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The Conservatives did what they did because they're Conservatives, not because of the cuts. This is Margaret Thatcher part 2. The deficit does not exist, and it's just an excuse to cut things, they're playing the shock doctrine.
Think of the economy like a workhorse. The horse has to work in order to earn food. You find out the horse is in debt. Would your first option be to cut off its food?
The cuts would have happened regardless, tax evasion or not. Don't be fooled.
The thing is, the deficit does exist. If you don't have a long run sustainable fiscal path, you become Greece. So even if we need to feed the horse now, sooner or later the horses debt is going to have be paid back.
That payback can be either in the form of
a) taxes or b) spending cuts.
If all taxes are dodged, then it has to be b) spending cuts? No?
Think of the economy like a tree graph of nodes and branches that connect people, much like Facebook Open Graph.
Except that this tree graph of the economy, has arrows on the branches, that indicate who is paying money to who. The arrows on the branches look like this.
Now what happens when the graph comes more disconnected, is that the country gets poorer, as there is less spending going on in it. The economy is starved. Governments make money by taxing, and to collect tax, people have to spend money on things. When the graph gets more disconnected, there is less money to tax, and less money for the economy and people overall. This is why the lack of spending in the credit crunch managed to collapse Borders, and Woolworths.
The current government cannot tax its way out of its deficit/debts [which doesn't exist], so the only and best way out, is to c) increase public services. They provide a good ROI.
We just got out of the credit crunch in 2008, and now the Conservatives have put us in the biggest unemployment crisis in 26 years. How is that helping the economy or the deficit? It only helps the rich.
I'm not saying fiscal austerity now now now, but its a fact agreed by all economists, including left-wing ones like Krugman, Roubini, Stiglitz etc that if you run perpetual deficits you end up like Greece...
In America, I would say there is a crisis. The American government needs to stop getting IOUs off banks of big sums. I know it's hard to stop borrowing more money, but America will have to get off the crack, and realise it can't tax its way out of its debts. If they continue, they'll have to introduce a new currency and start tabula rasa.
What are the consequences, locally and internationally, of some place becoming an "offshore" tax haven?
Nicholas Shaxson, author of Treasure Islands, argues that the "offshore" system - including such places as The Republic of Ireland, the City of London, Delaware (state), and Liechtenstein - is corrupting the economic system in general, and that both pro- and anti- free-traders should agree on this. Is he right? What are the real consequences?
society
understand
tynamite
Ravin
I would say the UK is suffering from it. If you go to the website of UKUncut, you'll see the amount of Tax Vodafone alone dodged is equal to the entire fiscal austerity of 2011. That austerity cuts funding for poor kids to do A-Levels, it raises the price of doing a degree (which is supposedly decreasing applications), and also has a big negative impact on the economy as a whole - all so that Vodafone can pay its shareholders a £6bn dividend...tynamite
Me
You are getting two unrelated things mixed up here.The Conservatives did what they did because they're Conservatives, not because of the cuts. This is Margaret Thatcher part 2. The deficit does not exist, and it's just an excuse to cut things, they're playing the shock doctrine.
Think of the economy like a workhorse. The horse has to work in order to earn food. You find out the horse is in debt. Would your first option be to cut off its food?
The cuts would have happened regardless, tax evasion or not. Don't be fooled.
tynamite
Ravin
OK, well I sort of agree with you...The thing is, the deficit does exist. If you don't have a long run sustainable fiscal path, you become Greece. So even if we need to feed the horse now, sooner or later the horses debt is going to have be paid back.
That payback can be either in the form of
a) taxes or b) spending cuts.
If all taxes are dodged, then it has to be b) spending cuts? No?
tynamite
Ravin
With massive tax dodging and no cuts, the fiscal multipliers to spend your way out of a (long-run) debt crisis would have to be implausibly huge. If the tax revenues are say 20% of GDP, then you need a 5:1 ratio of growth per pound spent in order to break even...tynamite
Me
Oh please! Britian is laizzes fairre about tax evasion. In a way they encourage it behind closed doors.Think of the economy like a tree graph of nodes and branches that connect people, much like Facebook Open Graph.
Except that this tree graph of the economy, has arrows on the branches, that indicate who is paying money to who. The arrows on the branches look like this.
Now what happens when the graph comes more disconnected, is that the country gets poorer, as there is less spending going on in it. The economy is starved. Governments make money by taxing, and to collect tax, people have to spend money on things. When the graph gets more disconnected, there is less money to tax, and less money for the economy and people overall. This is why the lack of spending in the credit crunch managed to collapse Borders, and Woolworths.
The current government cannot tax its way out of its deficit/debts [which doesn't exist], so the only and best way out, is to c) increase public services. They provide a good ROI.
We just got out of the credit crunch in 2008, and now the Conservatives have put us in the biggest unemployment crisis in 26 years. How is that helping the economy or the deficit? It only helps the rich.
tynamite
Ravin
The problem with this argument is that you keep saying deficits/debt don't exist, even though they do...I'm not saying fiscal austerity now now now, but its a fact agreed by all economists, including left-wing ones like Krugman, Roubini, Stiglitz etc that if you run perpetual deficits you end up like Greece...
tynamite
Me
I believe the financial situation is fine in the UK, because the government isn't financially forced to deprive its citizens, and the banks aren't lending money irresponsibly.In America, I would say there is a crisis. The American government needs to stop getting IOUs off banks of big sums. I know it's hard to stop borrowing more money, but America will have to get off the crack, and realise it can't tax its way out of its debts. If they continue, they'll have to introduce a new currency and start tabula rasa.
For more information about how tax havens affect poor countries, read Death and Taxes by Christian Aid: http://www.christianaid.org.uk/images/deathandtaxes.pdf
LEDCs typically are reliant on one source of income for their economy, and without it, the government and citizens are deprived of funds. A good example is Ibiza, which is why they are forced to enforce tourism tax. Ibiza isn't stratified, and India is, despite India being richer. The Special Economic Zones (SEZ) in India are causing citizens to lose out on jobs, opportunities, and for their community to develop. The same goes for when countries LEDCs like ___ are deprived of tax through tax havens.
The Transnational Companies take money out the country, and don't put any back. The same is what also happened to Argentina when corrupt officials used tax havens to further an economic crisis that deprived citizens.
For more information, go to the Tax Justice Network.