Wealth doesn't trickle down – it just floods offshore, new research reveals

There are some enormous and untested assumptions built into that report. And factual inaccuracies.

Solopower "if you have benefited from the housing bubble, the favourable business atmosphere, whatever[,] now is the time to help out."

The problem is that the net contributing taxpayers have already been bled dry over the years paying for everything, whilst the non-contributing amongst us have been the beneficiary. Your suggestion hits the contributors for another round of pain whilst leaving the non-contributors unaffected again.

Are you saying Solo that 'we're all in it together?'

We can blame politicians till the cows come home, but a) we voted them in and b) they were all in it together, imo. I would say it's the system we have, in which big business and the banks have so much influence over governments that is mostly to blame.

All I hope is that people learn from what they did and never let it happen again.

And I hope that everyone, whether responsible or not, pitches in now to try to repair the damage that has been done. Even if. like most of us, you have worked hard, paid your dues and have never had a loan in your life, you can't just sit back now and wait for someone else to sort it out. If you don't have money, you can't pay. But if you do (ie if you have benefited from the housing bubble, the favourable business atmosphere, whatever) now is the time to help out.

High speed rail as discussed on other threads is seen as an investment because it creates jobs and even after it's long finished, the new railway is seen to bring soft benefits to the economy (ie. shorter journey times promote trade).

The Olympics, the 'theory' is that whilst it costs a lot of money, it also brings in a lot of trade and investment. Personally speaking I'm dubious because it costs so much flipping money i am sceptical we actually come out of it in the black. I know there's a lot of debate over other countries who have found in the long run they lose money. But hey ho, that's the theory and we signed up to the Olympics back in better days.

I do agree bankers do bear some of the blame but my main point is that successive politicians share more of the blame. By continually running deficits which haven't been offset by tax revenues or economic growth. Banker bashing is a very convenient way to deflect the blame.

rosabud

More in tax than you cost??? You may not be paying more in tax because you are not paid enough for what you do, but that is not the same as not contributing.

What do you mean, 'not paid enough'? Perhaps your job isn't valued because lots of people want to do it or because it isn't skilled. Just because you're on a low salary, doesn't entitle you to a higher salary. How would it be 'fair' to someone with a PhD earning £50k a year if a cleaner got the same salary for mopping out the bogs? Where's the 'fair'?

And that still doesn't get away from the fact that you have to be earning about £30,000 a year to be (on average) a net contributor to the economy. You can call it 'unfair' but it's nothing to do with fair or unfair, it's to do with simple numbers.

Poor people are poor becuase their jobs are not valued equally and they are not paid enough (the vast majority of us actually) in contrast to rich people who gain lots of money for things like owning property.

What an insult to the extraordinary variety of lives and lifestyles out there.

So it's not just about being wealthy, it's about controlling that wealth. Poor people do not control wealth and have very little opportunity to alter that no matter how hard they work or how essential their role in society is.

They can get new skills. Tech colleges, apprenticeships, schooling, universities. It isn't a caste system, they're not refused access to high-paying jobs because they're poor. Businesses are smarter than socialists and can spot talent and treat it with the value it deserves.

Rich people do control the wealth and for that reason need to be the people who are contributing more to the well-being of others. To look at the payments of those in control under the same criteria as those who are not in control is ridiculous.

I thought that treating everyone the same way would be 'fair'. Apparently we have to treat people differently because they're rich. Which is, apparently, 'fair'.

You may call it vile socialism, I prefer to call it fairness.

Since when was it 'fair' to take loads of money off people, and then call them evil? What's evil is the view that poor people deserve high wages because they're poor, which isn't treating poor people as functioning humans who are responsible for their own lives but treating them as unthinking beasts whose lot can only be improved by the intervention of benevolent upper-middle-class Guardian readers.

One problem with all this is that you wonder just how bad the 'problem' is. The govt can find money for the Olympics and to invest in high speed rail, so maybe it's just a matter of priorities.

I tuned into all this after it had happened, and don't know much about the causes of the 'financial crisis'. However, I do understand what the bankers did and that they must bear some of the responsibility. I agree with you about PFI (from my extremely limited knowledge).

Whatever the case, I think it's dreadfully counter-productive to cut public services. The amounts raised by this short-sighted, short-term measure are relatively small, and the long-term problems caused could be enormous.

Capitalism doesn't work unless enough people have enough money to buy things.

Hi Solo. Raising taxes is of course perfectly legal. What i've been saying is that you can't tax the money from rich people if they've already paid tax on it.

Raising taxes is of course going to have to be part of the solution.....as is cutting public services. We have seen tax rises, VAT has gone up. Income tax went up to 50% then down to 45% (let's not argue over the politics of the 5%, it's still a net increase). Stamp duty for large homes went up. Tax avoidance is being clamped down on much harder than any time in the past which I can remember.

As for why we haven't prosecuted those who are responsible. Well I guess that depends on whom you class as 'responsible'? Many would say it's all the bankers fault. I disagree. Of course they've had input into the crisis but if we hadn't run a budget deficit for 26 years out of 30, signed up for all sorts of PFI contracts and took on massive pension liabilities, I'm sure UK PLC would be in much better shape. Those decisions are not on bankers. Not unless you count actually lending money to the state.

Niceguy, maybe it would be a bit simplistic to say that just by raising taxes (which is a perfectly legal thing to do, btw, not theft at all) we would solve all the financial problems in this country. But I still think it has to be a big part of the plan - along with the govt actually going after all the taxes it is owed by the avoiders. Cutting tax, even Corporation tax would be ridiculous, imo.

What are the other things we could do? Well I have never understood how the people who are largely responsible for the mess we are in - you know who you are - have not been prosecuted, because they are just continuing to milk the system. So we have to stop the money draining out of our pockets and into theirs as we speak.

But what else? Well of course there are long term social measures that can prevent people from needing benefits and make them economically active - like good affordable housing, a free NHS, free education, job creation - but the govt has clearly decided not to invest in these and all of them are threatened. Why has the govt decided this? Maybe because they are worried that the tax payers don't want to fund them.

So - any other ideas? Bearing in mind that doing nothing is not an option.

Agree with hamster.

The problem in the UK at least is that the government have spent far more money than we can reasonably afford. If we had a really low tax regime then you could argue that we should raise taxes.

But our tax burden is around 34% of GDP whereas the average G8 rate is only 29%. Even China, the authoritarian communist country collects only 24%, the same as the US. So compared to our major competitors we're already highly taxed. To raise taxes even higher seems to be unrealistic.

If we had a small structural deficit then again, you could argue raising taxes on the rich is the price worth paying. Except the size of the structural deficit is so large that even if you doubled income tax on the rich and assumed none of them flee, you still couldn't close the gap. And that would be a 80/90% rate!

Finally "Sharing out the wealth" to a socialist could be argued as legalised theft by the person who earned the money and has already paid the taxes due who is then threatened with a further tax just because they have money.

More in tax than you cost??? You may not be paying more in tax because you are not paid enough for what you do, but that is not the same as not contributing. Poor people are poor becuase their jobs are not valued equally and they are not paid enough (the vast majority of us actually) in contrast to rich people who gain lots of money for things like owning property. So it's not just about being wealthy, it's about controlling that wealth. Poor people do not control wealth and have very little opportunity to alter that no matter how hard they work or how essential their role in society is. Rich people do control the wealth and for that reason need to be the people who are contributing more to the well-being of others. To look at the payments of those in control under the same criteria as those who are not in control is ridiculous.

You may call it vile socialism, I prefer to call it fairness.

rosabud

Err......yes. That's the point of taxation, it's a way of sharing out the wealth.

It depends upon your political views as to the 'point' of taxation. Civilised people believe that taxation is a way of raising money to fund essential services. Vile socialists believe that it's a way of 'sharing out the wealth'

The government needs lots of money at the moment, there is a recession on.

The government needs to stop spending quite so much.^

You can't get money from poor people as they don't have any, so making rich people pay more tax is a good idea.

The top 5% of the population pay something like 30% of the income tax take in the UK. If your earnings are in the bottom 60%, then you're never going to pay more in tax than you cost. Rich people are paying plenty.

Solopower You seem to think it is perfectly fair game to rip up all existing agreements and punitively confiscate wealth from those that have worked hard, been successful, and managed to save up a lot of (already taxed) income.

Would it also be fair game to punitively deny benefits to fit and healthy people, who have never worked, never contributed and have no intention of paying tax any time soon? If it isn't fair game then why not?

"Well in the UK you tax them when they sell their shares (CGT). We do that already. He's still rich though...what now? Tax him again because he's still flipping rich?"

Err......yes. That's the point of taxation, it's a way of sharing out the wealth. The government needs lots of money at the moment, there is a recession on. You can't get money from poor people as they don't have any, so making rich people pay more tax is a good idea.

But if you are mega rich then I think you should share more of it.

Why? If you've already paid taxes due on the money then why should YOU or the government for that matter decide what the rich person should spend/not spend their money upon?

I think that's the fundamental principle here isn't it? In a free democratic country, just how do you make a rich person spend their money in a way you would like to see without the rather dangerous precedent of double taxation?

Also please bear in mind that most of the 'mega rich' don't have billions sat in a bank account. What I mean is that Mark Zuckerberg is 'worth' $15 billion. This doesn't mean he has $15b sat in a Cayman island account out of reach of the US authorities. In reality he probably has a few million cash to hand. So just how do you tax someone like that? Well in the UK you tax them when they sell their shares (CGT). We do that already. He's still rich though...what now? Tax him again because he's still flipping rich?

No-one is saying that it all belongs to the state, just more of it. The chancellor can change the tax we pay in any budget, we all know that, and it affects us all.

I've also heard people say, 'I've earned this money, I've paid my dues, why should I give it to the state?' Assuming that you are not one of those who avoids or evades taxation, you keep the money for yourself, you contribute a bit to the economy by buying things from other people, you provide a few jobs and your heirs pay inheritance tax. So what's wrong with that?

Nothing, if the amounts we are talking about are reasonable. But if you are mega rich then I think you should share more of it.

How would you start to put a value on 12 or 13 years of free schooling? Free health care. Safety as you go about your daily business. And the 101 aspects of the society you grew up in that enabled you to do so well out of life? Why is it wrong to ask rich people to pay a bit more of that back into the public purse?

And what is the alternative? A wider and wider social divide and then what? How long before the situation gets dangerous?

But Solo, your demonstration of how unfair it is to have the rules changed on you is also applicable to the rich.

Let's say you own a successful company you've built from the ground up. You employ lots of people who thanks to you all earn a decent living and they all as a result contribute to the UK economy and in turn pay lots of income tax. You yourself pay your income tax, capital gains on dividends, not to mention employers NI, business rates and whatever other taxes I haven't thought about. And despite all this, you've still manage to tuck a significant amount of money away.

The way you'd likely see it is that you've earned it, you've paid your dues and you should be allowed to enjoy it. And if that enjoyment is to stick it all in a bank account and stare at the numbers, who is anyone else to say otherwise?

But under the socialist mentality, this is wrong. That money somehow morally belongs to the state!?!?! And that the government should now change the law to grab this money to be used for 'the greater good'. Does that sound fair to you?

Off on a tangent maybe, but just before I go to pick up my grand daughter from nursery ...

Have you ever played a game of football where the rules are changed arbitrarily, people get sent off for no reason, one team has to play while hopping on one leg, the ref is massively biased, etc? We did this at the 'Make Poverty History' demos in Edinburgh. It was designed to show just how unfair life is for developing countries, and it wa brilliant.

That 'relatively small proportion' of my money works out at around 50% of my total salary when you add all the various taxes I pay together.

Also, I cannot see what is wrong with turning the health budget and the education budget into funding services - the so called voucher system. This way, we all know what we are spending and we all know what we are getting. Let's face it, if you are poor and need food, the government doesn't arrange for a delivery of groceries to your front door. Everyone agrees that it makes far more sense to give all of those who need it some money and put the individual in charge of how they spend their cash. The government?s attempts to manage all parts of the healthcare and education system remind me of the (now defunct) blogger Mr Eugenides' post about what the state should and should not do...

"The main argument now, increasingly, is between those who view the state as an enabler and those who view it as, at best, a sometimes necessary irritant. To employ a massively oversimplified analogy, statists seem to think that the state should act as captain, coach, physio, kitman, ballboy, PR department, groundsman, ticketing department, FIFA representative, the guy with the half time oranges, agent, translator, WAG, turnstile operator, matchday police, the guy selling the big flags outside the ground and the guy confiscating the big flags on the way into the ground. Libertarians just want a guy with a fucking whistle."

Tax havens are nothing new, and in a flourishing economy you could argue that they don't do the rest of us that much harm (though it still sticks in the craw that some people feel the need to do this).

But when the government says it can't afford to look after the people properly, surely it's pay back time for the tax avoiders?

I read something a few years ago about offshore tax havens like Guernsey, Jersey and Isle of Man.

The article pointed out that successive UK Govts of all colours had found it convenient to retain these offshore tax havens close to our jurisdiction to provide a safety valve for the super rich to escape taxes without the UK Govt having to pass special laws to allow them to do so.

Politically, it is impossible to put legislation in place that allows the super rich to have their tax capped (eg at a maximum of £5 million per year) as many people argue they should. A handy local tax haven does that job while still encouraging the super rich to live, work and invest in the UK.

'I can't trust the government to spend my money better than I can .. on myself and my family. Agreed.

But the govt also has to think of people who don't have any money to spend on themselves, and I'm afraid they ask you for a relatively small proportion of your money to go towards the less well-off. Also towards the roads and hospitals and schools which they assume you will need at some point in your lives.

"I can't trust the government to spend my money better than I can."

Perfect - couldn't have put it better myself.

Yes. The sooner they are out and we have someone inpower who can actually govern, the best for us.

Of course I trust you, MrJP. Why wouldn't I?

"But at least the elected profiteers should be more likely to use the money for the common good, and they are also subject to the law."

Both profiteers are subject to the law, but putting on my tin-foil hat, I have more faith in a body that cannot change British law/rules than one that can.