Is Gransnet leaning more to the left?

Cossy

In my view, those who can work, should work. Those who struggle to find sustainable decent jobs should be helped and retrained wherever and whenever possible.

Those who simply cannot work due to their own, or their family circumstances should be allocated support to assist them to get into a situation where they can work.

Those who cannot work due to caring responses, disabilities or life long conditions, should be well looked after by the state with decent housing, access to services, assistance with day to day living and without any stigma.

Those unwilling to even seek work, are the only group here I’d even think about penalising.

I’d ensure that this group had a chance, during a long and in depth meeting to try and ascertain if there were any real and genuine reasons for not looking for work, if there is, assist to fix, if there’s not then put onto courses, training, voluntary work and set up paid work interviews, 5 days a weeks. Failure to completely comply = zero benefit. The only caveat here is this will work for single people, what happens if there are children involved?

You sound as if you are trying to be fair Cossy but I would ask who decides who the "unwilling" are.

I get the impression that many people just use the "not like us" route when making that decision. That gives some that sense of their own significance and feeling that is essential for your mental health, but putting others down is not a good way to do it. The government do it and they do it using rules and procedure - applying government rules should involve more than processing cases against a set of criteria; it should also involve understanding individual circumstances and making fair, informed judgements.

It is easy to form opinions about who should be working, but much harder to know the full circumstances of someone else's life. Perhaps those tasked with making these assessments are better placed to judge than the rest of us.

Why is it that whenever I rise the subject of how the economy works to benefit the wealthy I normally just get posts defending them? David & AGAA4 are bucking the trend a bit this morning...

Are people just regarding this as a natural course of events that we and governments can do nothing about?

In my eyes there is nothing natural about an economic system which benefits only the wealthy, especially as our generation (or at least the over 70s) have experienced one which was more distributive and was narrowing the equality gap so we do know that there can be another way.

In my view, those who can work, should work.

Why do you think that, Cossy when it is patently obvious that 'work' isn't something that the very wealthy really do?

Work, like taxes, seems to be only for the 'little people'. Especially galling when the 'little people' are mostly working to maintain their wealth and their lifestyles...

AGAA4

I have said for a long time that the problems we have are due to the very rich.
The blame for our problems tends to be directed towards those who are unable to defend themselves.

No, it is due to the above average wealth hoarding money in property and pensions far beyond their needs. They/we live in much larger property than we need, pensions too, a couple giving £1m to family tax free is far too much, there is a lot of tax free gifting too.
The tax concessions businesses get needs tightening too it's far too easy to use a business for personal enjoyment. The 1 or 2% very rich have money tied up in companies and pay tax accordingly, if they are not allowed to make money they will close and jobs will go. Although a business may be worth £5m on paper, if it closes there is a big tax liability because any property has increased in value, IHT eventually adds to that.

David49

It's not just France it's exactly the same in the UK there is far too much private wealth that is not used to benefit the UK, it just enriches the individual and their family. Many tax incentives have allowed too much gain for individuals.

... but what to do David49 - because if those wealthy individuals are also business owners, we can't expect them to contribute more otherwise they will simply up-sticks and leave the country, we are told?

On the basis that I believe entrepreneurial talent doesn't have an expiry date, I'd be tempted to say we should just wave them goodbye - especially if those they employ are in receipt of Universal Credit because, for example, said company pays low hourly wages or offers limited hours of employment.

How many actually do leave is another discussion, but the threat remains and is wheeled out regularly at the appropriate moment - because, obviously, we should not expect those with the most to contribute more when, clearly, the burden should be placed on the shoulders of the low-paid and the 'middle' income earners. In spite of the fact that a company must rely on its workforce to become profitable, it has to be accepted that the infrastructure and the health and well-being that supports it - is none of its business, and it has to be left alone to hire-and-fire at will because, heaven forbid, it already pays 'enough' tax! No, it makes more sense to cut those services its employers and their families might need to rely on, keep the low-wages static, reduce or even cut any benefits a family might need to be able to maintain a basic standard of living - and hope that all the other low-waged and or casual employees have enough money to buy either the services or products that particular company is offering. That's how you fix the problem...

When you reduce benefits for the 'work-shy', they are also reduced for the oft-touted "hard working families" some of whom work in the basic infrastructure that is required to keep a country and its economy ticking over, an infrastructure that businesses rely on to just 'be there' and without which, they couldn't even begin to function.

Does increased productivity mean increased benefits for all, or are we spouting that old 'trickle down' effect nonsense?

David 49 I thought I had made it clear that the problems were caused by the very rich.
I would define very rich as those you describe in your post.

It's a myth that internal employment gives a net gain for GDP,

I never said that it did, David. GDP is something of a fantasy figure anyway. Are you aware that it contains an element in its compilation whereby a value is assigned to the completely fictitious 'rent' that homeowners pay for living in the homes they own?

It also fails to assign any value to the infrastructure that government provides to enable people and businesses to function effectively. Where is the figure in GDP for the provision of healthcare, education, the legal system, transport infrastructure, overseeing regulation put in place to ensure the food we eat and the water that we drink doesn't poison us? That the air we breathe isn't full of harmful emissions? The value of unpaid voluntary work, such as care for the elderly and for children carried out by family members?

All that GDP focusses on is economic activity (and those fictitious rentals) Not what enables that activity to function effectively. It's only part of the story.

DAR 10:50

Great point, which I can answer, having worked for the DWP between 2009-2022, much of this time in a front line role in various jobcentres, after meeting with claimants say half a dozen times, it’s pretty easy to weigh up who really does want to work, who is working on the side and who has no intention of getting into legal paid work.

There’s various ways we had to check this prior to Universal Credit being implemented,(UC receives a feed from HMRC directly onto the claimants personal claim, at least 6 weeks in arrears, and this stopped huge amounts of PAYE working on the side and lying about it).

Do I made very frequent use of something called “more frequent attendance”, this gave me the “authority” to set appointments every working day, at different times, for a set period of time, say two weeks. This quickly roots out those working on the side, those to blooming lazy to get out of bed and can identify those who genuinely struggle to physically make these appointments day in, day out.

In order not to unfairly penalise people who would need to use public transport we could a) pay fares to attend every day and b) check bus routes from their home to ensure that buses actually ran to get them into their appointments at the right time.

“On the basis that I believe entrepreneurial talent doesn't have an expiry date, I'd be tempted to say we should just wave them goodbye - especially if those they employ are in receipt of Universal Credit because, for example, said company pays low hourly wages or offers limited hours of employment.“

I entirely agree!

Apologies for typos This damp dank weather plays havoc with the arthritis in my fingers and I’m posting using a phone

MaizieD

And, of course, GDP per capita does not measure where those gains are - whether concentrated at the top, or shared broadly across society.

There are some good things being said on here about the problem of 'wealth' but people are failing to address the key to the perceived problem, which is how money gets into the economy in the first place, before it is distributed upwards to the wealthy.

There are only four theoretical sources of money in the economy, foreign investment, earnings from exports, bank lending and government spending.
The first two can be ignored because the profits from foreign investment go to the foreigners who invested it and we import far more than we export, so are losing rather than gaining money on this.

That leaves bank loans and government spending.

Bank loans are newly created money. This is a FACT confirmed by the Bank of England over a decade ago, but recognised by economist Adam Smith 300 years ago and the cause of many bank failures in the 19th C until banks were better regulated.

When a bank loan is repaid the money no longer exists. It is gone, destroyed. Double entry book keeping shows how it is done. The banks make their profit by charging interest on the loan. Those of us who have had (or still have) mortgages should know that as we repaid far more money than we actually 'borrowed'.

That leaves government spending. Just like a bank, the government is able to issue new money, it does it by spending money into the economy and the money it spends is issued by the Bank of England, which the government owns. Taxation, contrary to the myth propagated by Thatcher (Remember, 'There is no government money, only taxpayers' money'? Well she was completely and utterly wrong ) doesn't fund spending at all. Its prime purpose is to remove the money the government has spent from the economy, otherwise, because the government is always spending money, there would be rampant inflation. Once it has been removed it *no longer exists*; in exactly the same way as a repaid bank loan no longer exists. Double entry book keeping again.

But, unlike a bank. the government doesn't charge interest on the money it issues, and it doesn't get it all back. The money it doesn't get back is the deficit.

Now, if the deficit isn't in the government's hands it is in someone else's. It has to be, it doesn't just disappear into thin air. It is in the hands of the foreigner investors who have taken it as profit (profits made with money from UK consumers) and it is in the hands of the UK population who have received it in the form of wages, business profits and dividends paid by the government to those who have invested their spare money in government bonds (or Premium Bond winnings ).

The problems we are talking of; of the wealthy taking a greater share of government money and evading the taxes needed for the government to reclaim a portion, are due to the way that our economy is run, which works mostly to the advantage of the wealthy. they can only be solves by running the economy in such a way that there is a fairer distribution of the money the government issues so that everyone benefits from it, not those who have the most.

MazieD

The problems we are talking of; of the wealthy taking a greater share of government money and evading the taxes needed for the government to reclaim a portion (etc)

I think a specific example of how wealth is extracted from the economy - syphoned off - would be useful to explain the concept. So I consulted AI...

Rather than cut & paste and thereby creating another 'TLDR' post, I suggest anyone who's interested can consult it - AI - to understand how:

the wealthy extract money from an economy and avoid taxation by shifting their income from labor (salaries) to capital (assets), and then utilizing a strategy known financially as "Buy, Borrow, Die."

... this will then explain how... This framework relies on a fundamental rule of tax law: you are only taxed on realized gains (selling an asset), not on paper wealth (the asset growing in value).

And, then, it can be understood how the wealthy can utilise their assets to work for them, in a way that the average worker can not...

AGAA4

*David 49* I thought I had made it clear that the problems were caused by the very rich.
I would define very rich as those you describe in your post.

The very rich are 1 or 2% of the population, doubling the tax burden on them makes very little difference to the total revenue, it's mostly an ideological tax, like private schools. There are not enough very rich to make a real difference a much larger number have to be targeted, we saw this in the last budget a few % on employers NI yielded over £20bn because businesses were taxed on every employee.

One idea that has been mentioned is changing IHT to 10% on ALL estates so that everyone pays something to cover Care costs. Probably a 10% rate up to £1 m then higher rate above that would work.

We will find out next week

"And, then, it can be understood how the wealthy can utilise their assets to work for them, in a way that the average worker can not..."

A growing business expands and pays tax along the way, he gets tax relief on the interest but has to declare a profit and pay tax on it to pay back the capital of any loan.

The average worker does exactly the same but invests in his own domestic property attracting no tax at all. If he has surplus cash over that, there are some tax free investments like ISAs or Premium bonds, but most investments any gains are taxed

The average worker does exactly the same but invests in his own domestic property attracting no tax at all.

The 'average worker' doesn't expect to make a profit from their own domestic property, David so why should it be taxed?
Is a business taxed on its premises?

Oh yes, I can see the comparison, what with the average worker able to borrow against their property portfolio of untaxed assets...

I was going to ramble about ^limited retail tax allowances" and "structural tax avoidance" and "revolving lines of credit" but didn't want this comment to yawn into eternity, so rambled to Google AI instead which/who/it basically 'got' what I was driving at and said, and I quote verbatim:

"An average worker uses an ISA to save a portion of what's left over after the government takes up to 45% of their paycheck. A billionaire uses loans to spend money before the tax system can ever touch it. Comparing an ISA to asset-backed borrowing is like comparing a paper umbrella to an underground nuclear bunker."

MaizieD

^The average worker does exactly the same but invests in his own domestic property attracting no tax at all.^

The 'average worker' doesn't expect to make a profit from their own domestic property, David so why should it be taxed?
Is a business taxed on its premises?

Yes we do, house price inflation ensures that we make a gain in excess of inflation for sure. Then we can use that wealth for whatever we want or as most of us do leave the lot to the children untaxed.

Just because your own house is untaxed does not mean it's fair, renters are at a big disadvantage, you pay rent, the landlord in turn pays tax on it, not only are you keeping the landlord you pay his tax as well.

Thats one reason the rich get richer and the poor poorer they pay much more tax.

Dickens

Oh yes, I can see the comparison, what with the average worker able to borrow against their property portfolio of untaxed assets...

I was going to ramble about ^limited retail tax allowances" and "structural tax avoidance" and "revolving lines of credit" but didn't want this comment to yawn into eternity, so rambled to Google AI instead which/who/it basically 'got' what I was driving at and said, and I quote verbatim:

^"An average worker uses an ISA to save a portion of what's left over after the government takes up to 45% of their paycheck. A billionaire uses loans to spend money before the tax system can ever touch it. Comparing an ISA to asset-backed borrowing is like comparing a paper umbrella to an underground nuclear bunker."^

Billionaire is an extreme distortion any business can do it, while a business is expanding taxation is low because profits can be reinvested, this is how Bezos grew from an online bookseller to a global giant, now he invests in space travel to soak up his profits. He may well have started taking loans but most of his finance has come fron shareholders who get a share of the profits

On a down to earth scale a successful baker can open one shop, the customers like the cakes so she opens a second, then a third shop, taking loans along the way to expand working capital, maybe property. The business would soon be worth over £1m is she rich or a hard working businesswoman

David49

MaizieD

The average worker does exactly the same but invests in his own domestic property attracting no tax at all.

The 'average worker' doesn't expect to make a profit from their own domestic property, David so why should it be taxed?
Is a business taxed on its premises?

Yes we do, house price inflation ensures that we make a gain in excess of inflation for sure. Then we can use that wealth for whatever we want or as most of us do leave the lot to the children untaxed.

Just because your own house is untaxed does not mean it's fair, renters are at a big disadvantage, you pay rent, the landlord in turn pays tax on it, not only are you keeping the landlord you pay his tax as well.

Thats one reason the rich get richer and the poor poorer they pay much more tax.

When are you proposing that this taxation of private housing should take place, David?

How can the ‘wealth’ in a house be released for use while the owners are still alive? (yes, I know about annuities)

Are you suggesting that all properties should be subject to taxation on death?

What happens when house prices fall? It’s not inevitable that they constantly rise..

Well I very much doubt she'll have anything to squirrel away to a shell in a tax-haven...

MaizieD

How can the ‘wealth’ in a house be released for use while the owners are still alive?

I can't see a way other than extracting one of its bricks to take down to the supermarket to buy some groceries

Who knows, Dickens, if the world order collapses bricks might become valuable currency

MaizieD

^In my view, those who can work, should work.^

Why do you think that, Cossy when it is patently obvious that 'work' isn't something that the very wealthy really do?

Work, like taxes, seems to be only for the 'little people'. Especially galling when the 'little people' are mostly working to maintain their wealth and their lifestyles...

That was described in The Ragged Trousered Philanthropist and is a very good point. The problem is that money is needed so nothing really changes. I have often thought there must be a better way of living but cannot think how it could be achieved for us all.