Labour wants tax cuts now ??

[CogitoErgoSometimes]

Balls urges tax cuts

I can't help feeling that Balls has got wind of Treasury plans to announce some small tax-cuts in the next budget and by pre-announcing them as 'our idea' is trying to shoot the Coalition fox.

That would be a pity, as it would mean that Labour s still just yapping objections.

I was hoping that this might actually be the start of a real, costed alternative agenda.

BTW: where does he say the money will come fom? Is Labour recommending borrowing more to pay for any cuts? I assume they must be - or have they proposed additional new cuts to pay for the tax cuts (at least in the short term).

I can't help feeling that Balls has got wind of Treasury plans to announce some small tax-cuts in the next budget and by pre-announcing them as 'our idea' is trying to shoot the Coalition fox.

Why can't you help feel that?

BTW: where does he say the money will come fom? Is Labour recommending borrowing more to pay for any cuts? I assume they must be - or have they proposed additional new cuts to pay for the tax cuts (at least in the short term).

By cutting taxes on VAT and the lowest earners, you put more money in people's pockets to spend. When people spend, they stimulate the economy. This helps the economy grow and simultaneously increases tax receipts. It also reduces people on welfare and income support.

Hope this helps.

'By cutting taxes on VAT and the lowest earners, you put more money in people's pockets to spend. When people spend, they stimulate the economy. This helps the economy grow and simultaneously increases tax receipts. It also reduces people on welfare and income support.'

That's exactly the sort of thing that Thatcher said. The Tories have won many elections with their promise to reduce taxation and stimulate growth.
Thatcher changed the left
www.telegraph.co.uk/news/newstopics/themargaretthatcheryears/1895878/Margaret-Thatcher-inspiration-to-New-Labour.html
Are Osborne and Cameron changing the current crop of progressives too?

That's nice. Thatcher also oversaw the largest increase in wealth distribution from the poorest to the richest in 50 years.

The problem with the economy right now is not that it's so hard to do business, but that there's a lack of demand, because wages have stagnated since the 1970s, and people have have had to take credit to keep up their standard of living.

Now they're paying off their debts and many are without jobs. There's no way the economy can get moving again when the majority of the public doesn't have any money to spend.

So it's not about 'tax cuts' per se. Simply cutting taxes isn't a panacea for growth or a healthy economy. If you imagine the economy like a circulatory system, it is not suffering from blood clots and poor circulation. If people at the lower end had more money to spend, demand would increase overall, and get 'the blood' flowing again.

Agree it is mainly a lack of demand due to not enough income and surplus cash. The Tories always believe in letting people keep more of their money in their pockets and believe in letting people make their own free choice about how to spend their own money rather than letting the state decide for them. So the more quantitative easing for the people by allowing them to keep more cash, the more hope there is of increased spending which will increase demand. That way teh nbottleneck of banks holding onto cash and not lending it out may be broken and the economy may begin to recover as goods and services begin to experience increased demand.

It looks like Ed Balls and co are possibly beginning to agree that we are in good hands with Osborne at the helm.

If it carries on like this, there will be no real opposition at the next election, as all sides move closer to agreement.

pandering to the people who don't feel disenfranchised you mean.

there is no real thought for the poor when considering power

ttosca: yes, I get that as the long term aim, but how does one afford the costs of initial implementation? For in the short term, it's more expenditure and it's not clear how expensive it would be nor how that expense would be covered.

"Why can't you help feel that?"

Because it's out of character for Labour to propose tax-cuts and, as Claig points out, far more typical of Conservative economics. If Osborne was to announce anything like this in a budget the Labour front bench would normally be waving their papers, shouting him down for looking after the wealthy or bribing voters. They know that approach wouldn't go down well this time around. If Osborne now announces anything similar in the budget, Balls will say 'it was our idea first' and, if Osborne's tax cuts are lower, Balls will say 'we'd have done more'.

So the conclusion is that Balls knows there will be tax-cuts in the budget and is trying to steal Osborne's thunder. Pure politics.

Cogito-

Because it's out of character for Labour to propose tax-cuts and, as Claig points out, far more typical of Conservative economics. If Osborne was to announce anything like this in a budget the Labour front bench would normally be waving their papers, shouting him down for looking after the wealthy or bribing voters. They know that approach wouldn't go down well this time around. If Osborne now announces anything similar in the budget, Balls will say 'it was our idea first' and, if Osborne's tax cuts are lower, Balls will say 'we'd have done more'.

So the conclusion is that Balls knows there will be tax-cuts in the budget and is trying to steal Osborne's thunder. Pure politics.

Your perception is obviously based on a strawman. Cutting taxes isn't necessarily good or bad, or regressive or progressive. It's a matter of how they are done.

Of course the Tory scum would typically be criticised for cutting taxes, because they would tend to cut taxes for the wealthiest, and they would do so in the name of 'trickle-down' economics; that idea which started in the 1980s, and which has shown, not only to be false, but to have precipitated a massive rise in wealth inequality.

Cutting taxes for the poorest is not a Tory idea. It's not a right-wing idea. It's a Keynesian idea.

It's Keynesian because it concentrates on stimulating demand during a recession, and it concentrates on the demand, rather than the supply side. That is to say, rather than trying to make it easier for jobs to do business in the UK (this is not a problem, the UK already being relatively deregulated and low-tax environment), one tries to put more money into people's pockets, so that they can spend and get the economy going again.

Edith-

What makes you think they're unaffordable? The UK has one of the lowest borrowing costs in europe. The increase in tax revenue will, if successful, more than make up for the cost.

And the cost for not stimulating the economy and sitting in a recession is far, far, worse.

David Davis was quoted in the Telegraph as saying that the tax cuts that would most benefit the economy are also the ones that would be the most politically unpalatable - the 50% top rate, corporation tax and capital gains.

Meanwhile the LibDems are pushing to increase tax for higher earners so that they can take more low earners out of tax altogether.

David Davis was quoted in the Telegraph as saying that the tax cuts that would most benefit the economy are also the ones that would be the most politically unpalatable - the 50% top rate, corporation tax and capital gains.

Indeed, and he is wrong, and that's why tax cuts shouldn't be given towards the highest earners and corporations, but those on the bottom end of the scale who will stimulate demand.

Meanwhile the LibDems are pushing to increase tax for higher earners so that they can take more low earners out of tax altogether.

Right. And Milliband's proposed tax cuts (AFAIK), concentrate on the lowest earners and VAT -- which hits the poorest hardest, and directly relates to consumer spending.

Yes, I agree that tax cuts should go to the lowest earners in the first instance. They are more likely to spend their money in this country in local shops rather than jetting abroad and spending it on holidays abroad.

I agree that it would be morally wrong to prioritise tax cuts for big corporations and the wealthy, and would prefer to see a more progressive VAT cut.

But I wonder if there are any statistics about which tax cuts generate the biggest economic benefit, would be interesting I think.

We've read of some of these big corporations not paying much tax in this country, so I am not sure if they really need any further tax cuts.

"What makes you think they're unaffordable?"

The absence of a costed plan to pay for them. Balls needs to show the figures.

If we embark on additional borrowing to a for tax cuts, the cost of borrowing will not remain low. And it isn't clear we can afford more borrowing anyhow, it's bad enough with what we've got anyhow.

Yes Balls did admit to his plans being unfunded, which seems mad given the warning from Moody's. Surely any tax cuts would have to be matched with revenue raising elsewhere?

I know - cut tax for the wealthy and increase cuts in benefits for the poor! Hurrah! Oh, wait, even better: cut benefits for the poor and introduce Workfare schemes run by large, profit-making businesses. That way you can keep a technical minimum wage but bypass it at the same time. And then encourage wealthier people to do non-profit making voluntary activities in their spare time in an attempt to cover the real needs of the local community, beyond shelf stacking at the local supermarket - because although necessary, they really are tiresomely unprofitable and therefore not worth spending much time or effort on. And with a large, cheap labour force, this country will look very attractive to big businesses, although there will be fewer and fewer well paid jobs to go around as time goes on, because the roads and essential services are beginning to fall to bits, so the well off will have to live in little protected enclaves and do a lot of jetting off to more agreeable climes (where they keep their tax-free profits) when they want to relax and spend money.

Still, with any luck, when we're really poor, we'll get aid from India, because it will delight in giving us peanuts.

Yes Balls did admit to his plans being unfunded

And that to me is why I will find it very difficult to ever take Labour seriously again. At this point the Labour solution is to cut taxes and borrow more.......

I'd support a costed tax cut either by reducing spending further or targeted taxation (ie. tax the rich, cut taxes for poor)

But Labour proposing an unfunded tax cut just makes me think they still haven't grasped the fundamental problem in our economy was overspending by successive governments (across the western world).

a) short-term borrowing is perfectly feasible if it is spent on stimulus, which will promote long-term growth.

b) The fundamental problem with our economy wasn't overspending by successive governments.

The fundamental problem with our economy was squandering the revenue from the finance boom and borrowing money on top to pay for the wrong things. Brown promised the 'Golden Rule' ie. only borrowing to finance capital projects and other long-term measures to create growth. He then quietly abandoned it in favour of creating a massively overblown public sector that could never survive the bust that the boom would inevitably result in.