to wonder why Labour supporters think...

[TipTopCat]

that raising taxes will be the answer to all our problems?

However, the IFS has stated categorically that all that Labour wishes to do cannot be done by raising taxes.

Labour’s proposals would raise spending to its highest level since the mid-1980s and tax levels to record levels in peacetime, the thinktank said. But the party’s plans for tax hikes aimed at top earners and businesses may “not raise anything like” the £48.6bn claimed and its proposals could turn out to be economically damaging, it added.

Additionally, companies currently providing jobs in the UK may well leave it corporation tax is increased.

The 'brain drain' of the 1970s may well emerge too.

There is masses of evidence that increasing tax for high earners does not result in a bigger pot for the government. Reason? High earners stop working so hard, defer promotion, etc.

So why do Labour voters think that a high tax economy is the answer to everything?

TipTopCat - welcome to Mumsnet. I assume you have arrived here from Conservative HQ?

I wonder why the hard left thought companies where all about to leave the UK because of Brexit but they have changed their minds and are all going to stay here because they will be able to pay more tax.

Companies leaving because of Brexit would not be down to levels
of corporation tax, but due to the implications of leaving the single market - tariffs and non-tariff barriers, difficulties with the supply chain etc.

OP What the IFS seem to be saying is that Labour are optimistic in raising the funds from tax increases for specific policies which could have damaging economic consequences But why do you think Labour supporters would think this was either the only answer or the only policy? What the IFS also say, is that raising the minimum wage is a gamble in terms of economic growth but I like Nice's reasoning above. There are no Tory attempts to provide costings for their policies. And regarding Brexit, we have no idea what those policies are anyway!

National instability and uncertainty, unknown trading conditions, issues with public services, a national government that is openly influenced by outside pressure groups (arms, energy etc), why wouldn't a company choose an EU country over the UK? But moving takes time - may as well collect corporation tax while you can.

Personally I don't want to live in a society where we don't even have the ambition to let all children eat and all sick people be seen by a doctor. Where you are actively encouraged not to care. I consider that a greater misfortune than a raise in income tax. I wouldn't wish it on anyone, I certainly don't wish it on my own children.

This election will be the first time I've ever supported Labour. I'm supporting them because of the 'higher' taxes. In the last 7 years my wage has been cut by almost 20%, as has most of the public sector. The school I work at has lost so much funding that is now really struggling. The Police have been chronically starved of the resources needed to ensure our safety.

This money has gone on two things in particular that piss me off:

-Cutting the top rate of tax for the wealthiest from 50% to 40%.
-Cutting corporation tax to almost the lowest in Europe.

In other words: redistributing wealth from the poor to the rich.

The Labour party are only partially reversing these tax cuts and I benefit personally from this reversal, as do the services I value.

I think there should be a flat rate of tax for everyone.

Ooh I've had my first ever post deleted. I must admit it wasn't up to my usual eloquent standard, and I apologise if my swearing offended anyone.

However, like BIWI I noticed the OP was a first-timer and also wondered if they were a Tory plant. I also note the OP hasn't returned to the thread - perhaps they didn't like the turn it took policy-wise?

And for the record DH & I are both in the top tax bracket and would be happy to pay more tax to help fund public services. And especially if it means free University tuition fees (which I benefited from back in the Dark Ages). As a family we'll be in hock for over £60k with 2 dc heading to University. We could afford to pay quite a lot more tax in lieu of that.

(Not a Tory or Labour supporter by the way)

It's not just the headline rate of tax which us relevant to the debate on weather the richer are seeing their taxes increase or decrease.
Even the resolution think thank - which deals in inequality have stated that the rich are taxed too much..

I don't think raising taxes is the answer to all our problems. I don't know any Labour supporters that do. Where have you got that viewpoint from?

I see a country that needs a long term plan that works for everyone. I want our young people to have futures away from nil hours jobs, I want those with disabilities to stop being punished for daring to fall sick.

I see the Labour manifesto as a long term plan. We need to invest in order to increase productivity, in terms of manufacturing, education, infrastructure. This will require higher taxation on those on the highest incomes, but a more productive, prosperous country will inevitably result in gains for those people. I expect debt to increase in the shorter term, but debt isn't a bad thing if it reaps greater rewards.

There's nothing wrong for wanting a better future for everyone.

headofthehive55 no they don't. The FT covered their report which looks at how tax in the UK has become increasingly progressive, (where does it say the rich are taxed 'too much'? They point out that when direct and indirect taxes are taken into account , the 20 per cent of households with the lowest incomes paid 38 per cent of their gross income — £4,900 — in tax, while the 20 per cent with the highest incomes paid £29,200 — or 35 per cent of their gross income, according to the Office for National Statistics. Indirect taxes have a much greater burden on lower income families who spend (rather than save) more of their income.

Where are these companies going to decamp to. Have you looked at international corporate tax rates. I will take that as a no.

Gah missed the first sentence out. The Resolution foundation did not say the rich were taxed 'too much' but that the tax system was too dependent on them. It was the OECD report that the FT covered though the Resolution Foundation's other findings showed the burden was greatest on the poorest.

Cutting tax rates does not cut tax paid. Companies do not need to move production/staff around to move profits around.
For example:

Starbucks argue they make sales in the UK due to the value of the bran name and formulation of the coffee blend. Both of those are owned by a Swiss company, which the UK pays royalties to. The lower the UK corporation tax rate, the less incentive there is for Starbucks to increase the royalty rate. 17% of something is more than 26% of nothing.
To raise £4.5 bn from a 5p rate rise it will mainly come from the 18,000 who earn over £1m. Most of these people are extremely mobile (except footballers)

"Starbucks argue they make sales in the UK due to the value of the bran name and formulation of the coffee blend. Both of those are owned by a Swiss company, which the UK pays royalties to. The lower the UK corporation tax rate, the less incentive there is for Starbucks to increase the royalty rate. 17% of something is more than 26% of nothing."

1. Most companies can't move imaginary money around to edit their "profits like this". Very few companies move their profits abroad in this way to avoid tax.
2. If a company wants to do this enough there are plenty of tax havens. Its not worth slashing taxes on our real economy to attract a few companies. There is a good reason that big economies are never tax havens.
3. Fix the damn tax laws so this is definitely illegal. Make all tax avoidance punishable by prision for the board members. Starbucks' fiddling is under investigation even with the many grey areas in current law.

If you are too dependant - then it's too much and too risky. You must reduce your dependency on them. How? Take less. citroen

Hatred of "tax dodging" implies that the companies are doing something illegal. If they are not doing something illegal then they are legitimately operating within our tax laws - which the govt have set up with the authority of the people.

That is neither avoidance or dodging.

In a similar vein then, lots of occupational groups of people, ambulance crew, nurses, HCAs, must be "dodging" tax as they get set allowances to offset against tax. No?

If needs are not met then it's not enough headofthehive

Donquix You cannot make it illegal. International tax laws agree, and it is obviously fair, that where a company trades across borders, profits should be based on 'economic' value of transactions.
For example, Mini cars are designed and built in the UK but sold to BMW in Germany and then to a German customer. The total profit to BMW is, say £10,000. How much should be in the UK and how much in Germany.
Under current rules it would be around £8k UK and £2k UK as design and build has more added value than selling.
Under your rules, it would all be in Germany because that's where the car is sold.
How do you deal with both Starbucks and Mini? It is not a simple calculation and relative tax rates will influence how companies treat these trades. They also have to deal with rules and public opinion in Germany.
The companies that pay the majority of tax can move money around. Under UK rules they must prepare documentation to support their international trade position, and relative tax rates influence how they set up their profit sharing

needs and wants sometimes get confused. citroen

Intellectual property re making coffee (Starbucks). The profit sits where the 'value' is created. So if you roast beans in the Netherlands you can divert profits etc etc etc etc. There are all kinds of ways to NOT pay tax but the only way Starbucks DID pay 8.1 billions worth of tax to HMRC in 2015 (that's an awful lot of footballers) was it became the poster child of tax evasion. Tory response? Tax was not a 'moral issue' and it was wrong that Starbucks should be subject to 'public bullying'.

Well you can define keeping the NHS as a 'want' headofthehive if you like. I classify it as a need.

million not billion...!

surely it is better to raise income tax rather than VAT because it doesnt hit the most vulnerable?

All the parties are saying they will raise tax (apart from UKIP im not really sure what on earth they are saying) Its just a matter of how.

I think the theory is that if people feel more secure spending money because they are not facing austerity any more then it will encourage companies to stay even if they are taxed slightly more simply because there wil be more money to be made from people spending? So it should even out?

We ALL need to pay more citroen not just a few.

That's fair.