Poor people! Stop paying taxes!
Who gains from a system where we pay tax, then get some of the money back in benefits, and then pay tax on the benefits? The answer, obviously, is the bureaucracy responsible for its administration. Everyone else is worse off. Work is disincentivised, time that might have been spent productively is taken up with form-filling, the economy as a whole suffers.
The tax system has grown more and more complex, encrusted with a bewildering range of credits, allowances, subsidies and dispensations. Of these, the most confusingly named are 'tax credits' which are, in reality, simply a form of cash entitlement that can be paid directly into your bank account. They are not connected with taxed earnings, real or notional: see, for example, this official table on eligibility.
The Independent reports that poor people will be worse off, because the cuts in their income tax will be more than offset by the reduction in these 'tax credits'. Surely, though, the poorest should be taken out of tax altogether – one of the better Lib Dem commitments. Such a reform, more than almost any other change to the welfare system, would help rescue people from the squalor of dependency. As JFK used to say, the best way out of poverty is a secure job.
Instead of circulating the money round and round, let low earners keep it in the first place, so that low paid work is substantially more rewarding than welfare payments. Bizarrely, because of the way we measure these things, such a reform would be judged 'regressive' on the metrics used by the BBC and the poverty lobby – see here. In reality, though, it's the best thing we could do for the low paid.
So long and thanks for all the clicks
November 30th, 2014 22:43
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Wrong then, wrong now. Why do we keep listening to the Euro-fanatics?
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