Can someone explain how the UK Government’s plan can possibly stimulate economic growth?
In: 8
Anything that cuts taxes is inherently going to put more money into the private sector of the economy, and since that’s the only sector that’s ever going to grow, you’re movong money from a zero or even negative return to a positive return, thus growth. It’s pretty typical of euro style governements to deprioritize growth, but over time that puts you in a position where the growth you lost out on is now preventing you from affording the public services you want to have. It’s a tricky game, and so far there seems to be nothing but wrong ways to play.
Tories, using trickle down economics argument to bamboozle the electorate whilst increasing the class divide and making the wealthy, even more wealthy.
The word ‘Tory’ comes from the old Irish for thief btw.
I have zero idea why anyone votes for them.
Trickle down economics is the idea. Make the extremely rich richer, with a smattering of (literally) a few quid to the lowest earners in tax breaks; they spend more and invest in business, everyone wins because the economy grows and people get paid more.
The problem is trickle down economics has been proven to be a myth the world over. The mini budget, a time of unprecedented inflation over the last two decades, only serves to add to the inflationary pressure because the people with large disposable incomes have more to spend, whereas the people who can’t afford food and electricity still can’t afford them, this leads to higher inflation which necessitates increased interest rates and devaluation of the pound as we’ve seen, which in turn makes mortgage rates go up and the price of imports (like food and energy) get more expensive.
So there you have it. All because the auto mod didn’t like me saying “it doesn’t work”
“It can’t.” There you go. An ELI5 answer.
The plan was just a repackaging of “trickle down economics”, which has been long-since proven to be a flat-out lie. It turns out that in reality, giving all of your country’s money to the richest people…just makes them *even richer people*. That’s it. Full stop.
In the old days, before there were various services to put your capital in low tax/asset accumulation portfolios, the rich would invest their money in businesses. The idea being if you give start ups and small businesses money they have more resources to grow and then pay you back with interest. This helps the lower class because business growth should bring about wage growth and opportunity growth. So to make the lower class rich give them better jobs, you give them better jobs by growing businesses. This caries risk because small businesses fail often but can also have high returns. Nowadays the richest prefer a safer way to store their money which can even be non-domestic.
Well, it’s the party that gave BREXIT to the world and still thinks it’s an economically sound idea. What do you expect?
The more you tax something, the less you get of it. The income tax is a tax on economic activity, fundamentally. Lower taxes on it, more economic activity, more growth.
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