Trickle down don't work

Ivor Windybottom said:
OK, let's imagine that you're a successful, rich entrepreneur. You have a business idea, which will involve £10m startup cost and will employ 20 people on £50k each, and you'll make £2m profit for yourself. So 20 working people will earn a living, you'll make more than all of them put together but you'll be recovering the £10m initial investment. You'll make an annual profit and will recover your startup cost after 5 years, after which you'll make clear profit if it's still viable, but all this involves risk - you might lose the lot and never make any money at all.

What exactly are the resident lefties suggesting? If the suggestion is that the owner shouldn't make a profit then they simply won't bother starting the business and precisely £0 will trickle down. Or do you have another answer?

I suspect that no lefty has ever actually thought through this sort of situation, it's all just angry bitterness from resentful people and wouldn't ever result in anything constructive.

Or should "the people" i.e. the government own and run everything? i.e. communism.
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If business premises were cheaper to rent, energy bills more affordable, better infrastructure, less trade barriers, better educated and skilled people and better access to healthcare…..we would have more entrepreneurs creating and growing businesses.

In your example you have 20 people getting paid £50k - those are educated skilled people. How did they acquire those skills? Let’s say the govt gave grants to people doing vocational education or apprenticeships - that would be good.

Cutting taxes for the rich does not help create an entrepreneurial environment….it tends to lead to the rich buying more assets.


Ivor, what do you think about tax havens like Ireland, where Amazon, Google, Starbucks etc route their finances avoiding paying tax in U.K.



Trickledown is not the binary argument you are attempting to make.
 
Notch7 said:
If business premises were cheaper to rent, energy bills more affordable, better infrastructure, less trade barriers, better educated and skilled people and better access to healthcare
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What are you suggesting, that we don't have uncontrolled rises in population?! How do you think we could achieve that?
 
Ivor Windybottom said:
There's a point at which tax is so high there's just no point in bothering to take risk, make the effort or bother getting out of bed in the morning.

The UK is somewhere around that point. That's why unemployment is rising.
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A bit more Googling:

"what does research show for the revenue maximizing point on the Laffer curve"

AI Overview

Research shows that while a revenue-maximizing point on the Laffer curve theoretically exists,
its precise location is highly context-dependent, varies by country and type of tax, and is difficult to estimate in practice. There is no single, universally agreed-upon rate, and estimates from academic studies vary widely.

Key Findings from Research
  • Existence is broadly accepted: The general concept that zero and 100% tax rates yield zero revenue, and an optimal rate lies in between, is broadly accepted among economists.
  • No consensus on a specific number: Estimates for the revenue-maximizing top income tax rate have varied widely across different studies and time periods.
    • Mid-range around 70%: According to The New Palgrave Dictionary of Economics, a comparison of many academic studies yields a range of revenue-maximizing income tax rates that centres around 70%.
    • Other specific estimates:
      • A 2011 study by Trabandt and Uhlig estimated a 70% revenue-maximizing rate for the U.S. and most European economies.
      • Other models predicted peaks around 65% for the U.S..
      • An analysis of the U.S. economy between 1959 and 1991 suggested an average federal tax rate for maximum revenue between 32.67% and 35.21%.
      • For the UK, one paper suggested the revenue-maximizing rate for top earners might be around 56.5%.
  • Most economies are on the "left" of the peak: The majority of research suggests that most modern economies, including the U.S. and most European nations, operate with tax rates below the revenue-maximizing point. This implies that, in most cases, cutting taxes will actually reduce government revenue, not increase it.
  • Context matters: The position of the peak is influenced by factors such as:
    • The specific structure of the tax system (e.g., availability of loopholes).
    • The elasticity of labour supply and the tax base (how much people change their behaviour in response to tax changes).
    • The size of the "black" or informal economy.
    • The time frame (short-term vs. long-term effects).
In essence, research confirms the existence of the curve's peak but highlights the difficulty in pinpointing it precisely, emphasizing that the "optimal" tax rate is a complex empirical question rather than a fixed number.
 
Notch7 said:
If business premises were cheaper to rent, energy bills more affordable, better infrastructure, less trade barriers, better educated and skilled people and better access to healthcare…..we would have more entrepreneurs creating and growing businesses.

In your example you have 20 people getting paid £50k - those are educated skilled people. How did they acquire those skills? Let’s say the govt gave grants to people doing vocational education or apprenticeships - that would be good.

Cutting taxes for the rich does not help create an entrepreneurial environment….it tends to lead to the rich buying more assets.


Ivor, what do you think about tax havens like Ireland, where Amazon, Google, Starbucks etc route their finances avoiding paying tax in U.K.



Trickledown is not the binary argument you are attempting to make.
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He can't see the lack of logic in his view

He's arguing against himself a lot of the time

Irony, I think it's called
 
So do we tax 100% of all profits then?

Any chance this could have any unintended effects?

Actually, why stop at 100%?? You could tax "the rich" say 150%, just to ensure there's absolutely no chance of anyone starting or running any business ever.
 
carmanmemoranda said:
Any evidence of trickle down working as it should ?
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Yes, lots, absolutely everywhere. It's how the entire economy* works. Generally rich people own the companies where people work. Their wages are wealth, trickling down into their bank accounts every month without fail.

* The real business economy anyway. There's also a parallel ever-growing state-run economy, which produces approximately nothing.
 
Ivor Windybottom said:
Yes, lots, absolutely everywhere. It's how the entire economy works. Generally rich people own the companies where people work. Their wages are wealth, trickling down into their bank accounts every month without fail.
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That's not proper trickle down how you express it.

People with money buying goods dies exactly this

You are talking of less tax for the rich

Try again, when you can
 
Define "the rich".

It would appear that this government's definition is everyone who gets out of bed in the morning and goes to work, as that is whose taxes they're raising.
 
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