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Comment by incomingpain | Hacker News Reader

I havent checked on UK in awhile. Lets look at it together. objective observer pov.

GDP growth: basically 0% for years. You're stagnating and losing economic time. Bad news.

Unemployment looks to be rising but overall not terrible. Participation rate seems high, grandma and grandpa still working it seems?

Interest rate of 4.5% is rough. Housing is problematic.

Balance of trade is negative, you're getting poorer.

Govt debt to gdp is up against the 100% barrier. Looking at central bank balance sheet, it does look like you just avoided bankruptcy.

Consumer confidence hasnt been positive in 10 years.

corporate tax rate of 25%? personal income tax of 45%. sales tax of 20% Yikes.

Seems to me the UK government is holding the economy back with far too high taxes.

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> Govt debt to gdp is up against the 100% barrier. Looking at central bank balance sheet, it does look like you just avoided bankruptcy.

A country cannot go bankrupt. After the war the debt to gdp ratio was 250%, and from that position the government nationalised 20% of industry, built houses, create the NHS and welfare state and developed a nuclear programme.

> corporate tax rate of 25%

on profit yes, but if you are big enough you declare as little profit as possible.

> personal income tax of 45%

that's the highest band there is, payable only on income over £125,140

> sales tax of 20% Yikes.

well it's a tax on added value on every step thorough the retail chain, collectable by the end retailer. It's zero rate on food and child clothes and some other things.

Taxes are indeed on the wrong places in many cases: e.g. dividend tax on unearned income should be equalised with income tax, income tax thresholds should be increased in line with inflation / wages and not frozen as they currently are. but I don't think overall tax burden is the issue here.

>A country cannot go bankrupt. After the war the debt to gdp ratio was 250%, and from that position the government nationalised 20% of industry, built houses, create the NHS and welfare state and developed a nuclear programme.

Correct that there isn't a bankruptcy legislation, but there's a factor of cant pay the creditors and you just stop. Which mostly implies that retirees go back to work.

If you'd like to invent a new word for it, fine but bankrupt is what many western countries are right now.

>but I don't think overall tax burden is the issue here.

This is without talking about property, tv, etc taxes. The total tax burden is probably over 100% and you're feeding people into specific tax free things like food. Definitely total tax burden problem.

The problem comes up against thermodynamics. The longer you run taxes at these high levels, the worse things get. That includes roads and everything. Even though in theory taxation should at least maintain those things. So your country becomes poorer and poorer. Not sustainable.

> but there's a factor of cant pay the creditors and you just stop

in the UK case then £895 of the debt is owned directly by the bank of England. So in the case of about 1/3rd of the debt the 'creditor' is your own central bank.

The government can of course pay interest on gilts by simply issuing more gilts. It's one of the advantages of running a country, intergeneration debt.

> The total tax burden is probably over 100%

Compared to what? income? capital gains? GDP?

total tax in UK through all taxes is 36.1% of GDP.

Taxes are not high in historical terms. USA for example had much higher tax rates (90% top income tax band) while it was arguably undergoing its phase of highest development.

Roads (and everything) get worse if governments do not invest in roads, or they invest in roads, but have outsourced to multiple layers of contractors who end up extracting a lot of the investment in profit and squeezing of labour costs and not in quality of road building.

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