Umm, don\’t think so really

Evidence from the Institute for Fiscal Studies suggests the state would make considerable savings by raising the minimum wage – as every extra pound earned is knocked off the bill for tax credits.

Two thoughts for Polly.

1) While it is indeed true that some people do lose benefits pound for pound as their incomes rise this is a conbination of benefits and taxes, not just tax credits themselves. And even then the number is fairly small….some hundreds of thousands (as opposed to some millions who lose 60 p out of each extra pound).

2) If this were true this would indicate that the working poor faced 100% marginal tax rates. Which would be rather a useful explanation of why it\’s so damn hard to work your way out of poverty in the UK. And it is true for some (those hundreds of thousands) but not for all…..but even so, it\’s an example of the problems with Brown\’s tax credit system, not an example of anything else.

4 thoughts on “Umm, don\’t think so really”

  1. The obvious solution is to change the tax code of anyone eligible for tax credits so they dont pay the tax in the first place.

    Simple.

    Any admin costs stay where they are on the collection side, dispensing with the whole tiresome treadmill of having people request a tax credit and then getting it back later.

  2. The minimum wage is the state insisting that somebody else pay somebody something, (though not yet refusing them the option of firing them).

    I would make significant savings if the state mandated that somebody else had to pay my electricity bill.

  3. If the minimum wage was £50 an hour the vast majority would be better off, tax receipts would be sky high, the defecit would be eliminated and debt would be reducing. I wonder why the goverment doesn’t do that? Polly? Hello! Polly you there?

    She’s an idiot, and under the new govt her idiocy will become ever clearer to all.

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