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Would people please stop lying about the living wage

As a recent report by the Joseph Rowntree Foundation (JRF), points out, it isn\’t just fares that are rising. The average family is in a vice. The minimum cost of living has soared by 25% in the past five years as wages have flatlined.

No, it does not describe the minimum cost of living. The living wage describes the cost of living the people think it would be nice that people have. This is, I hope you will be able to note, something rather different.

More formally, the JRF asks focus groups what it is that people should be able to do if they are not to be living in poverty. They then add this up, add tax, and we get a wage necessary for people not to be living in poverty.

Do note that not living in poverty and the minimum necessary to live are wildly different things. Not living in poverty includes the cash to eat out occasionally, purchase a couple of pints one evening a week. I too agree that these are highly desirable things. But not being able to have them means, in the opinion of the people of this country, that you are poor, not that you are below the minimum cost of living.

And yes, this is an important distinction. Between what it would be nice that everyone could have and…..well, what justifies taking someone elses\’ money to provide. I\’m happy enough with the idea that the welfare state should provide a minimum. Enable the kiddies to eat, the babbies to have nappies. That happiness doesn\’t extend to taking money forcibly from person A so that Family B can go to Harvester once a month.

Now, to reach an adequate standard of living, JRF says that a lone parent requires £25,600 a year

Note that this is around median household income. We\’re getting into Lake Woebegon territory here.

That may not seem much to those fortunate enough to earn significantly more than the median salary of £21,583

Significantly above median salary indeed. And there\’s a serious problem with a poverty measure that is actually above that median salary or household income. Ah yes, this is it:

The voluntary living wage is set at £8.55 an hour in London and £7.45 in the rest of the UK. The statutory minimum wage is set at £6.19 an hour for those over 21, due to rise by 12 pence in October.

Knock the tax that must be paid off and that living wage pretty much is the minimum wage. No, really, add the NI,(employers\’ and employees\’) and the income tax that this country, heinously, charges to those on low wages and the difference between the two numbers melts away to pennies per hour. The answer to the whole conundrum is simply to lift the low paid out of the tax net altogether. The personal allowance should be the full year minimum wage. That personal allowance should be for both NI (both types) and income tax. At which point the current minimum wage is that living wage near enough.

So, get on with it, as the ASI, UKIP (unsurprisingly, organisations I am and have been involved with) suggest and as I hear the Lib Dems are going to argue next election.

12 thoughts on “Would people please stop lying about the living wage”

  1. If we were to increase the personal allowance for the low-paid would we not also need to further lower the 40p threshold to make up the shortfall in tax revenues? (or denude the tax base?) This would result in squeezing the 20p and 40p thresholds closer together, would it not?

    Aaah, I think I see where you’re coming from: a flat-rate tax through stealth, yes? 😉

  2. why does everyone who thinks that removing people from paying tax means you’ve got to tax others more. the solution is to collect less tax as well as removing people from paying tax. if the low paid didn’t pay tax then there woukld be no need to collect the tax to pay their tax credits and other benefits.

  3. I might be mis-remembering here but I seem to recall our host saying he would be quite happy for the better off to pay more in order for the working poor to be lifted out of income tax altogether?

  4. @SBML: Exactly.

    We cut spending at the same time. No child or housing benefit. Goodbye to tax credits.

    In short, let people keep their own money and spend it how they choose.

  5. Surreptitious Evil

    Ah, but you have to remember – it is evil and anti-democratic to stop taxing the poor. It deprives them, not of money, but of feeling an inclusive contributor to society.

    Every poor person without exception, if they are taken out of the tax brackets by swinish neo-liberals, will weep, whenever they see a Diversity and Inclusivity Co-ordinator walk past, that their pockets had not been picked to fund the undoubted and glorious good that paragon of civil society brings to us all.

  6. I’m much taken by this argument. However, it’s often been argued that exempting those on low incomes from the tax system is socially exclusive – that is, it disengages them from the underlying social compact of taxation under which we all pay in to a common pool in return for the provision of services which only the state can provide (cf your ASI post of 21 July).

    I don’t have an answer to this one.

    Tim adds: It’s easy enough if you don’t believe in that underlying social compact of taxation. My view is that the scum and turds that float to the top extract what they desire from us: not that our paying taxes gives us control over what they do. I can think of no reason at all for the existence of either diversity advisers nor the Arts Council that does not include a parasitic class making us pay for them: entirely feudal in fact, just as with the King owning all the land because the King had to defend it.

  7. I don’t understand this ‘living wage’ thing. I would have thought a simple test to see if one is earning a living wage is to ask oneself, “self, do I have beri-beri?” If the answer is no then ipso facto you are earning a living wage.

    And one of the most toxic things that Oliver Wendell Holmes ever came out with in his long and illustrious career of being a king-sized shit was that guff about taxes being the price of living in a civilised society. It’s the sort of thing that Murphy has been known to quote (no doubt while playing an energetic frame of pocket billiards) so it’s obviously nonsense.

  8. As KJ says, take low-waged people out of Income Tax altogether and you will denude the tax base. The obvious alternative, which he suggests Tim W has propounded, is to tax the rich more. (But never, ever with Corporation Tax, so the incidence will have to be on rich bastards as individuals).
    The point is that now taxpayers are paying skinflint employers to supplement ruthlessly low wages with working tax credits (since 2003) and hoping to establish a minimum wage (since 1999; both Labour). All this misanthropic chunter about Diversity advisors and the Arts Council is a smoke screen for toe rag employers forcing working people to rely on food bank hand outs and work on zero hours contracts etc when the toe rags are relying on the slightly better off supplementing their workers wages by credits funded by the better-off workers’ payment of tax.
    Also diversity and the Arts are no bad thing.

    All this rather goes to show that ,absent massive democratic pressure the employers will lower wages.
    You mean nineteenth century romantic laissez faire laissez passer does n’t work? Who’d have though it?

  9. @DBC Reed ‘As KJ says, take low-waged people out of Income Tax altogether and you will denude the tax base. ‘

    Oh no! The horror! Then we would… what? Have to start spending less?

    The great thing about not taking tax off people who can’t actually afford to pay it, for the purpose of subsidising fat lesbian outreach workers and the like, is that you then have to come after everyone else for the cash, and eventually even comfortable Guardian readers will start squealing.

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