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  #1  
Old 12-07-2019, 01:48 PM
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Where is the money coming from?

Johnson and Hunt have both said tax cuts and money for the Navy and business rate cuts etc Corbyn has said more money as minimum wage buy back the utilities etc. But where the hell are these people going to get the money to fund this all? None of them make sense do they think they will get it from the magic money tree?
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Old 12-07-2019, 02:01 PM
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Well Labour are pretty old school, so you can be fairly sure there will be tax rises.

The Conservatives, presumably by cutting spending on public services.

Both will likely increase borrowing, and aim to set some of the cost of this aside as asset improvement (i.e. In theory Labour could nationalise an industry borrowing to pay the cost, but in turn also could leverage the assets obtained and income generated as a means of mitigating the full cost of the borrowing - or spinning off small franchised operations to the private sector).

I think Hunt and Johnson are really just 'saying things to win votes' and aren't remotely considering delivering on their 'promises'. Even the Conservative party would consider Johnsons tax cuts to be excessive and too much too soon. Likely once PM, they'll rephrase and spin these into policy.

No way will Hunt, if elected, turn around and increase Defence spending by 25% immediately (maybe over a decade). Similarly, Johnson won't impliment such dramatic tax cuts in one go, more likely it'd be over an extended period.
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Old 12-07-2019, 02:03 PM
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Originally Posted by Isle of Wight View Post
Johnson and Hunt have both said tax cuts and money for the Navy and business rate cuts etc Corbyn has said more money as minimum wage buy back the utilities etc. But where the hell are these people going to get the money to fund this all? None of them make sense do they think they will get it from the magic money tree?
Austerity is over
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Old 12-07-2019, 02:45 PM
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Well, Boris has said he might scrap HS2, or might not. He may have to, if he wants to find 100b for other priorities.
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Old 12-07-2019, 03:09 PM
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They have options.

The budget deficit for this year will be somewhere in the region of £29bn i.e 1.3% of GDP. He could easily go to 2% or possibly 3% of GDP.

That leaves either £15bn or £37bn a year. In reality as 35-40% comes back in tax that could enable an increase in spend of £25bn or up to £60bn.

Now note that Boris' talk of raising the starting point for 40% tax from £50k to £80K is not quite as generous as it seems. The upper earnings limit for NI would rise with it so reducing the benefit by 35% and of course pension fund tax relief would also be reduced for those benefiting.

The general view however is that the government is transferring tax from the individual to companies so look out for more NI for employers.
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Old 12-07-2019, 03:14 PM
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They have options.

The budget deficit for this year will be somewhere in the region of £29bn i.e 1.3% of GDP. He could easily go to 2% or possibly 3% of GDP.

That leaves either £15bn or £37bn a year. In reality as 35-40% comes back in tax that could enable an increase in spend of £25bn or up to £60bn.

Now note that Boris' talk of raising the starting point for 40% tax from £50k to £80K is not quite as generous as it seems. The upper earnings limit for NI would rise with it so reducing the benefit by 35% and of course pension fund tax relief would also be reduced for those benefiting.

The general view however is that the government is transferring tax from the individual to companies so look out for more NI for employers.
But that means our debt, and the intrest we pay on it is getting bigger and bigger. Its just kicking the can down the road. I wont be here but my kids will. Good point on the tax + NI Thanks

So Labour will simply borrow more and tax more at the top end. The problem is that the top end as an overall contribution, I thought, didnt really give that much, its the middle income PAYE that gives the gvnt the most.
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Old 12-07-2019, 03:28 PM
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But that means our debt, and the intrest we pay on it is getting bigger and bigger. Its just kicking the can down the road. I wont be here but my kids will. Good point on the tax + NI Thanks

So Labour will simply borrow more and tax more at the top end. The problem is that the top end as an overall contribution, I thought, didnt really give that much, its the middle income PAYE that gives the gvnt the most.
According to ONS figures the UK was running a budget deficit of around 3% of GDP in each of the 6 years leading into the global crash of 2008. 2016/17 was the lowest level of borrowing in proportion to GDP since 2001/02.

There is capacity to reduce the rate of cuts and even reverse them, especially if the result of that is an increase in growth.
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Old 12-07-2019, 03:29 PM
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Originally Posted by Isle of Wight View Post
Johnson and Hunt have both said tax cuts and money for the Navy and business rate cuts etc Corbyn has said more money as minimum wage buy back the utilities etc. But where the hell are these people going to get the money to fund this all? None of them make sense do they think they will get it from the magic money tree?
You're forgetting the Brexit premium.

It is worth inestimable trillions, if we can just be positive and optimistic.
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Old 12-07-2019, 03:32 PM
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The idea of raising the start point for 40p tax wouldn't be my preference for social justice reasons but from a supply side angle it could make sense. The government strategy seems to be to increase the size of the workforce and given the shape of the demographic pyramid they will have to work hard to attract more older workers into the labour market and keep skilled staff.

So as people get to 60 and they get both their wages and in many cases part of their occupational pensions, plus income from investments and inheritance you will see many getting caught in the 40p tax band. Failure to act could see a brain drain from work to retirement to avoid 42p marginal rates of tax and NI.
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Old 12-07-2019, 04:13 PM
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I think Hunt and Johnson are really just 'saying things to win votes' and aren't remotely considering delivering on their 'promises'.

surely not!
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Old 12-07-2019, 04:35 PM
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So Labour will simply borrow more and tax more at the top end. The problem is that the top end as an overall contribution, I thought, didnt really give that much, its the middle income PAYE that gives the gvnt the most.
Not sure I follow.

Basic rate tax makes up roughly 50% of all income tax receipts. Higher rate tax makes up roughly 30% of income tax receipts and additional rate makes up roughly 20%. There are circa 26m basic rate tax payers, circa 4m higher rate tax payers and circa 400k additional rate taxpayers.

Top 1% of income (per the release a week or so back) is expected to be income of £188k this year, and those taxpayers are expected to account for 29.6% of all income tax receipts. The top 5% (which is expected to be income of £83k, and includes the top 1%) are expected to account for 50.1% of all income tax receipts.

There are not details for the top 0.1%, which is usually income of around £1m, and will represent a large proportion of the top 1%’s contribution).

Edit: Actually I did find some numbers for this. In FY20 6000 taxpayers are expected to account for 7% of all income tax paid. So that’s the top 0.02% of earners will account for 7% of all income tax receipts.
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Old 12-07-2019, 05:36 PM
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Not sure I follow.

Basic rate tax makes up roughly 50% of all income tax receipts. Higher rate tax makes up roughly 30% of income tax receipts and additional rate makes up roughly 20%. There are circa 26m basic rate tax payers, circa 4m higher rate tax payers and circa 400k additional rate taxpayers.

Top 1% of income (per the release a week or so back) is expected to be income of £188k this year, and those taxpayers are expected to account for 29.6% of all income tax receipts. The top 5% (which is expected to be income of £83k, and includes the top 1%) are expected to account for 50.1% of all income tax receipts.

There are not details for the top 0.1%, which is usually income of around £1m, and will represent a large proportion of the top 1%ís contribution).

Edit: Actually I did find some numbers for this. In FY20 6000 taxpayers are expected to account for 7% of all income tax paid. So thatís the top 0.02% of earners will account for 7% of all income tax receipts.
Hah much better than my ramblings

So his plan would be to hit the top 5% who produce 50% of income tax. However they tried that in the 60s and 70s and they all buggered off. The really high ones hide it all in avoidance schemes anyway as they can afford to employ people to do it for them. Never changes as no matter what a Gvt does they find loopholes. The other thing is how much does income tax provide to the whole budget?
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Old 12-07-2019, 07:45 PM
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2018-19 financial year income tax made up £202bn out of £740bn tax revenue. See Figure 3.
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Old 12-07-2019, 07:57 PM
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Forgive me I never did economics at school but isnt this the same as me saying Im going to spend 3% more than my salary and building up a bigger an bigger debt that with the interest that gets compounded eventually makes me bankrupt. It simply doesnt make sense.
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Old 12-07-2019, 08:33 PM
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Quote:
Originally Posted by Adlerhorst View Post
Not sure I follow.

Basic rate tax makes up roughly 50% of all income tax receipts. Higher rate tax makes up roughly 30% of income tax receipts and additional rate makes up roughly 20%. There are circa 26m basic rate tax payers, circa 4m higher rate tax payers and circa 400k additional rate taxpayers.

Top 1% of income (per the release a week or so back) is expected to be income of £188k this year, and those taxpayers are expected to account for 29.6% of all income tax receipts. The top 5% (which is expected to be income of £83k, and includes the top 1%) are expected to account for 50.1% of all income tax receipts.

There are not details for the top 0.1%, which is usually income of around £1m, and will represent a large proportion of the top 1%ís contribution).

Edit: Actually I did find some numbers for this. In FY20 6000 taxpayers are expected to account for 7% of all income tax paid. So thatís the top 0.02% of earners will account for 7% of all income tax receipts.

So if my maths are correct.....4.4 million tax payers will benefit from Boris's new tax change? and we as a country are set to loose circa 9.6 billion pounds????

Need to stick that on the bus I reckon
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Old 12-07-2019, 09:35 PM
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So if my maths are correct.....4.4 million tax payers will benefit from Boris's new tax change? and we as a country are set to loose circa 9.6 billion pounds????



Need to stick that on the bus I reckon

In true Boris style this is pandering to his current electorate and it will no doubt be forgotten about once heís in. No doubt howls from the blue rinse brigade but they are less relevant electorally once Boris is in. He has form in having his pants n fire and heíll have the Corbyn spectre to use to the disaffected crumblies when he reneges on this promise.

Of more relevance is the 90bn a no deal will cost. Thats what needs to go on the bus
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Old 12-07-2019, 10:27 PM
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Forgive me I never did economics at school but isnt this the same as me saying Im going to spend 3% more than my salary and building up a bigger an bigger debt that with the interest that gets compounded eventually makes me bankrupt. It simply doesnt make sense.
There is a multiplier effect in that every pound the government spends is recirculated several times in the economy. Running a deficit can be a good thing if it stimulates other economic activity.

It is not the absolute level of the debt that is important, but the level of debt compared to GDP.
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Old 12-07-2019, 10:34 PM
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There is a multiplier effect in that every pound the government spends is recirculated several times in the economy. Running a deficit can be a good thing if it stimulates other economic activity.

It is not the absolute level of the debt that is important, but the level of debt compared to GDP.
But that debt still has to be paid at some time also who is the debt with? An ever increasing GDP is an impossible dream. It has to end some time. I thought I read somewhere that NZ was abandoning a slavish drive for ever increasing GDP .
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Old 12-07-2019, 11:33 PM
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But that debt still has to be paid at some time, also who is the debt with?
Governments raise money by issuing treasury bonds. There can be many buyers and they may include pension funds, hedge funds, and other governments that want assets in a reserve currency.

The bonds have an expiry date so, in theory, they have to be repaid but generally a government will just issue new bonds to replace them. If a government had surplus cash they could choose not to reissue bonds.

Quote:
An ever increasing GDP is an impossible dream. It has to end some time. I thought I read somewhere that NZ was abandoning a slavish drive for ever increasing GDP .
Increasing GDP is the policy objective of just about every government in the world. New, well paid jobs come from increasing GDP. I would argue that ensuring well paid jobs for its citizens is a government's highest duty. The opposite is recession. The trick for governments is to manage the increase so that all parts of the economy growth at a supportable rate.

I don't see there is a finite limit to growth though what constitutes growth will change over time as circumstances change.

In the terms of this discussion the value of existing debt shrinks as the economy grows so modest deficits that facilitate economic growth (such as infrastructure development and research and development) are a good thing.
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Old 12-07-2019, 11:39 PM
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"In the terms of this discussion the value of existing debt shrinks as the economy grows so modest deficits that facilitate economic growth (such as infrastructure development and research and development) are a good thing."

That makes sense Thank you.
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