Sunday 29 April 2012

Sunday, April 29, 2012 Posted by Jake 4 comments Labels: , , , , ,
Posted by Jake on Sunday, April 29, 2012 with 4 comments | Labels: , , , , ,

[If you want to read Part 1 click here, but you don't need to] 

UPDATE NOV 2016: The rich have been the biggest winners from ex-Chancellor George Osborne’s tax giveaways of £32bn, rolled out since 2010. That’s according to the think-tank, the Resolution Foundation, chaired by the former Tory cabinet minister David Willetts. They say the £32bn - including £17bn on raising the point at which people pay income tax, £8bn on cutting corporation tax and £7bn in freezing fuel duty - would be enough to eliminate the UK’s deficit.

Matt Whittaker, Chief Economist at the Resolution Foundation, said: “The £32bn worth of tax cuts announced since 2010 has been the difference between the government hitting and missing its deficit reduction targets in the last Parliament, or indeed in this one... Tax cuts on this scale have clearly played a role in supporting household incomes, though around four-fifths of the £21bn due to be spent on raising the personal tax allowance by 2020 will have actually gone to the richest half of households.”

It was a former leading Labour politician, Peter Mandelson, who said “we are intensely relaxed about people getting filthy rich”. A philosophy that has been followed doggedly by Labour and Conservatives alike for over 30 years. Ministerial claims of shock at tax avoidance and horror at excessive pay have been nothing but camouflage for this policy. 

Particularly since the cut in the top rate tax from 50% to 45%, in the March 2012 budget, government ministers have been swearing that cutting income tax for the rich makes us all richer. They claim lower tax encourages clever entrepreneurs to come and work hard and give us all jobs, and bring us economic growth. The opposition swears that this is not true. 

Each side says it with such earnest confidence that we ordinary Britons don't know what to think. So we just let the politicians carry on as usual, which the politicians do with great and insatiable appetite.

But the truth is out there, if you know where to look.

The impact of this philosophy is made very clear by the graphs below from a paper by the Centre for Economic Policy Research, "Optimal Taxation Of Top Labor Incomes: A Tale Of Three Elasticities"Graphs that expose a great and stubborn lie: that allowing people to get 'filthy rich' is good for national economic growth. The lie that if the few get ‘filthy rich’ we will all get mussed up with a splattering of extra wealth ourselves. The fib used to justify slashing personal and corporation tax. It is asserted that so long as there is a feast at the top table we all will get some of the leftovers. The evidence below shows that this assertion is false.

This first graph below shows there is actually no correlation between economic growth and cutting taxes - massive tax cuts for the rich make no difference to growth. The horizontal band of countries, excluding Ireland, shows that countries like the UK and the US who cut taxes most aggressively saw no greater economic growth than Germany, Australia, and many others who made smaller or no top rate tax cuts. Here is yet more evidence against the lie that letting the 1% get rich makes us all richer - evidence that is all around us. That successive governments stubbornly stick to it supports the theory of Goebbels, the nazi propagandist, “If you tell a lie big enough and keep repeating it, people will eventually come to believe it.”

On the other hand, the next graph shows there is a clear correlation between reducing tax and increasing inequality. As their taxes were slashed, the top 1% accrued even greater wealth because
a)      Less was taken away from them in taxes, leaving them more to pocket.
b)      As they were allowed to keep more they were more incentivised to grab a bigger slice of the pie. Not by creating a bigger pie and spreading the wealth, but by snatching a bigger share with excessive pay and excessive profits.

Providing low tax rates and plentiful routes for tax avoidance – which the chancellor George Osborne found so shocking in spite of his complicity – do nothing more than enrich the few with no benefit to the many.

The extraordinary degree to which taxation policy swung in favour of the top 1% is shown in these two graphs. Between 1975-79 and 2004-2008 the UK and US swung the scales in favour of the wealthiest. While Germany, the economic powerhouse of Europe, demonstrated steady growth and steady income shares by maintaining a 60% top marginal tax rate.

Our earlier post (Part 1) showed that the 1% getting richer has not improved the lot of the 90%. A doubling of the income of the top 1% has not improved the lot of the 90% by a jot. To claim otherwise is simply a lie.

The key characteristics that make successful leaders are impossible to define. 

Combinations of character traits create different outcomes. An excessive affection for drink has ruined many men, and yet that famous toper Sir Winston Churchill was a great leader. Like mixing colours the presence of a particular trait manifests itself in strange ways.

But of the essential ingredients found in leaders two stand out:
  • A clear objective
  • A conviction that the ends justify the means
Of course, to paraphrase Lord Palmerstone, leaders have no permanent objectives only permanent interests (which generally centre around themselves). However, the conviction that the ends justify the means is strong in almost all successful leaders.

It is this conviction that enables leaders to abuse the truth far more frequently, comprehensively, effectively, malignly, and shamelessly than the rest of us admittedly fallible and flawed humans. From tobacco bosses' claims that smoking does not cause cancer, to energy company executives claiming price changes are driven by wholesale energy costs, to bankers promising to provide high investment returns, cheap loans and a prosperous retirement. And to cabinet ministers claiming to be surprised by tax avoidance, misremembering whether or not they authorised aiding and abetting kidnapping and rendition, or experiencing memory lapses whether they authorised a special adviser or best mate to duck and dive on their behalf. 

Look back at the news archives, and you will find these leaders looking the camera straight in the lens with their most earnestly open and honest expressions, only to be exposed as fibbers and liars a few months or years later. In truth, they don't care. They have salted away their rewards, and care nothing for their subsequent exposure.

They know many of us know they are lying. They don't care if we know they know we know they are lying. Their satisfaction is we never do anything about it.

Stopping lies being told is an impossible and futile task. The best we can do is spread evidence to expose them. Sometimes with a tweet and a link. Sometimes with a conversation. Always with evidence.


  1. Thanks for this information. It's very helpful.

  2. You won't comprehend the lump you feel in your throat as soon as your manager informs you of the government is garnishing your take-home pay. I wasn't able to believe it. My cash was being stripped away from me and given to the federal government, and I also could hardly complain because I had adequate opportunity to reply to the correspondence the Internal Revenue Service directed to me and didn't. Do not make the misstep I did, get your tax debt solved as quickly as possible.

  3. This is what infuriates me...the cuts in welfare, the restraint on wages and yet the 'elite' continue to increase their already bloated wealth. The increasing divide between haves and have nots will continue to lead to calls for self governance . One day, not too far away, the camels back will be broken..and then nothing on earth will stop what then follows...'they' "won't even have time to get into their jets and fly off to their islands.." .(unquote)

  4. I have been saying this for years, unfortunately the majority of people have decided not to support those groups which were formed to help spread the wealth by being paid resonably for work and to be allowed to be sick and to take holidays. Yes we sacked the Unions but we also allowed the Unions to become something which they should not have become.

    However, when it comes to the infamous miners strike, I was aware of how she had planned it from when she was Education Opposition spokesperson by a letter she sent out, to the effect that to bring the Unions to heel they should take on the biggest the NUM. (I will add, that she also knew how to rile up Arthur Scargill, he was an exceptional fit for her purpose. He trait also supported by recent comments attribute to the late Bill Sirs.)

    We are only now learning how much lies and scheming went on in the name of making the economy work better and for the good of the country. I will not be surprised to find out that She even had the SAS involved in Police Uniforms, this would be reasonable when we consider how much covert survailence has gone on against innocent people.

    All in the name of Government of the People by the People for the People.

    Do not make any mistake in my support for Arthur, he was dead right on all that he said, the Tories had all the power and control to bismerch and even have him arrested and all to make themselves able to send money to Apartied South Africa, close down the mines without reasonable retraining and making jobs available etc.

    Arthur was aware of the Maggie letter the same as I was and he should have done things differently as Bill Sirs said and as a result Maggie killed the Trades Unions. It can be seen that during the following period the people running the economy have been able to do just as they please as there was no real opposition. Even the Blair Labour government was more right wing in actions than Maggie but the rhetoric was Labour Spin.

    Sorry to say this, but Ed Milliband was right and has been treated diabolically, it is time that people understand that when they are reading the paper or watching the TV the information is generally fixed
    to the benefit of the rich, since they own the papers and most of the TV stations.

    People need to question the Big Sovereignty Issue of the EU. What benefits will the ordinary person
    get from Out or In, forget what our politicians say, look at the 27 other countries who think that we are stupid to be considering jumping from a Big Ship onto a raft in the middle of the Atlantic with 360 degrees of no where to go.
    The US has already made its position clear, the Japanese, the Chinese, lets be fair because the Rich are hoarding the money we the Tax payers have to borrow more from other countries to get things done only for the profits to go to the rich and to foreign shareholders, with ever greater costs to the consumer and tax payer.

    Time for change see Energy Independence

    Best Regards
    Al Scott


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