Labour Plans to Cut Taxes Paid by Rich

CLAPTON

Generali wrote: »

Well there's a graph that shows the Laffer curve peaking at 40% tax and, of course, the Thatcher Government under advice from Dr Laffer set the income tax top rate at 40% but apart from that there's very little evidence.

your view of 'evidence ' is a little different to mine.

how did laffer gather the data to set the higher rate of tax (ignoring NI etc) to 40% before the rates were so set?

Uxb

Linton wrote: »

Strange how making poor people poorer makes them work harder whilst making rich people poorer makes them work less.

No different from the concept of increasing the tax on cigarettes to make them smoke less.

Generali

CLAPTON wrote: »

your view of 'evidence ' is a little different to mine.

how did laffer gather the data to set the higher rate of tax (ignoring NI etc) to 40% before the rates were so set?

I have no idea. He received his PhD from the best economics university in the world and advised both the Thatcher and Reagan Governments.

You disagree with him on what basis? What qualifications do you have that trump a PhD in economics from Stanford?

CLAPTON

Generali wrote: »

I have no idea. He received his PhD from the best economics university in the world and advised both the Thatcher and Reagan Governments.

You disagree with him on what basis? What qualifications do you have that trump a PhD in economics from Stanford?

have you been drinking?

So, take the last 10 years in the UK
i.e. 2005 to 2015

do you really and truely believe that the total tax take in the UK is solely correlated to the highest rate of income tax (or other effective tax rate)?


also one might note that economics Ph.D and even Nobel prize winners have a very poor track record at predicting much at all and even less at agreeing with each other.
To see in such a one dimensional way is amazing.

Graham_Devon

Generali wrote: »

And someone on £20,000 gets 20% of their income in 'free' schooling whereas the person on £100,000 probably pays for their kids to go to school.

Anecdote is not data

And in any case, I'd have to completely disagree with this.

Secondly, no one is suggesting that anyone on 100k a year has to, or should send their child to a fee paid school.

Third, not everyone on 20k has a child at school to "get 20% of their income from free schooling" - whatever that means.

Generali

CLAPTON wrote: »

have you been drinking?

So, take the last 10 years in the UK
i.e. 2005 to 2015

do you really and truely believe that the total tax take in the UK is solely correlated to the highest rate of income tax (or other effective tax rate)?


also one might note that economics Ph.D and even Nobel prize winners have a very poor track record at predicting much at all and even less at agreeing with each other.
To see in such a one dimensional way is amazing.

1. I had a glass of wine with dinner
2. Can you provide a link to where I made that claim?
3. Can you state on what basis you think that you are better able to judge the maximum point of the Laffer curve than Dr Laffer? You claimed earlier that we all believe in the Laffer curve but then seem to cast doubt on the entire economics profession.
4. If not at 40% then where? On what basis?

To claim to be an expert in economics without any obvious expertise is amazing.

the_flying_pig

Generali wrote: »

I have no idea. He received his PhD from the best economics university in the world and advised both the Thatcher and Reagan Governments.

You disagree with him on what basis? What qualifications do you have that trump a PhD in economics from Stanford?

I think you're being a bit unfair there.

A very obvious truism that's well known by anyone who's ever thought about the price that they should charge for something, from the humblest market trader up, is that you need to go for a 'goldilocks' not-too-high, not-too-low price.

Set the price too low & you'll get a lot of volume but not enough margin on that volume. Set the price too high & volume will be so low that the high margin won't matter. Income tax, being the price of working, is of course subject to the same laws.

You don't need a GCSE in economics to realize that this is an inescapable truth.

But it's a heck of a leap from here to saying that a 50% top rate would lose money.

What Laffer very very definitely did not ever do is carefully look at the evidence for the UK [to do this you'd need to look at really shedloads of evidence, e.g. the rates of other taxes like capital gains, rules on spousal income, the types of work that the top earners do {e.g. GP jobs can't really leave the country, footballer jobs probably can}, pensions tax relief, etc etc etc] in 2015 & conclude that the optimal tax rate is 45%. I'm not sure it's very likely that he carried out this exercise for the UK [or even the US?? though I'd be completely guessing] in the 80s even.

As an aside, when Thatcher came into power in 1979, the top income tax rate was 80-odd percent. It's not at all controversial to say that this is probably above the revenue-maximizing level.

StevieJ

Generali wrote: »

....and in the 1980s?

Top rate was reduced from 83% (or 98% for unearned income) to 40%. I don't disagree with the premise of the Laffer curve, tax at 98% would certainly push high earners into looking for loopholes, I just don't agree that tax change from 45 to 50 % would necessarily have a negative effect on the treasury finances. BTW when higher tax rates were dropped from 79 onwards, VAT rates was doubled, this being a far more effective collector of revenue.

CLAPTON

Generali wrote: »

1. I had a glass of wine with dinner
2. Can you provide a link to where I made that claim?
3. Can you state on what basis you think that you are better able to judge the maximum point of the Laffer curve than Dr Laffer? You claimed earlier that we all believe in the Laffer curve but then seem to cast doubt on the entire economics profession.
4. If not at 40% then where? On what basis?

To claim to be an expert in economics without any obvious expertise is amazing.

we all believe that if one has a curve that can credibly said to have a zero value at zero rate of taxation
and also a zero value at 100% taxation rate and
and it is everywhere greater than or equal to zero
and that there are reasonable grounds for believing that the cure is smooth
then the maths says that there must be one or more maxima


the maths does not say where those maxima are.

there is no reasonable theory that predicts that these maxima will be the same in different economic systems, periods of history etc.
In addition, it is obviously, (even to Harvard Ph.D and failed BA students alike), that the tax take of a country is a function of many variables.

Given it is a function of many variables the usefulness of drawing the curve against one is of limited value especially in dramatically changing economic conditions.

You don't need a degree to know the above is correct. (always allowing for spelling and grammatical errors and errors in general)

jamesd

CLAPTON wrote: »

your view of 'evidence ' is a little different to mine.

how did laffer gather the data to set the higher rate of tax (ignoring NI etc) to 40% before the rates were so set?

You may be missing the point, which wasn't how the initial estimates were made but that income tax revenue was found to have increased.