Mmmm, Fiscal Drag

The number of people paying the highest level of income tax has almost doubled since Labour came to power, according to recent statistics.

There\’s more than one way to raise taxes you know. Just raise the thresholds in line with price inflation rather than rising earnings (yes, earnings do normally rise faster than inflation, yes, everyone is, in normal times, gradually getting better off) and watch people march into those higher tax brackets.

Thus you can raise the income tax yield without raising the rate.

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