I think that you’re all overegging the “OMG Britain will turn into a horrible mess under the Tories!!!!ELEVENTYONE!!212!!!!”. I expect Tory government to be much the same as the current Labour one; centre-right, authoritarian and obsessed with the sound of its own voice and courting the Daily Mail.

I don’t believe that voting Labour or Tory at the next election will make much of a difference, honestly.

Take a skilled manual worker earning around twenty grand a year and his partner earning roughly the same. They are pretty much high up on the income scale and he knows it. He has little in common with the natural working class vote, say the lower skilled (or just less valued) worker on say 10 to 12 thousand a year, supplemented by family credit or even a member of the long term sick or unemployed. That ‘middle income’ couple at the top of the scale have either no affinity with the other working class groups, but are more likely to have more in common with the middle classes.

They resent their taxes being spent on these groups of workers or benefit claimants. These people think (or know depending on their outlook) that to help the most vulnerable in society you are going to hamper the better off.

The thing is, how do you win an election without the votes of ‘Monedo Man’? The demographics mean that the working class are now a shrinking part of the electorate. I use the term ‘electorate’ advisedly, look at voting patterns and intentions. Look at the three elections previous to 1997 Labour win in their heartlands, but middle income working class voters in more affluent areas return Thatcher and Major.

One of the most striking successes (from their perspective) the Tories did in power was lower the income tax rates, whilst raising indirect taxation as well as nailing it onto Fuel knowing that could never be reversed. As we know, income tax cuts really favour the rich and indirect taxation really hurts the poor.

To those on the left who want the Tories to win the next election, be careful what you wish for, you might get it.

The Tories have balanced the tax regime in favour of the rich. The Labour Party have been unable or unwilling to rebalance this because of the backlash that would follow. The ONE tax you would struggle to get away with increasing is basic and top rate income tax. Make no mistake, once elected, Cameron will either cut INCOME tax (the Right Wing press will drop the ‘stealth tax’ tirades) or be replaced with someone who will, making progressive politics in this Country impossible.

The point that is being missed is that the Laffer Curve *was* invented by the rich to persuade the middle and working classes that they could share in the glut of money they were going to save in taxes… It is and always was a con job, and those who cite it or make use of its principles are either extremely wealthy or extremely stupid.

It has a pretty long pedigree. Ibn Khaldun, a 14th century Muslim philosopher, wrote in his work The Muqaddimah: “It should be known that at the beginning of the dynasty, taxation yields a large revenue from small assessments. At the end of the dynasty, taxation yields a small revenue from large assessments.”

Or you could look at JM Keynes, whose economics seem to be popular again.

Nor should the argument seem strange that taxation may be so high as to defeat its object, and that, given sufficient time to gather the fruits, a reduction of taxation will run a better chance than an increase of balancing the budget. For to take the opposite view today is to resemble a manufacturer who, running at a loss, decides to raise his price, and when his declining sales increase the loss, wrapping himself in the rectitude of plain arithmetic, decides that prudence requires him to raise the price still more–and who, when at last his account is balanced with nought on both sides, is still found righteously declaring that it would have been the act of a gambler to reduce the price when you were already making a loss.

Where the disagreement always lies is precisely where we are on the scale.

In any event, my analysis above wasn’t solely a description of the Laffer Curve. It also dealt with the opportunity cost of raising direct taxation, both in terms of the impact it has on discretionary spending and the wider economy, and relatedly the impact it has on indirect taxation. If you tax more at source, people will spend less money, and you will thereby reduce the VAT take and the Customs & Excise take.

It’s debatable that banning cars from city centres reduces fuel consumption anyway, many people (and I’m one of them) will simply take a longer route, thus creating more pollution/congestion and using more energy.

It’s really simple, if it takes half and hour to get from A to B under normal conditions and 1 hour after “traffic management measures” are taken by a crackpot locxal council, all that happens is cars are on the road fot twice as long and you get twice as much pollution, the opposite of what the anti-car brigade are ostensibly trying to acheive

The left/environmentalists really need to get their heads around the fact that people use cars out of neccessity. I really would rather not have to drive anywhere but being in a full-on job, having 2 kids at school and living in a country that has shitty weather 70% of the year means I have no realistic alternative.

Aah – the classic vulgar libertarian “Let them eat cake” argument. Back when I was unemployed at the start of the millennium (2001 was a lousy year to graduate for software engineers), banks and credit card companies were still sending me literature about how great their rates were, how you didn’t have to pay a penny for a certain amount of time. Pressure sales in other words.

Oh, and then there’s the trick they pulled when one was dragged into the red by the previous month’s overdraft charges, thus allowing them to charge you again.. but before they did, they’d call you tw oor three times a day to remind you you could always avoid that charge by going and getting a cash advance on your credit card and paying it into your current account.

Personal responsibility is a very easy thing to espouse when you’re rich and/or well-connected enough to get yourself dug out of any hole.

The point that is being missed is that the Laffer Curve *was* invented by the rich to persuade the middle and working classes that they could share in the glut of money they were going to save in taxes… It is and always was a con job, and those who cite it or make use of its principles are either extremely wealthy or extremely stupid.

And people spending money they don’t have – at the instigation of the banks and credit card companies, who told them they could spend it – is what’s made this recession cycle so much worse than it would have been if it had been caused by the US subprime crisis alone.

If the Laffer curve didn’t exist, the rich would have to invent it in order to perpetuate the notion that they shouldn’t pay their share (in a proportion of how much income they earn) of taxes. You should me the bare facts and I might even buy into the view that a 50p tax rise has no impact. Until then, lame theories don’t do it for me.

I will you the bare facts if you like (whatever the hell that means). A higher direct tax rate has three implications that will affect what additional revenue is raised. Ths first is that it will reduce the indirect tax take. This is for the obvious reason that people don’t spend money that they don’t have. A further implication of that is that if people aren’t spending this extra money that will impact on the economy more generally – they aren’t lending it to entrepreneurs, or spending it at the shops, or even using it to buy government debt. All these factors will negatively impact on the overall tax take – even though the revenue raised directly from the increased rate may increase.

The third factor, which is I suspect entirely unquantifiable, is that an increased tax rate will increase tax revenue by less than a static model might predict, because it affects people’s behaviour. It might reduce their motivation to work the extra hours, or it alternatively might encourage them to utilise sophisticated tax avoidance measures that would otherwise not have ben worth it. At some stage an increased rate will reduce revenue – though when this takes place is debatable.

Now, I’m not arguing that the raised top rate will reduce overall revenue. Only that it might, for the reasons given above. And my question was basically whether overall tax revenues mattered to you in your desire for higher tax rates or, like Sevillista, you believe that “redistribution and fairness can be valuable goals in and of themselves.”

But let’s start at the beginning again. As Gary Younge says in the article referenced at the start of tis thread, New Labour decided that it was better off without principlies. It has appealed to the direct interests of various groups and has used spin to obscure the fact that very often choices have to be made between these different direct interets. The typical liberal-left Guardian reader is interested in principles and the New Labour project has been fairly clear that it is not interested in that kind of person. Except that before the 2005 elections, and again now, there is a bit of a scramble for votes – before the 2005 elections New Labour had an “operation bearded lefty” which tried to inflate what had actually been done about aid to Africa or the environment in a mad scramble for the votes of that group of people. There were articles in the Observer from Peter Hain about how the voters of Neath wouldn’t thank us if we let the Tories in. There are contributers here saying that the working class won’t thank us if we let the Tories in this time.

It is all very ironic. New Labour decided that it was better off without principles but, scrambling for votes, starts berating us bearded lefty Guardian readers because we’re not thinking of the interests of someone else. I don’t think that it will work.

But seeing as how the arrival of peak oil means we’re going to get used to the idea of losing our cars eventually, wouldn’t it be sensible to start now to avoid rioting in the street when we do run out?

The greens regularly poll an impressive 2% of the vote, therefore in practice very few people actually want cars banned from anywhere, and the solution is not to listen to the most vocal minority cyclists in the first place, thus using limited resources most efficiently and pissing off the fewest number of peope.

Did anyone say that?

All needs cannot be met, therefore stop trying to pretend they can be. You’re not “expected” to do anything except keep your mouths shut and your facile 6th form opinions to yourselves. Talk about self appointed and self important…………………….

Pissed off with the New Labour lot I may be, but I am genuinely terrified of how much damage 5 years of Tory government would do.

I’m even more terrified if the Keynesianist policy starts to show results by next year and the Dacre/Murdoch press claim it’s Smiley Dave’s genius that led to recovery – we’d be looking at 10 years plus then…

Except that we liberal-left Guardianistas are expected to think about everyone’s interests except our own. No sooner do we express an opinion than there is someone berating us for not thinking about the interests of somebody else. If we say that we want traffic to be reduced in our city centres, there’s someone along in less than a minute to berate us for not thinking about the aspiring working-class who want to own cars. It seems that we are expected to be gibbering wrecks on election day thinking about how our vote is going to have an impact on the lives of various other groups of people (while other groups are openly bribed with tax cuts or pork-barrel projects).

As a thinking person I expcet political parties to talk sense to mne, I expect them to be able to answer my questions. I expcet them to be able to set out the logic of their programme. New Labour doesn’t do that: it is all dog-whistles and spin, so I’m not going to vote for them. It’s quite simple really.

Those who run small businesses have invariably worked extremely hard for their money , yet those middle class, often government employed labour types are happy to squeeze every last penny of tax out of them. Now wonder Labour is in danger of losing the next election.

Just to point out that last time we tried this, we ended up with Maggie Thatcher and John Major in the UK (and then Tony Blair as well), and Ronald Reagan and a pair of George Bushs in America. I would therefore humbly suggest that being prepared to make working class people “collateral damage” in a “war” to win control of the Labour Party for our faction is a really, really bad idea.

Largely reflecting Dan @38

I think you need to think through the implementation of the policy towards Labour that you are proposing, or at least define what you mean by ‘die-hard Labourite’, in a ‘get real’ kind of way.

While it may be ok for the ‘commentariat’ to refuse to support Labour while it’s losing and thne come back with lots of guidance on how it can do better next time and expect to be listened to (readership turnover helps, as does not having to bother what the readership thinks of you), it’s not the same for the non-commnetariat.

For Labour activists up and down the country, announcing that you no longer support Labour and going off to work for the Libdems, or even ‘voting with their feet’ and not turning up to leaflet/canvass for anyone, is by and large the end of the road. There’ a common saying, at least round my way, ‘You’re a long time dead’, and if as a Labour activist you are seen to do the dirty on your comrades/colleagues/friends, then that’s your Labour party death.

surely the best prospect is for an annihilation of Labour (i.e. New labour) at the next election, or else these Tories with red rosettes will continue their unwanted occupation of the party

THAT I have to agree with 100%. Ad nauseum I repeat that, I too, was a Labour man, 100% never say die, Labour man – yet I am not a Tory, nor ever will be a Tory. In 97 I didn’t realise I had voted for a Tory government – yet that changed quickly enough.

The “New” Labour project has to be smashed to complete smithereens! And that could mean a massive win for the Conservatives. We all know that having Dave as leader and PM will be real disaster for the UK people, not so much he friends in the city and business – but especially the poor and working people.

But this is a war – and I don’t use that lightly – it is a war that will have to have collateral damage. If the British people are to get government that works for them – then they have to do it for themselves and see what devastation Conservative governance brings.

Labour people should stay well away from New Labour and let it be beaten to death – then – once that corps is ashes – Labour, real Labour people should make their move and bring about a Labour party that will govern for the people.

You are quite correct to point out that the Laffer curve as a logical construct is valid – it stands to reason that additional tax revenue at a 0% marginal rate and a 100% marginal rate of tax will both be zero.

However, the Laffer Curve logic loses it’s way in the next step.

An argument that runs:

* The marginal tax rate that maximises tax revenue will be between 0% and 100%
* Therefore it must be lower than what we have

does not convince.

If the higher rate of income tax was 20%, the ‘Laffer Curve’ argument would, I’m sure, still be harnessed.

The IFS analysis you cite basically says “we do not know what the tax-maximising marginal rate is” but that “it is around 45%-55% on the top rate, providing we make a lot of assumptions which we know are quite shaky”.

And in my mind there are questions as to whether income tax rates should be chosen to maximise tax revenue – redistribution and fairness can be valuable goals in and of themselves.