So, for the record, let me make it clear that Sunak has no unexpected bonus. Instead what we have is a shortfall of cash in the economy. More money has been destroyed than was expected. That must mean there is less money in the economy than was anticipated. And, given that the economy is already under economic pressure from a cost of living crisis what that means is that the consequence of this overpayment of tax is not good news, but is instead bad news. If £30 billion of extra tax has been paid that is money not available for other use when keeping the economy solvent with readily available cash to fund spending is vital.
According to commentators, Jeremy Hunt is not going to be spending his ‘windfall’. It will instead be used to reduce the national debt. That is one of Sunak’s stated five goals if you recall his announcement of his five big objectives in January. So this money will not be replaced, which it could be by increasing government spending on decent pay rises for those who need them, for example.
If commentators really understood money (and they don’t) they would appreciate that this is not the moment to reduce the amount of government money in the economy. In fact, it is the moment when more is needed.
It’s hilarious, isn’t it?
It’s not even MMT. Which says that print the money and spend it, take it back out by taxation in order to reduce the resultant inflation. We’ve got 10% inflation now. So, the Solanum is insisting we should have even more money around.
He can’t even grasp the implications of the very policy he claims to be a Guru of.
It’s really not hard to work out unless you do not wish to understand it, of course. And that is the real problem that we face. Wilful ignorance is the last bastion that is supporting neoliberal economic thinking. But at least that means that one day things must change.
Sigh.
So Jeremy Hunt has a big furnace at No 11, onto which he shovels all the cash that people pay in tax?
Isn’t that what burned down the original Palace of Westminster?
So Jeremy Hunt has a big furnace at No 11, onto which he shovels all the cash that people pay in tax?
If only! Would be a far better than the normal government modus operandi of spending the money on making our lives worse.
One of Spud’s little hobby horses is that all money injected into the economy by the government eventually gets taxed and so returned to the government. So why is he so bothered about tax evasion? If Joe the Plumber sticks £100 in his back pocket to save the £20 income tax he’d otherwise pay, he has £20 extra to spend down at Bob the Butcher’s. Assuming Bob is honest, Bob will pay the tax Joe didn’t. If Bob is dishonest, he’ll spend it and eventually it will be spent somewhere where tax will be paid.
QED, tax evasion has no impact on the amount of tax collected by HMG.
Stream of Consciousness Economics is pretty amazing.
He’s the Marcel Proust of economists.
What is more, the money created by commercial banks is particularly volatile. It behaves pro-cyclically (there is more of it in good times than bad). And it is always subject to relatively short-term notice when it comes to life expectancy, by which I mean all of it is subject to notice when it comes to its own destruction, which happens whenever the loan that created it is repaid. As a mechanism for funding the state it is far too volatile in that case.
So, we are ultimately dependent on state-created money to underpin the functioning of our economy, all of which is made by the government running a deficit. That deficit is simply a record of the fact that the government has spent more into the economy than it has taxed back out. The rest is left as a promise to pay (which is even printed on bank notes) that might one day be cancelled by way of a tax demand, in settlement of which the government promises to accept the currency it created.
I’m just posting this for now with the note that the author is employed in a higher education institution in the UK (And I believe it is the economics faculty in said institution) – I’ll dissect it shortly but suffice it to say the education secretary should say that the institution in question should have its ability to award degrees removed while the author is employed in an academic position.
More interesting is every commentator taking what might be a one-off windfall as justification to make a permanent increase in spending of the same amount. It’s like taking a £500 lottery win as evidence that you must spend £500 more every month on existing commitments without any consequences.
PS: Nice way of looking at it @AndrewC.
” So why is he so bothered about tax evasion? If Joe the Plumber sticks £100 in his back pocket to save the £20 income tax he’d otherwise pay, he has £20 extra to spend down at Bob the Butcher’s. Assuming Bob is honest, Bob will pay the tax Joe didn’t. If Bob is dishonest, he’ll spend it and eventually it will be spent somewhere where tax will be paid.”
You’re assuming his interest is purely the amount of tax raised. When in reality his interest is more the control of people. People who deal in cash are not under the control of the State, and that is what exercises Spud more than any loss of revenue.
Jim, “People who deal in cash are not under the control of the State, and that is what exercises Spud more than any loss of revenue”.
Not just spud, our betters and parasite politicians, who are dead keen to introduce a digital economy for the most important thing that comes with it as you say – Control.
Biggest tax avoidance in the UK = VAT. Not millionaires with Panama / Cayman Island / Luxembourg et al bank accounts or clever accountants.
If I were worth millions with time on my hands I would enrol at Sheffield bumfuck university (or whichever it is) on a course taught by professor potato, with the intention to ask / sue for my money back due to the lecturer knowing less than the cleaner – and probably begging me to buy him a fucking coffee on the way out the lecture.
“Biggest tax avoidance in the UK = VAT. Not millionaires with Panama / Cayman Island / Luxembourg et al bank accounts or clever accountants.”
I’ve always said that the Average Joe is more of a tax evader than the average multi-millionaire. The AJ does work for cash in hand, which is outright tax evasion. The average multi-millionaire is hardly going to bother with such chicken feed and can afford accountants who advise how to arrange his affairs such that the minimum tax is paid entirely legally. You’ll find more tax evaders on the average council estate than in leafy Surrey. Admittedly one multi-millionaire tax evader could evade more tax than an estate full of AJs, but in terms of a head count AJ wins every time.
Just found this:https://www.usdebtclock.org/world-debt-clock.html
《we should have even more money around.》
Why not just index inflation away, like Türkiye?
Perhaps Murphy has gone full MMMT (Modern Motherfucking Monetary Theory, which says print money faster than prices rise and distribute equally via a Strong Basic Income (SBI))?