Looks like you cannot do the joined up bit:
with a commensurate reduction in the income tax and national insurance paid by people with low earnings.
Yes, absolutely, a proposal orginally from the Adam Smith Institute and one then taken up by UKIP.
It is indeed appalling that those on, for example, the minimum wage less than full time are forced to pay income tax. We should quite naturally, set the full time full year minimum wage at the same level as the income tax allowance. Or if you prefer, the other way around. That the allowance is set at the minimum wage.
Do note please, the support of froth mouthed neo-liberals for this.
But here\’s the joined up bit that you\’re not getting:
The government should set a target of 0.5% per year for reducing the Gini coefficient – the measure of income inequality – in the UK. To this end it should raise the minimum wage by inflation plus 5% each year until it reaches the level identified by the Living Wage campaign.
Apologies, but the Gini is determined by post tax, post benefit numbers. And, as we\’ve noted, those working poor do get taxed. Which means that the operation of the tax system itself increases the Gini.
Note also, please, that the \”Living Wage\” number is a pre-tax one. It is derived from the Joseph Rowntree Foundation research into (as fully supported by the Adam Smith Institute, on the basis of the linen shirt example that Ol\’ Adam himself used) what is perceived to be poverty.
And, you know, the amazing thing is that, when you take that pre-tax Living Wage and subject it to taxation, it\’s the same as the minimum wage if it didn\’t pay tax. No, really, the £13,900 (I think that\’s right for this year) Living Wage is the same as the £11,800 (ish, think that\’s right for this year) minimum wage if the State didn\’t take so much damn money off those working poor.
Which means, of course, that if we just reduced the income tax and national insurance paid by those working poor then we would already have reduced the Gini and also have achieved the Living Wage.
Joined up George, joined up. We only have to do one of the two. And stopping the State\’s depredations on the working poor seems the easier one really.
As to the other bits, please do wake up.
On earnings of up to £844 a week, you currently pay 11% national insurance. On earnings beyond that point, you pay 1%. We should raise the national insurance rate for higher earnings from 1% to 15%.
No, it\’s generally accepted (even Murphy agrees!) that the workers pay the employers\’ NI as well. Thus NI rates are in fact 25.8% up to the limit, 13.8% after that. And at that top end, 63.8% total tax rate is going to run into some Laffer Curve problems.
The tax gap amounts to between £40bn and £120bn a year. Not all this money can be reclaimed. We need a national target to claw back £25bn a year. Staffing levels at HM Revenue and Customs should be raised accordingly.
I generally warn against taking Richard Murphy\’s calculations as being valid. If that tax gap really be £40 billion (the HMRC number), and , as it does, that includes quite a lot of people and companies who have gone bust, no, we cannot just \”set a target\” for £25 billion to be retreived.
Of the various means of reclaiming money from the banks, a financial transactions tax – the Robin Hood tax – is the fairest and the most sustainable. It\’s easy to collect, hard to avoid and highly progressive, as it falls largely upon the richest people in the country.
No, it ain\’t, blog posts passim. Firstly, transactions taxes are a really bad idea, secondly, it won\’t be progressive it will fall upon everyone who uses the financial system or anyone who buys anything from someone who has used the financial system and finally, it just ain\’t easy to collect. See above about R. Murphy.
by 2020 levies on damage to the environment should amount to 20% of the total tax take,
Why? Green taxes are Pigou Taxes. Pigou Taxes are determined not by how much revenue you want to raise but by the damage that is being done by the things you are taxing. Take, for example, CO2-e emissions. Current tonnages are of the 500 million a year sort of level. From the Stern Review we know that tax should be $80 per tonne. So perhaps 26 billion quid or so. 4% ish of the total tax take. Pigou Taxes, recall, determine an optimal level of tax, not one that we can simply add to if we feel like it.
Greg Philo of Glasgow University has proposed an interesting means of mobilising the money that the very rich have stashed away: transferring the entire national debt to them.
Snigger. So what do we do with next years\’ addition to the debt, having already soaked all the rich once and for all?
As Unison points out, 92% of the cost of employing a public service worker is recouped by the state, because it raises tax revenues while reducing benefit payments.
Sigh, R. Murphy again. I have warned you….