An interesting article I wrote on the reality of the current system.

I have compiled an article(most compassionate one to date) about the ideal vision for our revised system. Click here http://www.assupportgrouponline.org/system

Please check it out.

Emma

  • Interesting and whilst I agree that we do need to look at the way the NHS and social care operate, or how the disability benefit system functions I also think we need to be careful not to throw the baby out with the bathwater. For instance, we’ve been told for almost the last three decades that the NHS was on the brink of collapse unless it got a lot more funding, but it hasn’t collapsed, the problem is that it functions as a system designed to meet the needs of the past, not the present or the future, but being such as sacred cow everyone is scared of complete reform and restructuring of the NHS.

    Agreements and disagreements aside on the actual policies one of the major problems is funding. Less than 30% of working age adults are net contributors to the state, with all but a handful of children (usually child actors) and only 2% of pensioners being net contributors you’re in a situation where roughly 20% of people in the UK are funding everyone else. If we want European style services then we have to pay for them, and they key is that we ALL have to pay for them.

    To give an example someone working for minimum wage on a 40 hour week in the UK would pay £1,710 in income related taxes per year, someone on the same wage in Germany would pay £4,328 in income related taxes per year. Germany VAT 19% vs 20% in the UK for most goods, however they charge a 7% rate on food vs 0% in the UK and there are far fewer exemptions than in the UK. There’s also a municipal tax which is roughly similar to council tax. In Scandinavia, the taxation is even higher on almost everything but especially income taxes.

    The difference is that in Germany or other European countries it’s seen as everybody’s job to contribute, however in the UK over the last decade an attitude of “the rich” should pay for everything. Until the majority of the population accept that they will have to pay more in tax, that it can’t just be paid for by someone else then the current situation will continue. 

  • NAS15840 said:
    Interesting and whilst I agree that we do need to look at the way the NHS and social care operate, or how the disability benefit system functions I also think we need to be careful not to throw the baby out with the bathwater. For instance, we’ve been told for almost the last three decades that the NHS was on the brink of collapse unless it got a lot more funding, but it hasn’t collapsed, the problem is that it functions as a system designed to meet the needs of the past, not the present or the future, but being such as sacred cow everyone is scared of complete reform and restructuring of the NHS.

    That is indeed true. The NHS is run according to an outdated ideology from the mid 20th century rather than a modern institution providing the services required for today and tomorrow. It is far from a progressiveinstitution and many of its employees are institutionalised so are resistant to change. There are also plenty of undeserving people in senior positions who strive to maintain the status quo to protect their jobs.

    Even worse is that the NHS is Britain's unofficial national religion.

    The difference is that in Germany or other European countries it’s seen as everybody’s job to contribute, however in the UK over the last decade an attitude of “the rich” should pay for everything. Until the majority of the population accept that they will have to pay more in tax, that it can’t just be paid for by someone else then the current situation will continue.

    I disagree with this one. My mother's background is politics and economics. What you have basically subscribed to is the railings for scrap mentality from WW2.

  • Arran said:

    I disagree with this one. My mother's background is politics and economics. What you have basically subscribed to is the railings for scrap mentality from WW2.

    I don't really see how the concept that everyone should contribute, rather expecting "someone else" to pay for the things they want has anything do to with a badly managed program to maintain a supply of iron for the war.

    The current tax system is reliant on an ever decreasing group of people paying for everyone else, the reason we "can't afford" a German or Scandanavian level of state expenditure is because people aren't willing pay their levels of taxation. Either services stay as they are everyone pays in more. The idea that "the rich" can be made to pay for everything is not only daft, it is vindictive and has become part of the politics of envy that defines the British left.

  • NAS15840 said:
    I don't really see how the concept that everyone should contribute, rather expecting "someone else" to pay for the things they want has anything do to with a badly managed program to maintain a supply of iron for the war.

    Railings for scrap was a propaganda piece intended to increase public morale. The railings were dumped in the Medway estuary but the government knew that if people were prepared to make personal sacrifices for the common good then Britain would stand a greater chance of winning the war.

    Your argument that everyone needs to contibute is effectively the same concept of personal sacrifices for the common good.

    The current tax system is reliant on an ever decreasing group of people paying for everyone else, the reason we "can't afford" a German or Scandanavian level of state expenditure is because people aren't willing pay their levels of taxation. Either services stay as they are everyone pays in more. The idea that "the rich" can be made to pay for everything is not only daft, it is vindictive and has become part of the politics of envy that defines the British left.

    I'm not really sure that you understand economics very well.

    It really is futile, if not downright offensive, to tell common folk to pay more taxes whilst multinational companies use tax havens to cheat the exchequer out of billions. Make companies like Sky TV, Google, Amazon, and Facebook pay their share of taxes first before telling the average Joe to.

  • It wasn’t all dumped in various estuaries, it was just that they collected too much and couldn’t process it and didn’t want to tell people it was all a pointless exercise. It was badly planned and implemented though, especially as we continued to need to import iron.

     

    I'm not really sure that you understand economics very well.

    I would throw exactly the same as you.

    It really is futile, if not downright offensive, to tell common folk to pay more taxes whilst multinational companies use tax havens to cheat the exchequer out of billions.

    It’s not futile or offensive, people should pay the tax due, if they feel that they want more public spending then they should also feel that they correspondingly should pay more. If anything is offensive it’s the idea that they should be able to live of the labour of others just because they “want more”. It’s totally different to having a safety net, but if people want higher government spending then they have to accept higher taxation (or massive QE, rampant inflation and devaluation of Sterling but that’s a separate matter).

    Make companies like Sky TV, Google, Amazon, and Facebook pay their share of taxes first before telling the average Joe to.

    That old chestnut, “their share”, or often with the addition of “fair”. They pay what they are required to by the law, just as everyone else does and personally I’d like to see corporation taxes lowered further but with a dividend tax when the dividend is issued to a non-UK taxpayer/entity and a profit transfer tax.

    People seem to forget the incentive, I run a company, after paying all normal costs there’s business rates (tax), there’s ers NI (tax), there’s then Corporation Tax at 20% on the remaining profits. I’ll already have paid income tax and ees NI on my PAYE salary and on any profit that I take out as dividend I then have to pay Income tax on that at 40%. On top of that there’s council tax, duty, VAT etc. I’m already giving away a significant chunk of my income and getting very little back, whilst at the same time being told I don’t contribute enough, that I should give up even more of my income so that other people don’t have to contribute at all. I have no problem with the state helping people with disabilities, who are ill, pensioners, children etc. but where I take issue is people insisting that they shouldn’t pay any more tax because they want to be able to go on holiday more often or want to be able to drink more. If everyone was willing to pay more the I would be as well, but I’m not willing to pay more because others think that everything should be paid for by “someone else”.

  • Successive governments have failed to realise that automation is increasingly making income tax for common folk redundant. Automation is LEGITIMATE tax evasion for companies. Robots and computers which have replaced human workers do not need to pay income tax or NI.

    Considering how many jobs WILL be lost to automation in the future then one should sober the thought of how much tax revenue will also be lost along with it.

    Something has to change...

    One possibility is a complete reform of the tax system away from income tax onto taxation of things like corporate profits, land value, and financial transactions.

    I believe that scrapping income tax, or at least having a high tax free allowance of say £40,000, will remove this us vs them attitude between people who work and people who don't work.

  • One possibility is a complete reform of the tax system away from income tax onto taxation of things like corporate profits, land value, and financial transactions.


    Wealth taxes are inherently bad in the long run, they encourage spending and discourage responsibly planning for one's future because it's eaten into by the wealth taxes. The concept of financial transaction (Tobin Tax) has been discredited so many times it's not even worth mentioning, the damage it would do to the banking system (no industry, but system) is immense, it also encourages the black market which is untaxed and untaxable. Corporate profits are already taxed, that income then goes to private individuals who are taxed on in again as income, as in my previous example the company I own pays corporation tax, only after that can I take the profit as dividend, where I pay tax on it again in the form of income tax, That already has a tax rate from company profit to my bank account of 52%.

    I believe that scrapping income tax, or at least having a high tax free allowance of say £40,000, will remove this us vs them attitude between people who work and people who don't work.

    Having a £40k or similar high-ish allowance would exaggerate the us vs them even more and would move the point where people are net contributors to probably less than 15%. Allowing people to not pay any tax is a bad thing, it give the impression of "free" and people think free has no cost and often no value. If everyone has contributed then everyone feels a sense of ownership and so cares about things far more.

    If you really want to remove us vs them then the best solution would be a flat tax, where everyone regardless of earnings was charged at the same rate for every pound they earned, probably around 30%.

    The sensible option, at least for the moment would be to step roughly in line with the European averages, a tax free allowance of £2-5,000 pa, with a basic rate around 20%, intermediate rates of 35% (from £50-150k)and a top rate of 50% (£150k+). There would also be the need to move to a more contribution based welfare system, for instance in Germany if you lose your job your unemployment benefit is paid at around 60% of your previous income (tax free) for up to a year, then reducing on a sliding scale after that, based on having made enough contributions.

    Corporation tax could be a bit higher, but only if it was tied with more support for business, both in ease of legislatiave process and also infrastructure. 

  • As both an engineer and an economist I will assure you that the biggest problem society faces is not climate change, and certainly not terrorism, but unemployment resulting from automation and other developments in technology with the inevitable consequence of a shrinking tax base. The problem is that whilst climate change and terrorism are considered to be issues for governments to tackle, unemployment resulting from automation is deemed to be an issue for individuals to deal with themselves or left to the free market to sort out. The resulting loss of tax revenue has not been given the attention that it really deserves. At the same time companies will emerge on the back of automation that employ only a small number of staff but make enormous profits.

    The unemployment problem probably has no workable solutions but there is no way that a tax system designed for a heavy industrial, or even service sector, economy and society will be able to provide governments with the revenue that they need to provide public services on the scale that they currently offer once the effects of automation have made deep inroads. What has happened so far is just the tip of the iceberg.

    NAS15840 said:
    Allowing people to not pay any tax is a bad thing, it give the impression of "free" and people think free has no cost and often no value. If everyone has contributed then everyone feels a sense of ownership and so cares about things far more.

    That's a purely ideological and psychological, not a practical economic, theory.

  • No one who’s sensible thinks it is terrorism and climate chance, potentially leading to a collapse in food production in a hugely serious issue, there is the potential for increased unemployment related to increased automation but just as with the first two problems it is something we can both manage and mitigate.

    The problem at the moment is that we have shrunk the tax base due to ideological reasons, the idea that “poor people” shouldn’t pay tax is an ideological position. The changes from automation really haven’t taken hold yet, unemployment is very low by historical standards and the participation rate has never been higher.

    The issue we’re going to face is an oversupply of unskilled labour, it’s an issue that’s already raising its head in some areas and the solution is not an ever-increasing supply of unskilled labour. We need to stop importing unskilled immigrants, increase the skills of our workforce and at an absolute minimum move population growth to zero and ideally negative, not just in the UK but even more importantly globally. As for leaving it to the free market we probably can’t do that entirely but the free market actually operates incredibly efficiently, although what we have isn’t really a free market (Ha-Joon Chang has written several great books on that), but in a free market there would have been several banks and thousands of companies going bust in the 08/09 recession, instead they were put on life support and they have suffocated long term growth in the economy because successive governments weren’t willing to deal with a bit of short term pain. Just as companies and individuals can be allowed to succeed, they must also be allowed to fail.

    Fewer people, in more skilled and more productive rolls, with various types of automation taking over the mundane and inane tasks, where the profit is in knowledge and skills is the way forward. The idea that a small group of people should work, design, create and invest their time, energy, personal wealth and ability into a system that allows the vast majority to sit around doing nothing is insane, that’s not a country I want to live in. I don’t resent the successful, I strive to work as hard and as smart as they have to reach the best outcome.

     That's a purely ideological and psychological, not a practical economic, theory.

    Economics is never purely practical because the vast majority of people are irrational, illogical creatures who behave in a way that isn’t the most sensible course of action, that has to be accounted for. Part of economics is just as much psychological as analysing the maths, stats or affordability of policies, if human behaviour isn’t properly accounted for the model won’t work.

  • What exactly does this business of yours do?

    Where did you (think you) learned economics from?