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crackerjack
22-04-2009, 01:50 PM
Go, Red Al!


The chancellor, Alistair Darling, today told the rich they faced a top tax rate of 50% as he sought to plug a record budget deficit and admitted the country would suffer this year as a result of the biggest contraction in its economy since the second world war.

so what does it all mean?

BareBones
22-04-2009, 02:13 PM
it means the daily express are going to be very unhappy indeed

crackerjack
22-04-2009, 02:18 PM
it means the daily express are going to be very unhappy indeed

Why the Express in particular? Has he refused to raise the tax on Muslims?

BareBones
22-04-2009, 03:26 PM
lol.

anyway. i admit i don't really "get" the budget. It always perplexes me - my understanding of the workings of economics in general is pretty poor, and i find it impossible to comprehend such large amounts of money, not to mention trying to imagine exactly what the money is spent on. The only things i can normally see that directly apply to me is stuff like tax on fags.

stuff like this i find terribly confusing:
260m new money for training and subsidies.

training for what? what subsidies? (realising that the guardian's 'budget at a glance' isn't probably the best place to glean the most details)

crackerjack
22-04-2009, 05:44 PM
lol.

anyway. i admit i don't really "get" the budget. It always perplexes me - my understanding of the workings of economics in general is pretty poor, and i find it impossible to comprehend such large amounts of money, not to mention trying to imagine exactly what the money is spent on. The only things i can normally see that directly apply to me is stuff like tax on fags.

stuff like this i find terribly confusing:
260m new money for training and subsidies.

training for what? what subsidies? (realising that the guardian's 'budget at a glance' isn't probably the best place to glean the most details)

I haven't delved much deeper than the TV ticker tape, but I believe the govt is guaranteeing free training (in what I don't know) for anyone under 25 who can't find a job.

The Times is warning of a brain drain cos of the 50% top rate.It all seems quite nostalgic. If only Harold Wilson was here to reassure us all with his pipe.

BareBones
22-04-2009, 05:57 PM
yeah, that was one of the bits that popped out at me - "From January 2010 everyone aged under 25 who has been unemployed for a year to get an offer of a job or a training place." Not sure how that will work but sounds lovely.

crackerjack
22-04-2009, 06:00 PM
Not sure how that will work but sounds lovely.

We will have the best-trained leaf-sweeping service in the world!

swears
22-04-2009, 09:47 PM
If they'd had the balls to bring in a 50% top tax rate ten years ago, we might not be in quite as much shit now.

vimothy
22-04-2009, 11:38 PM
Who knows exactly what amount of shit we would be in, but rest assured we would be in it.

josef k.
23-04-2009, 04:43 AM
From the Guardian (!)

The measures of economic gloom were remorseless: record levels of unemployment under Labour; record borrowing of 175bn, twice the estimate of less than a year ago; record interest costs of 43bn a year, more than the schools budget; a record post-war recession of 3.5%; and no return to fiscal balance until 2018.

http://www.guardian.co.uk/uk/2009/apr/23/budget-tax-labour-conservatives

josef k.
24-04-2009, 06:21 PM
It seems like this budget is being widely attacked...

DannyL
24-04-2009, 10:43 PM
Who knows exactly what amount of shit we would be in, but rest assured we would be in it.

Why? I don't disagree with you necessarily but neither do I think it's axiomatic that higher taxes for a very small percentage of top earners = world of financial shit - what' s your reasoning?

jtg
25-04-2009, 02:33 AM
If they'd had the balls to bring in a 50% top tax rate ten years ago, we might not be in quite as much shit now.
The Centre for Economics and Business Research estimates that the number of high-earners leaving the country as a result of this will actually lose the Treasury 800m a year. Even if the unrealistic 7bn is raised, it's very small potatoes, nowhere near enough to service the interest on the debt this government has accumulated. This is just class warfare. Will it help poor people? Not at all; it might even cost us money. But will it punish rich and successful people? Excellent! As for it preventing the current recession, I take it you mean that the government wouldn't have borrowed as much money? I don't think so -- trying to stop a Labour government from borrowing is like trying to stop the sun setting.

vimothy
25-04-2009, 12:54 PM
Why? I don't disagree with you necessarily but neither do I think it's axiomatic that higher taxes for a very small percentage of top earners = world of financial shit - what' s your reasoning?

That isn't what I was saying. My point was that regardless of individual tax rates, every state is suffering from the fall-out of the financial crisis.

Mr. Tea
25-04-2009, 01:12 PM
Sorry if this is a very stupid question, but who or what is Darling borrowing this money from - World Bank? IMF? Other countries? Privately-owned banks?

vimothy
25-04-2009, 01:31 PM
The government borrows money by issuing bonds, known as "gilts".

crackerjack
25-04-2009, 02:23 PM
That isn't what I was saying. My point was that regardless of individual tax rates, every state is suffering from the fall-out of the financial crisis.

Yeah, clearly even the most optimistic forecasts for the new tax yield couldn't cover the deficit, even if they were extrapolated back for 12 years.

Still, as gesture politics go, this is :D

DannyL
25-04-2009, 02:54 PM
The Centre for Economics and Business Research estimates that the number of high-earners leaving the country as a result of this will actually lose the Treasury 800m a year. Even if the unrealistic 7bn is raised, it's very small potatoes, nowhere near enough to service the interest on the debt this government has accumulated. This is just class warfare. Will it help poor people? Not at all; it might even cost us money. But will it punish rich and successful people? Excellent! As for it preventing the current recession, I take it you mean that the government wouldn't have borrowed as much money? I don't think so -- trying to stop a Labour government from borrowing is like trying to stop the sun setting.

How the hell is it class warfare when the percentage of people earning this amount is so small? That's absolute rubbish. 7bn isn't enough to service the debt, true, but it's not an insignificant amount of money either. As for this estimate - why that figure? How was it worked out so quickly? Can you provide me with any assurance that this isn't just a random figure plucked out of someone's arse?

Mr. Tea
25-04-2009, 02:58 PM
The government borrows money by issuing bonds, known as "gilts".

And who buys these - private investors? Special firms? Banks?

(Sorry, this is probably your equivalent of someone asking me "So what are these 'atoms' all about, then?" - there's a reason I generally stay out of these economics threads...)

DannyL
25-04-2009, 03:02 PM
That isn't what I was saying. My point was that regardless of individual tax rates, every state is suffering from the fall-out of the financial crisis.

I getcha. I find backwards extrapolation like this kind of weird anyway, near impossible. New Labour defined themselves pretty much by an attempt to get close to the to the City of London (cf. Brown's "prawn cocktail offensive") and with a clear difference in attitude towards the wealthy (Peter Madelson's (realaxed" quote) so it's hard to imagine them acting differently without New Labour being an utterly different institution.

Was interesting to see all the headlines yesterday though. It struck me more as newspaper editors/owners worried that they were going to get hit in the pocket than reflecting the views of their readers.

vimothy
25-04-2009, 04:37 PM
And who buys these - private investors? Special firms? Banks?

Anyone who wants to, basically: private investors, institutional investors, international investors, sovereign wealth funds...

swears
25-04-2009, 07:34 PM
That isn't what I was saying. My point was that regardless of individual tax rates, every state is suffering from the fall-out of the financial crisis.

Of course, but if you'd have had higher taxes and less borrowing to begin with we'd have more of a cushion to fall back on.

vimothy
25-04-2009, 09:56 PM
If we didn't have such a large deficit going into the crisis, our situation would be much improved. I don't know if you can extrapolate from that (undoubted) fact the correct taxation (or spending, for that matter) regime for the UK. I'm not even sure how much revenue this tax rate will generate, but as I said, we'd still be in the shit.

josef k.
26-04-2009, 01:23 AM
It strikes me that this budget could conceivably deepen the British recession.

Mr. Tea
26-04-2009, 01:34 AM
Anyone who wants to, basically: private investors, institutional investors, international investors, sovereign wealth funds...

In other words, probably a large number of lending/investing partners? So it's unlikely that a single financial or corporate entity would be able to tell the UK to jump, and receive the response "How high?", by dint of being our creditor to the tune of multi-billions?

crackerjack
26-04-2009, 11:26 AM
Anyone who wants to, basically...institutional investors, international investors

So could the govt be borrowing money from the very same banks it's just recently bailed out?

I hope they geet a very preferential rate.

jtg
26-04-2009, 03:53 PM
How the hell is it class warfare when the percentage of people earning this amount is so small? That's absolute rubbish.
Why does the size of the class of people matter? You seem to be suggesting that because they're a minority, it's OK to victimize high earners. The point is, it's a *big* increase in tax (10%, £15k+/yr) that makes a *big* statement politically, but the actual revenue it's bringing in is very modest. It's quite clearly been done for political purposes, to make a point -- "gesture politics", as crackerjack put it. Punishing rich people is the message -- Labour are trying to catch the wave of anti-banker, anti-greed sentiment -- and that's class warfare. Perhaps you agree with going after the rich, or perhaps you don't think that successful people deserve to be taxed so much more than anybody else, but they're clearly sending a message by oppressively taxing a certain class of earners.


As for this estimate - why that figure? How was it worked out so quickly? Can you provide me with any assurance that this isn't just a random figure plucked out of someone's arse?
The £7bn is, I believe, the government's own figure -- it should be pretty accurate, since they know how many people earn £150k+, and it's simple arithmetic to work out how much they get from 50% of those incomes. The £800m loss figure is speculative, yes, based on the idea that a certain number of high earners will leave the country because it taxes them oppressively, which isn't factored into the Budget's forecast. This will happen to some degree, without a doubt. The estimate given is 25,000 people leaving. When the rate was predicted tog o up to 45%, both CEBR (the source for these figures) and the IFS made predictions that agreed with each other, and these figures for 50% are extrapolated from those reports:

http://www.cebr.com/Resources/CEBR/Impact%20of%20the%2050%20per%20cent%20tax%20rate.p df

vimothy
26-04-2009, 05:46 PM
It strikes me that this budget could conceivably deepen the British recession.

I think that is highly likely.


In other words, probably a large number of lending/investing partners? So it's unlikely that a single financial or corporate entity would be able to tell the UK to jump, and receive the response "How high?", by dint of being our creditor to the tune of multi-billions?

Creditors have a definite interest at stake (cf. Chimerica). But investors aren't setting government policy. Investors want to be paid back at given times. Do that and don't devalue the currency and they're happy. On the other hand, aid is often conditional, but I think that the IMF has had a change of heart recently, so if it comes to that, we're unlikely to get the usual regime.


So could the govt be borrowing money from the very same banks it's just recently bailed out?

I hope they geet a very preferential rate.

It's possible, but government bonds are a fixed income investment, and they're already at what is basically a risk free rate.

vimothy
26-04-2009, 05:58 PM
On supply-side economics, the Laffer curve is obviously true at some level of taxation, but that's a very mundane observation. I think Greg Mankiw did some empirical research on it and, IIRC, found that if you reduce taxes -- surprise, surprise -- government revenue tends to go down.

josef k.
26-04-2009, 06:53 PM
Pressure to call an election can surely now only grow, as the media turns on New Labour.

crackerjack
26-04-2009, 07:00 PM
Pressure to call an election can surely now only grow, as the media turns on New Labour.

As opposed to the kid gloves treatment they've been getting the last few years?

You'll have to bide your time, old boy. The prospects of an election this side of next year are nil. Unless you can concoct a scenario in which 30 die-hard Blairites vote against the budget.

Inicdientally, why do people think this might deepen the recession? I can see the argument that some of the super-rich might leave, but we've already established this is a smll numbr of people, so you must be referring to other aspects of the budget.

Which ones?

edit: This looks like th beginnings of wisdom.


The climbdown came as Stephen Byers, a former cabinet minister, called on Brown to scrap ID cards and the replacement of the Trident missile programme because of the recession, warning that it would be a "fraud on the electorate" if all the parties were not open about cutbacks needed to balance Britain's books. His words reflect a growing divide in cabinet over whether ministers should now admit that specific major programmes will have to be axed after the election, with the business secretary, Peter Mandelson, pushing for what would be a major change of strategy and Brown resisting.

Byers has long supported both identity cards and the nuclear deterrent but said he could not justify to vulnerable constituents the respective £5bn and £70bn bills when basic public services were threatened by the economic crisis.

vimothy
26-04-2009, 08:13 PM
"Which ones?"

The spending cuts. Since the economic crisis is a crisis of demand, reducing government spending can only increase it.

crackerjack
26-04-2009, 08:22 PM
"Which ones?"

The spending cuts. Since the economic crisis is a crisis of demand, reducing government spending can only increase it.

I love the credit crunch (notwithstanding mass unemployment, including my own). It's even making a Keynesian out of Vimothy.;)

Have any speciific spending cuts been announced yet?
I thought these were all yet to come.

vimothy
26-04-2009, 08:34 PM
Pity it's not making Keynesians out of our government.

On Friday The Guardian had Vince Cable saying he'd identified cuts of 3bn from health and education spending for 2010-11. TBH, I've not been following the story in any depth. I'm spending all my time reading about these motherfucking torturing cunts.

crackerjack
26-04-2009, 08:48 PM
Pity it's not making Keynesians out of our government.

On Friday The Guardian had Vince Cable saying he'd identified cuts of 3bn from health and education spending for 2010-11. TBH, I've not been following the story in any depth. I'm spending all my time reading about these motherfucking torturing cunts.

Are you gonna stick something up about that?

Seems inconceivable to me that top legal wonks could end up in jail over this. But the Yanks are so much better at holding powerful crooks to account than we are, so it's possible.

vimothy
26-04-2009, 09:21 PM
Yeah, sure.

Phillipe Sands' VF article, "The Green Light" (and book "Torture Team") is the definitive account of the policy making process:

http://www.vanityfair.com/politics/features/2008/05/guantanamo200805

Jane Mayer's article "The secret history of America's "extraordinary rendition" program" is essential:

http://www.newyorker.com/archive/2005/02/14/050214fa_fact6

As are Mark Danner's twin articles in NYRB, reviewing the ICRC Report to the CIA:

http://www.nybooks.com/articles/22530
http://www.nybooks.com/articles/22614

Lawyers can be prosecuted (Bybee, Yoo, etc) for giving advice that enables war crimes. I don't think individual agents or intelligence officers should be prosecuted, because it's clear that all the pressure came from the top. Rumsfeld and Feith are the people responsible. That said, the CIA didn't follow the guidelines given in the OLC memos, and, as Nuremberg shows, the good faith defence is not sufficient. But still, this one's on Feith and Rumsfeld.

josef k.
27-04-2009, 06:09 AM
The Economist on the Budget:

http://www.economist.com/opinion/displayStory.cfm?story_id=13527695&source=hptextfeature

The photo of Brown is fascinating.

vimothy
27-04-2009, 04:18 PM
Catherine Eban, "Rorschach and Awe", on the two CIA pychologists who designed the torture programme:

http://www.vanityfair.com/politics/features/2007/07/torture200707?printable=true&currentPage=all

Pestario
27-04-2009, 05:32 PM
The photo of Brown is fascinating.

yes, his eyes, they aren't so droopy. It's an electric expression.

viktorvaughn
30-04-2009, 10:29 AM
Guy in the guardian writes

the wealthiest taxpayers will still be contributing to the public purse at a 10% lower rate than for nine of Margaret Thatcher's 11 years in office

this is interesting - didn't know that.