UK General Election 2017

[Nearly Sane]

Let's spend 10 billion to sell assets.



https://skwawkbox.org/2017/05/30/may-loves-naylorreport-everyone-must-seeshare-video-ge17-nhs/

[Udayana]

Just confirmed to me that these "debates" are a waste of time. Bunch of bickering kids each and every one of them.

Not sure what else you expected. Do you think a different format would be better - one on one interviews or 2-2 traditional debate style?

[jakswan]

Yet to hear from Labour what they will do if they are the wrong side of the Laffer curve and get less money than the expect, and more like the money the IFS predicts, more tax or more borrowing?

[ProfessorDavey]

Yet to hear from Labour what they will do if they are the wrong side of the Laffer curve and get less money than the expect, and more like the money the IFS predicts, more tax or more borrowing?

Are you asking the same question of the Tories - both on their specific tax/spend proposals, but also on growth. This is a big issue for both parties - dampen growth and the public finances immediately look shaky.

[Nearly Sane]

Yet to hear from Labour what they will do if they are the wrong side of the Laffer curve and get less money than the expect, and more like the money the IFS predicts, more tax or more borrowing?

Apart from the Laffer curve being a piece of simplistic nonsense, I have never heard any party have a plan for not raising the money they plan to raise. Surely if you did, you would then have to have a plan if that plan didn't work, and then a plan for what happened if that plan didn't work ad infinitum

[jakswan]

Apart from the Laffer curve being a piece of simplistic nonsense, I have never heard any party have a plan for not raising the money they plan to raise. Surely if you did, you would then have to have a plan if that plan didn't work, and then a plan for what happened if that plan didn't work ad infinitum

The laffer curve is generally accepted, the debate is where the curve is.

https://www.ifs.org.uk/publications/7066

Corporation tax receipts are at record levels since the crash.
https://www.ft.com/content/ca3e5bd2-2a7e-11e7-9ec8-168383da43b7

It is a fair question to ask.

[jakswan]

Are you asking the same question of the Tories - both on their specific tax/spend proposals, but also on growth. This is a big issue for both parties - dampen growth and the public finances immediately look shaky.

Yes, can you answer my question. As far as I'm aware the Labour party is raising taxes a lot to high earners so it is reasonable to expect they will be on the summit of the laffar curve.

[ProfessorDavey]

The laffer curve is generally accepted, the debate is where the curve is.

https://www.ifs.org.uk/publications/7066

Corporation tax receipts are at record levels since the crash.
https://www.ft.com/content/ca3e5bd2-2a7e-11e7-9ec8-168383da43b7

It is a fair question to ask.

Unfortunately your FT article is behind the paywall so I cannot read it - you might want to summarise.

I presume this is the 2015-16 tax year. If so then you aren't really supporting your point about the Laffer curve. Why - well because the corporation tax rates for that year were identical to the previous year, so whatever the reason for the increase in receipts it isn't due to a change in rate.

There are a number of reasons why the 2015-16 receipts are particularly good (and some other tax receipts too) which you may be unaware of unless you own and run a company. The first (and most obvious) is growth in the economy. But there are other reasons less apparent. Probably the most significant being changes to dividend taxation rules making distribution of dividends much less attractive from a tax point of view from April 2016. The effect of this was that companies up and down the country - particularly the backbone of small and middle size - emptied out their balance sheets though distribution of dividends before the changes were brought in. Dividends cannot be accounted away in profitability terms as can other surplus elements, and therefore companies were forced to reveal that profit and therefore bare the corporation tax. It is a one off anomaly associated with a change in tax policy.

The tax year of my company is end August so we are liable to pay that tax by end of May - and guess what we had a whopping corporation tax bill that we paid yesterday, which is artificially high for the reason I stated - distribution of as much dividend as possible prior to 4th April 2016.

[jakswan]

Unfortunately your FT article is behind the paywall so I cannot read it - you might want to summarise.

I presume this is the 2015-16 tax year. If so then you aren't really supporting your point about the Laffer curve. Why - well because the corporation tax rates for that year were identical to the previous year, so whatever the reason for the increase in receipts it isn't due to a change in rate.

There are a number of reasons why the 2015-16 receipts are particularly good (and some other tax receipts too) which you may be unaware of unless you own and run a company. The first (and most obvious) is growth in the economy. But there are other reasons less apparent. Probably the most significant being changes to dividend taxation rules making distribution of dividends much less attractive from a tax point of view from April 2016. The effect of this was that companies up and down the country - particularly the backbone of small and middle size - emptied out their balance sheets though distribution of dividends before the changes were brought in. Dividends cannot be accounted away in profitability terms as can other surplus elements, and therefore companies were forced to reveal that profit and therefore bare the corporation tax. It is a one off anomaly associated with a change in tax policy.

The tax year of my company is end August so we are liable to pay that tax by end of May - and guess what we had a whopping corporation tax bill that we paid yesterday, which is artificially high for the reason I stated - distribution of as much dividend as possible prior to 4th April 2016.

Yes wonderful insight any chance you will answer my question, here it is again:-

Yet to hear from Labour what they will do if they are the wrong side of the Laffer curve and get less money than the expect, and more like the money the IFS predicts, more tax or more borrowing?

[Sriram]

I somehow always felt that May was taking a big risk by calling these elections.

[ProfessorDavey]

Yet to hear from Labour what they will do if they are the wrong side of the Laffer curve and get less money than the expect, and more like the money the IFS predicts, more tax or more borrowing?

I have no idea - I'm not in charge of Labour's economic plans and I am sceptical of them to say the least.

Pure speculation, but if they failed to bring in the tax receipts they suggest then they'd probably ditch some of the more costly and less priority pledges, while additionally raising tax more generally on those earning below £80k. Plus they'd probably borrow a bit more too. None of these would make them popular.

So reverse question to you - yet to hear from the Tories what they will if they are the wrong side of the Laffer curve and get less money than the expect, and more like the money the IFS predicts, more tax or more borrowing?

The question is equally valid for them as their proposals (according the IFS) are also poorly costed.

But there is a broader question, which is that however well plans are made they are merely that, projections of tax receipts and spending in the future, which can prove to be wrong because of 'events dear boy', even with sensible planning. Governments and chancellors have to have the discretion to change planning and priorities to deal with changed circumstances, which is why crude pledges of 'not raising income tax etc' - while seeming to be good in sound bites merely mean that government's end up fettering their discretion and having to raise the same amount of tax, probably from the same people, via backdoor routes.

Frankly what matters to me (and probably to most people) is the total tax take. I'm not going to be happier if my take home pay is reduced to the same extent because of a 1% increase in NI rather than a 1% increase in income tax.

[Nearly Sane]

The laffer curve is generally accepted, the debate is where the curve is.

https://www.ifs.org.uk/publications/7066

Corporation tax receipts are at record levels since the crash.
https://www.ft.com/content/ca3e5bd2-2a7e-11e7-9ec8-168383da43b7

It is a fair question to ask.

Woo, the Laffer curve is generally accepted.  Doesn't make it right though. That tax revenues and tax take is different in different countries shoes that it is simplistic. It tries to midel behaviour way without understanding there is a feedback loop on what happens.

And saying something is a fair question to ask doesn't jusitfy the issue of the question creating an infinite regression so being logically flawed.

This is a pretty gopd explanation of the issues with the Laffer curve

https://www.google.co.uk/amp/s/whistlinginthewind.org/2012/09/07/the-mythical-laffer-curve/amp/

[jakswan]

I have no idea - I'm not in charge of Labour's economic plans and I am sceptical of them to say the least.

Pure speculation, but if they failed to bring in the tax receipts they suggest then they'd probably ditch some of the more costly and less priority pledges, while additionally raising tax more generally on those earning below £80k. Plus they'd probably borrow a bit more too. None of these would make them popular.

To be fair to Corbyn I think he would keep all his promises whatever the cost.

So reverse question to you - yet to hear from the Tories what they will if they are the wrong side of the Laffer curve and get less money than the expect, and more like the money the IFS predicts, more tax or more borrowing?

The question is equally valid for them as their proposals (according the IFS) are also poorly costed.

All Labours revenue is coming off the back of taxing the top earners and corporation tax, not aware of any major tax changes from other parties apart from LibDems.

But there is a broader question, which is that however well plans are made they are merely that, projections of tax receipts and spending in the future, which can prove to be wrong because of 'events dear boy', even with sensible planning. Governments and chancellors have to have the discretion to change planning and priorities to deal with changed circumstances, which is why crude pledges of 'not raising income tax etc' - while seeming to be good in sound bites merely mean that government's end up fettering their discretion and having to raise the same amount of tax, probably from the same people, via backdoor routes.

Frankly what matters to me (and probably to most people) is the total tax take. I'm not going to be happier if my take home pay is reduced to the same extent because of a 1% increase in NI rather than a 1% increase in income tax.

Don't disagree with most points you make. I have some concern that Labour, having failed to get the revenue they thought, will then start taking bites out of the next batch of high earners, until they are hitting middle incomes. If you like we are all made 40% poorer to make the bottom 10% a bit richer.

Maybe being a negative nelly, the labour party MPs are mostly sensible centrists so Corbyn would not have full control of these things.

[jakswan]

Woo, the Laffer curve is generally accepted.  Doesn't make it right though. That tax revenues and tax take is different in different countries shoes that it is simplistic. It tries to midel behaviour way without understanding there is a feedback loop on what happens.

And saying something is a fair question to ask doesn't jusitfy the issue of the question creating an infinite regression so being logically flawed.

This is a pretty gopd explanation of the issues with the Laffer curve

https://www.google.co.uk/amp/s/whistlinginthewind.org/2012/09/07/the-mythical-laffer-curve/amp/

So you quote me some random site and I quote the IFS, neither of us are economists.

From your site ' Most economists know the Laffer Curve isn’t true. An IGM survey of economists found that not a single one of them agreed that a tax cut will increase revenue.'

That is not an accurate description of the laffer curve from wiki:-

'In economics, the Laffer curve is a representation of the relationship between rates of taxation and the resulting levels of government revenue. Proponents of the Laffer curve claim that it illustrates the concept of taxable income elasticity—i.e., taxable income will change in response to changes in the rate of taxation.'

I don't think its that debatable in concept, imagine the government decided to tax high paid footballers 90% on the earnings, with a few years they will have left to play in France / Germany / Spain and the tax receipts will have completely collapsed.

The debate is at what level your tax receipts start to fall isn't it?

[ProfessorDavey]

not aware of any major tax changes from other parties apart from LibDems.

Err what about the so-called 'dementia tax' - which now was an (undefined) cap on it - so how will the cost of the U-turn be funded.

Also the IFS were clear that the Tories manifesto pledges didn't add up financially, most notably due to the cost of delivering theyr immigration pledge and the unachievable nature of some of the cuts. They have failed to rule out tax rises (fair enough - see my earlier point) - so if the Tories get in there will be tax rises, they are just refusing to tell us what those will be.

There is another factor which is key - growth. Independent analysis predicts that the economy would be grow 1.9% more under the Lib Dem plans and 1% more under Labour’s plans than under the Conservative plans.

https://www.theguardian.com/business/2017/may/28/far-from-strong-and-stable-mays-economic-plan-is-weak-and-unstable

[Nearly Sane]

So you quote me some random site and I quote the IFS, neither of us are economists.

From your site ' Most economists know the Laffer Curve isn’t true. An IGM survey of economists found that not a single one of them agreed that a tax cut will increase revenue.'

That is not an accurate description of the laffer curve from wiki:-

'In economics, the Laffer curve is a representation of the relationship between rates of taxation and the resulting levels of government revenue. Proponents of the Laffer curve claim that it illustrates the concept of taxable income elasticity—i.e., taxable income will change in response to changes in the rate of taxation.'

I don't think its that debatable in concept, imagine the government decided to tax high paid footballers 90% on the earnings, with a few years they will have left to play in France / Germany / Spain and the tax receipts will have completely collapsed.

The debate is at what level your tax receipts start to fall isn't it?

The issue isn't about what happens at the extremes and that was covered in the link bit whether a curve is any useful representation. If the Laffer curve was true, you would  know where you were on it because of previous changes and comparison with other countries.

[jakswan]

Err what about the so-called 'dementia tax' - which now was an (undefined) cap on it - so how will the cost of the U-turn be funded.

The "tax" is spin, agree it is unfunded, more of a principle.

Also the IFS were clear that the Tories manifesto pledges didn't add up financially, most notably due to the cost of delivering theyr immigration pledge and the unachievable nature of some of the cuts. They have failed to rule out tax rises (fair enough - see my earlier point) - so if the Tories get in there will be tax rises, they are just refusing to tell us what those will be.

There is another factor which is key - growth. Independent analysis predicts that the economy would be grow 1.9% more under the Lib Dem plans and 1% more under Labour’s plans than under the Conservative plans.

https://www.theguardian.com/business/2017/may/28/far-from-strong-and-stable-mays-economic-plan-is-weak-and-unstable

Again not what I'm asking, I think generally Labour has better policies, I'm sold on that. Corbyn is ideologically a socialist, if the centrists (most Labour MPs / LibDems / most Tories) don't get the tax receipts they expect I would expect them them to do what you suggested, i.e.  'they'd probably ditch some of the more costly and less priority pledges'.

[jakswan]

The issue isn't about what happens at the extremes and that was covered in the link bit whether a curve is any useful representation. If the Laffer curve was true, you would  know where you were on it because of previous changes and comparison with other countries.

So you think if you raise taxes to 90% on highly paid footballers they will all stay in the UK?

Your link is ideologically motivated do you have something a little more independent, like the IFS?

[Nearly Sane]

So you think if you raise taxes to 90% on highly paid footballers they will all stay in the UK?

Your link is ideologically motivated do you have something a little more independent, like the IFS?

No, I precisely didn't say that. I could argue the IFS is ideologically motivated but I'd rather look at the arguments presented than indulge in ad hominems.


Again, if the curve was factual you should be able to see it perform consistently.

[Walt Zingmatilder]

A couple of care home owners on the PM programme. Problems in care due to 2000 legislation labour and directors of care who hate the private sector and aren't paying Owners sufficient. Central government since 2014 only partly to blame. These care home owners are heartbroken that their workers are paid so little. Such was the woe I was moved, by the owners plight, to t........aking a couple of Onions cutting them and holding them under my eyes.

[jakswan]

No, I precisely didn't say that.

Let me rephrase, why are you evading with engaging with that model?

I could argue the IFS is ideologically motivated but I'd rather look at the arguments presented than indulge in ad hominems.

If an article makes a false claim and the proceeds to rant against the existence of something on clearly ideological grounds than I think its valid to question the integrity of the article. 

Again, if the curve was factual you should be able to see it perform consistently.

No its always a theoretical hypothetical model. Lets drop the laffer curve, I've little interest in it per se.

Do you agree that by increasing tax at some point you risk that at some point you will see a decline in tax receipts?

If you do agree then the party that is introducing large tax increases risk not be able to match their promises.

I agree that all parties face this risk, I do think it reasonable to question that a party with a socialist leadership is going to behave differently to a more centrist party.

[Humph Warden Bennett]

FWIW Corbyn has gone up slightly in my estimation for turning up to the debate.

[ProfessorDavey]

Do you agree that by increasing tax at some point you risk that at some point you will see a decline in tax receipts?

Yes, in principle. But it depends upon the tax in question. Where the tax is aimed at those with the means and ability to rearrange their financial affairs to avoid, then certainly that's true. On the other hand if this is aimed at those who really have no meaningful way to avoid (the vast majority of the population) then no.

Hence the dilemma - it is easiest, politically, to argue for 'soaking the rich' - but the rich are, by definition rich enough to employ the best accountants etc to be able to avoid the increase and this may result in lower receipts.

If you actually want to be successful in raising more revenue much better to impose relatively small increases on low/middle income people, who will likely find it pretty well impossible to avoid the tax. Economically sensible, but politically this is suicide.

[Ricky Spanish]

Peter A Bell's insight:

I may have been wrong.

We'll take a short pause here while those so inclined get the sarcastic comments off their chests.

Better now? Shall we proceed?

I have always maintained that, at UK level, the British Conservatives tend to beat their British Labour rivals for a very simple reason. It has nothing whatever to do with the Tories' entirely mythical economic competence. It's because the Tories get stronger under stress. Where British Labour is fragile even at the best of times - like now! - nothing unites and inspires the Tories like adversity. The greater the adversity, the more their support pulls together. British Labour is in a constant state of impending disintegration under the pressure of self-destructive factionalism.

There are always internal power struggles within political parties. It's only a question of how damaging these power struggles are allowed to be. The people with the real power in the Conservative Party - people you will never see nor ever hear mentioned by name - don't allow the internal politics to get out of hand. If it ever gets to the point where it looks like jeopardising the party's grip on real political power, somebody gets quietly and coldly stabbed in the back.

Similar tensions exist within British Labour. But they don't deal with them nearly so effectively. They can easily get out of control. This is largely due to the customary internal power struggles being exacerbated by the existence factions so utterly persuaded of their righteousness that they will gladly sacrifice electoral success, and more besides, in the name of ideological purity.

The Tories have only one overriding ideological imperative and that is power. When push comes to shove, the entire party coalesces around that core aim. The Tories will not allow a party leader to jeopardise their grip on power. To the extent that British Labour coalesces at all it tends to be around a leader, with the consequence that unity crucially depends on that leader rather than on some 'higher purpose'.

Until recently, I've been convinced that the Tories would win the election because, whatever circumstances arose, ultimately they would be able to call on resources massive enough to overcome. Whether by manipulating public perceptions of their own record and proposals or by setting the hounds of spin on their opponents, they would win.

While there is still time for this to happen, and we should not be at all surprised to see some very dramatic developments over the next few days, it now seems possible that Theresa May is just so appallingly dire that even the colossal propaganda machinery available to the Tories might not be enough. The Tories could actually lose this election.

Not that I think they will lose power. Even if Jeremy Corbyn were to become the new British Prime Minister he will not be permitted to govern. The machine that was ineffective in compensating for the crushing awfulness of Theresa May will immediately be turned against Corbyn. That machine knows exactly where to place the wedges that will open the splits in British Labour. It has the capacity to drive those wedges home. British Labour has no defence against this onslaught. Corbyn will be forced into one compromise after another. Each compromise will be sold to the public as an embarrassing climb-down, and to those factions within the party as a betrayal. Corbyn's enemies will not subordinate their hatred of the man to the demands of effective political power. They will be just another component in the machine set upon bringing him down.

Should he actually win, I give Corbyn two years at most. Probably less. All the apparatus that was geared to portraying the inevitable disaster of Brexit as a triumph for the Tories will be diverted to presenting the whole process as the shambles it was always going to be - and putting the blame firmly on Corbyn's shoulders. He will be destroyed.

For the rest of us, nothing much will change. Little, if any, of British Labour's 'radical' manifesto, will be implemented. It will all be dropped or watered down. We will continue to live with the unrelieved grimness of an austerity agenda which, we will belatedly discover, is not a Conservative Party agenda, but a British state agenda.

And that is the nub of it. The Tories are the 'natural' party of government in the UK because the British state is a Tory state. A temporary switch between the two main British parties won't change anything. It won't alter the fundamental nature of the British state. The Tories didn't turn the UK into the intolerant, repressive, elitist entity that we have seen emerge over the last couple of years. The Tories are merely reflecting the British state as it really is.

Meaningful progressive change, however that may be defined, cannot happen until the British state is broken. And the British state will not be broken by voting for a British Labour Party which, regardless of occasionally throwing up a fairly convincing leader, is nonetheless firmly embedded in the British establishment. However superficially appealing Jeremy Corbyn may be, and however alluring his siren promises of reform, he really is no more than a marketing device for a party which is embedded in and dependent upon and beholden to the structures of power, privilege and patronage which define the British state.

I've never subscribed to the 'Red Tory' epithet commonly applied to British Labour. They are not the same as the Tories. But they are part of the same system. a system that will ultimately assert itself regardless of which party currently enjoys the trappings of power.

Scotland has a way out of this system. We don't have to be part of this British state. We have the means to follow our own path. It's possible that I could be wrong about the Tories winning this election. But I'm certainly not wrong about the fact that a British Labour win will change nothing. So long as Scotland is part of the British state the change we hope for cannot happen.

So long as we are part of the British state, Scotland can only be adequately represented by people who acknowledge the true nature of that state. Whatever the outcome of the unedifying contest between British Labour and British Tories, the closest Scotland can get to a win is by putting the full weight of our democratic power behind the SNP.

I can't link to this blog at the moment.

it is somewhere on Pete Bell's site, I've just misplaced it!!  http://peterabell.blogspot.co.uk/

[ProfessorDavey]

There is another factor which is key - growth. Independent analysis predicts that the economy would be grow 1.9% more under the Lib Dem plans and 1% more under Labour’s plans than under the Conservative plans.

https://www.theguardian.com/business/2017/may/28/far-from-strong-and-stable-mays-economic-plan-is-weak-and-unstable

And we are now seeing that the UK economy is grinding to a halt - in the first 3 months the economy barely grew (just 0.2%) which puts us rock bottom of the G7 in terms of growth. The French economy is growing twice as fast as us, the Germany economy three times faster and Canada over 4 times faster.