem out of all proportion to the ratio between the hard work put in by an average worker and the highest paid workers. But I am not convinced that someone who takes home £26 million is a thousand times harder working than the average worker. Maybe five times harder, perhaps ten times harder, but a thousand?
I don't mind people earning huge amounts, I am proud of some of our industrialists (such as James Dyson) who have made something new, taken the risk, provided employment and pay tax on their income. And they are hugely rewarded when it works. I do have concerns about some operations of the City, such as derivatives trading, which don't seem to add any genuine value to society, just shuffle money around in some theoretical meta-game and then take huge amounts of cash out, usually siphoned off to some offshore tax haven so they don't have to pay tax. And when it goes wrong, you and I bail them out. So while some very weatlhy people are earning it and taking the risks themselves, others are withdrawing money from the system without adding genuine value and we are underwriting them. I have a problem with that. I also have a problem with the main party of government receiving over half of their funding from the City, with 1 in 6 of the House of Lords receiving payments from such financial institutions. It is a clear conflict of interest and not good for democracy.
So, in a nutshell, my case is that we can only flourish as a society if we have a given level of services and infrastructure, and the indirect benefits of public services are huge but usually overlooked. These benefits can only be accrued if we invest in them, and that means taxation. Taxation should be proportional to wealth, partly because the wealthy are more able to pay (and will still be wealthier than the rest once tax has been deducted), but also because the generation of their wealth has needed a greater reliance on the indirect benefits of public services than someone who generates less wealth (i.e. they can only have the multi million salaries by making use of a large number of workers, consumers and infrastructure provided by an organised state dependent on tax revenue). However, it becomes unfair when a person or corporation is so wealthy that they can bypass the tax system through tax avoidance schemes such as offshoring their assets. When this is tolerated it leads to a greater tax burden on the less well off and an erosion of public services, and therefore the organised society needed by the next generation of entrepreneurs to generate wealth from. So government should be spending every waking hour trying to figure out how to make sure the high wealth tax avoiders can be made to pay their fair share of tax - because if they did all the headaches about the deficit and where to make the cuts would disappear. Estimated tax avoidance in the UK is about £70 billion a year, tax evasion is about £15 billion, while the budget deficit for 2012/13 is £90 billion. Forget demonising the disabled, closing care homes, sacking police and saddling the next generation with huge debts. Just make everyone pay their fair share and we're just £5 billion short, which in governmental terms isn't a huge amount to find.
Rosieres - you talk a huge amount of sense in a non-confrontational way. Have been following this thread and have learned a lot from your posts and others.
If you ever feel like going into politics you've got my vote.
£45,000 is a daunting figure for most people twofingers. I can only tell you the thoughts and discussions that we had about it.
We feel that having received a free education up until the age of 18, it is right that the student should contribute for the higher education that should stand him in good stead for the rest of his life. Why should someone who leaves school at 16/18, and starts work, pay through their taxes for the degree that is only going to benefit our son.
Student tuition fees and maintenance loans need to be paid back, and you can also apply for a maintenance grant (which you don't have to pay back) if your income is below a set amount (about 25,000 as I recall). EVERYBODY has access to these.
Nothing needs to be paid back until the graduate (hopefully ) is earning £22,000 a year, and even then the repayments only come in at £7.50 a month, because the repayments are spread out over a long period. If they lose their job, the repayments stop, if they take a lower paid job having decided thats not what they want to do after all, the repayments stop (unless they start earning over £22,000 again) The potential to earn far better money makes this a very favourable investment AS LONG AS your child is studying for a "proper" degree.
Languages, history, maths, sciences, medicine, geography, law "proper degrees.
Pop music production, Adventure tourism, Events management wouldn't touch them with a barge pole.
It would be a tragedy for your daughter not to have this opportunity for fear of figures on a piece of paper that have no significance whatsoever until she is earning good money, potentially great money.
Have a look at www.moneysavingexpert.com/students/student-loans-tuition-fees-changes#9this site with her, it might help you make your minds up.
I wish her the best of luck, whatever she decides.
Apologies Domestic The comment was intended as a spot of gentle teasing, but I omitted to add the at the end leading to misinterpretation.
However, given that you have demonstrated yourself to be a little thin skinned, it might be an idea not to chuck about such comments as:
^Sunflower's post is quite the strangest most twisted attempt at 'ethical' reasoning I've ever read.
Even my undergrads do better than that^
I wouldn't worry Rosie. The likes of sunflowers are only likely to change their tune once something bad happens to them.
She is sticking to the 'private good public bad' mantra she's been taught by the press
Just a thought.
Blimey, Rosie, I think I need a , or even before I tackle that one!
Will open a bottle and give it some thought.
Enjoy the sunflowers
Emphatic - thanks for the vote of confidence . Should I ever run for high office I'll be in touch. Although with two children, a delightful OH, a small business and various voluntary work I think it's unlikely that I would add politics to my commitments!
Hi Rosie, sorry I didn't get back to you last night, a rl friend dropped in and helped me finish off the . Happily, she'd bought another one with her.
OK,*Domestic*. Gird your loins, here's another dose of twisted Sunflower thinking. (Hey! I like that, I might namechange to TwistedSunflower. )
My first quibble is with your assertion that it is the highest paid who benefit most from "society" being educated and kept healthy. This could be true if people were educated/cared for specifically for them to employ, but that patently isn't the case. The fact that a person is educated gives them power in their own right. They can choose who they want to work for or even if they want to work for anyone at all, they could choose to go down the self employed route, as we did. Goodness, just think for a second about the breathtakingly heroic Malala Yousafzai shot in the head by the Taliban because she protested her right to an education. Just so she could be useful enough to employ? I really don't think so.
Putting that aside for a moment, I ran our "imaginary" CEO and average wage examples through a tax calculator this time, so the figures are accurate.
Our £2 million CEO already does contribute £136,937 to an education system that in all likelihood neither he, nor his children use (based on the fact that 18% of the £978,126 tax he pays goes to education). Meanwhile, our average wage earner (£26,000) pays £501. I would say he already contributes handsomely to the education budget of his employees, whether or not you accept that they are educated purely for his benefit (which I don't).
Then we need to also consider that the employees, themselves, pay for their education through their taxes, the education that empowers them and gives them the tools to make of life what they will.
There's also the fact that the employee's parents, through their tax contributions, have paid for the education of their child.
How many times does one person's education need paying for?
Looking at the health aspect, once again, CEO contributes £176,062 to the health budget, average worker £644. (Based on 18% of tax bill going to health) Again, quite probably, the CEO has private health cover and does not use the NHS except perhaps A & E and potentially ICU)
PLUS Companies have to pay Employers NI for every employee (I think I'm correct in thinking it is NI that is supposed to cover health and pensions) I don't mean the employees own NI contribution, which is automatically deducted from his wage, I mean the Employers National Insurance . The employer has to pay 12.8% of every single employees salary in a NI contribution, that's £3,328 for every single average wage person they employ.
Again, I think that's a handsome contribution, whether or not you agree he is responsible for his employees general health.
Now, I have no clue about the ins and outs of Amazon and Mittal (I confess I had to google Mittal-I had no idea who he was) My concern is that vast amounts of high earners do, year in, year out, contribute these vast sums to our society.
The indirect benefits of public services are huge, but so are the amounts the high earners contribute to them. I for one, am happy to acknowledge that they do so.
God help us if they do decide they've had enough of being despised and vilified because some of their number use every loophole going to minimize their tax bill.
However,these people are trying to hang on to their own money benefit fraudsters, at the other end of the scale, are stealing other peoples money. They steal from everyone who pays tax and they steal resources from groups like the disabled who really need it. I really don't understand why people aren't, at least as disgusted and angry at them as they appear to be at "rich bastards".
Tax avoidance, off shoring I know less than nothing about such things, obviously it would be wonderful to be able to pull in tax from these companies. But such organizations, by their nature, really don't care where they operate from, and will up sticks and move on without a second thought. 1% of a vast amount is still a massive sum, certainly better than 50% of bugger all. Its up to the government close the loopholes, but I feel it's equally important that they drop like a ton of bricks on the benefit thieves.
The harsh fact is, none of this can happen quickly, and we are flat broke (Thanks Gordon!). At this moment, this government has to work with what they have (or more correctly what they haven't) got.
Magical thinking about how brilliant it could be if everyone paid their fair share is all very well, but it ain't gonna happen anytime soon. Unfortunately, the bottom line is, those who need it most are inevitably going to feel it most.
Good Lord now I need to open another bottle!
Thanks for the reply. My point about someone earning £millions being dependent on the labour of others, and therefore on the inputs that allow those others to work, comes from this observation. As a sole trader I know what I am worth, exactly what I earn. If I worked twice as hard (or maybe twice as smart) I would probably earn twice as much. But at some point I am going to reach a limit on what I can earn purely by my own efforts. So if I take someone else on I am permitting them to earn an income, and my income is increased by their work. Scale that up enough and you can get people earning millions - not because of their own work, but because they have thousands of people working for their organisation, all contributing part of the wealth they generate to the person at the top. So when the person at the top says "I earned this money", what they are really saying is "I created conditions for others to earn this money, and I take a cut of what they earn". nothing wrong in that, we need leaders and entrepreneurs. But it shows that the conditions that have equipped their employees to create that wealth (e.g. health and education) contribute hugely to their £million(s) salary, and therefore they are receiving indirectly from those public services. And I would say that a person whose income is dependent on thousands being healthy and educated is receiving more from society than an individual on a low wage who has only benefitted from their personal use of health and education services.
I don't feel that the tax rates applied to the wealthy are penalising. From your figures above, our £2 million CEO takes home £1,120,874, which is a massive reward and enough to live an incredibly high standard of living. And I salute wealthy folk like James Dyson and JK Rowling who pay their tax. How do we handle the tax avoiders? You're right, it is down to government to do it. It could pay for 94.7% of the budget deficit if they did. But why aren't they? I don't think Labour did it because until the banks crashed enough money was coming in and they were afraid to upset the wealthy vested interests. And I don't think the Conservatives are doing it because they are anti-tax, anti-public services and don't want to alienate those who support them financially (such as Belize based tax avoiding multi millionaire Michael Ashton). Labour were afraid of the big tax avoiders, the Conservatives are in league with them. And the size of tax avoidance and evasion dwarfs benefit fraud. Yes, benefit fraud is wrong, but the damage it causes to the UK economy and society is tiny compared to that done by tax avoiders. And tax avoiders are trying to keep hold of money they have only been able to earn because other people have provided services for them (such as educating their workforce for them, or having a police force that stops criminals preying on them).
The harsh fact is we are not flat broke as a country. There is enough money in the system. The problem is the government doesn't want to collect the taxes that are due, which would close the deficit and avert the majority of the budget cuts. Instead of closing the loopholes and going after those who don't pay their taxes (which means you and I have to pay more, or put up with worse services, probably both) they are actually reducing the number of tax inspectors. The HMRC is having to lay of 13,000 staff and has big cuts to its revenue and capital budgets. This is a totally wrong-headed move if the government is serious about collecting the taxes it needs to sustain public services. So the government are either plain idiotic (because if they strenghtened the HMRC it would bring in much more revenue than they would spend on it) or don't really want to go after the big tax avoiders. Either way, I am not confident in a government whose actions are either stupid or corrupt. And that's what makes me angry - the decisions to try and resolve the budget deficit are largely driven by service cuts (which hits the vulnerable) and there is little consideration for collecting the full taxes that are due (which would affect the wealthy). Not even raising taxes, just collecting those that are due under the spirit of the law at this point in time. And because of this ideologically driven approach we are seeing police officers getting sacked, serving soldiers returning from Afghanistan to find their jobs under threat, construction companies going bankrupt because they no longer have any public contracts, students starting their adult working life £40K+ in debt, care homes being closed, etc. etc. etc. The government may not be wanting to make these cuts, but it comes across as if they are saying "Well, we couldn't possible ask Sir Philip Green or Vodaphone to pay their fair share of tax, that wouldn't be proper, so we'll just have to demonise the disabled, sack nurses and make the under 25s homeless".
And because the government has cut too quickly and too far any hope of growth in the economy has been choked off. From the little economics I do know, the reliable approach to managing public finances is to save in the good times and spend in the bad, even if you have to borrow some to get things going. If you look at the American economy in the 1930s you see laissez-faire economics at the start, with government stepping back and hoping the markets would sort it all out. It didn't work. Then you had Roosevelt and the New Deal spending on projects such as the Hoover Dam, getting people back to work, and that started to get growth going again. Ironically it took the massive borrow and spend under a centralised command economy during World War 2 to really get everyone back to work and out of the Great Depression, it wasn't austerity and the private sector. I hope it won't come to that, but it shows that sometimes drastic spending and government intervention are necessary. At present some heavy weight economists, such as Nobel prize winner Joseph Stieglitz, are saying that the UK government's policy of austerity will kill off growth and send us futher into recession. I hope they are wrong, but the data so far is showing they are right.
One final point, and that's to do with the relative unimportance of money. I have been reading about happiness and what makes people happy recently (my first degree was in Psychology!). By and large, once people have a minimum income level (and it doesn't have to be much), having more and more money above that level does very little to improve their happiness. Far more important are factors such as the quality of relationships, having control over things in your life, and doing things for other people. An experiment at Harvard gave one group of people money and told them to spend it on themselves, and gave a second group some money but told them to spend it on other people. The first group went out and spent their cash, and at the end of the day were no happier than they were before. The second group spent the money on someone else, maybe gave it to charity, and it made a lasting impact on their well being. I find a lot of political discourse over who can get how much money a bit depressing, because it misses the point that money is a means to an end, not an end in itself. I don't mind paying my taxes (perversely I quite enjoy it) because I know society needs it and because I know the really important things in my life (family, friendships, culture, faith, voluntary work) will be unaffected by me giving away the 20% that I earn above the basic threshold. On my modest income I have more than enough to live a good and happy life.
But I suppose that if I am idealistic in expecting the government to chase after the wealthy and powerful who dodge taxes, I am more so if I hope people will take a step back from the rat race and ask the question of what is really important in life. That's far more important than clinging onto some extra pennies (or £millions), but we are ruled by bankers rather than philosophers.
(Who is getting far too verbose in old age).
We're going to have to agree to differ on the idea that the country isn't broke Rosie
Will be back tomorrow at some point.
(nothing wrong with verbose, have been known to get a bit inclined that way myself. )
We're going to have to agree to differ on the idea that the country isn't broke Rosie.
You can disagree if you like, but you're wrong. Debt, as a percentage of GDP, as at historically low levels:
As you can see from the charts, immediately prior to the financial crisis, the debt level was almost at a low point for the 20th Century. Post-crisis, it's roughly what it was around 1970.
Interest payments on debt also follow roughly the same pattern, with the level before the crisis being at an almost record low, and still quite low post-crisis, historically speaking.
Perhaps you should put down that copy of the Daily Mail?
Also, the austerity measures in the UK and europe are deepening, not helping the crisis:
I think saying the country is broke is hyperbole. To me broke means bankrupt, absolutely no money in the account, no money coming in. I've just been looking on a GDP stats website, and at present UK GDP is the same in real terms (i.e. when you filter out the effects of inflation) as about 2004. We weren't broke in 2004, unless I missed something, so we can't be broke now.
Yes, the level of government debt is higher now, largely due to the banks being bailed out in 2008. The National Audit Office in 2009 said that the cost of covering the banks was £850 billion. Not all of that £850 bn passed directly into national debt (some of it was underwriting risk, some of it was quantitative easing which contributes to inflation rather than government debt), but it still contributed a significant proportion of the current £1064 billion debt. Perhaps you can see why I feel it is important that those who profited so much from the banking crisis, and who are still making a lot of profit out of the financial sector, to give something back and pay their fair share of tax.
Of course, there will always be people who stand to gain from making out that there is no money. Usually people with money. I have a relative who is on a village Parish Council. The Parish Council covers 500 people in her village and they raise £7 per person to cover the council's costs. All year they comment on planning applications - people building extensions, having swimming pools put in, putting solar panels on roofs, etc. For the Jubilee celebrations they raised £2000 in an evening's fundraising do. But when it comes to looking at whether they raise the annual parish precept above £7, the Councillors all talk about how everyone is hard up and there isn't much money around. In spite of the fact that many in the village are professionals and the average house price is over £400,000. It's a bit like when I was in a regular office job - everyone said they were always busy, not because they were, but they knew if they said that they had just enough work that they would be given more to do.
So is it any surprise that people not wanting to pay more make out that the country is broke, because then the only way to close the deficit is through spending cuts. The people with cash don't pay, the people reliant on services do. And when the current main party in government is largely funded by financial institutions and individuals based in the City, many of whom were involved in the 2008 crash (and bailed out by you and I to the tune of hundreds of billions), is it any wonder that the government chooses to believe them? I gather that 1 in 6 members of the House of Lords receive funding from financial institutions (fancy a non-Executive Board membership m'Lord?), another example of how big money influences politics. The Leveson enquiry has also shown how the press has sought to use its power to bend politicians to its will, and I can't see the Rupert Murdochs and Richard Desmonds of this world trying to persuade politicians to increase taxes, quite the reverse. If I had a few billion quid, a media empire and no scruples I would do the same.
It seems to me that those with money and influence are batoning down the hatches, moving money to the Cayman Islands, and leaving the mess of the banking implosion to be sorted out off the backs of the poor, the elderly and the disabled. And all the while they say there isn't any money, yet the bonus culture hasn't gone away and the companies are still making millions and hide it offshore, handing a fraction of their profits to the Conservative party while telling them to stick with plan A.
Well said Rosieres,
I would also add that the same people with money who have offshored all that money will only invest where there is growth. So whilst they may have earned their money here, when they do invest it will not be in the UK. We are, what economists like to call a "mature" economy. That is one that is in decline just as the states is. For that reason alone I do not buy into the rich will hop on a plane should you seek to collect their taxes, they already have and no one told us.
The other point about not taxing the rich for fear they would leave is that companies avoiding tax won't leave. Boots has avoided £100 million in corporation tax each year since it "moved" from Nottingham to Switzerland. But if you introduce measures to ensure that trade in Britain pays corporation tax in Britain Boots aren't going to close all of their shops and re-open them in Zurich. Of the 100 biggest companies listed on the FTSE100, 98 have subsidiary or holding companies based in tax havens. Between them these 98 companies have around 1200 offshore companies. Some might be for genuine operational reasons (it's hard to penetrate the secrecy of these arrangements), but most will be for anti-tax money laundering.
So there is money around, it just isn't being collected. The government has no interest in collecting it though, they don't want to penalise the top 1% which provides their support base. Which explains why they are reducing the staff at HMRC by 13,000, which is counter-intuitive at a time when we need to be collecting every penny that is legitimately owed.
Yes they left the building some time ago. Or rather these big companies set up head offices for tax purposes elsewhere to avoid tax. Very impressed with your level of knowledge......what have you been reading Rosieres?
I think the mansion tax was a good idea. The people who make money here but bank it elsewhere are happy to live here and indeed many own property and have assets which could be taxed. I know at one time it was possible to live in your own property whilst have that property registered as the property of some offshore fund. I don't know if many do this, I suspect some do but the mansion tax may have been a good way of taxing assets if we are unable to tax income. Would it have worked? I don't suppose for one minute it would raise all the tax that should be collected from the corporate dodgers though.
What might be an interesting programme is on R4 this evening about alternative economies.
My interest comes from hearing several speakers this August at the Greenbelt Festival (an annual Christian arts festival with a broad social justice agenda). These included Giles Fraser (the priest from St Paul's Cathedral who resigned after supporting the Occupy movment) and Peter Tatchell (who was there with a general brief about human rights, democracy and fair taxation). Christian Aid also have a campaign about tax justice, not just for the UK but also in the developing world (where multinationals take vital tax revenues out of developing countries, with a terrible cost to society). Otherwise it's a case of research online, some stuff from UK Uncut and some economics I studied at A level (many years ago).
I occasionally think about trying to organise a boycott of a tax dodging company, such as Amazon, to see if we can make an example of one company and try and change the culture. If the big tax avoiding companies felt that their actions lead to big reputational damage we might be able to shift the corporate culture to being a bit more ethical.
I think the boycott idea is really great. I joined the boycott against Tescos over workfare and also fired off several letters to their CEO. We all got the same stock response but it certainly rattled them. I believe they are still using workfare and over Christmas I guess they will certainly be cashing in on free labour. One of the main problems is keeping the pressure up because in an age of instant gratification and consumerism most people drift off when they discover the next thing or something isn't being reported everywhere in the media.
I recently read The Silent Takeover by Noreena Hertz, in which she talks about the death of democracy. People now tend to lobby businesses directly because they are losing faith in governments regarding social justice. It's quite interesting because you see the corporates changing culture (at least on the surface of things) when they feel that they may lose the battle for customers.
One thing that really amused me in the book was the story of the greens buying up shares in a petroleum company and then gate crashing the general meeting dressed as polar bears! It was a ray of light in what was otherwise an interesting but very glib picture of democracy and human rights.
The IMF and the WTO trade in misery to the third world, I was very shocked by watching this interview with Susan George on Neoliberalism
www.youtube.com/watch?v=_viNHVzadeM where she explains how the WTO are exploiting the third world and that their debt is growing and will likely never be paid down, keeping them in perpetual poverty.
In case anyone was wondering whether corporate tax avoidance was a significant factor in the government's budget deficit, I would encourage you to look at today's news on the BBC about Starbucks:
In brief, Starbucks dodge corporation tax and have only paid £8.6m over the last 14 years, despite having sales of over £3 billion, an effective rate of only around 1%.
Why are we cutting staff numbers at the HMRC and letting these big multinationals get away with it? Surely we need to be subjecting their arrangements to more scrutiny, not less? It's as if the government didn't want to tax these big companies.
Lego has just started a thread in AIBU about starbucks and asking people to consider boycotting them
I've been boycotting Starbucks since they opened. Not only are they a fucked company, but they charge ridiculous prices for coffee which is basically all sugar and cream compensating for bad coffee.
Brilliant and informative posts Rosieres
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