Social Democracy and the demise of the middle class.

Drifterwood

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Most outside the UK view it as a very class based society. I feel that this is out of date and the reason is social democracy and political bureaucracy.

My premise is that ultimately, a middle class lifestyle needs to be funded. You may have been raised middle class, but if you can't afford it yourself, you are in effect the nouveau pauvre. My figures will not be relevant to people without children.

Thirty years ago, the middle class used to enjoy major tax benefits. There was mortgage tax relief, worth up to £20k today, free education at Grammar Schools that today costs someone with two kids £50k a year, tax free company cars that today cost up to £20k, and capital gains on trusts including pensions that has cost people perhaps more.

Thirty years ago you could have benefits worth more than £90k. Today you are classified as wealthy, a top rate tax payer if you earn just £40k. This amount will not pay for a middle class lifestyle. A middle class house is around £1 million, £40k will give you a mortgage of only £150k, a UK public school cost £50k a year of pre tax income.

In effect, only maybe 2% of the UK can afford the old Middle class lifestyle. The Upper Middle class are the new Middle Class.

The problem comes when you ask where the money has gone. I have to conclude that only half of it has genuinely raised the living standards of the poorest third of society, the rest has been wasted in expensive government. When government takes money, it makes some people a lot poorer than it makes others wealthier. I think that the challenge is to find a better way to redistribute wealth, but I definitely do not think that it should be through direct taxation.

The US should have this as their top issue at the upcoming election. From this outsiders POV, they should raise tax, or cut benefits to the richest to pay for services above and beyond the 35% of GDP that they take to supply the current level of Public Service. But somewhere between the current level and them50% that Euro Govs take is the slippery slope of no coming back.
 

KTF40

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I'm all for repealing the Bush tax cuts on the rich, but do people realize how little impact this would actually have? I believe the CBO estimated this would bring in about $800-900 billion in new revenue over the next 10 years. Our current debt is $16 trillion not to mention deficits growing ever closer to $2 trillion annually. And this doesn't even take into account that entitlement spending will continue to explode in the near future while we have less and less people paying into the system compared to those receiving benefits.

This notion that you can just tax the rich or take away their benefits and pretend that would solve anything, or even begin to help to solve anything, is really really far off base at least for the USA.
 

Mensch1351

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I'm all for repealing the Bush tax cuts on the rich, but do people realize how little impact this would actually have? I believe the CBO estimated this would bring in about $800-900 billion in new revenue over the next 10 years. Our current debt is $16 trillion not to mention deficits growing ever closer to $2 trillion annually. And this doesn't even take into account that entitlement spending will continue to explode in the near future while we have less and less people paying into the system compared to those receiving benefits.

This notion that you can just tax the rich or take away their benefits and pretend that would solve anything, or even begin to help to solve anything, is really really far off base at least for the USA.

I think your math is a little off! Your $800-900 billion isn't the TOTAL in revenue increase it's how much revenue it would generate PER YEAR so multiply that figure by 10!
 

Drifterwood

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I think your math is a little off! Your $800-900 billion isn't the TOTAL in revenue increase it's how much revenue it would generate PER YEAR so multiply that figure by 10!

Deficit reduction is one thing and essential IMHO, but what I think you need to not believe is that socialism will redistribute wealth effectively and efficiently. It will not. Everyone ends up poorer.
 

KTF40

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I think your math is a little off! Your $800-900 billion isn't the TOTAL in revenue increase it's how much revenue it would generate PER YEAR so multiply that figure by 10!
No, you could not be more wrong. Here don't take my word for it, take the word of a left-leaning outlet.

CBO: Eliminating Bush Tax Cuts for Rich Will Save Almost $1 Trillion Over Next 10 Years ‹ I Acknowledge Class Warfare Exists

Over the next ten years, raising taxes would not even cut 1/16th of the current debt. Like I said before, I'm all for repealing the Bush tax cuts on the rich. But it's nonsense that liberals continue to perpetuate this idea that it will make a difference in any way.
 

Klingsor

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Over the next ten years, raising taxes would not even cut 1/16th of the current debt. Like I said before, I'm all for repealing the Bush tax cuts on the rich. But it's nonsense that liberals continue to perpetuate this idea that it will make a difference in any way.

Instead, we should follow the conservative deficit reduction plan: cut funding for PBS.

Much more effective.
 

KTF40

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Instead, we should follow the conservative deficit reduction plan: cut funding for PBS.

Much more effective.

Actually, the "conservative plan" would contain entitlement reform. You know, the main drivers of our debt.

But yes, cutting discretionary spending would also be useful. Since current spending levels are about 25% of gdp, 7% higher than historical levels.
 

KTF40

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Entitlement reform as in, vouchers for Medicare?
Whatever it may entail.

My original point though was a response to Drifterwood's idea of "The US should have this as their top issue at the upcoming election. From this outsiders POV, they should raise tax, or cut benefits to the richest to pay for services above and beyond".

We could raise taxes on the rich, cut their benefits, and we will still incur massive annual deficits and be unable to pay for any "services" using this new revenue.

And I'm saying this as someone who supports repealing the Bush tax cuts for the rich.
 

dude_007

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Whatever it may entail.

My original point though was a response to Drifterwood's idea of "The US should have this as their top issue at the upcoming election. From this outsiders POV, they should raise tax, or cut benefits to the richest to pay for services above and beyond".

We could raise taxes on the rich, cut their benefits, and we will still incur massive annual deficits and be unable to pay for any "services" using this new revenue.

And I'm saying this as someone who supports repealing the Bush tax cuts for the rich.

Yes, let's cut off grandma's social security, get rid of cops and fire departments, let's tell people they will have to let their child with cerebral palsy rot in his bed because there is no money to pay for his proper care, in fact, all programs for poor kids are just too expensive for us to pay for so the next generation is just SOL.

Oh, and hey, thanks for keeping us safe and doing that bit in Afganistan, sorry you lost your legs. Sucks for you now cuz we can't afford to pay for you.

What a great plan.
 
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dandelion

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Deficit reduction is one thing and essential IMHO, but what I think you need to not believe is that socialism will redistribute wealth effectively and efficiently. It will not. Everyone ends up poorer.
what evidence do you have for that? socialism is word whose definition is in the mind of the user and means everything from organising a national army (one of the first socialist reforms) to having every last want provided by the state. so how many from the us now attacking socialism will agree to disband the us military? that is where a heck if a lot of your deficit has come from.

those attacking government spending seem to misunderstand how an economy works. it works by money changing hands in exchange for services. all that happens if governments tax and spend is money makes an extra loop from one person back to a different person. I am extrememly sceptical how this can be a bad thing. at the end if the tax year all the money is back in the hands of private individuals. it doesn't matter if it was spent well or badly, it still ends up back with people. and in the meanwhile it did some good, if you reckon blowing up foreign countries is good, but less contentiously it paid for police and firemen and medical services and preventing Americans starving. of all the social measures the us engages in, I reckon it least needs its huge armed forces. yet I see little debate about this.

I see socialism not only as an enormous force for good but as essential for a well managed economy. wealth is created by money circulating whereas the natural human desire is to prevent money circulating by keeping for yourself all that cones to you. paradoxically everyone becomes wealthier if you spend everything, and taxation helps this process. obviously taxes should mostly be levied on those with most money, the poor spend all their money anyway.

you ask why in the UK the middle class is suffering. here's a couple of reasons. housing takes a high chunk of everyone's income and always has. how would people be feeling if tomirror housing costs halved? I ask, because they have more than doubled in real terms. suppose we reduced cost to 1/3,1/4?

income distribution is changing. slowly but remorselessly. suppose we take 10% of national income and give it back to the middle classes who have lost it. will that help? this simply represents an imbalance in power between factory owners and workers. this has shifted such that workers (and I include the middle classes) are getting less. this is bad for the economy. Jason likes to complain you cannot tax the rich. this us nonsense, we simply choose not to. its propaganda. in recent years the middle classes have been compensated for their falling incomes by being given loans. a short term fix with the side effect of speeding up wealth transfer to the rich, but which has created today's crisis. you cannot borrow forever ( but you most certainly can tax forever)
 
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dandelion

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Most outside the UK view it as a very class based society. I feel that this is out of date
I dont. We have just celebrated a return to government by public school aristocrats. The conservative party had moved to choosing leaders who had state education and just a touch of the middle class if not the poor. Now they are back to rule by and for the rich minority. Once upon a time there were two political parties, the tories representing the traditional aristocrats, and the liberals representing the middle class rich. Then along came the party of labouring men. The liberals died out, so maybe it is poetic justice the part of society they represented is suffering now. Except that labour went so upmarket it too has pandered to the rich in recent years. Milliband seems to represent a return somewhat to its roots, so maybe there is hope for the middle and lower classes yet.


My premise is that ultimately, a middle class lifestyle needs to be funded.
My premise is that it cannot be funded by borrowing from the rich.

You may have been raised middle class, but if you can't afford it yourself, you are in effect the nouveau pauvre.
This is just a reflection of wealth transfer back to the rich. We could let this continue until the middle classes are all back to living in hovels and starving where some people think they belong, or we could use legislation to reverse the trend in society where wealth inequality is increasing. Its a choice.

My figures will not be relevant to people without children.
yet in the past, in the good times, the average middle class family had more children than it does now. Plus only one wage earner.

Thirty years ago, the middle class used to enjoy major tax benefits. There was mortgage tax relief, worth up to £20k today,
No, this was worth nothing. The day after it was abolished, house prices fell proportionately. All that happened from tax relief was that sellers charged more. Better to have no relief and cheaper houses.

free education at Grammar Schools that today costs someone with two kids £50k a year,
This is a bit deceptive because there are still good state schools, and the way you get into one is by buying a house next to it. OK, this is still a cost, but the middle classes would be buying better houses anyway than the poor, and you could get the money back later by moving again. Its still a middle class perk to get into good schools.

tax free company cars that today cost up to £20k,
yes, this is a tightening up of tax on the middle classes, but it is also true that the real cost of cars is lower than it used to be and goes down annually. A stark contrast to house prices.

and capital gains on trusts including pensions that has cost people perhaps more.
Hmm. These concessions on pensions were a perk in the first place. What has noticeably happened is that the state pension has failed to rise in line with earnings, so that it no longer represents an acceptable proportion of a typicl income. This means someone wishing to maintain their income in retirement has to put much more of their own money into a pension. Falling state pension, equivalent to a tax on the poor/middle classes.

Today you are classified as wealthy, a top rate tax payer if you earn just £40k.
Because it is true! Wealth inequality has increased so much that just the top few percent of people recieve most of the income of the whole country! Its obvious how to fix this, tax the truly rich, but if you are talking about the bulk of society, ordinary people, you are indeed amongst the rich at £40,000. Obviously there are lots of ways to tax the truly rich, but the current governmen, for one, is totally set against this.

This amount will not pay for a middle class lifestyle.
I suggest you look at some foreign countries, where a typical lower middle class UK income would give a fabulous lifestyle. Wealth is not absolute, but relative. if the rich in the Uk were disappeared by magic overnight, then suddenly the buying power of the middle classes would increase but there would no longer be that small number of very wealthy people pushing up prices.

In effect, only maybe 2% of the UK can afford the old Middle class lifestyle. The Upper Middle class are the new Middle Class.
Partly this is a numbers game, since the old smaller middle class was wealthy in comparison to the much bigger poorer working class. As the working class has become middle class, so the money has been spread thinner but also so there are fewer and fewer poor people to look down on and give you that sense of satisfaction. But also, as I said, the rich have been grabbing a bigger proportion of the total wealth for themselves rather than it being redistributed to finance this growing middle.

you ask where the money has gone...the rest has been wasted in expensive government.
see my last post.

When government takes money, it makes some people a lot poorer than it makes others wealthier.
I disagree. The government employs a lot of people who would otherwise be jobless. (by your argument government is inefficient and emloying people unnecessarily is what inefficiency means. We also have permanent unemployment, so its not as if there is anything else for them to do. I do not accept private industry has been starved of investment money or workforce thereby preventing it growing. It has grown as much as it could. At the very worst government has simply provided makework to keep the unemployed busy, but I do not actually accept either that it is especially ineficient or that most of what it does could simply be not done.)

I think that the challenge is to find a better way to redistribute wealth, but I definitely do not think that it should be through direct taxation.
Then what? Charity from the rich? That certainly did not work when we tried it before. Cooperative ownership? We used to have some of that in the finacial sector, in fact left over from the times when the state did not intervene nearly so much, but in recent decades the governmen has abolished much of it.

somewhere between the current level and them50% that Euro Govs take is the slippery slope of no coming back.
No. Government money does not disappear, it goes back to the people. So no money whatsoever is taken from the people however much they are taxed.Government intervention is all gain for society.
 

Fuzzy_

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Fuzzy wonders how many middle-class members on this site enjoy paying extra taxes for corporate welfare when corporate profits are at an all-time high.

Fuzzy fails to see how this trickle-down thing works. Take Wal-mart, for example. They get over $1 billion in annual government subsidies, yet they are one of the most profitable businesses in the world. Most of their employees make poverty wages. That money is not "trickling down" to their employees. It may be creating more jobs, but this really only expands the working class and creates a larger divide between the rich and poor.
 
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KTF40

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Yes, let's cut off grandma's social security, get rid of cops and fire departments, let's tell people they will have to let their child with cerebral palsy rot in his bed because there is no money to pay for his proper care, in fact, all programs for poor kids are just too expensive for us to pay for so the next generation is just SOL.

Oh, and hey, thanks for keeping us safe and doing that bit in Afganistan, sorry you lost your legs. Sucks for you now cuz we can't afford to pay for you.

What a great plan.

You're the only person who has ever mentioned a plan of that nature.

Also, you don't need to begin off your post with "Yes..." as if there is some sort of agreement between you and I. There is none.
 

h0neymustard

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Ah, the fear routine. Make the people think the other guy is going to cut teachers and police and throw granny into a woodchipper. Common tactic of the Democrats.
 

KTF40

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That's the scary part. Romney won't mention a plan of that nature, even as he promotes one.
Of that nature? What plan has Romney promoted or supported that in any way "cuts off grandma's social security"? Please tell me.

As both Romney stated and Obama tacitly agreed during the first debate, neither candidate has any plan that would do such a thing.

Ah, the fear routine. Make the people think the other guy is going to cut teachers and police and throw granny into a woodchipper. Common tactic of the Democrats.

The truth. Any time someone mentions entitlement reform, you know address the issue of the main drivers of our deficits and debt, you got someone on the extreme left out there to demagogue the issue. What klingsnor and srdude007 just stated are outright lies.