As the Telegraph noted this weekend:
While Chancellor George Osborne insists benefit reforms are designed to help hard-working families, new rules which take effect on Saturday will mean that some of the poorest people in the country pay marginal rates of tax that are half as high again as those paid by millionaires.
Many on the minimum wage will be left with just 27p in each additional pound they earn.
Except they got that wrong. As Paul Lewis has shown, the likely tax rate is 81%. And it may be higher when council tax charges and graduate payments are taken into account.
But apparently the 50p tax rate was a disincentive to work.
The idea that there is one rule for the rich and another for everyone else is well rooted in fact.
It is indeed an absolute scandal that marginal tax and benefit withdrawal rates are so high on the working poor. It\’s an entirely disgusting factor of our current society.
Indeed, under the Brown Terror there were several millions of poor families who faced over 60% rates, several hundred thousands over 80% rates and some unfortunates who faced rates of over 100%. The numbers are recorded in the various budgets actually.
There is a solution of course: raise the personal allowance for income tax. This means that the interplay between income tax being charged and benefits being withdrawn is at least lessened. And what has the current, Osborne, Terror been doing? Raising the personal allowance. As we disgusting neoliberal capitalist running pig dogs at the ASI hve been shouting should be done for years now.
You know, this policy that Ritchie himself vehemently opposes?
It does seem pretty simple though, doesn\’t it? If marginal tax rates on the working poor are too high then lower taxes on the working poor? Makes some sort of logical sense, no?