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On January 24 2017 01:32 farvacola wrote:Show nested quote +But this also means that, to achieve these goals, May is really going to pursue the ultra-Atlanticist fantasy that UKIP has been pleading for all these years: instead of a European-oriented British capitalism, a “global” state linked to Washington and Europe through bilateral free trade deals, and trying to foster former colonies as export markets. This suits a wing of cowboy capitalists, spivs, and petty-bourgeois traders, anxious to be relieved of the constraints of the EU’s ordoliberal “social model.”
Instead of the single market, therefore, Britain will seek a separate free-trade deal with Europe, allowing it to trade more freely globally. And in the event that it can’t get good terms, Chancellor Philip Hammond promises to use massive tax reductions for corporations to lure investors, prompting German scowls. Donald Trump, using his position already to create leverage for the Brexit right, has promised that Britain can have a “quick” free trade deal with the United States once Brexit is complete. This is probably more of “the old Trump bullshit,” since it would take at least a few years to get such a deal in place, but it has been welcomed by May as a conversation-changer.
It is possible that May’s current position is posturing, an attempt to drive a hard bargain. Asked less than six months ago, I would have wagered that May has no interest in leaving the single market. But this may have been to give her too much credit as a strategist, and the squeals of business and the business press suggest that they’re taking her plans very seriously. The Financial Times laments that May is giving up on “one of Margaret Thatcher’s greatest legacies.” Former Liberal leader Nick Clegg echoes this sentiment: “Theresa May has finally turned her back on Margaret Thatcher’s greatest economic achievement, the world’s largest borderless single market.”
There are various reasons why this is bad capitalism. In the first instance, as Oxford academic Ngaire Woods pointed out prior to the Brexit vote, if you aren’t part of the single market, then you can’t offer access to that market as a perk of trading with you. You will get worse terms in any trade deal you strike, because you have a smaller market, and the larger economies you’re trading with will dictate the rules. When Trump talks about a “fair” trade deal, this artist-of-the-deal can be assumed to know what leverage he will have.
The government has attempted to talk up post-Brexit trade deals, claiming a total of £16 billion in trade deals made since the vote: a figure that turned out to be concocted from deals unveiled in previous years. Investors, who were interested in Britain in part because its access to European markets, have been reconsidering their investments. Those who have invested have been subject to extraordinary serenading and special offers on the part of the government. The Telegraph, which can always be relied on to deliver the “good news” about Brexit, can at best offer the decidedly unenthusiastic opinion of someone at the Fitch ratings agency claiming that Brexit will not be “the bogeyman that causes everything to fall over” and “ultimately companies will cope.”
British capitalism is already in a bad way. With low domestic demand caused by wage contraction and spending cuts, the Bank of England and the chancellor’s office has for some time talked of an “export-led recovery.” This was part of an austerian answer to Britain’s economic malaise: suppress wages and cut corporate taxes to stimulate investment, reduce debt, and export goods. This proved unavailing. It was hoped that the plummeting value of the pound, post-Brexit, would finally stimulate more exports. The large British trade deficit begged to differ with such sunny prospects.
Labor productivity remains very low. It was never Britain’s strong point and, while it has recovered to levels last seen prior to the credit crunch, it remains well behind that of other powerful economies and will not return to its long-term trend before 2020.
Hammond, appointed after the Brexit vote, claims that he is prepared to raise public investment in order to raise productivity. In this respect, he has stolen a trick from shadow chancellor John McDonnell. But what was notable in his autumn statement was how little he actually broke with the policy of his predecessor. While he abandoned the failed attempt to run a budget surplus, in order to invest about 1 percent of GDP in infrastructure investments by 2020, the figures are extremely modest. It also comes with a continued commitment to public-sector austerity, contributing to the “humanitarian crisis” in the National Health Service. The Stakes Are Clear
I don't think the stakes are all that clear at all. The UK turning itself into a corporate tax haven isn't going to go down well with either the EU or Trump. They might find themselves socially isolated rather quickly. I'm sure Russia would be delighted, but not sure how much that helps. Insofar as I know, the main economy for England is financial services, and if they are shunned by both the US and EU, I'm not sure who they are providing financial services for. Maybe they try to be Switzerland, but I don't really think the UK can reinvent themselves fast enough to not crash and burn first.
But well, we'll have to see what a hard Brexit means for Europe. If the EU (or at least the Euro) crashes and burns as well, then the UK will be in a pretty good position.
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In switzerland we just now have to rehaul our taxcode cause of very "nice" tax policy towards holdings (and the single effect will be even lower taxes for big business at the expense of the middle class, but now in tune with eu law).
GB, while much bigger, will have to jump thru the same hoops every few years. The EU will say "jump" and most likely, GB will jump.
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Lower corporate taxes are to the benefit of everyone. More jobs, better productivity etc. The EU should lower it's tax rate instead of bitching about others having a low one.
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Yeah, because tickle down has proven to work so good for the lower/middle class... seriously?
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Lowering corporate tax rates only makes sense if it comes alongside personal rate and avoidance reform. Otherwise, you're using short-term tax policy to solve problems brought on by global phenomena that implicate far more than taxes alone.
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On January 24 2017 02:00 Acrofales wrote:Show nested quote +On January 24 2017 01:32 farvacola wrote:But this also means that, to achieve these goals, May is really going to pursue the ultra-Atlanticist fantasy that UKIP has been pleading for all these years: instead of a European-oriented British capitalism, a “global” state linked to Washington and Europe through bilateral free trade deals, and trying to foster former colonies as export markets. This suits a wing of cowboy capitalists, spivs, and petty-bourgeois traders, anxious to be relieved of the constraints of the EU’s ordoliberal “social model.”
Instead of the single market, therefore, Britain will seek a separate free-trade deal with Europe, allowing it to trade more freely globally. And in the event that it can’t get good terms, Chancellor Philip Hammond promises to use massive tax reductions for corporations to lure investors, prompting German scowls. Donald Trump, using his position already to create leverage for the Brexit right, has promised that Britain can have a “quick” free trade deal with the United States once Brexit is complete. This is probably more of “the old Trump bullshit,” since it would take at least a few years to get such a deal in place, but it has been welcomed by May as a conversation-changer.
It is possible that May’s current position is posturing, an attempt to drive a hard bargain. Asked less than six months ago, I would have wagered that May has no interest in leaving the single market. But this may have been to give her too much credit as a strategist, and the squeals of business and the business press suggest that they’re taking her plans very seriously. The Financial Times laments that May is giving up on “one of Margaret Thatcher’s greatest legacies.” Former Liberal leader Nick Clegg echoes this sentiment: “Theresa May has finally turned her back on Margaret Thatcher’s greatest economic achievement, the world’s largest borderless single market.”
There are various reasons why this is bad capitalism. In the first instance, as Oxford academic Ngaire Woods pointed out prior to the Brexit vote, if you aren’t part of the single market, then you can’t offer access to that market as a perk of trading with you. You will get worse terms in any trade deal you strike, because you have a smaller market, and the larger economies you’re trading with will dictate the rules. When Trump talks about a “fair” trade deal, this artist-of-the-deal can be assumed to know what leverage he will have.
The government has attempted to talk up post-Brexit trade deals, claiming a total of £16 billion in trade deals made since the vote: a figure that turned out to be concocted from deals unveiled in previous years. Investors, who were interested in Britain in part because its access to European markets, have been reconsidering their investments. Those who have invested have been subject to extraordinary serenading and special offers on the part of the government. The Telegraph, which can always be relied on to deliver the “good news” about Brexit, can at best offer the decidedly unenthusiastic opinion of someone at the Fitch ratings agency claiming that Brexit will not be “the bogeyman that causes everything to fall over” and “ultimately companies will cope.”
British capitalism is already in a bad way. With low domestic demand caused by wage contraction and spending cuts, the Bank of England and the chancellor’s office has for some time talked of an “export-led recovery.” This was part of an austerian answer to Britain’s economic malaise: suppress wages and cut corporate taxes to stimulate investment, reduce debt, and export goods. This proved unavailing. It was hoped that the plummeting value of the pound, post-Brexit, would finally stimulate more exports. The large British trade deficit begged to differ with such sunny prospects.
Labor productivity remains very low. It was never Britain’s strong point and, while it has recovered to levels last seen prior to the credit crunch, it remains well behind that of other powerful economies and will not return to its long-term trend before 2020.
Hammond, appointed after the Brexit vote, claims that he is prepared to raise public investment in order to raise productivity. In this respect, he has stolen a trick from shadow chancellor John McDonnell. But what was notable in his autumn statement was how little he actually broke with the policy of his predecessor. While he abandoned the failed attempt to run a budget surplus, in order to invest about 1 percent of GDP in infrastructure investments by 2020, the figures are extremely modest. It also comes with a continued commitment to public-sector austerity, contributing to the “humanitarian crisis” in the National Health Service. The Stakes Are Clear I don't think the stakes are all that clear at all. The UK turning itself into a corporate tax haven isn't going to go down well with either the EU or Trump. They might find themselves socially isolated rather quickly. I'm sure Russia would be delighted, but not sure how much that helps. Insofar as I know, the main economy for England is financial services, and if they are shunned by both the US and EU, I'm not sure who they are providing financial services for. Maybe they try to be Switzerland, but I don't really think the UK can reinvent themselves fast enough to not crash and burn first. But well, we'll have to see what a hard Brexit means for Europe. If the EU (or at least the Euro) crashes and burns as well, then the UK will be in a pretty good position.
I don't want to get into the discussion, but that doesn't sound right. Maybe you're thinking of services overall, not financial services. For the UK as a whole, a quick glance at wikipedia puts financial services at 3% of gdp, and a good chunk of that is domestic.
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On January 24 2017 02:00 Acrofales wrote:
But well, we'll have to see what a hard Brexit means for Europe. If the EU (or at least the Euro) crashes and burns as well, then the UK will be in a pretty good position.
I can´t think of a serious reason that the UK would want a crisis in the rest of Europe.
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On January 24 2017 03:51 Velr wrote:
Yeah, because tickle down has proven to work so good for the lower/middle class... seriously?
You address people with high incomes via the income tax. Corporate tax is a tax on literally everyone and everything except the government (and even there it increases costs).
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So? Its on businesses (and therefore also the people that work there - assuming fair pay, rofl) instead of a tax directly and only on the people.
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On January 24 2017 11:34 Yoav wrote:Show nested quote +On January 24 2017 03:51 Velr wrote:
Yeah, because tickle down has proven to work so good for the lower/middle class... seriously? You address people with high incomes via the income tax. Corporate tax is a tax on literally everyone and everything except the government (and even there it increases costs).
And yet when you lower corporate tax the additional profit tends not go to the workers but to the CEO. Hence the problem with trickle down economics.
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On January 24 2017 11:34 Yoav wrote:Show nested quote +On January 24 2017 03:51 Velr wrote:
Yeah, because tickle down has proven to work so good for the lower/middle class... seriously? You address people with high incomes via the income tax. Corporate tax is a tax on literally everyone and everything except the government (and even there it increases costs).
And how do you address people who stash their high incomes in a corporate shell, and use all those other complicated tax structures to ensure that they are the sole benefactors of whatever that corporation (which exists solely as a shell to stash money and not pay taxes) decides to pay for.
It's just so so so much easier to charge corporate taxes than try to shut down all loopholes that allow people to create corporate shells. You want a corporate shell? Fine. But you pay the same taxes as somebody who simply receive their money as a private person.
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Today in Italy the constitutional court will decide whether the current electoral law is constitutional. This is crucial for the next elections. Probably we will have to wait until February 10th anyways (the court will say the motivations then - a thing I never understood; if you decide on something, wouldn't you have your motivations already?).
Center-left and center-right hope to keep the ball rolling until the end of legislature in 2018. 5 stelle and other movements (i.e. Lega nord) want to vote as soon as possible. In septembter it will be 4 years and 6 months of this legislature and the members of the parliament will automatically earn a pension. This is one of the reasons why 5s want to vote before that date.
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Confirmed: Sigmar Gabriel won't be chancellor candidate of the SPD and will step down from the party leadership.
Suspected: Martin Schulz, former president of the European parliament, will take both roles.
Schulz was discussed for chancellor candidate for quite a while, but then said that this won't happen (in 2017, many thought he may wait until 2021 to dodge Merkel), so while Gabriel stepping down (he is considered unelectable by most, even among SPD ranks) is not surprising, Schulz following him after he refused at first would actually be real news.
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Personal opinion:
With Schulz, the SPD has a distant fighting chance against the CDU. But to make this happen, it would still require a lot of things to come together. First "Die Linke" has to really decide to go into the election with the goal of governing, which I still somehow doubt. Then the Red-Red-Green alliance has to win quite a lot of votes, preferably with the FDP (Liberals) ending at 4% and not making it into the Bundestag. Yeah, and then the parties have to agree to some coalition, instead of the SPD deciding that a big coalition with the CDU would be the better choice. And well... the SPD won't overtake the CDU, so in that coalition it would always be Merkel as chancellor.
And I'm really not seeing red-red-green to happen. So imho Schulz is really throwing himself away here and I would have preferred him to wait until 2021. Let Gabriel lose the election, send him to the moon afterwards as scapegoat.. But nah...
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You don't think CDU will lose a ton of votes?
I don't know the situation in Germany, but over here Merkel has certainly lost a lot of popularity.
Though the people who dislike her for her immigration policy probably didn't vote for her in the previous election either..
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![[image loading]](http://www.forschungsgruppe.de/Aktuelles/Politbarometer/Projektion_17_KW02_440.jpeg)
Germany 2017.
Mind you polls were wrong so many times in the recent year already and the electoral campaigns haven't yet fully begun.
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United Kingdom13775 Posts
Germany, of all European countries, seems least likely to have a populist revolution of sorts. But as someone said way upthread, history will not be as kind to Merkel and her leadership as the German electorate is right now.
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On January 24 2017 03:51 Velr wrote:
Yeah, because tickle down has proven to work so good for the lower/middle class... seriously?
Corporate taxes are the most damaging tax in existence. Lowering corporate taxes gives increased returns on capital. This means more capital investment and more R&D. Then there's also the fact that (high) corporate taxes increase the informal economy. The negative effects of corporate taxes are pretty well researched.
Corporate income taxes appear to have a particularly negative impact on GDP per capita. This is consistent with the previously reviewed evidence and empirical findings that lowering corporate taxes raises TFP growth and investment. Reducing the corporate tax rate also appears to be particularly beneficial for TFP growth of the most dynamic and innovative firms. Thus, it seems that corporate taxation affects performance particularly in industries and firms that are likely to add to growth
www.oecd.org
Corporate taxation also has a negative effect on wages. Corporate tax is borne by shareholders, employees, consumers etc. There's a wide body of research on how much of of the burden is on labour. Estimates range from none to 360%. This study comes to the conclusion that it's 50% (There might be significant differences by country, firm etc. though).
A conservative reading of the available evidence would suggest that raising additional revenue through the
corporate income tax comes at the cost of a short to medium term decline in wages of at least 50 per cent of the
additional revenue raised
www.etpf.org
Even if most of the burden falls on shareholders that can be bad for the middle class. A lot of the biggest shareholders are public institutions like pension funds or sovereign wealth funds.
A better alternative for corporate taxes would be property taxes. Property taxes are progressive as well.
Why don't you provide an actual argument for why you think corporate taxes are a good thing instead of reverting to the vague concept of trickle down economics whenever someone mentions lower taxes.
On January 24 2017 20:30 Acrofales wrote:Show nested quote +On January 24 2017 11:34 Yoav wrote:On January 24 2017 03:51 Velr wrote:
Yeah, because tickle down has proven to work so good for the lower/middle class... seriously? You address people with high incomes via the income tax. Corporate tax is a tax on literally everyone and everything except the government (and even there it increases costs). And how do you address people who stash their high incomes in a corporate shell, and use all those other complicated tax structures to ensure that they are the sole benefactors of whatever that corporation (which exists solely as a shell to stash money and not pay taxes) decides to pay for. It's just so so so much easier to charge corporate taxes than try to shut down all loopholes that allow people to create corporate shells. You want a corporate shell? Fine. But you pay the same taxes as somebody who simply receive their money as a private person.
Usually they're taxed when they get it out of the company, an income tax (In NL at least). The problem with using corporate tax as a solution against shell companies is that it doesn't work. Shell companies exist solely to lessen the tax burden and avoid things like a corporate tax. A higher tax will only push more rich people to create these shell companies. Believe it or not most people prefer to simply pay taxes instead of creating complicated structures.
Edit: Corporate tax is also levied on SMEs. It's not just (or mainly) multinationals who have to pay it. Owners of SMEs are exactly the middle class you apparently support.
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Germany3128 Posts
On January 24 2017 23:37 mahrgell wrote:
Confirmed: Sigmar Gabriel won't be chancellor candidate of the SPD and will step down from the party leadership.
Suspected: Martin Schulz, former president of the European parliament, will take both roles.
Schulz was discussed for chancellor candidate for quite a while, but then said that this won't happen (in 2017, many thought he may wait until 2021 to dodge Merkel), so while Gabriel stepping down (he is considered unelectable by most, even among SPD ranks) is not surprising, Schulz following him after he refused at first would actually be real news.
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Personal opinion:
With Schulz, the SPD has a distant fighting chance against the CDU. But to make this happen, it would still require a lot of things to come together. First "Die Linke" has to really decide to go into the election with the goal of governing, which I still somehow doubt. Then the Red-Red-Green alliance has to win quite a lot of votes, preferably with the FDP (Liberals) ending at 4% and not making it into the Bundestag. Yeah, and then the parties have to agree to some coalition, instead of the SPD deciding that a big coalition with the CDU would be the better choice. And well... the SPD won't overtake the CDU, so in that coalition it would always be Merkel as chancellor.
And I'm really not seeing red-red-green to happen. So imho Schulz is really throwing himself away here and I would have preferred him to wait until 2021. Let Gabriel lose the election, send him to the moon afterwards as scapegoat.. But nah...
Yeah. I think Martin Schulz is the best bet SPD currently has but I feel he currently stands no chance against Mutti. I would have loved to see him more profiled in German Politics until he can make a serious challenge in 2021 but as it stands a lot of the Germans probably have never even heard him talk. The SPD is just gonna burn him now... It's either gonna be a Große Koalition or a Jamaika one.
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The AfD will be very happy that the SPD picked Schulz. Even to me, this guy has been working with the EU for so long that he has become associated with all of its bad aspects. I look at what I expect the SPD to have as their core values (workers rights, increase of wealth for the middle class) and his profile seems to be unrelated to these fields.
Basically, I am under the impression that the SPD wants to out-Merkel the CDU.
I would never consider to vote the for the AfD, but I am starting to think that they really have a point with their name, as I feel it makes only a marginal difference if I vote CDU/SPD/green.
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On January 25 2017 00:00 LegalLord wrote:
Germany, of all European countries, seems least likely to have a populist revolution of sorts. But as someone said way upthread, history will not be as kind to Merkel and her leadership as the German electorate is right now.
Why ? Germany is still, economically, the strongest European country (by far, even), doubtlessly has the potential to become the strongest military in Europe if they want to, and is also the key holding the EU together. If we look at economic indicators, the unemployment rate was at more than 10% when she took office, in 2005, and is today nearing 4% ; meanwhile, the GDP went up by roughly 30%, average wages went up, etc. By comparison, in France during the same timespan, under 3 different Presidents and 5 different Prime Ministers, unemployment rate went from 8.5% to 10%, and the GDP went up by only 10%.
(source : www.tradingeconomics.com)
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EPT
