Yet another loon over at Liberal Conspiracy.
My response to him:
\”A single rate for the rest of the country is currently £7.20 per hour. The National Minimum Wage is £5.93 per hour (rising to £6.08 in October).\”
As I never tire of pointing out, the difference between that living wage and the minimum wage is entirely the tax and national insurance that is charged to the poor.
£7.20 an hour, 37.5 hours a week, 52 weeks in the year. £14,040.
Personal allowance, £7475. Thus you pay 20% income tax on 6565, or £1,313.
Lower earnings limit for (employees) NI is £97 a week. x 52 is 5044. So, on 14,040 minus 5044, or 8996, you pay 11%. £989.
So, your post tax income from your full time work on the living wage is £11,738.
Divide by 52 and 37.5 to give us your hourly post tax rate.
So, raise the personal allowance and NI limit to full time full year minimum wage and, hey presto, everyone who works full time is now on the living wage.
There, wasn\’t that simple? It always surprises me that the living wage campaigners don\’t argue for this more forcefully……
Another way of putting it: the best way to help the working poor is to stop taxing them so bloody much.