Fewer “young mums paying back 96 pence” than under Conservatives

RT @leftfootfwd: Fewer "young mums paying back 96 pence" than under Conservatives – 'marginal deduction rates' explained http://bit.ly/EM0Vf

So is it ok then? After 12 years of Government? Forget the Tories – is this situation one Labour should be proud of? Just because it was worse under the Tories 12 years ago????? It seems to me that nit-picking at every line and sniping about every comment is not very constructive, and even rather childish. Tony Blair promised the world in 1997, and I don’t think I will ever be as disappointed in a politician again, because, sadly, he killed off any trust and enthusiasm for me. The debacle in Iraq killed of Labour for me anyway.

Jess – It’s not OK and I never suggested otherwise but marginal deduction rates are an inevitable consequence of a benefits system. Tax credits have helped to address the problem to some extent but there is further to go.

The point, however, and why it is so important to go over Cameron’s speech with a fine toothcomb, is that he got a good soundbite out of it without explaining what he would do to address it. It’s not sniping, it’s holding a potential future PM to account.

Willstraw. Maybe you should have looked a little further. Labour are imposing a 50% income tax on the highest earners. I agree in principle that this is the right thing to do, because we’re all in this together. However, if you aggregate the 2 totals, in 1998 1,980,000 heads of families were paying a marginal rate of 60% or over, whereas in 09/10 2,550,000 low-paid people were paying a marginal rate of 60% or more. Your use of statistics is questionable in that you are attempting to demonstrate that the poorer are better off, whereas there is infact an increase of about 20% in the number of low-paid that are paying a higher rate than the richest. Is this the 10p rate all over again? Your comments wouuld be appreciated over this apparent anomally

@leftfootfwd has the answer http://bit.ly/EM0Vf

Will . . . Hellooooooo!

How about Labours 10p tax abolition which DOUBLED 6 million of the poorest workers tax bill at a stroke.

Did you think we’ve forgotten?

Labour are D E A D come the General Election and deservedly so – not least for involving us in ILLEGAL WARS and INCREASING!!!!! FFS! the gap between their rich Banker friends and the poorest in society.

Is that what Labour were supposed to do when they got in, on a wave of public support in 1997?

WELL?

Got an answer have you?

I may be misunderstanding something basic, and if so apologies, but…

Won’t high marginal tax rates always exist as long as a benefit is means-tested? I mean won’t there always be a point when someone crosses some form of benefit threshold (even if there is tapering) and loses an extra bit of money from the state compared to what they were receiving previously?

If so, I understand we could play around with where the marginal rate falls, but wouldn’t the only way to abolish it forever be to make all benefits universal?

Rich – I think you’ve absolutely nailed this one. The problem is that there will always be marginal deduction rates so long as you have a benefits system that isn’t universal.

Grumpy – I see your point but there’s a difference between a marginal tax rate (ie the income tax we pay on an additional pound earned) and a marginal deduction rate (which is the income tax plus the lost benefits and tax credits when you earn an additional pound). The reason for the higher aggregate number in 2009-10 is because the tax credit system now captures many more families. It can actually be seen as a measure of success since the additional people would not have been helped prior to 1997. Iain Duncan Smith’s recent report is very informative on all this: http://www.centreforsocialjustice.org.uk/default.asp?pageref=266

Silent – Welcome back! It’s always good to have you on here. 10p tax was a disaster and I wish Labour had done more on bankers’ pay before the crash. As to inequality, Left Foot Forward is going to do something on that in the next few days. It went down from 2000-04 but has sadly started rising again. Still, the UK has done much better than other OECD countries. More on this soon.

willstraw. Thanks. So in fact, we still have a system which positively encourages people not to work more, or to work on the Black Market, administered at great cost, and the poorest with a higher marginal rate of tax than the richest. Agreed, an incremental improvement, but using an aspirin to heal a gaping sore. What would raising the personal allowance in incremental steps, so that the poorer you are, the higher your personal allowance, do to the paradigm? In particular, if the bottom 1 million were taken out of the tax system altogether, would that have a noticable impact on the costs of administration?

Found this worthy of re-read after reviewing 96% marginal tax claim in VacuDave's cpc09 speech http://bit.ly/EM0Vf (orig. via @leftfootfwd)