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Post by Orac on Feb 7, 2023 21:48:39 GMT
Tax cuts don't need to be 'funded'. Spending needs to be funded. Tax cuts are (more or less) free I can't help thinking that some of the confusion around this topic springs from this bizarre, and often repeated, semantic hiccup Reducing the tax take without reducing spending involves increased borrowing so is de facto unfunded. It's the spending that's unfunded, not the tax cuts. This might be tricky at first, but once you see it you can't un-see it. |
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Post by Deleted on Feb 7, 2023 21:50:02 GMT
Tax cuts don't need to be 'funded'. Spending needs to be funded. Tax cuts are (more or less) free I can't help thinking that some of the confusion around this topic springs from this bizarre, and often repeated, semantic hiccup It's a deliberate confusion to claim that tax cuts need to be funded Of course tax cuts need to be funded, either by spending cuts or increased borrowing to replace the lost revenue. Unless you believe in magic economics and something for nothing. That was the problem with the Truss/Kwarteng budget. Massive tax cuts unfunded by spending cuts and thus necessitating greatly increased borrowing. In that very real sense the cuts were unfunded, however much a certain person chooses to attempt to derail an intelligent thread with semantic nonsense of no real relevance to the debate at all. Magrathea has form with this sort of nonsense, which is a kind of deflection from the real points being made. We all know in what sense the Truss tax cuts were unfunded. |
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Post by Deleted on Feb 7, 2023 21:58:35 GMT
Reducing the tax take without reducing spending involves increased borrowing so is de facto unfunded. It's the spending that's unfunded, not the tax cuts. This might be tricky at first, but once you see it you can't un-see it. You are wasting everyone's time dancing on the head of a pin for no useful purpose. If spending that is being funded by taxation ceases to be because of cuts in the funding source, which is being replaced by a massive increase in borrowing instead, it is in practice an unfunded tax cut. We can all see that however much you try to obfuscate and deny it. Cuts in revenue raised need to be paid for, ie funded, by cuts in revenue spent or increases in borrowing to cover the shortfall. This is where Truss and Kwarteng proved themselves to be such economic illiterates, however much in their defence you attempt to derail such legitimate criticism by attempting to steer the thread down a semantic sidetrack. And in effect arguing over an utterly boring bit of pointless semantics |
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Post by Pacifico on Feb 7, 2023 22:13:01 GMT
Tax cuts don't need to be 'funded'. Spending needs to be funded. Tax cuts are (more or less) free I can't help thinking that some of the confusion around this topic springs from this bizarre, and often repeated, semantic hiccup Reducing the tax take without reducing spending involves increased borrowing so is de facto unfunded. Why can't you reduce spending? |
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Post by Pacifico on Feb 7, 2023 22:19:00 GMT
It's a deliberate confusion to claim that tax cuts need to be funded Of course tax cuts need to be funded, either by spending cuts or increased borrowing to replace the lost revenue. Unless you believe in magic economics and something for nothing. That was the problem with the Truss/Kwarteng budget. Massive tax cuts unfunded by spending cuts and thus necessitating greatly increased borrowing. In that very real sense the cuts were unfunded, however much a certain person chooses to attempt to derail an intelligent thread with semantic nonsense of no real relevance to the debate at all. The Budget didn't set Departmental budgets - that is done at the Spending Review. OK - there is an argument that the spending review should have been done at the same time but as it was not you cannot claim that the tax cuts would have led to extra borrowing. |
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Post by Toreador on Feb 7, 2023 22:23:00 GMT
They could have borrowed the one I've had since birth or the one given to my wife by the gypsy that ran off with her mother. The one I have has allowed me to forecast a list of politcal mismanagement. Well you got the one wrong on what NL knew when they brought in the Minimum Wage. You just ended up with a piece of Tory propaganda. I dislike them equally. |
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Post by Deleted on Feb 7, 2023 22:27:55 GMT
Reducing the tax take without reducing spending involves increased borrowing so is de facto unfunded. Why can't you reduce spending? That is a different argument and indeed the only alternative to funding massive tax cuts by massive borrowing increases would be by massive spending cuts. But that too would have been disastrous with public services already on their knees, and would have triggered a downward spiral in the economy likely to have wiped out many of the savings. The big mystery is why, after many years of stiff departmental and local government spending cuts resulting in broken public services, taxation levels nevertheless remain at record highs. The money must be going somewhere. Solve that and we can redirect whatever is being siphoned off into whatever offshore accounts towards either public spending or tax cuts or a combination of the two. |
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Post by Deleted on Feb 7, 2023 22:29:41 GMT
It's a deliberate confusion to claim that tax cuts need to be funded Of course tax cuts need to be funded, either by spending cuts or increased borrowing to replace the lost revenue. Unless you believe in magic economics and something for nothing. That was the problem with the Truss/Kwarteng budget. Massive tax cuts unfunded by spending cuts and thus necessitating greatly increased borrowing. In that very real sense the cuts were unfunded, however much a certain person chooses to attempt to derail an intelligent thread with semantic nonsense of no real relevance to the debate at all. Magrathea has form with this sort of nonsense, which is a kind of deflection from the real points being made. We all know in what sense the Truss tax cuts were unfunded. Magrathea is spot on. It is government spending which needs funding. Tax funds government spending. If the government, e.g. civil service, was smaller and spending smaller, those taxes could be lower and people would have more of their own money to spend. People should be allowed to keep as much of their own money as possible, in my view. |
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Post by Deleted on Feb 7, 2023 22:33:16 GMT
Of course tax cuts need to be funded, either by spending cuts or increased borrowing to replace the lost revenue. Unless you believe in magic economics and something for nothing. That was the problem with the Truss/Kwarteng budget. Massive tax cuts unfunded by spending cuts and thus necessitating greatly increased borrowing. In that very real sense the cuts were unfunded, however much a certain person chooses to attempt to derail an intelligent thread with semantic nonsense of no real relevance to the debate at all. The Budget didn't set Departmental budgets - that is done at the Spending Review. OK - there is an argument that the spending review should have been done at the same time but as it was not you cannot claim that the tax cuts would have led to extra borrowing. Well they promised no return to austerity and the markets certainly seemed to believe the tax cuts were unfunded, thereby necessitating more borrowing, and reacted accordingly. And what they tended to believe is a little bit more credible that whatever little old you might choose to think. Fact is to put in place such massive tax cuts without explaining how they were to be paid for whilst promising no return to austerity was clearly disastrous. There was every appearance of them being unfunded. |
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Post by see2 on Feb 7, 2023 22:38:59 GMT
Well you got the one wrong on what NL knew when they brought in the Minimum Wage. You just ended up with a piece of Tory propaganda. I dislike them equally. That is seriously sad because NL is the only government I have known to look at the needs across most of the political spectrum. IMO both the left and the right of politics play a see saw game of politics which inevitably ends in division and the circular politics that have failed this country since 1951. As feelings are learnt, I forgive you  |
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Post by Pacifico on Feb 7, 2023 22:41:21 GMT
Why can't you reduce spending? That is a different argument and indeed the only alternative to funding massive tax cuts by massive borrowing increases would be by massive spending cuts. Well there were no massive tax cuts. There was the abolishing of the 45% rate which brought in trivial amounts, the main area of lost potential revenue was stopping the NI increase which had not even been started. As the NI increase was opposed by the Labour Party and TUC as being a 'tax on jobs' I would have thought that would be a policy you supported? |
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Post by Pacifico on Feb 7, 2023 22:44:14 GMT
The Budget didn't set Departmental budgets - that is done at the Spending Review. OK - there is an argument that the spending review should have been done at the same time but as it was not you cannot claim that the tax cuts would have led to extra borrowing. Well they promised no return to austerity and the markets certainly seemed to believe the tax cuts were unfunded, thereby necessitating more borrowing, and reacted accordingly. And what they tended to believe is a little bit more credible that whatever little old you might choose to think. Fact is to put in place such massive tax cuts without explaining how they were to be paid for whilst promising no return to austerity was clearly disastrous. There was every appearance of them being unfunded. The big issue for the markets was the open ended energy bill support program - which is precisely why Hunt scrapped it as soon as he got through the door and replaced it with the restricted help we have now. Hence the Labour Party complaining that the present support is not enough. |
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Post by see2 on Feb 7, 2023 22:45:57 GMT
Of course tax cuts need to be funded, either by spending cuts or increased borrowing to replace the lost revenue. Unless you believe in magic economics and something for nothing. That was the problem with the Truss/Kwarteng budget. Massive tax cuts unfunded by spending cuts and thus necessitating greatly increased borrowing. In that very real sense the cuts were unfunded, however much a certain person chooses to attempt to derail an intelligent thread with semantic nonsense of no real relevance to the debate at all. Magrathea has form with this sort of nonsense, which is a kind of deflection from the real points being made. We all know in what sense the Truss tax cuts were unfunded. Magrathea is spot on. It is government spending which needs funding. Tax funds government spending. If the government, e.g. civil service, was smaller and spending smaller, those taxes could be lower and people would have more of their own money to spend. People should be allowed to keep as much of their own money as possible, in my view. You have just nailed one way in which tax cuts could be funded, i.e. cut the size of the Civil Service. |
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Post by Orac on Feb 7, 2023 22:46:02 GMT
[ You are wasting everyone's time dancing on the head of a pin for no useful purpose. If spending that is being funded by taxation ceases to be because of cuts in the funding source, which is being replaced by a massive increase in borrowing The only point i have made in the discussion is that it is spending that is funded by taxation, and therefore , it is spending rather than tax cuts that need to be funded and can become unfunded I thought this would be relatively uncontroversial, but it seems I have hit a hot vein of strong feelings. |
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Post by Deleted on Feb 7, 2023 22:48:35 GMT
Of course tax cuts need to be funded, either by spending cuts or increased borrowing to replace the lost revenue. Unless you believe in magic economics and something for nothing. That was the problem with the Truss/Kwarteng budget. Massive tax cuts unfunded by spending cuts and thus necessitating greatly increased borrowing. In that very real sense the cuts were unfunded, however much a certain person chooses to attempt to derail an intelligent thread with semantic nonsense of no real relevance to the debate at all. Magrathea has form with this sort of nonsense, which is a kind of deflection from the real points being made. We all know in what sense the Truss tax cuts were unfunded. Magrathea is spot on. It is government spending which needs funding. Tax funds government spending. If the government, e.g. civil service, was smaller and spending smaller, those taxes could be lower and people would have more of their own money to spend. People should be allowed to keep as much of their own money as possible, in my view. Reductions in taxation need to be funded too by reductions in spending or increased borrowing. The markets simply did not find credible that such massive tax cuts could or would be funded by commensurately massive spending cuts without themselves doing counterproductive economic damage, and took the view that much of the funding would come in the form of increased borrowing. What the markets thought proved to matter far more than what you or Magrathea choose to have thought. And it was all so predictable. Many in her own party warned Truss against going down this route. Sunak himself predicted exactly what would happen and has been vindicated. How those who hate him must hate that fact. Truss economics proved to be economically clueless. The Tories are supposed to believe in market forces and working with them for the greater good. Even Thatcher's tax cutting was costed at every stage so as not to spook the markets. Truss was an idiot and a dangerous idealogue. Those who share in her failed ideology struggle to accept this, and will eagerly deflect and obfuscate We have been seeing exactly that in their attempts to divert this thread away from any criticism of Trussonomics by engaging in a semantic diversion of the utmost tedium. |
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