Income Inequality is the next challenge.

Discussion in 'Markets & Economies' started by JulieW, Oct 7, 2019.

  1. JulieW

    JulieW Well-Known Member Silver Stacker

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    The following piece discusses "trickle down" economic concepts and how the data presents a different picture to the wishful thinking of those in the upper tax levels.

    Income inequality is one of the proven triggers for revolutions and the economies of the world seem to provide more and more disparity between wealthy and poor, and in the more developed economies the middle class is a shadow of its previous healthy balancing effect on societies.

    In the USA, Warren had been talking about the collapse of the USA middle class and the consequences in that country. Here in Australia income distribution is becoming more unequal, but not significantly it seems, though the rising CEO and executive pays are the noise we hear.

    (see https://www.pc.gov.au/news-media/pc-news/unequal for current figures)

    So here goes:

    According to the IMF, countries looking to boost economic growth should concentrate their efforts on the lower segments of society rather than bolstering so-called "job creators" with tax breaks. The study results suggest that raising incomes for the poor and middle class yields measurable improvements to the national economy: Increasing the income share to the bottom 20 percent of citizens by a mere one percent results in a 0.38 percentage point jump in GDP growth. By contrast, increasing the income share of the top 20 percent of citizens yields a decline in GDP growth by 0.08 percentage points.

    notes, the Organisation for Economic Co-operation and Development recently published a strong case for fighting income inequality, asserting that economic growth "is most damaged by the effects of inequality on the bottom 40% of incomes," Quartz's Gabriel Fisher writes.

    The message of the IMF report is clear: Income and wealth inequality isn’t a class problem, but a national issue. "Widening income inequality is the defining challenge of our time," the authors of the report write. "The poor and the middle class matter the most for growth via a number of interrelated economic, social, and political channels."

    https://psmag.com/economics/trickle-down-economics-is-indeed-a-joke

    Australia, funnily enough seems to tax us all into relatively equal incomes, so the incendiary circumstances that mean burning cars and street blockades are a long way off here in Oz it seems.

    Europe and USA may be different though next time round.

    For anyone interested, Warren on the death of the middle class:

    She starts 5 minutes in








     
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  2. alor

    alor Well-Known Member Silver Stacker

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  3. JulieW

    JulieW Well-Known Member Silver Stacker

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    Further along is the issue of corporate tax avoidance, and the current global initiatives to address profit shifting etc.

    This always arises in tax base discussions. Not that it will mean less tax for PAYE subjects, but the issue of inequality raised consistently when firms such as Apple, Uber etc pay next to no tax contributes to discontent, discontent which fuels and inspires actions such as the riots in France where the raison d^etre is the disproportionate burden of the government's tax reforms falling on the working and middle classes, especially in rural areas.

    Dr Piketty said the profits of big global companies must be declared on a global level, and tax must be spread among countries according to sales, the level of employment, and in some sectors such as the digital world, it would also include looking at users.

    "These criteria must not be subject to manipulation," he said.

    Australia still looking for permanent solution
    The Coalition previously introduced other laws aimed at getting more tax locally, including the Multinational Anti-Avoidance Law (MAAL) and Diverted Profits Tax (DPT).

    The ATO has previously said MAAL has resulted in companies booking an additional $7 billion in sales in Australia every year, thus resulting in a higher tax take.

    While companies such as Facebook and Google have already restructured their operations due to MAAL and pay some more tax here, the law only applies to sale contracts managed by sales teams in Australia.

    Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume.

    The ATO does not require tech giants to disclose the revenue they book overseas from local clients.

    This is why the laws have not been able to stop the legal practice of hefty amounts of advertising revenue earned by companies such as Facebook and Google still getting channelled via low-tax countries like Singapore.

    Mr Frydenberg said since July 2016, local measures to address multinational tax avoidance had helped the ATO raise about $13.5 billion in tax liabilities against large public groups and multinationals, as well as wealthy individuals and associated groups.

    Former Labor treasurer Wayne Swan, who is also a member of the ICRICT, told ABC News that while Australia has had some success in tackling multinational profit shifting, these were mainly due to stronger transfer-pricing laws introduced in 2012 by the former Labor government.

    Armed with these laws, he said the ATO had been able to successfully litigate against multinationals including Chevron.

    "There is still not a permanent solution to ongoing issues of taxing value where it's created either here or elsewhere in the world," Mr Swan said.

    "The whole point about reforming the system is to get the money out of tax havens and get it returned to where value was created — it certainly wasn't in Bermuda or Singapore."

    He said the OECD's global plan would also put an end to unilateral measures, which have already caused a "stand-off" between the United States and France.

    Trouble is how to allocate taxing rights
    The Tax Justice Network also suggests the OECD plan is flawed, and instead wants a global minimum tax that will help developing countries protect their tax base.

    OECD push for a global minimum tax

    It suggested the minimum rate should be 15 per cent, rising to 20 per cent after a transition period.

    "It should be as broad as possible, with no carve-outs and income blending only at country level," TJN said.

    https://www.abc.net.au/news/2019-10-08/global-plan-to-tax-multinationals-could-fall-short/11579228
     
    Last edited: Oct 7, 2019
  4. wrcmad

    wrcmad Well-Known Member Silver Stacker

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  5. Jason1

    Jason1 Active Member

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    Im not so much a a fan of the grass is greener thing, so the pay thing isnt something that worries me.
    I do get pissed off at greed more than pay inequality so greedy people who rip off others for them to sit at the top is a separate issue from pay inequality, can often be mixed up as the same.
    But the OP has touched on Tax inequality with Corporate business, that is a big problem especially with the likes of google, amazon, ebay netflix and facebook, Not a single road in this country has been ever paid from by those guys yet small business Gets reamed out the back side with taxes. Big multinationals now have to charge GST but even then thats just the customer paying not them so is really only helpfull to even the play-field for local businesses with pricing.
    they do need to figure out how to tax profits on multinationals who make hundreds of billions of dollars here but enjoy not paying taxes because they have an empty office in some tax haven country.
     
  6. sammysilver

    sammysilver Well-Known Member Silver Stacker

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    The next talk on my philosophy night this coming Monday.

    Basic Income or Basic Outcome? The Great Philosophical Economic Debate.


    Details
    TOPIC: The presentation focuses on the philosophical arguments not only for and against a universal basic income in its variety of proposals but also raises the question: what is the purpose of economics as a science in the first place? By examining the current debate on the particular policy, it ought to compel economists to reflect and examine the raison d'etre of their craft and the very outcomes of their analyses and recommendations on the individual and society.

    SPEAKER: Joffre Balce is the Secretary of the Association for Good Government and an economist for over 30 years with practical and academic experiences in several countries.

    GENERAL INFORMATION: Philo Agora's format is a talk for 20 minutes starting at 7:15 for 7:30. The presenter then answers any questions of clarification from the floor. We then take a break of 10 minutes for more coffee and to mull over the talk and discuss it within small groups. The microphone is then passed around the audience for comment, opinion, and often counter argument to a maximum of 3 minutes. The presenter is then given a 5 minute right of reply.

    We usually finish up at 9pm. The cover charge is $5 for the talk. There are tea and coffee facilities available in-house. There is plenty of street parking in Shepherd Street and surrounds.

    We look forward to seeing you on the night.
     
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  7. JulieW

    JulieW Well-Known Member Silver Stacker

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    I'll be interested in reading your summary sammysilver.

     
  8. Timmy88

    Timmy88 Member Silver Stacker

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    Julie this is great thread thank you for starting.

    A great book on this subject is Giants the global power elite by Peter Phillips
    Also Abby Martin touch on this subject in some of her videos, channel on you tube is empire file.

    Timmy
     
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  9. sammysilver

    sammysilver Well-Known Member Silver Stacker

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    I'll see if I can get the speaker's notes or a link.
     
  10. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    What would be a refreshing change would be if all the liberals started being honest. :cool:

    I'll say it again, for probably the 23rd time (and I haven't been the only one), not that it will make any difference (shit it won't even make me feel better):

    THERE....IS....NO....SUCH....THING....AS....TRICKLE....DOWN....ECONOMICS..........IT....IS....A....FALLACY!

    There you go, in oversized coloured font - about the only thing that sticks in some people's minds.

    Hey, but if you're happy to contribute to the continuing dumbing-down of the world then I know reason won't stand in your way.
     
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  11. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    What is meant when it states economics is a science?

    Edit to add: interesting, just did a quick google search and I see The Association for Good Government is a Georgist organisation. Mmmm. I think I know in what direction that topic will head.
     
    Last edited: Oct 8, 2019
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  12. willrocks

    willrocks Well-Known Member Silver Stacker

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    Higher corporate tax rates ≠ Lower individual income taxes

    Higher corporate tax rates = Bigger government, and more taxes

    Higher corporate tax rates = Higher consumer prices
     
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  13. willrocks

    willrocks Well-Known Member Silver Stacker

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    It's also a huge disincentive for entrepreneurs to set-up in Australia. They will flee Australia and set-up elsewhere. Australia will eventually become a hub for numpties, government employees, and welfare recipients.

    Then when all the productive people are gone, the unproductive people will burn cars because no one will be there to fund them.
     
    Last edited: Oct 8, 2019
  14. wrcmad

    wrcmad Well-Known Member Silver Stacker

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    We are already half way there....
     
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  15. JulieW

    JulieW Well-Known Member Silver Stacker

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    and there I was thinking that the post supported your proposition.
     
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  16. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    Didn't read it, so it was lost on me. Just jacked up, especially when I saw Elizabeth Warren's head.

    Edit to add: just clickbait really.
     
  17. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    On the UBI, most of us would agree that it is immoral for the wealthy to benefit from government largesse and earn un-deserved wealth. So how can it be moral for the non-wealthy?

    Gunna go and have another beer before @JulieW comes back and embarrasses me again. :oops:
     
  18. willrocks

    willrocks Well-Known Member Silver Stacker

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    It's immoral for anyone to benefit from ill gotten gains.
     
  19. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    I think the author of the article is being dishonest, claiming trickle down economics is a joke whilst at the same time tacitly implying it’s an economic theory.

    It’s a sham story.
     
  20. JulieW

    JulieW Well-Known Member Silver Stacker

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    All good Shiney! If you were closer I'd buy you that beer. lol.

    [​IMG]

    ;)

    :p
     

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