For a number of years we have been fed this lie that the more we tax the rich the more income the country receives. The thought behind this is quite simple, and in essence sounds logical. It is this, if you raise the amount of tax a wealthy man pays, the more money he will contribute to the economy.
Is this true? Well to put it simply it isn't! You might be surprised to hear that. You may say, 'it makes sense that the more you tax someone the more you receive'. That sounds logical, and it is true when you look at the lower end of the social and economic scale. I pay my tax at source via PAYE (basically it is taken directly out of my wage) and there is nothing I can do to stop that. If the government decided tomorrow to increase tax for lower earners to 50 per cent, there is nothing I can do but pay it.
For the very wealthy (that is the top 1 per cent) it is different, they can invariably get away with paying a smaller proportion of their wealth simply because they can find lots of different ways around the tax system.
The government received last year £47 billion in tax from the top one per cent. Since 2000 the share contributed by this top 1 per cent has increased from 22,2 per cent to 27.7 per cent. What is interesting is since the 50 per cent tax rate has been introduced the amount the exchequer has received in income tax from the top bracket has actually decreased by £500 million.
Why is this? Well an economist called Arthur Laffer discovered this simple truth; high tax rates bring in less tax than lower ones, because they result in greater tax avoidance. There is nothing illegal about this, it just means organising your affairs within the rules so as to pay less tax. Any self employed person will do this, they will claim for anything and everything, like their; expenses, fuel, heating, clothing, telephone, etc and if you are self employed and do not earn a very high wage you could actually end up paying no tax. This is the same for very wealthy people but obviously on a grander scale.
If we look at history we will see that the evidence is there to show that what Arthuer Laffer said is true. In 1979 our top rate of income tax was 83 per cent, one of the first things the then Chancellor Geoffrey Howe did was reduce it to 60 per cent. Practically overnight the top one per cent went from contributing 11 per cent to the nations coffers to contributing 14 per cent.
In 1986 the conservatives reduced it again from 60 per cent to 40 per cent and the amount received increased to 21 per cent. So by reducing the top rate of income tax the amount paid by the most wealthy almost doubled.
Here are some other examples from around the world. In 2003 George W. Bush reduced the tax paid by those earning over a $1 million and the income from them almost double in three years.
In India taxes were cut in 1997 and income rose. In 1981 Canada's top rate taxes were cut and receipts from taxes rose. In Russia Putin replaced the complicated tax system and brought in a simple flat rate tax of 13 per cent and receipts rose by a quarter.
In the UK we have an incredibly complicated tax system, which mean that for many self employed people they have to employ an accountant to sort out their accounts. As I said in my last post Gordon Brown almost double the size of the accountant's tax guide to 14,500 pages.
Surely the answer to many of our economic problems would be to bring in a simple flat tax system. It would mean it would be easier for lower earners who are self employed to pay their tax, by having a very simple form to fill in, and secondly it would be more difficult for the rich to avoid paying tax. Those earning under £12,000 - £15,000 would not have to pay tax, thus meaning they would have more to spend, and then they can contribute towards the economy.
Many of our economic woes are down to bad management, the government has continually wasted money; one good example of this was a report which looked into waste which found that Whitehall could save £600 million on phone bills alone.
Over the years chancellors have tried to close tax loopholes, Chancellor Alistair Darling tried to do this in 2008 by introducing a £30,000 tax on 'non-doms' (these are rich people who basically work in the UK but are domiciled abroad). 16,000 simply moved their affairs overseas, resulting in a loss to the treasury.This happens all the time.
I have had conversations at work in regards to what I have written, and some have argued that we should stop this and bring in more regulation and tax them more. They say the government should bring in legislation that forces them to pay tax on what they earn in this country. But as you can see it is quite clearly not that simple, and if we tax and over regulate people and companies they will just leave. The obvious thing to do would be to reduce regulation, thus freeing up business to do what it does best, and that is grow (what businessman when asked if they wanted to stagnate or grow would say stagnate?). And secondly it is quite obvious that taxing the rich at an exorbitant rate does not work, this has been borne out by what happened to Britain in the 1970's. So surely the obvious thing to do would be to cut taxes, but I believe because that would look bad politically and also the Libdems hold so much sway and do not have a clue it is unlikely to happen, even though it should.
Saturday, 10 March 2012
Friday, 9 March 2012
Waste, over regulation and how to get our economy going.
Since coming to power the Conservatives and Liberals have been talking tough about cuts and helping our economy. When the Tory led coalition came to power they talked about helping manufacturing and about cutting regulation. We have had leftist propaganda stating how awful these cuts are, but the reality is somewhat different.
There haven't been any real cuts. Basically the state spends 43 per cent of our annual output compared with 37 per cent when Labour came to power in 1997.
One of the problems we have within government (and this probably goes for all governments around the world), is that it is very easy to waste money. This is because it is not their money, secondly governments are large bureaucratic organisations and thirdly they are run by people who do not really understand what they are doing, and have done very little if anything outside of politics.
You only have to look at the previous government to see how not to run a country. Massive waste on a scale that has hardly ever been seen before; over £20 billion wasted on a computer system for the NHS, billions more sacrificed by Gordon Brown's decision to sell off most of our gold reserves. I could go on and on.
What the previous government also did was create many departments and QUANGO's which have also wasted billions of our taxes. One example is the Dept for Business and Skills, which 36 MPs have called to be abolished, this would save £1 billion a year.
On top of this Gordon Brown created such a complicated tax system that the current edition of Tolley's accountant's tax guide runs to 14,500 pages - twice as big as when Gordon Brown became Chancellor in 1997.
This department headed by Vince Cable has failed to make Britain a better place to do business. Companies continue to complain about regulation in every aspect of their business, this of course heaps massive costs on their ability to compete.
The Free Enterprise Group has claimed that excessive regulation costs Britain's economy £112 billion every year. Let me repeat that £112 billion!! And that is only the start.
In 2008 all parties voted through the 'Climate Change act', this one law is going to cost tax payers £18.3 billion every year from now until 2050. Our contribution to the EU this year will be nearly £20 billion, not including what we will contribute via the IMF to help bail out the eurozone economies. The government has also committed themselves to increasing our overseas aid budget to 0.7 per cent of our GDP, even though they admit themselves that there is massive problems with fraud and waste.
The Business department recently hosted a 'manufacturing summit' to discuss how 'the government continues to put manufacturing at the heart of its growth programme'. This is the same government who handed over a multi billion pound contract to build trains for the Thameslink rail programme to Seimens of Germany instead of a British based company - Bombardier, which would have protected thousands of jobs. This same government handed a £485 million contract to build small sea going tankers for the Ministry of defence to a South Korean company, when there are plenty of British companies who need the work. This same government which talks about helping British manufacturing handed the multi million pound contract to print tickets for the Olympics to an American company, when there are plenty of British companies which need the work.
This government and the last government created a regulatory regime which has given us no advantage over most of Europe. National insurance has been increased, which in essence is a tax on jobs.
The only way our economy can grow is by de-regulation and encouraging private enterprise. I recently looked into starting up my own business - a fruit and veg shop. I looked at the cost of renting a small shop on my local high street, with rent and rates it would have cost me £78,000 a year. That figure did not include; the produce, bills, insurance or any sort of wage. Then if I did happen to take a risk and start up a business and then I needed to expand and take on an employee, the cost and risk of doing this would be insurmountable. Is it any wonder that our economy is struggling?
Currently the Department for Business, innovation and skills is running a 'Red Tape Challenge', the idea of this you would have thought was a to get rid of red tape and help growth, but instead of this it is asking for 'a debate, a discussion of the ways in which the aims of existing regulation can be fulfilled in the least burdensome way possible'. Instead of saving money, it has been reported that work on regulation in the last two years has actually cost £18 million.
Governments, as I have said are very good at wasting money, but unfortunately for us it is not their money it is ours. What I haven't looked at is regional assemblies and the massive amount of; cost, added bureaucracy and regulation that comes with them. We have the Scottish, Welsh and Northern Irish assemblies, and the cost of running these talking shops runs into billions, then we have district, local, town and parish councils - more bureaucracy. Then of course the biggest and most outrages waste of money of them all - THE EUROPEAN UNION!
I just cannot see that there is any justification for all these departments and talking shops. We have a country overwhelmed in regulation and officialdom. Something needs to be done but unfortunately I cannot see that the government has got the balls and morals to do something about this hideous waste of our money.
There haven't been any real cuts. Basically the state spends 43 per cent of our annual output compared with 37 per cent when Labour came to power in 1997.
One of the problems we have within government (and this probably goes for all governments around the world), is that it is very easy to waste money. This is because it is not their money, secondly governments are large bureaucratic organisations and thirdly they are run by people who do not really understand what they are doing, and have done very little if anything outside of politics.
You only have to look at the previous government to see how not to run a country. Massive waste on a scale that has hardly ever been seen before; over £20 billion wasted on a computer system for the NHS, billions more sacrificed by Gordon Brown's decision to sell off most of our gold reserves. I could go on and on.
What the previous government also did was create many departments and QUANGO's which have also wasted billions of our taxes. One example is the Dept for Business and Skills, which 36 MPs have called to be abolished, this would save £1 billion a year.
On top of this Gordon Brown created such a complicated tax system that the current edition of Tolley's accountant's tax guide runs to 14,500 pages - twice as big as when Gordon Brown became Chancellor in 1997.
This department headed by Vince Cable has failed to make Britain a better place to do business. Companies continue to complain about regulation in every aspect of their business, this of course heaps massive costs on their ability to compete.
The Free Enterprise Group has claimed that excessive regulation costs Britain's economy £112 billion every year. Let me repeat that £112 billion!! And that is only the start.
In 2008 all parties voted through the 'Climate Change act', this one law is going to cost tax payers £18.3 billion every year from now until 2050. Our contribution to the EU this year will be nearly £20 billion, not including what we will contribute via the IMF to help bail out the eurozone economies. The government has also committed themselves to increasing our overseas aid budget to 0.7 per cent of our GDP, even though they admit themselves that there is massive problems with fraud and waste.
The Business department recently hosted a 'manufacturing summit' to discuss how 'the government continues to put manufacturing at the heart of its growth programme'. This is the same government who handed over a multi billion pound contract to build trains for the Thameslink rail programme to Seimens of Germany instead of a British based company - Bombardier, which would have protected thousands of jobs. This same government handed a £485 million contract to build small sea going tankers for the Ministry of defence to a South Korean company, when there are plenty of British companies who need the work. This same government which talks about helping British manufacturing handed the multi million pound contract to print tickets for the Olympics to an American company, when there are plenty of British companies which need the work.
This government and the last government created a regulatory regime which has given us no advantage over most of Europe. National insurance has been increased, which in essence is a tax on jobs.
The only way our economy can grow is by de-regulation and encouraging private enterprise. I recently looked into starting up my own business - a fruit and veg shop. I looked at the cost of renting a small shop on my local high street, with rent and rates it would have cost me £78,000 a year. That figure did not include; the produce, bills, insurance or any sort of wage. Then if I did happen to take a risk and start up a business and then I needed to expand and take on an employee, the cost and risk of doing this would be insurmountable. Is it any wonder that our economy is struggling?
Currently the Department for Business, innovation and skills is running a 'Red Tape Challenge', the idea of this you would have thought was a to get rid of red tape and help growth, but instead of this it is asking for 'a debate, a discussion of the ways in which the aims of existing regulation can be fulfilled in the least burdensome way possible'. Instead of saving money, it has been reported that work on regulation in the last two years has actually cost £18 million.
Governments, as I have said are very good at wasting money, but unfortunately for us it is not their money it is ours. What I haven't looked at is regional assemblies and the massive amount of; cost, added bureaucracy and regulation that comes with them. We have the Scottish, Welsh and Northern Irish assemblies, and the cost of running these talking shops runs into billions, then we have district, local, town and parish councils - more bureaucracy. Then of course the biggest and most outrages waste of money of them all - THE EUROPEAN UNION!
I just cannot see that there is any justification for all these departments and talking shops. We have a country overwhelmed in regulation and officialdom. Something needs to be done but unfortunately I cannot see that the government has got the balls and morals to do something about this hideous waste of our money.
Thursday, 1 March 2012
The eurozone, a wonderful success story!
The unemployment rate in the eurozone continues to rise, hitting a record high. The jobless rate of the countries that use the euro rose to 10.7 per cent in January. There are now 16.9 million out of work in the countries that use the euro.
In Italy unemployment rose to 9.2 per cent, the highest since records began. Spain's unemployment rate is now 23.3 per cent.
Herman van Rompuy was 're-elected' as president of the European Council for a second two and a half year term. Well when I say re-elected, no-one else stood against him and he now continues in his job. Here is a taster of this eurocrat's acceptance speech:
'In a way my job is to be the guardian of trust: fostering mutual understanding around the table among ourselves, knowing that for us together, our duty is to preserve the trust of citizens in the union'.
'We are already harvesting the first results of our work on stabilising the eurozone'.
'We must convince people across Europe that their sacrifices were not made in vain, that they are leading to results, that the eurozone in the end comes out stronger'
'I know you all share my deep conviction that the euro and the union are irreversible projects. They support the ideals of a peaceful, prosperous and democratic continent. It is our duty to continue with this historical endeavour'.
This lot do not get it, they seem to think that if they continue to say the right thing everything will turn out all right.
Recently pictures were published from North Korea of the new president standing in front of tables of food, as if showing the world how wonderful it is in their paradise. And of course the reality is the majority of North Koreans do not have enough to eat, and it is not some paradise. The world knows it isn't true and so do the North Koreans know that we know it isn't true. But they hope the more they show these types of pictures that somehow we might actually start to believe that North Korea is a wonderful place to bring up your children. But of course we never will, because we are not stupid, well some of us aren't.
It is exactly the same with those running the EU, they think that if they keep telling us everything is going well within the euro we will actually believe it is wonderful. But of course we won't!
This lot are so far removed from reality it really is like the tzar's of Russia who lived in opulent splendour whilst the people around them were starving. I honestly find it difficult to find words to describe these people and their complete denial of what is going on around them. I look at this small snapshot of Herman's speech and realise that they are like aliens who are completely devoid of any intelligence or compassion.
Just look at the wording of his speech. He talks about trust and democracy, yet the EU first ignored the French and Dutch people when they voted against the European constitution; the Irish people when they voted against the treaty of Nice and then the Lisbon Treaty. They have forced two elected prime ministers from office and established two eurocrats in Greece and Italy.
He spoke about stabilising the eurozone; well do I need to say anything that hasn't already been said about the situation in Greece.
He spoke about the people of Europe and their sacrifices; this is spoken from the lips of the HIGHEST PAID POLITICIAN IN THE WORLD!!!!!!!!!!!!!!!!!!!!!!!!! I cannot truly understand this man. Those eurocrats are not losing their jobs, they are not struggling to feed themselves, they do not have to worry about whether they or their children are going to have a future, they do not have to worry about a whether they will have a pension, they do not have to worry about finding a job.
I have decided, I don't actually think Herman Van Rompuy is human, because he does not show any of the traits of a human being. I reckon he is really a robot which sits in some forgotten cupboard somewhere in Brussels and every so often the eurocrats wheel him out on a sack barrow and wind him up with a key, feed him a complete load of gibberish and then sit and watch as he regurgitates it.
Having listened to many politicians over the years I have concluded that this lot are leading us to hell in a handcart, they are driving ever quicker to economic disaster. With the EU on course to see its share of world GDP shrink to about 15 per cent by 2020, there is no chance whatsoever of this bunch of complete incompetent ostriches doing anything that resembles anything sensible ever. And if you think I am overstating this slightly, well just go and ask the people of Greece, Italy and Spain what they think. I am sure those idiots in Brussels won't.
In Italy unemployment rose to 9.2 per cent, the highest since records began. Spain's unemployment rate is now 23.3 per cent.
Herman van Rompuy was 're-elected' as president of the European Council for a second two and a half year term. Well when I say re-elected, no-one else stood against him and he now continues in his job. Here is a taster of this eurocrat's acceptance speech:
'In a way my job is to be the guardian of trust: fostering mutual understanding around the table among ourselves, knowing that for us together, our duty is to preserve the trust of citizens in the union'.
'We are already harvesting the first results of our work on stabilising the eurozone'.
'We must convince people across Europe that their sacrifices were not made in vain, that they are leading to results, that the eurozone in the end comes out stronger'
'I know you all share my deep conviction that the euro and the union are irreversible projects. They support the ideals of a peaceful, prosperous and democratic continent. It is our duty to continue with this historical endeavour'.
This lot do not get it, they seem to think that if they continue to say the right thing everything will turn out all right.
Recently pictures were published from North Korea of the new president standing in front of tables of food, as if showing the world how wonderful it is in their paradise. And of course the reality is the majority of North Koreans do not have enough to eat, and it is not some paradise. The world knows it isn't true and so do the North Koreans know that we know it isn't true. But they hope the more they show these types of pictures that somehow we might actually start to believe that North Korea is a wonderful place to bring up your children. But of course we never will, because we are not stupid, well some of us aren't.
It is exactly the same with those running the EU, they think that if they keep telling us everything is going well within the euro we will actually believe it is wonderful. But of course we won't!
This lot are so far removed from reality it really is like the tzar's of Russia who lived in opulent splendour whilst the people around them were starving. I honestly find it difficult to find words to describe these people and their complete denial of what is going on around them. I look at this small snapshot of Herman's speech and realise that they are like aliens who are completely devoid of any intelligence or compassion.
Just look at the wording of his speech. He talks about trust and democracy, yet the EU first ignored the French and Dutch people when they voted against the European constitution; the Irish people when they voted against the treaty of Nice and then the Lisbon Treaty. They have forced two elected prime ministers from office and established two eurocrats in Greece and Italy.
He spoke about stabilising the eurozone; well do I need to say anything that hasn't already been said about the situation in Greece.
He spoke about the people of Europe and their sacrifices; this is spoken from the lips of the HIGHEST PAID POLITICIAN IN THE WORLD!!!!!!!!!!!!!!!!!!!!!!!!! I cannot truly understand this man. Those eurocrats are not losing their jobs, they are not struggling to feed themselves, they do not have to worry about whether they or their children are going to have a future, they do not have to worry about a whether they will have a pension, they do not have to worry about finding a job.
I have decided, I don't actually think Herman Van Rompuy is human, because he does not show any of the traits of a human being. I reckon he is really a robot which sits in some forgotten cupboard somewhere in Brussels and every so often the eurocrats wheel him out on a sack barrow and wind him up with a key, feed him a complete load of gibberish and then sit and watch as he regurgitates it.
Having listened to many politicians over the years I have concluded that this lot are leading us to hell in a handcart, they are driving ever quicker to economic disaster. With the EU on course to see its share of world GDP shrink to about 15 per cent by 2020, there is no chance whatsoever of this bunch of complete incompetent ostriches doing anything that resembles anything sensible ever. And if you think I am overstating this slightly, well just go and ask the people of Greece, Italy and Spain what they think. I am sure those idiots in Brussels won't.
Facts, free speech and democracy
I was once having a discussion with someone about an issue, and was accused of using facts to back up my argument. I found this to be a bit strange and a little worrying that someone would think because I was using information that is based on facts to formulate an argument that this could be deemed somehow wrong.
We continued our discussion, which then turned into an argument, and the reason it changed was simply because the two people I was having the discussion with knew nothing about the subject matter, and just ended up saying 'no you are wrong' and 'that isn't right'. I found this to be very frustrating and ended up getting quite irritated and annoyed.
The interesting thing is when I discuss many issues with many people they generally have spent very little, if any time looking into the issue that we are discussing. I have spoken to people about; the EU, global warming, the link between heart disease and saturated fat, and many other issues and found that most people will repeat the same arguments time and time again.
Now, don't get me wrong and think that I am boasting, and that I am putting myself on a pedestal and making out that I am special and I am always right, I am not. The point I am making is that for so many of us we just follow the consensus, we never question, we just agree with what is said and go along with it. We either do this because we think that what we are told by 'so called experts' is always right, or we trust those who are 'informing' us. Or we just cannot be bothered to find out or look at a different opinion.
What I have noticed, particularly over the past fifteen years is that much of what we have taken for granted has been removed or has changed. Many of the things that we would have said without any concern have now been removed, whether that is certain jokes or certain words. The fear of offending people is everywhere, many people feel it is their right to be offended, so then follow this through with court cases, this then ends up with the government and organisations bringing in more and more legislation to stop any sort of offence.
You could accuse me of being paranoid, but I do not believe I am. It would be interesting if we could travel back in time and take someone from twenty years ago and bring them forward to now and see if they would be shocked at how things have changed.
And this brings me to may last little point, and highlights how so many people are willing to except things. Do you not think that it is rather concerning that we have two unelected prime ministers running two Democratic countries in Europe and people have just accepted it? Mario Monti (Italy) and Lucas Papademos (Greece). And this to me just shows how so many people are happy to just except what they are being told without questioning whether or not it is right or wrong. After what has happened in Egypt and Libya recently, with many people dying to bring 'democracy' to these two countries. And the UK and France spending millions on defending the Libyan people and supporting their fight for democracy, yet no-one raises even a murmur about the removal of democratically elected prime ministers in Europe!
Let me finish with this from The Times which was written in 2002 in regards to the EU and our further integration:
'It is at first denied that any radical new plan exists; it is then conceded that it exists but ministers swear blind that it is not even on the political agenda; it is then noted that it might well be on the agenda but it is not a serious proposition; it is then conceded that it is a serious proposition, but it will never be implemented; after that it is acknowledged that it will be implemented but in such a diluted form that it could make no difference to the lives of ordinary people; and at some point it is finally recognised that it has made such a difference, but it was always known that it would and voters were told so from the outset'.
That is why I believe it is very important to look at the facts and gain information, because as we have seen in regard to so many issues it is very easy to accept something and be blinded by propaganda, spin and disinformation. And before you know it the 'so-called facts' are not what they seem.
We continued our discussion, which then turned into an argument, and the reason it changed was simply because the two people I was having the discussion with knew nothing about the subject matter, and just ended up saying 'no you are wrong' and 'that isn't right'. I found this to be very frustrating and ended up getting quite irritated and annoyed.
The interesting thing is when I discuss many issues with many people they generally have spent very little, if any time looking into the issue that we are discussing. I have spoken to people about; the EU, global warming, the link between heart disease and saturated fat, and many other issues and found that most people will repeat the same arguments time and time again.
Now, don't get me wrong and think that I am boasting, and that I am putting myself on a pedestal and making out that I am special and I am always right, I am not. The point I am making is that for so many of us we just follow the consensus, we never question, we just agree with what is said and go along with it. We either do this because we think that what we are told by 'so called experts' is always right, or we trust those who are 'informing' us. Or we just cannot be bothered to find out or look at a different opinion.
What I have noticed, particularly over the past fifteen years is that much of what we have taken for granted has been removed or has changed. Many of the things that we would have said without any concern have now been removed, whether that is certain jokes or certain words. The fear of offending people is everywhere, many people feel it is their right to be offended, so then follow this through with court cases, this then ends up with the government and organisations bringing in more and more legislation to stop any sort of offence.
You could accuse me of being paranoid, but I do not believe I am. It would be interesting if we could travel back in time and take someone from twenty years ago and bring them forward to now and see if they would be shocked at how things have changed.
And this brings me to may last little point, and highlights how so many people are willing to except things. Do you not think that it is rather concerning that we have two unelected prime ministers running two Democratic countries in Europe and people have just accepted it? Mario Monti (Italy) and Lucas Papademos (Greece). And this to me just shows how so many people are happy to just except what they are being told without questioning whether or not it is right or wrong. After what has happened in Egypt and Libya recently, with many people dying to bring 'democracy' to these two countries. And the UK and France spending millions on defending the Libyan people and supporting their fight for democracy, yet no-one raises even a murmur about the removal of democratically elected prime ministers in Europe!
Let me finish with this from The Times which was written in 2002 in regards to the EU and our further integration:
'It is at first denied that any radical new plan exists; it is then conceded that it exists but ministers swear blind that it is not even on the political agenda; it is then noted that it might well be on the agenda but it is not a serious proposition; it is then conceded that it is a serious proposition, but it will never be implemented; after that it is acknowledged that it will be implemented but in such a diluted form that it could make no difference to the lives of ordinary people; and at some point it is finally recognised that it has made such a difference, but it was always known that it would and voters were told so from the outset'.
That is why I believe it is very important to look at the facts and gain information, because as we have seen in regard to so many issues it is very easy to accept something and be blinded by propaganda, spin and disinformation. And before you know it the 'so-called facts' are not what they seem.
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