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Thread: Britain's Labour Party Resorts to Class Warfare

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    Default Britain's Labour Party Resorts to Class Warfare

    History repeating itself. In a desperate attempt to stave off electoral defeat in the upcoming elections, Gordon Brown and the Labour Party have raised the top marginal income tax rate to 50 %. This despite the fact that their own financial and economic experts have publicly told them that it will not result in any increased revenues. In fact, it may result in DECREASED revenues.Britain's producers and investors will reject being wealthy sheep waiting to be meekly shorn and will instead return to the days of avoidance, off-shoring and tax exile as in the Pre-Thatcher 60's and 70's.

    This is an important object lesson for the U.S. as Obama and the Dems are heading down the same path.
    Last edited by Eric Stoner; 04-07-2010 at 09:18 AM.

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    Default Re: Britain's Labour Party Resorts to Class Warfare

    well it appears that America is learning a lesson from Europe re taxes ... I'm just not sure what they are learning !


    (snip)"(Reuters) - The United States should consider raising taxes to help bring deficits under control and may need to consider a European-style value-added tax, White House adviser Paul Volcker said on Tuesday.

    Volcker, answering a question from the audience at a New York Historical Society event, said the value-added tax "was not as toxic an idea" as it has been in the past and also said a carbon or other energy-related tax may become necessary.

    Though he acknowledged that both were still unpopular ideas, he said getting entitlement costs and the U.S. budget deficit under control may require such moves. "If at the end of the day we need to raise taxes, we should raise taxes," he said."(snip)

    from


    Of course, as Mr. Brown's famous Brit predecessor Margaret Thatcher put it - "sooner or later you run out of other people's money"


    (snip)L.A. to Shut Down City Departments in Budget Crisis; IBEW Local 18 Head: "How Taxpayers Feel Is Not Relevant"

    Yesterday I noted L.A. Controller Says City Could Run Out of Cash by May 5

    After raising taxes and fees, again and again and again, the city is broke and Mayor Villaraigosa is blaming the city council for not hiking fees yet again.

    Having run the city into the ground, Villaraigosa calls for shutting down some city departments amid budget crisis

    Los Angeles Mayor Antonio Villaraigosa called Tuesday for all city agencies -- except for police, other public safety and revenue-generating departments -- to close for two days a week starting April 12 because of the city's continuing budget crisis.

    "We have to act, and we have to act quickly," Villaraigosa said at a press conference.

    Villaraigosa's call comes one day after executives with the city's Department of Water and Power said they would recommend not sending a promised $73.5-million contribution to the city's beleaguered treasury because the City Council recently declined to grant a desired electricity rate increase.

    Union contracts and pension benefits are the biggest city problem and Villaraigosa is ignoring police and fire departments, the worst problems of the lot."(snip)

    (snip)"The Price Of Power

    Inquiring minds are reading SoCal Connected Investigates The Price of Power

    In the middle of the worst budget crisis in Los Angeles history, one department is thriving without mandatory job cuts, furlough days or loss of the perks they've come to enjoy. In fact, thanks to a new contract approved by the L.A. City Council in December, most of its already well-paid workers will get salary increases over the next five years. Which department is it? It's the Los Angeles Department of Water and Power (DWP) and this week SoCal Connected Anchor Val Zavala looks into how the DWP stays immune from L.A.'s fiscal problems.

    In a rare sit-down interview, Brian D'Arcy, powerful head of the IBEW Local 18 (the union representing 9 out of ten DWP workers) defends the deal, saying the higher salaries paid DWP workers are merely the price of attracting talent in a competitive job sector. Confronted with the complaints of angry ratepayers, he responds that "...generally how they feel is not relevant."

    According to a former DWP commissioner, some L.A. residents should soon expect their utility bill to exceed their monthly mortgage.

    IBEW Local 18 Head: "How Taxpayers Feel Is Not Relevant"

    Sadly that appears to be the attitude of L.A.'s politically and morally corrupt mayor as well.

    L.A. desperately needs to dump Villaraigosa and elect a mayor and city council willing to stand up to union thugs.

    Better yet, the city should declare bankruptcy immediately and seek to overturn those contracts in court on grounds the bargaining was not in good faith. Clearly, no one was representing the taxpayer."(snip)

    from


    I don't want to go too far afield on the political versus economic side of tax policy questions. But it is obvious that both British and American politicians are under the impression that taxes and fees on citizens can be increased forever in order to maintain gov't spending levels that will keep their supporters happy ( i.e. gov't employees, social welfare benefit recipients ).

    Unfortunately, they fail to face the reality of the so-called 'Laffer Curve' ... where increasing taxes and fees eventually causes those who must pay those taxes and fees to change their 'behavior patterns' in favor of minimizing taxes as opposed to maximizing earnings. Britain went through this in the 70's, which as you pointed out already resulted in expatriations, offshoring etc. America's 'rich' are now beginning to change their 'behavior patterns' towards tax minimization as well.

    Ironically, one extremely 'hot' investment for 'rich' Californians of late is the purchase of DWP municipal bonds, which pay over 6% tax free interest while denying both the federal and California state treasuries any additional tax revenue. The kicker of course is that the minimum buy-in price for a DWP tax free bond is $50,000, a fact which prices 'average' Californians out of this tax 'shelter'. Before tax rates rose so much, many of those 'rich' Californians would have invested that money into a business enterprise or stock shares ... which would have produced tax revenue as well as some additional jobs !

    ~
    Last edited by Melonie; 04-07-2010 at 09:00 AM.

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    Default Re: Britain's Labour Party Resorts to Class Warfare

    ^^^ The attitude of the union rep quoted is instructive in light of James Hoffa's recent call for a TAXPAYER bailout of the notorious Central States Pension Fund of the International Brotherhood of the Teamsters. And he is not alone. As I have continually pointed out, many pension funds are technically broke i.e. they are paying out more in benefits than they are taking in and/or are slated to do so in the future. It's bad enough that the taxpayers are expected to bail out pension funds for public employees but for the Teamsters ? And other private union pensions ? This is "Bail-out Nation" run amok !

    As for your caution in dancing around the "politics" , I think it ought to be kept in mind that this stuff directly affects the economic well being of a lot of us. How much we pay in taxes for what; where to put our money; where to live; whether to stay and fight or move out of the U.S.,
    as you have. Sadly, it's looking more and more to have been a fine idea. The more folks who follow your lead will just increase the burden on the productive folks left behind.

    I raise Britain as an example because we seem to be intent on repeating almost every mistake Britain made since Churchill was defeated by Atlee. While making plenty of our own, of course. No country exhibits the costs of excessive taxation, excessive spending and excessive use of "the dole" than Britain. The economic revival it experienced under Thatcher, Major and Blair has almost entirely been squandered away by Brown and his hard left policies. His increase was clearly designed to distract the British middle class from another increase in the VAT which ALL Britons pay. It is nothing more than a feeble attempt to show Britons that the upper earners are "suffering too" . In fact it is highly unlikely that they will shoulder an increased share of the tax burden. Quite the contrary. They are most likely to avoid its effects. There have been no reductions in spending and there aren't enough British millionaires altruistic enough to blithely pay increased income taxes. Gee. Just like here in the USA.
    Last edited by Eric Stoner; 04-07-2010 at 09:45 AM.

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    Default Re: Britain's Labour Party Resorts to Class Warfare

    ^^^ and the trend continues ...



    (snip)"WASHINGTON (AP) -- Tax Day is a dreaded deadline for millions, but for nearly half of U.S. households it's simply somebody else's problem.

    About 47 percent will pay no federal income taxes at all for 2009. Either their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate their liability. That's according to projections by the Tax Policy Center, a Washington research organization.

    Most people still are required to file returns by the April 15 deadline. The penalty for skipping it is limited to the amount of taxes owed, but it's still almost always better to file: That's the only way to get a refund of all the income taxes withheld by employers.

    In recent years, credits for low- and middle-income families have grown so much that a family of four making as much as $50,000 will owe no federal income tax for 2009, as long as there are two children younger than 17, according to a separate analysis by the consulting firm Deloitte Tax.

    Tax cuts enacted in the past decade have been generous to wealthy taxpayers, too, making them a target for President Barack Obama and Democrats in Congress. Less noticed were tax cuts for low- and middle-income families, which were expanded when Obama signed the massive economic recovery package last year.

    The result is a tax system that exempts almost half the country from paying for programs that benefit everyone, including national defense, public safety, infrastructure and education. It is a system in which the top 10 percent of earners -- households making an average of $366,400 in 2006 -- paid about 73 percent of the income taxes collected by the federal government.

    The bottom 40 percent, on average, make a profit from the federal income tax, meaning they get more money in tax credits than they would otherwise owe in taxes. For those people, the government sends them a payment.

    "We have 50 percent of people who are getting something for nothing," said Curtis Dubay, senior tax policy analyst at the Heritage Foundation."(snip)


    Indeed when one counts nearly 50% of US tax filers not actually having to pay income taxes, another 5% or whatever of US residents who don't earn enough money to even file a tax return etc. you wind up with a clear voting majority. This vindicates PM Brown-like policies by US politicians at least where the next election results are concerned.

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    Default Re: Britain's Labour Party Resorts to Class Warfare

    I'm not sure, but I think that when the income tax was first established, only approximately one percent of Americans paid it.

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    Default Re: Britain's Labour Party Resorts to Class Warfare

    ^^^ actually, the 1913 top marginal income tax RATE was 7%, actually paid by perhaps 1% of 1913 Americans who were earning more than $500,000 in 1913 dollars ... which equals more than $11,000,000 present day dollars. Of course in 1913 the US didn't have entitlement spending, didn't have much to speak of for military spending, didn't have anywhere near as many gov't employees ( per unit population ) etc. The first major jump in income tax occurred as a result of world war 1.

    (snip)"Taxpayers whose income was similar to that of the average American today paid a small percentage of income tax from 1913 until the late 1930s. Rates increased slightly at the beginning of World War I. That tax rate decreased during the 1920s but increased to the same earlier wartime level during the Great Depression. Tax rates, not surprisingly, increased substantially at the beginning of World War II. Although tax rates since WWII have fallen gradually from those wartime peaks, they remain much higher than they were before 1941.

    What about "the rich?" Consider a household at the 95th percentile of income earners in 2006. Those taxpayers would earn $174,000 per year. Claiming the average deductions and exemptions available at that level, taxable income for 2006 would be $131,698. Tax tables show a 28 percent marginal tax rate. However, because most of that income would be taxed at lower rates, the average tax rate would be 15.10 percent.

    When the income tax code was first imposed, the rates applied to a couple with an equivalent income would have been much lower. Because of lower prices in 1913, today's $174,000 and a 1913 income of $8,544 would be roughly equivalent. Using today's exemptions and deductions would result in a 1913 taxable income of $6,467 with a marginal tax rate of 1 percent and an average tax rate of only .76 percent"(snip)

    from


    The pertinent point both in regard to the UK and in regard to likely trends in the US is that tax law is being 'jiggered' to collect essentially zero net income tax dollars from the lower earning 50% of the population. Those 'missing' income tax dollars are being made up for by attempting to collect more tax dollars from the higher earning 50%. The 'class warfare' angle is being sold as if these additional tax dollars will all come from the 'rich' ... i.e. those earning more than $200,000 per year. But in point of fact, those earning more than $200,000 per year are in a reasonably good position to legally avoid paying higher taxes ( i.e. the purchase of $50,000 denomination tax free municipal bonds to name just one example ). Instead it is today's 'middle class' that are being forced to pay more tax dollars.

    ~
    Last edited by Melonie; 04-08-2010 at 09:44 AM.

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    Default Re: Britain's Labour Party Resorts to Class Warfare

    A significant factor in the lower number of Americans paying income tax is the weak economy and high unemployment rate. When the economy improves and the unemployment rate goes down, I expect there to be more Americans paying income tax.

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    Default Re: Britain's Labour Party Resorts to Class Warfare

    Quote Originally Posted by eagle2 View Post
    A significant factor in the lower number of Americans paying income tax is the weak economy and high unemployment rate. When the economy improves and the unemployment rate goes down, I expect there to be more Americans paying income tax.
    You may be right as a LOT of people are pushing income forward into 2010 and will pay taxes on it this year via estimated taxes and next year around April 15th.
    Then what ? Even with the expiration of the Bush tax cuts and Obamacare tax increases the percentage of Americans actually paying income taxes is likely to be little more than 50 %. Obama has nothing to grow the size of the pie. ALL of his efforts are focused on redistributing the size of the slices.

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    Default Re: Britain's Labour Party Resorts to Class Warfare

    ^^^ agreed ... via the recent enactment / increase in refundable tax credits ... which are skewed on eligibility to reduce income taxes for lower income tax filers ( or actually produce a 'handout' situation where the gov't pays out more money in tax return dollars than the tax filer had withheld in the first place ) while doing nothing to help 'middle class' tax filers. This indeed serves to increase the percentage of Americans who pay no income taxes ( which is now hovering just below 50% - see ).

    If you add up the tax filers that don't have to actually pay income taxes, plus non-working Americans who don't have to file income taxes at all but are able to vote, you've got a voting majority that has a vested interest in seeing tax increases leveed on the minority of Americans who do actually pay income taxes since increased tax rates have no personal tax consequences but positive consequences on social welfare benefits for which many are also eligible! This is the archtypical 'bread and circuses' situation that ultimately led to the demise of the Roman Empire.

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