ESRI says we need more "progressive" taxes lol

ThunbergsAreGo

suicide_circus wrote: »

Did he actually say that?

Was on The Stand podcast

KyussB

View wrote: »

No the ECB did not do that.

Individual governments in the Eurozone do not have the legal authority to print money, so no government can operate a “printing press” model (on an individual basis).

Zero-to-negative interest bonds are pretty much a license to print money.

suicide_circus

ThunbergsAreGo wrote: »

Was on The Stand podcast

Sinister.

timmyntc

KyussB wrote: »

Zero-to-negative interest bonds are pretty much a license to print money.

These bonds are only worth anything if someone buys them. The principal buyer of 0% or negative bonds is the ECB which is currently providing stimulus during COVID crisis.

It is not a license to print money by individual governments.

KyussB

Bonds are as good as money. Them being bought is never in question, only their rate, as we're not going back to Euro crisis times. The ECB has been providing stimulus for half a decade, not starting during Covid.

Government bonds at low-to-negative rates are a license to print money, effectively.

B2021M

View wrote: »

A flat tax is by definition unfair since it would mean that the poorer pay disproportionately for the services that all citizens get. That is why countries use, or aspire to use, progressive taxes.

As for the latter point, that’s a “how much should we spend?” question, which, as I pointed out, is not necessarily linked to the “how do we collect the taxes?” question as you can have high government expenditure while having a highly regressive tax system.

How do the poor pay disproportionately with a flat tax?

fliball123

KyussB wrote: »

Bonds are as good as money. Them being bought is never in question, only their rate, as we're not going back to Euro crisis times. The ECB has been providing stimulus for half a decade, not starting during Covid.

Government bonds at low-to-negative rates are a license to print money, effectively.

Yet we are not in control of the printer. This has been pointed out to you again and again and as soon as corona is over and it no longer serves the needs of Germany and France and other larger populated countries in the EU it will be turned off. We will see how Germany react when Ireland are saying keep that printer going and then looking at our welfare, coronation tax and public sector rates, we will laughed out of it

timmyntc

KyussB wrote: »

Bonds are as good as money. Them being bought is never in question, only their rate, as we're not going back to Euro crisis times. The ECB has been providing stimulus for half a decade, not starting during Covid.

Government bonds at low-to-negative rates are a license to print money, effectively.

No, they are a license to borrow money. The ECBs borrowings are not dependent on the issuing of bonds by member states, but they do use their borrowings to buy said bonds.

Even bonds at negative rates will eventually need to be refinanced, and at that stage they likely will no longer be at negative rates and just become regular serviceable debts.

View

B2021M wrote: »

How do the poor pay disproportionately with a flat tax?

Disproportionately as in disproportionately to a person’s income.

Paying €30,000 in a flat tax will disproportionately hurt you a lot more if your income is €40,000 than if it is €400,000.

Believe it or not, but some countries even levy fines, speeding tickets etc based on annual income which resulted in one dot.com multi-millionaire in Finland getting a speeding fine one year of several hundred thousand Euro (admittedly it was his third offence that year). :-)

KyussB

We don't need direct control of the 'printer'. Right now government bonds give us extensive indirect access. No individual EU country controls the ECB - it's not being 'turned off' until the EU wide economy reaches full recovery - because that's how ECB policy works.

Refinancing is only an issue of servicing costs - by keeping GDP growth maximized, which also bolsters tax intake (with both GDP and tax intake compounding in growth through maximizing this) - we have pretty much no problem with any debt servicing costs.

The only cost is leaving the economy below maximum GDP - that's a direct costs of multiple tens of billions to the economy every year, at minimum - debt servicing costs never get anywhere near that.

View

KyussB wrote: »

Bonds are as good as money. Them being bought is never in question, only their rate, as we're not going back to Euro crisis times. The ECB has been providing stimulus for half a decade, not starting during Covid.

Government bonds at low-to-negative rates are a license to print money, effectively.

Being able to borrow at low-to-negative rates is not a license to print money. It may be tempting to do so, but unless that is being for prudent reasons, or reversed pretty sharply at some point, it will inevitably lead to disaster as the Greeks discovered when rates spiked and government revenues plummeted.

fliball123

KyussB wrote: »

We don't need direct control of the 'printer'. Right now government bonds give us extensive indirect access. No individual EU country controls the ECB - it's not being 'turned off' until the EU wide economy reaches full recovery - because that's how ECB policy works.

Refinancing is only an issue of servicing costs - by keeping GDP growth maximized, which also bolsters tax intake (with both GDP and tax intake compounding in growth through maximizing this) - we have pretty much no problem with any debt servicing costs.

The only cost is leaving the economy below maximum GDP - that's a direct costs of multiple tens of billions to the economy every year, at minimum - debt servicing costs never get anywhere near that.

Lets see how that works when their is a threat to inflation and/or interest rates.

Remember we will be taking a good hammering in our corporation tax over the next few years with the ERSI tax changes. Also an increase in income tax IMO will be the straw that breaks the camels back. Lots of high tax payers with jobs that can be done remotely will not stay. It will also force workers to deal more and more into the black market Add in we will be losing a lot of younger workers due to the housing issue.

We have been lucky that we could roll over our existing debt on the new rates and our repayments actually went down over the last few years. Problem is we are paying historically low interest and as Yazz used to sing about "the only way is up , baby"

Add in we already need another 17Billion this year on top of existing debt and that is before ps payrises, the housing problem and our cut in income from corporation taxes. If our ecconomy does not come out like a house on fire when corona is gone then the we will grow our way out will not work.

Do you think the lads with the printer will ignore our corporation tax rates, our welfare rates and our public sector pay rates which are very very very generous and say yeah lets just keep printing who cares if our cost of living or interest rates go up.

KyussB

View wrote: »

Being able to borrow at low-to-negative rates is not a license to print money. It may be tempting to do so, but unless that is being for prudent reasons, or reversed pretty sharply at some point, it will inevitably lead to disaster as the Greeks discovered when rates spiked and government revenues plummeted.

Right now with the ECB's policies, it is...

The rate on the existing stock of debt doesn't spike, don't know where you're getting that from - the existing stock of debt has a fixed rate.

The ECB is not allowing another Euro crisis - the days of interest rate spikes, due to the threat of Euro disintegration, are over - why on earth would the ECB allow such a crisis to occur again? They have all the power they need to prevent it, now - unlike before.

fliball123

KyussB wrote: »

Right now with the ECB's policies, it is...

The rate on the existing stock of debt doesn't spike, don't know where you're getting that from - the existing stock of debt has a fixed rate.

The ECB is not allowing another Euro crisis - the days of interest rate spikes, due to the threat of Euro disintegration, are over - why on earth would the ECB allow such a crisis to occur again? They have all the power they need to prevent it, now - unlike before.

You do know the existing debt will be rolled over at the going interest rate at some point in the future??

blanch152

KyussB wrote: »

Bonds are as good as money. Them being bought is never in question, only their rate, as we're not going back to Euro crisis times. The ECB has been providing stimulus for half a decade, not starting during Covid.

Government bonds at low-to-negative rates are a license to print money, effectively.

That is only true if they are perpetual bonds, never having to be paid back.

KyussB

fliball123 wrote: »

Lets see how that works when their is a threat to inflation and/or interest rates.

Remember we will be taking a good hammering in our corporation tax over the next few years with the ERSI tax changes. Also an increase in income tax IMO will be the straw that breaks the camels back. Lots of high tax payers with jobs that can be done remotely will not stay. It will also force workers to deal more and more into the black market Add in we will be losing a lot of younger workers due to the housing issue.

We have been lucky that we could roll over our existing debt on the new rates and our repayments actually went down over the last few years. Problem is we are paying historically low interest and as Yazz used to sing about "the only way is up , baby"

Add in we already need another 17Billion this year on top of existing debt and that is before ps payrises, the housing problem and our cut in income from corporation taxes. If our ecconomy does not come out like a house on fire when corona is gone then the we will grow our way out will not work.

Do you think the lads with the printer will ignore our corporation tax rates, our welfare rates and our public sector pay rates which are very very very generous and say yeah lets just keep printing who cares if our cost of living or interest rates go up.

The ECB controls the interest rates, and the ECB doesn't hike rates until the EU wide economy reaches economic recovery (thus triggering inflation) - and when we are recovered, we don't need to be taking advantage of that ability anymore as we're fully recovered...

ECB policy, use of government bonds, interest rates, and inflation - they are all linked, and operate in a harmonious way through the economy cycle - with more room for bonds/spending in downturns, with that tightening up after recovery (at which point further bond issuance isn't needed anyway).

Europe is at least half a decade away from economic recovery at present, so I don't see where you're getting the idea rates will increase anytime soon.

Where are you getting the idea that the ECB has any say in corporate tax? No individual country controls the ECB, nobody is going to tell them what to or not to do.

KyussB

fliball123 wrote: »

You do know the existing debt will be rolled over at the going interest rate at some point in the future??

All debt roll overs are spread out over time - we don't roll over the entire stock of government bonds at once - and high interest rate periods are blips, and we are able to structure bonds with terms that allow us to roll them over early so that the bonds during high-interest blips can be replaced with low interest bonds.

The Euro Crisis days are over - the ECB's current powers prevent us ever going back to that - so I don't know why you are taking about bonds as if they still work like in that period.

KyussB

blanch152 wrote: »

That is only true if they are perpetual bonds, never having to be paid back.

I'm not saying it's directly the same. When you combine it with the fact that Public Debt is rolled over forever, and that the true cost is only the servicing cost - then it's pretty close to being a license to print, only with an added servicing cost (with that servicing cost being far less than the benefit from the GDP boost).

timmyntc

KyussB wrote: »

I'm not saying it's directly the same. When you combine it with the fact that Public Debt is rolled over forever, and that the true cost is only the servicing cost - then it's pretty close to being a license to print, only with an added servicing cost (with that servicing cost being far less than the benefit from the GDP boost).

But its not a license to print. You aren't getting free money, you are getting free debt. The debt is speculative - you borrow on the assumption that you will grow your GDP and ability to service. That isn't a guarantee though. That is the difference between debt and money. And it is a big one.

fliball123

KyussB wrote: »

The ECB controls the interest rates, and the ECB doesn't hike rates until the EU wide economy reaches economic recovery (thus triggering inflation) - and when we are recovered, we don't need to be taking advantage of that ability anymore as we're fully recovered...

ECB policy, use of government bonds, interest rates, and inflation - they are all linked, and operate in a harmonious way through the economy cycle - with more room for bonds/spending in downturns, with that tightening up after recovery (at which point further bond issuance isn't needed anyway).

Europe is at least half a decade away from economic recovery at present, so I don't see where you're getting the idea rates will increase anytime soon.

Where are you getting the idea that the ECB has any say in corporate tax? No individual country controls the ECB, nobody is going to tell them what to or not to do.

And how long do you think a recovered Germany or France or any other country in the EU will play ball. Do you think Ireland can dictate policy to the rest of the EU? The interest rates will rise when its good for the EU in general and not because a small country who have decided to keep stupid policies in place and want more money printed to pay for such policies. I cant see the rest of the EU signing up for that one. The ECB are already on record as saying they want inflation and that will rise interest rates remember we are in stimulus mode due to corona. This is going to end soon. We are a very small % of the population in the EU and once things start getting more expensive due to inflation that is when the printers will be turned off as well interest rising. Now it may not happen for a few years but to kid yourself that the current situation can go on indefinitely is complete denial.

I never said ECB has any role in corporation taxes.

fliball123

KyussB wrote: »

All debt roll overs are spread out over time - we don't roll over the entire stock of government bonds at once - and high interest rate periods are blips, and we are able to structure bonds with terms that allow us to roll them over early so that the bonds during high-interest blips can be replaced with low interest bonds.

The Euro Crisis days are over - the ECB's current powers prevent us ever going back to that - so I don't know why you are taking about bonds as if they still work like in that period.

True but the point is it does gets rolled over in the future all of it even if its spread out over 10 years. So do you think interests which are at 0% have more of a likelihood of going up or down in future?

What I am taking about is when things get more expensive in Germany or France due to the value of the Euro dropping due to printing money can you not see a point in time where they will say ok its now 50 Euros for a bottle of water I think it might be time to turn off the printer there. (Analogy a bit overblown but you get the point) At some stage it will be better for the majority of the EU for interest rates to rise and for inflation, both of these actions will have serious consequences for Ireland.

Dyr

I assume the HSE is could be reamed with the mother of all fines by the Data Protection Commisioner...... unless someone in govt has a quiet word.

fliball123

KyussB wrote: »

I'm not saying it's directly the same. When you combine it with the fact that Public Debt is rolled over forever, and that the true cost is only the servicing cost - then it's pretty close to being a license to print, only with an added servicing cost (with that servicing cost being far less than the benefit from the GDP boost).

I would agree with you except for the recent history of the troika coming into town and telling us to get our sh1t together or there will be no more loans. I believe we were in the EU back then. Your also basing our projected GDP on multinationals who pay corporation tax which is going to be reduced severely over the next number of years. Currently a 1% rise in interest means our debt will cost 2.4billion a year more to pay out. Its like we are dealing in monopoly money. I have outlined the current interest rate position in other posts and I cant see it lasting forever even if we can rollover for ever.

KyussB

timmyntc wrote: »

But its not a license to print. You aren't getting free money, you are getting free debt. The debt is speculative - you borrow on the assumption that you will grow your GDP and ability to service. That isn't a guarantee though. That is the difference between debt and money. And it is a big one.

I replied to all of this in the post you're replying to. Government bonds do not operate like Private Debt, either - the dynamic is completely different, due to bonds being rolled over forever.

GDP growth from spending, when below Maximum Output, is a very safe assumption.

fliball123

Bambi wrote: »

I assume the HSE is could be reamed with the mother of all fines by the Data Protection Commisioner...... unless someone in govt has a quiet word.

I thought there were hiring Laimo Neesen to go in and get our data back.

timmyntc

KyussB wrote: »

I replied to all of this in the post you're replying to. Government bonds do not operate like Private Debt, either - the dynamic is completely different, due to bonds being rolled over forever.

GDP growth from spending, when below Maximum Output, is a very safe assumption.

Yes and bonds are rolled over and serviced which costs money. it is not free.

GDP growth from spending is not a certainty. Just ask Greece or Italy.

fliball123

KyussB wrote: »

I replied to all of this in the post you're replying to. Government bonds do not operate like Private Debt, either - the dynamic is completely different, due to bonds being rolled over forever.

GDP growth from spending, when below Maximum Output, is a very safe assumption.

You need to look at the differential between GDP and GDI and understand the threat for corporation tax going forward. This lending on the basis of GDP will be severely impacted due to future tax changes.

KyussB

fliball123 wrote: »

And how long do you think a recovered Germany or France or any other country in the EU will play ball. Do you think Ireland can dictate policy to the rest of the EU? The interest rates will rise when its good for the EU in general and not because a small country who have decided to keep stupid policies in place and want more money printed to pay for such policies. I cant see the rest of the EU signing up for that one. The ECB are already on record as saying they want inflation and that will rise interest rates remember we are in stimulus mode due to corona. This is going to end soon. We are a very small % of the population in the EU and once things start getting more expensive due to inflation that is when the printers will be turned off as well interest rising. Now it may not happen for a few years but to kid yourself that the current situation can go on indefinitely is complete denial.

I never said ECB has any role in corporation taxes.

France/Germany don't control the ECB. The EU don't control the interest rates - the ECB does.

If you're worried about interest rates rising later, then that's actually an argument for maximum bond-issuance and spending now - so that we achieve recovery faster.

You do understand that fiscal spending is a key role for stoking inflation - that the ECB have been trying to get fiscal policy based inflation going for half a decade now, because monetary policy is tapped out?

You're looking at only small parts of the economic cycle, instead of looking at the whole cycle: The ECB raising rates is not a bad thing for us, because by then we'll have achieved economy recovery (unless we waste that potential by not spending now...).

The cycle goes:
Economic Slowdown > reduced inflation > reduces interest rates > increased government bonds/spending > economic recovery > increased inflation > increased interest rates > reduced government spending and decreased issuance of bonds > (until the next Economic Slowdown)

What I'm describing is just normal policy as part of the economic cycle - working harmoniously with the ECB, to use fiscal policy to stoke recovery when monetary policy is tapped out - but you are looking at only disjointed pieces of that cycle, instead of looking at it all as a whole.

KyussB

fliball123 wrote: »

True but the point is it does gets rolled over in the future all of it even if its spread out over 10 years. So do you think interests which are at 0% have more of a likelihood of going up or down in future?

What I am taking about is when things get more expensive in Germany or France due to the value of the Euro dropping due to printing money can you not see a point in time where they will say ok its now 50 Euros for a bottle of water I think it might be time to turn off the printer there. (Analogy a bit overblown but you get the point) At some stage it will be better for the majority of the EU for interest rates to rise and for inflation, both of these actions will have serious consequences for Ireland.

Interest rates will go up and down with the economic cycle - economic growth and tax income growth from that outstrips debt servicing costs, especially if you keep GDP maximized.

Only the debt servicing costs matter. Debt rollover effects on debt servicing cost, are eclipsed by the amount of money generated by keeping economic growth maximized.

Unless Ireland is spending money in France/Germany, our spending isn't going to affect their prices. Spending that leads to economic growth isn't inherently inflationary - spending when at Maximum GDP is inherently inflationary.

KyussB

fliball123 wrote: »

I would agree with you except for the recent history of the troika coming into town and telling us to get our sh1t together or there will be no more loans. I believe we were in the EU back then. Your also basing our projected GDP on multinationals who pay corporation tax which is going to be reduced severely over the next number of years. Currently a 1% rise in interest means our debt will cost 2.4billion a year more to pay out. Its like we are dealing in monopoly money. I have outlined the current interest rate position in other posts and I cant see it lasting forever even if we can rollover for ever.

I don't know how you see the ECB in that day, as the same as the "whatever it takes" QE ECB of today. The ECB has the firepower to stop that ever happening again, and is now ready to use it - and if they don't use it when the time comes, that will lead to a fresh Euro Crisis and will collapse countries economically, pushing countries out of the Eurozone - which wouldn't make any sense for the ECB to do.

Take GNI* as a figure instead of GDP if worried about multinationals. Current interest rates don't need to last forever - focus on the debt servicing cost vs the cost of leaving GDP below Full Output.