Starmer's vision quest

[Pblakeney]

I suppose increased earning leads to increased spending, and, thus, typically to increased indirect taxation, (is that a form of the much derided trickle down economics?), but, without wishing to be picky, shouldn't that read Income Taxes (including NI) are linked.... etc

Increased earnings and increased spending only goes so far. Then it becomes increased earnings and increased savings.
This is how the wealthy become more wealthy.

 

[BoldonLad]

Increased earnings and increased spending only goes so far. Then it becomes increased earnings and increased savings.
This is how the wealthy become more wealthy.

Yes, I agree, my point was really exactly that (poorly expressed obviously), ie, if increased earning are to produce increase in tax income, then, it needs to be via personal income related taxes (ie Income Tax and NI).

As an aside, it is not clear to me how much of that increased tax income will be a "real" increase, since, increased income will (I would imagine) produce a degree of inflation.

 

[Pblakeney]

Yes, I agree, my point was really exactly that (poorly expressed obviously), ie, if increased earning are to produce increase in tax income, then, it needs to be via personal income related taxes (ie Income Tax and NI).

As an aside, it is not clear to me how much of that increased tax income will be a "real" increase, since, increased income will (I would imagine) produce a degree of inflation.

Yes, I was agreeing that trickle down is bollocks.

 

[First Aspect]

I think Copilot has it correct - as it shows in the title generated.

The graph shows that on average each worker paying NI is paying an increased burden of tax to support each pensioner. In households that have two workers on average pay paying NI they fund one pensioner. This is not a rant against people reaching pension and collecting their entitlement - they paid for the pensioners that were before them. It's not a rant against any people at all, but if we are to understand the strain on the UK economy, we must be understand it (not saying that you don't).

The claim is that we need to increase GDP. It is true that is the way to pay down the debt. In the meantime, measures need to be taken to increase the tax take - though for every tax there is a lobby group to either reduce or abolish it. Tax of course is linked to salary, pay people more then they'll be able to pay more tax.

The invitation here is for people to agree on the ways that tax income can be increased without making it an attack on political parties or individual politicians.

Every has a grievance, no one has the solution it seems.

The graph shows the opposite. Is suggests that the average tax take from 14 was needed to fund each pension in 1950, and only 3 now. That means pensions are cheaper.

What you want it to say is that in 1950 the tax burden for each pensioner was shared among 14 people, but now only 3, meaning it's more expensive .

 

[BoldonLad]

If I may just intervene with an apolitical fact. There is a noted decline in affordability of services. Political figures left, right, and centre like to discuss the cause of the decline and the party responsible using the now familiar array of true and false tropes around migrant, people living longer, the global financial collapse, covid19, scroungers, more dependence on services, the rising costs of providing services, Brexit etc, etc.

All true and valid for discussion, but critically in order to manage the decline, there needs to be a recognition - we no longer can afford what we've had. The North Sea revenue has been mostly extracted and spent. Without another such bonus around the corner, the only source of income is tax, otherwise there is borrowing without fixed interest rates. In other words the economy is volatile and vulnerable at the same time.

The apolitical fact. State pensions and benefits are both needed and unaffordable under the current model. In rounded numbers, the number of people whose NI payments were required to fund one state pension was 13 to 14. Today is less than 3. Some say the official figure for next year is 2.1 - unverified, but let us suppose for our purposes that it is close to accuracy.

I do know that people here hate Copilot, but I asked it to draw these graphs for me from the data.

View attachment 10553
Leaving about Copilot to the side please, the graph shows the trend and the problem. We must surely agree that the trend can not continue.

As workers age, they may hope for promotion and increased pay. Largely I think we'll manage to agree this happens. We can note that certain professions encourage early retirement ages, teachers, police, etc etc. When one examines the direct tax gap this creates, it is something like £2.1 bn lost. When the direct and indirect tax gaps are summed this produces a shortfall of around £6.3bn.

This while the numbers of state pensioners increases, and the number of benefit claimants increases, and the lost days to sickness increases.

View attachment 10554

This is clearly an unsustainable model. Further ...

The number of jobs vacancies in the UK is in the order of 950 000.

There number of people temporarily unable to work due to NHS waiting lists is in the order of 800 000.

The number of migrants / asylum seekers prevented from working by government policy is hundreds of thousands.

Opinions are sure to vary, but governments of any stripe will tend to tinker around the edges rather than set out bold policies.

Ultimately, the choices are increase tax income to fund services or cut services and ignore any potential losses to GDP.

The choices are who the government decides must pay.

Nobody wishes to pay. Some can not pay. Some can pay and not be left short.

The moral impediment - maintain the government covenant or let those with money keep it.

Solutions on a postcard to Rachel in accounts please.

Without entering into the fray regarding just what the first graph shows, since NI is not ring fenced for the payment of Pensions, then, wouldn't the level of Pensioner Income have a bearing?

I would doubt that the proportion of income tax paying pensioners (due to Private/Works Pension schemes, for example) in 1950 was comparable with 2020 or later. So, the "cost" of (State) Pensions is not being borne by only the those of the working population who are earning enough to be in the Income Tax and/or NI bracket.

 

[Dorset Boy]

Grickle down is not complete bollocks. If someone earning £50k pa suddenly earns £55k, they will almost certainly spend that increase.
If someone is earning £500k pa, then they will almost certainly save any extra income.

 

[monkers]

I suppose increased earning leads to increased spending, and, thus, typically to increased indirect taxation, (is that a form of the much derided trickle down economics?), but, without wishing to be picky, shouldn't that read Income Taxes (including NI) are linked.... etc

Sure, maybe we should just say direct and indirect taxes?

 

[bobzmyunkle]

Grickle down is not complete bollocks. If someone earning £50k pa suddenly earns £55k, they will almost certainly spend that increase.
If someone is earning £500k pa, then they will almost certainly save any extra income.

Isn't that a contradiction of trickle down economics?

 

[Pblakeney]

Grickle down is not complete bollocks. If someone earning £50k pa suddenly earns £55k, they will almost certainly spend that increase.
If someone is earning £500k pa, then they will almost certainly save any extra income.

I repeat my original post.

Increased earnings and increased spending only goes so far. Then it becomes increased earnings and increased savings.
This is how the wealthy become more wealthy.

 

[monkers]

The graph shows the opposite. Is suggests that the average tax take from 14 was needed to fund each pension in 1950, and only 3 now. That means pensions are cheaper.

What you want it to say is that in 1950 the tax burden for each pensioner was shared among 14 people, but now only 3, meaning it's more expensive .

Sorry FA but we don't agree. To put round numbers on this - if state pension per pensioner is say £12k per year, would you rather be funding a one twelfth share of that (£1k) or a half share (£6k) as a worker paying NI?

 

[First Aspect]

Sorry FA but we don't agree. To put round numbers on this - if state pension per pensioner is say £12k per year, would you rather be funding a one twelfth share of that (£1k) or a half share (£6k) as a worker paying NI?

If you require 14 months to save up to buy one car, and require 3 months to save up for another, which one is more expensive?

 

[monkers]

If you require 14 months to save up to buy one car, and require 3 months to save up for another, which one is more expensive?

OK, we aren't going to agree, so I suggest we leave it there.

 

[First Aspect]

OK, we aren't going to agree, so I suggest we leave it there.

You are mistaken, it is that simple. There is probably correct underlying data but the labelling of the axes is unquestionably wrong.

 

[monkers]

You are mistaken, it is that simple. There is probably correct underlying data but the labelling of the axes is unquestionably wrong.

I thought you were discussing only the first of the three graphs, which is correct. The second and third graphs have errors on the labels of the Y axes which if they were human-made would be typos - ''pensions'' should be ''pensioners'', and ''claims'' should be ''claimants''. The main point to this is that the data points, lines and gradients appear correct. Let's agree to leave it there.