Wednesday, 11 July 2012
Cameron and Hollande clash on tax
David Cameron said "I see it as my job to roll up my sleeves and ask what more I can do to make Britain the best country in Europe, the best country in the world, to do business".
I honestly thought his job is to make sure Britain is the best place to live in. For all its citizens. And to achieve this, the government will make sure the economic growth translates into improved living standards for all British nationals.
This is not happening. The argument that low taxes on business and rich is the only viable way to create investment, jobs and wealth is severely flawed and needs to be challenged.
If we're to believe Trading Economics, UK's GDP more than doubled since the 1980 to 2005, the GDP per cap grew by some 70%.
Poverty.org tells us the GINI coefficient grew by more than 50% over the same period of time. That's not good news for people who believe a rich nation = rich individuals, not a rich clique. The GINI coefficient measures the overall income inequality in the United Kingdom, and is now higher than at any previous time in the last thirty years.
The poorest 20% of the UK population have between them a little over 5% of the country's total income. The richest 20% have more than 45%.
The income of the richest tenth is more than the income of all those on below-average incomes (i.e. the bottom five tenths) combined.
The ratio of median income for the whole population compared to the income at the bottom decile point of the income distribution (50:10 ratio) rose for the fourth consecutive year in 2008/09. It is now higher than at any point since the mid-1990s.
The ratio of income at the top decile point compared to median income (90:50 ratio) has also risen in each of the last four years, albeit at a slower rate. It is also now higher than at any point since the mid-1990.
Trickle economics is a myth. Business-friendliness does not create wealth for all, but for a minuscule minority. Not over the long-run, not in short term. Not in the UK, nor in the US, nor in Brazil.
Corporate profits are at historic highs (in the UK and US), corporate effective tax rates in the UK are at historic lows, the effective tax rate paid by rich individuals in the UK is lower than the average income tax. Every elevated structure on the M4 motorway has, is or will be crumbling because there is no money to build roads. At least in Mr Cameron's vision for Britain.