It is Obvious

Chris Rick has got altogether too much to say

What was that?

Posted by chrisrick13 on February 23, 2015

It is obvious: I mean what I say

At last the UK media has become aware of the difference between debt and deficit and has made some progress towards educating the population.  Debt is what you owe and deficit is how much you are adding to the debt over a given time period.  There was a time that politicians could mix the terms up to bamboozle the electorate with impunity.  No more.

Another piece of education is taking place today.  A better understanding of the word ‘inflation’ is happening.  Inflation has a complex definition but the simple version we all have in our minds will do.  It is the rate at which the amount of cash needed to buy ‘things’ is increasing by.  I have to be careful with my words because the way inflation is calculated is under constant change.  If I express it in terms of movement then inflation is velocity.  Velocity is made up of speed and direction.  3% inflation means that the speed is 3 and the direction is up.  Just to confuse us the term deflation is used for downwards velocity.  When velocity changes (direction or speed) then acceleration is occurring.  Similarly to completely confuse we use acceleration when speed grows and deceleration when it shrinks.  (What do you call it when just direction is reversed?)  So when inflation decreases by an amount it is not deflation but accelerating inflation (decelerating).  It is still inflation until it reaches zero when we have a naming problem.  Then some acceleration in either direction gives us inflation or deflation.

Are you confused?  Most people are.  Just be aware of inflation and year-on-year (month-on-month) changes in it.

The next great education of recent weeks is the difference between tax avoidance and tax evasion.  The biggest offender is the Labour party.  While these two terms are not clearly defined in most people’s minds they are making publicity out of that fact that is difficult to support when examined.  No matter all the political parties are doing the same in areas of their choosing.

Tax avoidance is the duty of every citizen.  It happens where an entity (usually a person) organises their financial affairs to minimise the amount of tax they pay.  It is legal.  It deters but, alas does not stop, politicians from creating complex tax law that is expensive to enforce.  Suppose every person had to pay 30% tax on every bit of money they received over £15,000 each year and that was it.  (It is not the answer.)  Then there is not much that a person could do to avoid paying the tax.  A few might be able to delay taking the money or cause it to be given to someone else.  But tax would be paid.  Avoidance is difficult and not worth it.

Tax evasion is hiding money from the tax collectors so that no tax is paid.  It is illegal and is punished with fines and jail.  I think that the not so smart people caught should be fined and then returned to society so that they can again generate lots of money and be taxed.

Avoiding tax means that we will build up assets and use that to educate our children and look after ourselves when we get older.  I think that leaving money in the hands of the person is much more efficient than letting a government take it and spend it.  Look at the Irish pension fund.  It had real money in it unlike the UK one.  When the Irish economy collapsed they took the fund to support the banks and put an IOU into the pension fund.  The people with their own pension funds must have been very happy.

It is obvious: I mean what I say and I hope you assume what I mean

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