The idea of earning £10,000 of income tax, as anyone who\’s working will do from next April, sounds utopian in its generosity. For HMRC it\’s the public relations opportunity of a lifetime. Imagine the adverts: your first £10,000 – tax-free! And you don\’t even have to worry about how we\’re going to pay for your denuded public services.
Yet isn\’t the idea of 3 million people working hard and not being required to pay tax a recipe for their disenfranchisement? The Liberal Democrat segment of the coalition is most likely to see a high tax-free allowance, which goes up to £9,440 on 6 April, as a step towards the goal of a \”citizen\’s income\” – a no-strings basic payment from state to individual over and above any earned (and therefore taxable) income.
A fundamental component of citizenship, however, is paying towards the ongoing work of building and maintaining resources for everyone to use.
All inside the State and nothing outside the State.
Let\’s take this argument to its logical conclusion. The existence of any form of personal tax free allowance disenfranchises people. Not that they lose their vote or anything, they just lose that warm glow of contributing to Islingtonian diversity adviser salaries.
Complete cock of course.
Tax is a necessary but painful corollary of having government. And yes, we do need to have that. In a just and righteous world the rich would pay all the taxes to provide the government. This would of course mean that we could only have enough government that the rich could afford to pay for: that\’s where our Laffer Curve comes in. You do get to a tax rate where higher rates bring in less cash. Thus there is a limit to the size of government you can have if the rich are paying for it all.
And as the running dog capitalist pig dog that I am I\’m just fine with the idea that we should tax those on above median incomes at that Laffer Curve peak rate. Which is around that 45% or so of income that the rate is at currently. And then exempt all income below median income (mid £20ks somewhere) from both income tax and NI. Works for me. That there will be fewer Islingtonian diversity advisers is a feature not a bug of the plan. Let\’s have the government that the rich can afford to pay for.
But I\’m afraid that I really do hate this appalling argument that the poor must pay income tax because……well, because all must worship the State I think it is, isn\’t it?
Which leads me to a data request. I cannot immediately see that this is out there via Google. So if anyone is bored, or bedridden or something, would they like to dig around to produce it? Britmouse maybe?
What we want is a plot of median wages against the income tax and NI allowance. The income tax allowance was 50% (or whatever) of median wages in 2008, say, and it was 100% of median wages in 1950 (or whatever, say). And the same for each year post war (that would be enough I think).
For the basic fact of what has happened is that successive Chancellors have used fiscal drag to pull ever more poor people into the tax net. This current rise to £10k, the hoped for rise to £12.5k, this is just remedying the thievery of generations of politicians.
Anyone care to make up that chart?