Today in 2017, the UK and the USA have similar economy, which splits the population by favoring the high net-worth individuals. While it deprives everyone else not lucky enough to sit in the high net-worth part of the population and makes them poorer.
The economy scale has tipped in the favor of austerity and capitalism.
Unfortunately, in the UK this system that lead to the austerity and divide between the population is due to the Members of Parliament continually supporting the system that benefits the high net-worth part of the population and deprives the rest.
This system was introduced in the 1980’s by the relevant leaders, Margaret Thatcher (UK) & Ronald Regan (USA), the system was known as the “Trickle-down Economics System”.
The main foundation of the system was to Trickle-down, which can be (very loosely) characterised as the idea that reducing the tax burden on the high net-worth and wealthy individuals, in the end, is good for everyone.
They felt that the wealthy person’s taxes being reduced will increase their disposable income. This will then enable the wealthy person to spend the extra income on a new mansion, or luxury goods, or lavish holidays. Which in-turn will benefit the estate agent, the luxury manufacturer, tourist resorts and service providers profits increase, this increasing their disposable income and continue the trickle down processes. The profits will also enable the people to invest the profits, expanding their capacity, creating new jobs in the process. That additional investment boosts income and employment. This then will grow the economy, bringing in more tax revenues (more, indeed, than were forgone through the initial tax cut). The size of the state is reduced, the freedom of the population grows and general prosperity is enlarged.
Although this system / model sounds good, it is fact that it does not work and the only individuals who benefit is the wealthy. As they make the profit and continue to purchase expanding their wealth, the wealthy individuals are owners of the product ranges, estate agents and brands etc. that they initially make their purchases. So the money they spend just keeps going around in circles increasing the wealth dived.
Two well-known former government purse holders from the US & UK have commented on the system and agreed that is failed the majority of the country’s population. Larry Summers (US Treasury Secretary) and Ed Balls (UK Shadow Chancellor) have stated openly and in reports
“That tax cuts for the rich do not inexorably result in more economic activity, but create a growing income gap between those at the top and those at the bottom. The rich tend to save more of their disposable income and growth slows down.”
An academic and popular economic writer from Cambridge University – Ha-Joon Chang, states “The trickle-down argument crucially depends on the assumption that, when given a bigger slice of national output, the rich will use it to increase investments”, he has written. He describes this as “an assumption that has not been borne out by reality”, and goes on: “Once you realise that trickle-down economics does not work, you will see the excessive tax cuts for the rich as what they are: a simple upward redistribution of income, rather than a way to make all of us richer.”
Individuals who have worked in high-level positions within the government or who have become experts on the subject. Believe that higher wages for ordinary workers, higher rates of tax on the super-rich and corporations, as well as a co-ordinate international closure of tax loopholes, with the money used to finance more public infrastructure investment.
This trickle down system was introduced over three decades ago, it was not subscribed to by the population and no open discussion or review of the system has been undertaken to establish the areas of failings. Main reason for this is the individuals who introduced the system (Members of Parliament) are actually benefiting from the system, they do not want change as it will affect their wealth.
There is no record of any serious free-market thinker ever outlining that cutting tax rates on high earners is good because it encourages the rich to spend,” argues Ryan Bourne of the Institute of Economic Affairs think tank. “Free-marketers don’t believe in low taxes because of their effect on spending. They believe in low taxes because they provide a strong incentive to earn more income in the first place.”
Only in the last week Philip Hammond (UK MP & Chancellor of Exchequer) spoke out in cabinet meeting that he felt that Public workers are overpaid. This just strengthens the notion that the only system that is of any interest is the one that protects and enhances his wealth. When considering he and a majority of the MP’s representing the UK Population benefits greatly from the “Trickle-down System”. Philip Hammond, who has an estimated wealth of £8.2 million in 2014. He has previously been caught-out for avoiding tax’s http://www.mirror.co.uk/news/uk-news/millionaire-tory-philip-hammonds-200-3231876 .
In early 2017, Philip Hammond was challenged by an opposition leader to publicly publish his tax return, but he refused. http://www.huffingtonpost.co.uk/entry/jeremy-corbyn-publishes-tax-return-chancellor-philip-hammond_uk_58bc41b7e4b0b998941837c6
He told the BBC’s Andrew Marr Show he has “no intention” of making public his documents since “my tax affairs are all perfectly regular and up to date”. This just shows that the person to set the UK Budget and control the purse, cannot be open and transparent with his earnings or income. Which are most probably ten to twenty times more than any public worker and only shows his real intentions to enhance his wealth and support the minority of the population. MP’s serve the UK Population and should be accountable to the people, then why are they not showing their annual earnings by issuing the tax return publicly.
Income inequality has reached excessive levels and is now effecting the majority of the UK Population and growth in the public services and economy. Rather than stimulating spending by the wealthy it is doing the opposite, which in-turn is forcing much of the population to enhance their levels of debit.
Remember, majority of the Members of Parliament, who represent the UK People are receiving financial rewards of more than £100k year with salaries and expenses etc. Probably a majority have been fortunate to have generated a wealth through their careers in the government sector and do not feel the effects of austerity or capitalism.
Legal tax avoidance and illegal tax evasion is costing the UK billions a year and effecting the public services and population. Estimated cost in 2014 estimated at