Reply to: Why Labour's high tax plan is stupidity

[doodab]

More companies here mean more jobs, more tax reciepts etc. Why do you think these other countries are trying to attract them?

It's not automatically the case that lower taxes => more business => more tax receipts. At some point the revenue lost due to lowering taxes becomes greater than the increased revenue to be gained from whatever additional business you attract.

[doodab]

I'll bet that selling guns to both sides helped a bit too.

Bloody clever the Swiss. It's speaking all those different languages when they grow up wot does it.

[doodab]

A few arbitrary quotes. It looks like Switzerland will struggle to compete with us in many ways and we can probably justify the slightly higher tax burden here compared to there, if indeed that isn't a myth.

Dec. 21 (Bloomberg) -- Geneva, touted as a haven for London bankers facing heavier U.K. taxes, may lure fewer than predicted thanks to a housing shortage, crowded schools and a 44 percent income-tax rate.

...

“It’s a joke, it’s lobbying,” said Tim Dawson, an analyst at Geneva-based brokerage Helvea AG. “People are dreaming if they think the London investment banking world is going to move. There is more office space in Canary Wharf than in the whole of Switzerland,” he said, referring to London’s second financial district.

...

While each Swiss canton sets its own tax rate, allowing local officials to negotiate individual tax deals with wealthy immigrants, those rules are coming under pressure. Zurich, Switzerland’s biggest city and the home of UBS and Credit Suisse, will abolish special tax privileges for foreign millionaires on Jan. 1. The canton’s top rate of income tax is 40.3 percent.

“Some of the German-speaking cantons around Zurich are able to offer tax rates that never exceed 20 percent, but people don’t want to move there, they prefer the lifestyle around Geneva,” said Thierry Boitelle, a partner specializing in tax at law firm Altenburger. “From a tax point of view it doesn’t make sense to locate 100 people here.”

[doodab]

I rest my case.

And I rest mine. I have not suggested we chase them out of the country, simply that we call their bluff and let them leave rather than giving into what amounts to blackmail.

As I said, and you seem to agree with this, it will cause some short term pain. But I believe that in the long run the country will be better off, because it will recover and in the process it will cease to be so dependent on them and we'll have a broader based, more resilient economy and a more just society into the bargain.

Yoy may not realise this, but in many of the economies I have in mind as a model of how it ought to be done the poor share a much higher proportion of the tax burden than they do in the UK. This is possible because they have a greater share of the wealth with which to contribute, rather than being kept in poverty or close to it by those who preach profit at all costs

A just society benefits everyone.

[Doggy Styles]

Oh for ****s sake. Learn to read. And think.

I fully appreciate the argument that rich people pay more tax, and I am NOT suggesting that we chase the riche people out of the country

I happen to think if you stop kowtowing to the people who preach the profit at all costs dogma the UK will be a better place. These people are in the main spoiled little rich folk who throw their toys out of the pram when asked to pay their fair share of the costs of running the place they have chosen to live. We should let them go, it may cause some short term pain but in the long run we will be better off.

I rest my case.

[doodab]

If a country runs a small surplus every year, as Switzerland did for a long time, it gets into a virtuous circle of lower taxes and higher competitiveness, thus higher revenues. If a country runs a deficit every year, it can’t cut taxes without drastically cutting public services and remains in a vicious circle of raising taxes and falling revenues and rising interest payments. The issue isn’t the level of taxation or even redistribution; it’s how much gets spent in relation to how much comes in. Many people and businesses see Britain continuing in the wrong direction right now.

Indeed. The swiss economy is in fundementally better shape. Not having fought in two world wars probably does it's bit as well.

There is another circle, whereby a badly balanced progessive taxation system allows the gap between rich and poor to grow increasingly wide. Although many think this works in favour of the rich, it actually works against them, because as they grow disproportionately richer their share of the tax burden becomes disproportionally larger as the country becomes dependent upon taxing them. In the long run it harms the whole country.

[Mich the Tester]

You cannot just reduce tax revenues from the 38-40% of GDP or so that it has been for a while to the 32% or so it would need to be to actually compete with Switzerland. You need to transform the whole economy. That isn't going to be possible if you bend over for every medium sized firm who threatens to up sticks and leave. Thatcher would have known that. Brown doesn't.

If a country runs a small surplus every year, as Switzerland did for a long time, it gets into a virtuous circle of lower taxes and higher competitiveness, thus higher revenues. If a country runs a deficit every year, it can’t cut taxes without drastically cutting public services and remains in a vicious circle of raising taxes and falling revenues and rising interest payments. The issue isn’t the level of taxation or even redistribution; it’s how much gets spent in relation to how much comes in. Many people and businesses see Britain continuing in the wrong direction right now.

[doodab]

Tony, I wouldn't bother. The bloke hasn't got a leg to stand on.

If I earned 200,000 a year I'd pay about 80,000 of that in tax.

1. 80,000 is about the same tax as a dozen people of average wage would pay. So I'd be paying for my own welfare and public services, plus eleven others. That meets the criteria of social responsibility pretty well.
   
2. If someone were to say they wanted more of the 120,000 I'd have left, I'd reply that it's not your money. Go and earn it yourself.
   
3. If I moved to another country and paid my tax there instead, that's:
   • 80,000 that the exchequer has to find from elsewhere, equivalent to a dozen more average taxpayers
   • Up to 120,000 of spending power lost that I would otherwise spend with UK businesses.

Nobody in their right mind would conclude that chasing richer people out of the country would benefit anyone at all. It was an argument finally, utterly and conclusively lost in the 1970s and 1980s.

Oh for ****s sake. Learn to read. And think.

I fully appreciate the argument that rich people pay more tax, and I am NOT suggesting that we chase the riche people out of the country

What I AM trying to point out, which you seem happy to avoid comprehending at all costs, is that the successful lobbying of the rich (and I would count myself among them) in favour of lower taxes simply shifts the burden elsewhere. For example, in the UK recently, corporation tax has been cut by 2%, corporation tax for small firms is up 3%. The burden has been shifted, not reduced.

You cannot just reduce tax revenues from the 38-40% of GDP or so that it has been for a while to the 32% or so it would need to be to actually compete with Switzerland. You need to transform the whole economy. That isn't going to be possible if you bend over for every medium sized firm who threatens to up sticks and leave. Thatcher would have known that. Brown doesn't.

But keep on dismissing me an envious lefty if that makes you happy, or saves you the hassle of thinking for yourself. It doesn't really bother me because I don't have to live in your rapidly disintegrating country.

[Doggy Styles]

Tony, I wouldn't bother. The bloke hasn't got a leg to stand on.

If I earned 200,000 a year I'd pay about 80,000 of that in tax.

1. 80,000 is about the same tax as a dozen people of average wage would pay. So I'd be paying for my own welfare and public services, plus eleven others. That meets the criteria of social responsibility pretty well.
   
2. If someone were to say they wanted more of the 120,000 I'd have left, I'd reply that it's not your money. Go and earn it yourself.
   
3. If I moved to another country and paid my tax there instead, that's:
   • 80,000 that the exchequer has to find from elsewhere, equivalent to a dozen more average taxpayers
   • Up to 120,000 of spending power lost that I would otherwise spend with UK businesses.

Nobody in their right mind would conclude that chasing richer people out of the country would benefit anyone at all. It was an argument finally, utterly and conclusively lost in the 1970s and 1980s.

[BoredBloke]

I'm not justifying a high tax system, or even advocating tax rises. I'm pointing out that your blanket statement that these companies don't use the services that taxes pay for is incorrect, and hence to consider the lost tax revenue without also accounting for the reduced burden on the services concerned is fallacious.

Also, as I said in another post, I don't see the long term value in pandering to fair weather friends such as these. It makes the UK weaker, not stronger.

Ok - perhaps I shopld have said that these companies and their highly paid staff have little use for the vast majority of the services the government provides - almost none! Removing the company and it's highly paid staff will not reduce the overall costs to the governmnet - they will have to supply roads and 'toilets' at about the same cost - but they will be a 100m down from this company alone. Also, this 100m is the tax paid by the company - also factor in the loss bourne out of no income tax and NI from their employees (net contributors) when they relocate with the business. The extra govt costs that have to be paid in terms of benefits for those made redundant.

Quite how you can suggest that having a competative tax system makes the UK weaker is a joke. More companies here mean more jobs, more tax reciepts etc. Why do you think these other countries are trying to attract them?

[doodab]

"Flushing toilets was a reference to the sewage system, in case you missed it, and although a lot of these services are now privately run the fact of the matter is that they were originally built and paid for by the tax payer."

So a high tax system can be justified due to a victorian network of privately owned sewers.

I'm not justifying a high tax system, or even advocating tax rises. I'm pointing out that your blanket statement that these companies don't use the services that taxes pay for is incorrect, and hence to consider the lost tax revenue without also accounting for the reduced burden on the services concerned is fallacious.

Also, as I said in another post, I don't see the long term value in pandering to fair weather friends such as these. It makes the UK weaker, not stronger.

[BoredBloke]

And when their threats to leave in protest at higher taxes are heeded, who ends up paying higher taxes instead?

BTW, I haven't cherry picked anything, I've just pointed out that the statement that they dont use any government services at all is in fact bollocks. Flushing toilets was a reference to the sewage system, in case you missed it, and although a lot of these services are now privately run the fact of the matter is that they were originally built and paid for by the tax payer.

Brilliant! So as you wave goodbye to the city and it's tax reciepts as it heads off to Geneva you can be happy in the knowledge that Canary Warf and the square mile will contain some of the largest pound shops in the country!

The point is that certain places are trying to attract companies to them by offering a competative tax system. Whatever this company used to contribute to the UK economy would now be added to the Swiss one. But if we were able to offer a competative tax system then perhaps we could attract companies to us and their tax reciepts.

"Flushing toilets was a reference to the sewage system, in case you missed it, and although a lot of these services are now privately run the fact of the matter is that they were originally built and paid for by the tax payer."

So a high tax system can be justified due to a victorian network of privately owned sewers.

The simple fact of the matter is that rich people do not depend on the state as much as poor ones, but rich people pay for it. Remove the rich people and you have poor people with no state to depend on!

[doodab]

The 100m loss is due to the taxes the company pays. the taxes its staff pay in income tax, NI and VAT on their purchases would also go missing.

Your cherry picked government services doesn't even come close to covering the services that the government provides - there is the whole welfare state to consider that a highly paid employees pay for but does not use. Also a number of the services you listed are not even government services. Since when did the government provide toilets? I also pay a private company for my water. Branson buys his own trains!

So think of it this way. The company and its staff are net contributors. By definition this means that they put more money into the system than they take out. When this money is removed from the system, who makes up the shortfall. The costs of running the NHS, the welfare state, defence, the police, the fire service, your council etc do not drop but the money into the system does. The shortfall has to be made up by the remainder of the population. Since the remainder contains the same number of net users of the government services, then the burden has to increase on those reamining who fund it or the services have to be cut.

And when their threats to leave in protest at higher taxes are heeded, who ends up paying higher taxes instead?

BTW, I haven't cherry picked anything, I've just pointed out that the statement that they dont use any government services at all is in fact bollocks. Flushing toilets was a reference to the sewage system, in case you missed it, and although a lot of these services are now privately run the fact of the matter is that they were originally built and paid for by the tax payer.

[BoredBloke]

You said "I suspect that the folks concerned have very little use of the services the government provide"

I was simply pointing out that they do have a use for the services & infrastructure that society provides, and that it's not entirely implausible that the cost of providing such services to the company concerned and it's employees is comparable to the tax raised from them.

I'm not suggesting they are anything other than a net contributor, but the assumption that this company moving results in a €100m loss is overly simplistic because it fails to account for what having that company located here costs.

The 100m loss is due to the taxes the company pays. the taxes its staff pay in income tax, NI and VAT on their purchases would also go missing.

Your cherry picked government services doesn't even come close to covering the services that the government provides - there is the whole welfare state to consider that a highly paid employees pay for but does not use. Also a number of the services you listed are not even government services. Since when did the government provide toilets? I also pay a private company for my water. Branson buys his own trains!

So think of it this way. The company and its staff are net contributors. By definition this means that they put more money into the system than they take out. When this money is removed from the system, who makes up the shortfall. The costs of running the NHS, the welfare state, defence, the police, the fire service, your council etc do not drop but the money into the system does. The shortfall has to be made up by the remainder of the population. Since the remainder contains the same number of net users of the government services, then the burden has to increase on those reamining who fund it or the services have to be cut.

[doodab]

"I suspect that the folks concerned have very little use of roads, trains, schools, police, fire services, hospitals, airports, a legal system, running water and flushing toilets"

Are you serious. The services you listed are those the government provides to all. How does allowing rich people and businesses who pay for these services help? Services that those who don't contribute anything also consume.

As I said earlier on. If the govt loses the 100m euro per year from this comapny going to Switzerland, how do you think they will make up that shortfall?

You said "I suspect that the folks concerned have very little use of the services the government provide"

I was simply pointing out that they do have a use for the services & infrastructure that society provides, and that it's not entirely implausible that the cost of providing such services to the company concerned and it's employees is comparable to the tax raised from them.

I'm not suggesting they are anything other than a net contributor, but the assumption that this company moving results in a €100m loss is overly simplistic because it fails to account for what having that company located here costs.