To think we don't need austerity

[BreakingDad77]

Seeing as we give away £93 billion to businesses
www.theguardian.com/politics/2015/jul/07/corporate-welfare-a-93bn-handshake

and that all those people going on about tightening belts, cutting tax credits etc etc have become sucked into the Tory PR machine.

Does increasing tax rates always increase the revenue for the exchequer?

What does this patronising rhetorical question have to do with the price of fish? Are you just trying to make yourself sound clever?

Wonders what page of replies before someone mentions that we need austerity or end up like Greece. If anything Greece shows austerity does not work and causes people to riot/protest and the country is on the verge of collapsing

Greece should have adopted austerity about 15 years ago. Instead, they joined the Euro and went on a socialist spending binge "with their mum's & dad's credit card".

The Greek financial crisis shows that government spending does not create economic growth.

The "Banking Crisis" excuse ran out years ago.

how did it run out - it was a thing - that happened - that effected the world wide economy and cost the tax payer millions

CFaptain:
It wasn't rhetorical. If you felt patronised my apologies.
However, I guess from the tone of your reply that you know the answer.

You cannot apply household finance principles to business finance and beyond. Debt leveraging is a real thing.

That being said, I think the government need to do more to make work pay. Yes they should cut tax credits, to use the phrase, we shouldnt be spending taxpayers money subsidising big companies, but they also need to force businesses to pay a better wage to match.

YANBU there is no such thing as other people's money. It's all other people's money. None of us make money - we just pass it around.

If the government's austerity plan actually worked, they wouldn't have doubled the national debt in the last 5 years.

Mind you, they've costed everything now; e.g. sending lone parents back to work (right or wrong is irrelevant) will save about £55 million over 3 years, nearly as much as the MPs' pay rise will cost. So, you know, sacrifices necessary and all that ...

Be nice if the whole population had a 12% cut on their income, not just the poorest 30%.

Obviously not but most people didn't vote Tory

No bit most people did vote for a form of austerity though. Both Lab and Tories wanted some form of cuts and austerity.

People seem to forget this.

How sweet of you to apologise for patronising me and then immediately patronise me again.

There is a balance between having taxes so low that they don't bring in enough tax receipts for us to 'live within our means' and so high that wealth creation is discouraged. If you didn't know that then I'll eat my hat. We have just cut inheritance tax, which reduces tax receipts as people still die regardless, cooperation tax - which is woolier as a competitive rate cooperation tax encourages wealth creation and therefore increases tax receipts but as it was already the lowest in the G20 then it's tricky to argue that it isn't an idealogical tax cut for the rich during a time of 'austerity'. The tax threshold for the 40% rate and other tax cuts for wealthier people (isa limit increase) etc are broadly considered to reduce tax receipts. The low wage, low skill, low security economy that has been fostered under this government has considerably reduced tax receipts. The refusal to close tax loopholes used by the likes of DCs family is farcical at a time when the poor are ordered to 'live within their means' with poor job security and nipple clamps on the unions.

Of course austerity is ideological but I don't hear anyone suggesting anything radically different.

Capping private sector rents
House building programme
Banning/Limiting zero hours contracts
The Living Wage
Getting rid of workfare
Not renewing trident
Not selling off profitable state assets at knock down prices to your best man

Not radical maybe, but an alternative. Every time someone suggests it then they are ridiculed for being a lefty loon (Corbyn) or the most dangerous woman in Britain (Sturgeon), meanwhile the debt grows and grows.

I agree that some of those sound appealing as a way of reversing something which has been disasterous but do you not think that something much more radical is required? Tinkering at the edges of a sinking system is laughable - we need an alternative.

Simply the economic structure that we have is unsustainable and at some point in the future will implode.

Captain you forgot binning HS2.

Redbinneo - nothing is universally supported, but it's been the most widely accepted position of most economists for close to a hindered years.

Here in my county, they decided that they needed to save money on the Children's Centres that were set up by the Labour government and had taxpayers' money to provide state of the art services and facilities.

Note: these Children's Centres were free and accessible to all at first, and particularly to those who really needed them.

In the name of Austerity and saving money, the CC sold them off to a local nursery entrepreneur. All that taxpayers' money now in private hands. He had to agree to keep certain services going, of course, but we noticed a lot of groups being moved and changed.

A year or so ago, he sold the lot off to one of the big nursery chains.

And that, ladies and gentlemen, is how Austerity works. No wonder certain sections of our society are so in favour of it!

Redbinneo - I have two questions about your economic theories;
1- On counter cyclical fiscal policy, whilst it's not universally accepted it is the most widely held economic theory around and has been since the Great Depression in America which provided huge amounts of empirical support as the new deal and later WW1 brought the country out of recession. The basic idea that spending government money to create jobs gets an economy moving again, bringing it out of recession and in the long run therefore increasing tax revenue isn't new. In light of the volume of empirical and theoretical, support for this would you care to elaborate on "it's not universally accepted"?
2- On the later curve, no raising taxes doesn't always raise revenue (the most obvious example being that a 100% tax rate would bring in no revenue as no one would work) but most empirical studies have suggested around 70% is will raise the most revenue! most recently in the UK the Conservatives own figures were that reducing the top rate of tax from 50% to 40% would only cost £x billion, so whilst not every increase in the rate of tax will raise more revenue, every increase to Britains taxes will because we are below the revenue maximising level on almost all empirical estimates. Do you disagree with this empirical research or was there another point to your post beyond stating a theoretical fact that is true but irrelevant to this debate?

Incidentally to add to my point 1 above graphs like this show how much more effective counter cyclical fiscal policy in the 1930s was compared to austerity in the 2010s. The two recessions started off on the same tracks, but government spending bought the 1930s recession to a much quicker end, growth happened both sooner and more rapidly. It's also interesting to see that in 2009 we were recovering then the recovery levelled out (shortly after the Coservatives came to power and started announcing plans forw austerity).
upload.wikimedia.org/wikipedia/commons/5/5b/1937_to_1943_vs_2008_to_2011.png

Wait tat graph isn't GDP, it wasn't the graph i was looking for. Umm, just google Great Depression vs 2008 recession and you'll find it.

I hate the "most people didn't vote tory" line. More people didn't vote for the warmongerer and his spend freely government but you don't hear people ranting on at any opportunity about that.

Actually Doe some of us have been "ranting on" about the need for electoral reform for a long time.

This is the graph I meant;
www.economicshelp.org/wp-content/uploads/blog-uploads/2012/04/2-uk-recessions.jpg

That's because he isn't PM at the moment, DoeEyedNear. Plenty of moaning happened at the time, as it does with every Government under the present electoral system.