For a quick SCARY laugh…

 

This may be aimed at the numerous irrational Americans, but there is something in the video for us to pause and think about…

What’s Laffer got to do with it?!?!

There will be no reduction in the tax burden for five years, states Chief Secretary to the Treasury Danny Alexander in an interview in the Observer.

‘The tax burden is necessary as a significant contribution to getting the country’s finances in order. So, it will have to stay at that level for quite some time’.

When asked whether or not a reduction in the overall tax burden would be possible once the nation’s books were back in order, Alexander adds: ‘You are asking me to make decisions for five years down the line now and I am not going to do that. What I want to see is a rebalanced and fairer tax system. That is what I think is most important’.

Now the economic times are dire, yes – but that really was a counsel of sheer despair. It’s hard to give Alexander credit for his glass thoroughly half drained future outlook… Perhaps the coalition is running the risk of being bitten by its’ own negativity?

MPs concerned with their left flank constructed a budget with “progressive” stamped all over it. When that notion was challenged, by the IFS, they then had to elaborate- claiming that they have no intention in cutting the tax burden or moving towards that direction for at least five years. So, they can only prove that they are being “fair” by being redistributive. Anyone who suggests there is another way surely must want to stamp all over the faces of the poor…

But surely the answer to Britain’s deficit and other problems is not a constraint on public sector spending. The answer may just be sustained growth.

Fortunately/unfortunately, whatever, Britain’s economic success is linked to global demand, and developments in the U.S., in China and of course, in European economies such as Germany (with enviable levels of economic growth). Wealth is also not just created by governments but by the individual and enterprising companies, propelled by what Keynes called “animal spirits”.

However, the government does have control over the tax system. It can keep tax levels high to make a political point, you know -“fairness,” but only at the cost of inhibiting growth. A high tax take and tax rates, more recently known fondly (!) as banker-bashing policies will just have the bankers quietly running to the arms of other nations, think Switzerland and the East…

Maybe, just maybe, Alexander needs to get acquainted with Art Laffer, (still alive) the economist of the Laffer Curve fame. The curve points out, among other things, that the best way to increase revenue was to get the rich to pay less tax… No, NO, LET ME FINISH – the curve points to incentivising wealth creation by lowering taxes, domino effecting growth in a positive way and leading to increased tax receipts…

The other option, which the coalition has chosen to embrace, is to raise the taxes up so high that bankers will simply move abroad. Good riddance you say? No. No it’s not. If the top 1% is paying 23% of our tax revenues, how is it in our interests to drive this money away? Does that not leave us with 23% of the money short? Think about it…

Or let us let Camberwell’s most famous son put it: ‘I left for eight years when tax was put up to 82 per cent. The newspapers said: “Michael Caine’s leaving: let him go, the stupid, overpaid, loudmouth idiot, who cares where he goes?” Well, you didn’t get 82 per cent tax from me for eight years and a quarter of a billion dollars worth of movies were made outside this country instead of inside it. Now, that is just from one stupid, loudmouth moronic actor. Imagine what happens with companies that disappear.’