Sounds sensible enough

If we want to help people, particularly those on lower incomes, we should set the basic tax allowance at the minimum wage, and allow it to be transferred.

I would note that I\’m only, historically, responsible for half that argument.

13 thoughts on “Sounds sensible enough”

  1. Re. the second half, I gather the French tax /household/ rather than individual income. If one were to combine that with a per-dependent-adult/per-dependent-child allowance, that would seem to me to be quite a fair system.

  2. Yeah, I still don’t get why we allot benefits on a household basis but shrink in horror from the notion of taxing on a household basis.

    I mean, I get it /politically/, but at a theoretical level it is clearly nonsensical.

  3. To tax on a household level we have to do a bit more intruding than people like (what’s a household, are you two/>two sharing a bed, what about kids, does granny count…)? If you want benefits you jhave to put up with state prodnoses anyway so it’s less of an issue.

    Plus, the entire UK, if the citizens were not complete sheep, could set up as “one” household, and we’d effectively have a flat tax.

  4. Individual taxation is all about the wife not having to tell her husband what her income is so that he can fill in his tax return and household-income-based benefits is to avoid giving anything to households where the husband earns enough to provide for his family and the wife chooses to look after the kids instead of getting paid to be bored.
    After getting that out of the way, now can I say that the tax allowance should be set at the *median* income (preferably household income) – only those who have income surplus to their needs should pay tax on it.

  5. “only those who have income surplus to their needs should pay tax on it.”

    I’m supposedly rich but I don’t have income surplus to my needs. I need to fly first class but often can only afford business class, I need a Bentley but can only afford a Range Rover Sport and sometimes slum it in 4 star accommodation. If the government didn’t take half of what I earn and give it to people who haven’t earnt it I’d be able to satisfy more of my needs.

  6. Why not allow voluntary aggregation? Tax people as individuals, as now, but permit those who are married (or in civil partnerships etc) to jointly elect for joint taxation, with a single tax return with all the allowances available to the two spouses?

    That simplifies things, doesn’t impose any obligations on anyone, and brings income tax into a similar situation to capital gains and inheritance tax (both of which treat couples as essentially a single entity).

    If you tie it to formal couples you piggy-back the qualification for it on a recognised existing set of regulations, thus saving a whole load of tax-specific rules. And if you want to, you can claim that this is a tax relief to promote settled family life 🙂

  7. Potarto: Americans have definitions of “family” encoded into who and how you can aggregate. Pellinor is proposing completely voluntary aggregation – two or more people decide to pool resources, so pool their tax exemptions.

    So yes, if you live with and support your penniless granny, you and she can choose to transfer her exemptions to you.

  8. Because we already have that as a defined legal relationship, and it already treats two married people as a single entity for other tax purposes.

    I’d not extend it to penniless grannies as Sam suggests, as that widens the scope of the relief considerably, and unless you added a load of restrictions on who can aggregate with whom you’d end up with possibilities for abuse. Adding restrictions makes life more complicated, and adding a category of relationship which overlaps with but isn’t the same as the inheritance/capital gains position is doubly so (and such mismatches often open up scope for abuse).

    For example, if we say all you need to do is live together: student leaves university, gets a job, signs up a house-mate who hasn’t got a job yet as tax-relief-sharer: so student 1 pays less tax because student 2 hasn’t got a job. I can’t see a good policy reason for allowing that.

    I also generally like tax provisions to reflect something in the real world. The question “Why should A and B be treated for tax purposes as being particularly closely linked?” can be answered well by saying “Because they’re married, and that’s a particularly close link”; but not so well by saying “Because they feel like it”.

    Anyway, I’m talking about marriage/civil partnership, and that’s not the same thing as having sex 😉

  9. Er, Pellinor, you could say because they are held to be responsible for supporting one another (and children, if any) financially – wives can get a maintenance order if husbands swan off to London to get a job.


  10. For example, if we say all you need to do is live together: student leaves university, gets a job, signs up a house-mate who hasn’t got a job yet as tax-relief-sharer: so student 1 pays less tax because student 2 hasn’t got a job. I can’t see a good policy reason for allowing that.

    Well, yes, but student 2 wouldn’t be able to claim any benefits based on his lack of income, because he has declared that he shares finances with student 1.

  11. John77 – I could do, yes 🙂

    Sam – it depends on how the system is set up. I was just talking about tax, and hadn’t brought benefits in there at all. What is it about “Student 1 can use my tax personal allowance” that requires “therefore all our finances are inextricably bound up together and so I can’t claim any benefits”?

Leave a Reply

Your email address will not be published. Required fields are marked *