Saturday, 12 May 2012

Not Understanding the Deficit

There's a statistic doing the rounds in Lefty circles at the moment and is being promoted by my Occupy "friends". It originates from the Michael Meacher letter in the Guardian that I blogged about the other day:

The richest 1,000 persons, just 0.005% of the adult population, increased their wealth by £155bn over the last three years. That is enough for themselves alone to pay off the entire budget deficit and still leave them with £30bn to spare.

The Left don't seem to get the deficit; it's the difference between what the government spends and what it collects in taxes each year, with the former being greater than the latter. The options to reduce or clear it are to increase tax revenue, cut spending, or a combination thereof, and with the deficit being an annual thing, this must be repeatable - one-offs are no good because your deficit will return the following year. You would have to achieve what Meacher describes above every year for it to be zero, that is to say taxing the richest at a rate of over 80% on all gains over the past three years every year. I see a flaw here...

1 comment:

  1. Meacher is an idiot. He hasn't calculated the increase in value of the richest 1,000 persons from 2009-12. Instead he's compared the wealth owned by the richest 1,000 persons in 2009 to the wealth owned by the richest 1,000 persons today. Because those two populations aren't the same (although some of the people are shared), his statistic doesn't tell us what he thinks it does.

    As further proof, imagine that there's a huge influx of French billionaires if Hollande introduces his 75% tax rate. No doubt Meacher and his jealous lefty friends will use that as evidence that "the rich" are stealing even more of the nation's wealth.