Clegg first. He pretends that raising income tax thresholds helps the poor most when he knows that of the many billions already spent on this, three-quarters has gone to the upper, not the lower half of earners. He is bidding for another £1bn for raising personal tax allowances that will do virtually nothing for the bottom 30% of earners. He claims this would put £100 on the “average” pay, but the tyranny of averages is makes that misleading. As the Institute for Fiscal Studies (IFS) points out, tax credits and benefits are what most affect the bottom fifth of households, not tax rates. If Clegg sincerely wanted to help the poor, he’d raise their pay or their credits.
I’m afraid that you’re not quite understanding the argument here. It’s one more of morals than anything else.
The State, in its infinite wisdom, declares that there is sum amount of money which is the least amount that can justly be paid for an hour of someone’s time. Leave aside whether it should or not, it does.
Said State then dips its sticky fingers into the pay packets of those who work, even only part time, on this justly determined minimum amount. The working poor are fleeced to pay the Miliboy’s salary and for the job ads in The Guardian that pay Polly’s.
I, along with some others, regard this as immoral. If there is some just amount that no one should earn less than then there is that just amount which someone should earn. Without the upper middle classes that produce our rulers getting a cut of it.
Therefore, and solely therefore, the personal allowance for both income tax and both types of national insurance should be the same as the full year full time minimum wage. With no ifs or buts.
It’s worth noting that this would reduce tax credits paid out, it would make the current minimum wage, post tax, within pennies per hour of the current Living Wage, post tax, it would reduce the appallingly high marginal tax and benefit withdrawal rates that many working poor face. It might also be necessary to rejig other parts of the tax system to compensate for this as well.
But it is, at heart, entirely a moral campaign.
If the government determines that there is a minimum just wage then that government doesn’t get to nick part of that just minimum wage.