Lib Dem tax policy “fails the fairness test”

RT @leftfootfwd: Lib Dem tax policy "fails the fairness test": only 6% goes to poorest families http://cli.gs/BynM9

Reading @leftfootfwd's case against raising personal allowance http://bit.ly/bCo4V4

Lib Dem tax policy "fails the fairness test" | Left Foot Forward http://bit.ly/9veG2B

Lib Dem tax policy "fails the fairness test" | Left Foot Forward http://bit.ly/9veG2B

Things that the LFF report doesn’t contain:
* any analysis at all of the impact on marginal tax rates (which are a key problem for the working poor in terms of disincentivisation)
* any discussion at all of the enormous deadweight administration costs of the proposed alternative solution, tax credits
* any discussion at all of the fact that tax credits are so complex that millions of people fail to claim them, as opposed to a simple, automatic cut in PAYE that would require no extra work for the individual in question

Not very impressed by @leftfootfwd's report attacking LD plans to raise tax allowance – see my comment at http://bit.ly/bCo4V4

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This post was mentioned on Twitter by leftfootfwd: Lib Dem tax policy “fails the fairness test”: only 6% goes to poorest families http://cli.gs/BynM9...

Who's our biggest personal allowance increase cheerleader? @alixmortimer? http://bit.ly/bCo4V4

@krishgm Why Lib Dem plan to raise tax thresholds increases inequality http://cli.gs/BynM9 … if you have LibDems on, this may be useful

Lib Dem tax policy "fails the fairness test": only 6% goes to poorest families http://cli.gs/BynM9

Is there not an easy solution to this, which is to raise the personal allowance to £10k, but then increase the basic rate of income tax sufficiently to ensure higher rate taxpayers don’t gain? I can’t remember what the figures are but if we’re talking something like £3,500 extra on the allowance at whatever the basis rate is – 20%? – so every higher rate taxpayer is gaining £700, the basic rate needs to rise by something like 2% to offset this. This will also mean all basic rate taxpayers gaining.

I sometimes wonder whether a much higher personal allowance will lead to a lot more tax avoidance, but I have no evidence for that.

John B

Thanks for your comments and critique. I don’t think they address the central point of the paper – which was to assess the impact of the tax threshold change, and which shows that the threshold change is regressive. But they do they raise some interesting points about other parts of the tax and benefits system, outside of the LibDem proposal.

(1) The critique of the LibDem proposal does not depend on any alternative use of the £17 billion it costs.

If £17 billion is available to be used, then there are a limitless number of ways to deploy it, some of which might reduce relative poverty and inequality. The question for LibDems is really “what would you do with £17 billion”. If the best answer is “raise the tax threshold” then that is one major policy – perhaps the costliest any party will have – which isn’t going to reduce inequality or relative poverty. The suggestions of either public spending on pro-poor services, or spending on tax credits, are not exhaustive.

(2) You make some criticisms of tax credits. But what is Liberal Democrat policy on tax credits? I am not an expert, and appreciate any corrections on detail, but here is my understanding.

I think they are proposing that awards should be made for fixed periods of six months, to bring more stability to the system. This sounds to me a good idea, albeit a relatively minor reform, which is sensibly motivated. It could incur some additional costs (where people receieve more for longer), though it could mean some people having to wait longer for support when there was a significant adverse shift in their earnings (though in those cases it would be cheaper). But I don’t think it addresses your points about tax credits.

I am not aware of other substantive proposals to change the distribution of tax credits from the party. I assume this is because Vince Cable, Steve Webb and others are very much aware that, while there are real issues in administration and complexity, these are massively outweighed by their enormous positive redistributionist effects.

Without more significant changes to the benefits and tax credits system, the LibDem raised threshold will have relatively limited effect on issues like marginal tax and benefit withdrawal rates. (I will ask the authors about this: LFF might want to carry something about the detail of that as the discussion continues).

Some others propose tax threshold changes in order to scrap the tax credit system. I stress is not LibDem policy, but is often advocated by right-wing commentatators. One would have to model the distributional impact of that change too. I don’t have the detail. It seems obvious from the distributional impact of tax credits that it would be massively regressive: it would dwarf the impact of the 10p tax rate abolition. It would also be politically very difficult.

David Willetts made this point in 2005, in explaining his opposition to Maurice Saatchi’s proposals. At the time, he states that the £10,000 threshold would have cost £30 billion, because the threshold was then just under £5000. (It would now cost £12 billion less, because the nominal threshold is now much closer to £10k).

http://www.timesonline.co.uk/tol/comment/columnists/guest_contributors/article536372.ece

@johnb78 I have replied to yr critique (http://bit.ly/bCo4V4 ) on LibDem tax threshold & tax credits in the @leftfootfwd thread

Couple of quick points & I’ll read the PDF later, but I think I know what it’ll say. These are what Ben Goldacre calls zombie arguments. No matter how many times you knock them down, they always get up again.

“• the measure would do nothing to help the very poorest, who don’t have income large enough to pay tax;”

This is a dumb argument. It’s like saying “This is an apple and it doesn’t solve the banana shortage, therefore it’s a rubbish apple.” There are dozens of Lib Dem policies that “don’t help the very poorest who don’t earn enough to pay tax”, just like there are dozens of Labour policies that don’t – because they are about other things. This policy is about a fairer tax system. It does what it says on the tin. It will make the tax system fairer and flatter, and in the process it will offer the greatest proportional help to people who pay tax but are nonetheless on low pay.

For people who don’t earn enough to pay tax, we have a little thing called a welfare state. And, coincidentally, the welfare state as constructed by Labour currently includes so-called “tax credits” paid over to households earning up to about £70k in some cases. As I’m sure you know another Lib Dem policy is to taper those tax credits. High-minded claims about Labour’s opponents failing to concentrate funds on the poorest are not well-founded.

“• only around £1 billion of the £17 billion cost (6 per cent) actually goes toward the stated aim of lifting low-income households out of tax;”

I’ve not checked your figures, but I imagine this and the next objection on your list are both “objections” because of the same errors of interpretation. One, you have reinterpreted the “stated aim” to suit your purposes. The stated aim is to make the tax system fairer. This has the *effect* of lifting low-earners out of poverty. Two, you are implicitly assuming that absolute gain is more important than proportionate gain. This can pretty easily be knocked on the head. £300 per year will make far more of a difference to someone earning £12k than someone earning £30k. And *everybody* earning £12k will feel that difference. Ignoring this simple truth suggests a disturbing lack of interest in people’s actual circumstances.

“• households in the second richest decile would gain on average four times the amount than those in the poorest decile; and”

Again, not read the report, but I take it this is just a restatement of point 1, that the lowest earners (up to £6k) won’t earn enough to benefit from the tax cut, and those earning between 6K and 10K will “only” benefit to the tune of 20% on that range. And they’re all in your poorest decile, so they’re dragging the average gain down. If this is what you’ve done, your statement is misleading to the point of sophistry. You were on far more respectable ground with just stating the figures. You have deliberately sought to give the impression with this statement that the policy is biased in favour of higher earners. Unimpressive.

“• the policy would increase socially damaging inequalities between the bottom and middle.”

Again, pending my reading of the report, this sounds like an assertion-masquerading-as-finding, and is essentially a rehash of points 1, 2 and 3.

There *is* a debate to be had about the only point in which actual figures are quoted, i.e. point 2. This debate is largely about principle. The two questions are “Does absolute gain matter as much as proportionate gain?” and also “Should the tax system be fairer and flatter as a matter of principle?”. To which my answers are of course no and yes respectively, and accordingly, I don’t mind that the tax cut goes to everyone. It’s just a fairer tax system. I like fair tax systems. Your respective answers are yes and don’t care, so far as I can see. I note you haven’t mentioned at all the fact that this whole tax cut is being paid for by debarring access to tax breaks currently enjoyed by higher earners.

So I think my overall responses is twofold.

1. This is a liberal policy. Wherever possible I want people on low income lifted out of tax. I do not want them taxed and then given handouts. That is antithetical to me as a liberal. It also has nothing to do with the tax system. The tax system is the mechanism whereby government takes a due from people. The Liberal Democrat policy aims to alter in a revenue neutral way where that due falls. No-one should allow themselves to be bamboozled by Labour into thinking that benefits are part of the tax system. The fact that Labour has called some of its benefits “tax credits” does not make it so. They are not tax credits in any true sense of the term.

2. Show me the money. What have you got to offer instead? You, meaning this website and the Labour party generally. Have you got a way of taking low-earners out of tax and not extending the same tax reduction to higher earners? Something like Matthew’s scheme (above) would work. You come up with that, iron out the complexities of collection to a convincing extent, find a way of arguing that it is fair and flat, push it through the Labour party using whatever mechanisms are available to you and then we can talk.

Until then, I’m afraid the Lib Dems are offering to lift all earners >£10k out of tax altogether and make an enormous (and decreasing) proportionate difference to those earning over it.

Sorry, when I said “This has the *effect* of lifting low-earners out of poverty” I of course meant out of the tax system.

And furthermore…

This tax policy was actually passed at last year’s conference. I would expect the big debate this year to be around the DEBill.

Alix makes some very good points. I haven’t read the full paper yet, but I will, but from the blog, comments and rebuttals, it seems you have looked at lifting the tax threshold as a policy in isolation to suit your views.

I don’t believe anyone is usggesting that.

If, for example, you increase the basic rate of tax to around 24/25% at the same time, all top rate tax payers would be about £180 worse off, everyone under about £28k would be better off on a scaled, and those earnering over £28k would pay between £1 and £180 more as the graduate towards the top tax rate.

Soyou can lift the lowest eaners out of tax, without costing the Treasury a fortune!

I explain this here: http://owenmeredith.blogspot.com/2009/10/promote-growth-cut-costs-give-more-to.html

Some more footnotes and appendices in the report wouldn’t have gone amiss. At some point, details of a cut in individual income tax rates is transformed into an analysis of the impact on households, with little explanation of how this is done. I recognise that Landman Economics may have some intellectual property in their modelling, but it can’t be a hugely complex calculation, so it can’t hurt to explain how it was done, surely?

Rob: the reason why they analyse it on a household basis is simple.

The higher end of the houshold income distribution is dominated by two earner families. The lower end by one (and none).

So by analysing a change in “individual” taxation as a change in “household” taxation you manage to get in a nice cheap shot. For of course higher income households get more benefit….they’ve got two allowances to play with not one.

If you actually analysed a change in individual taxation on the basis of individual post tax incomes then much of what they’re complaining about here would go away.

Which is, of course, why they’ve done it this way.

Now they do have one line in there where they point out that the two allowance household gains more precisely because it is a two allowance household. But what makes the rest of their analysis meretricious is that they don’t explore the other implications of this……that the whole system of individual taxation is therefore regressive in exactly the same manner……that they most certainly would not support the idea of the household as the taxable unit….(nor would I but then I’m not complaining about the use of two allowances) and so on.

And as to the basic point of the rise in the allowance (and I would note that the ASI has been shouting about this for years, UKIP has been suggesting it for years and I personally (and there’s most definitely an overlap between the three) would argue that the personal allowance should be the full year full time minimum wage for entirely moral reasons.

Start from the beginninig:The Joseph Rowntree Trusts tells us that the people of this country think that £13,900 pre tax is required to be not living in poverty in the UK. That is £11,400 a year post tax.

Full time (37.5 hour week, 52 weeks a year) minimum wage brings in £11,300. Hell, this is close enough for government work.

If we say, for moral reasons, that those who work must not, by law, be paid less than the min wage, exactly the same moral reasoning insists that we should not be taxing said min wage to pay for outreach diversity advisors. Or SpAds. And if we are to say that no one working full time should be living in poverty then that again says, by the same moral reasoning, that we shouldn’t be taxing people earning under the amount needed to live not in poverty.

Increasing the personal allowance is a moral isse….we can clean up the economics of tax raising after we’ve dealt with that.

BTW, fun fact….as a result of fiscal drag recent governments (yes, Geo. Brown included) have been extending the income tax system ever further down the income scale. No one’s suggesting anything particularly radical here you know, only that the personal allowance should bear the same relationship to average wages as it did 20 or 30 years ago.

RT @leftfootfwd: Lib Dem tax policy "fails the fairness test": only 6% goes to poorest families http://cli.gs/BynM9

Tim – the reason we analyse the figures at the household level is because that is the level at which you assess welfare. For example, the Duke of Westminster’s wife would not be in poverty if she had zero income. (I thought Tories like you understood the importance of families?)

So we have not done it at the household level in order to ‘get’ these figures, but because that is the level at which welfare is meaningfully assessed. You might not like the results, but there you go. (As far as I know, no party is planning to change the basis on which the government assesses welfare and poverty.)

Specifically, the analysis has been done over ‘equivalised’ household incomes, that is, adjusted to take the composition of households into account – such as number of children, pensioners etc.

The distributional gradient therefore also reflects the pattern of characteristics like this across the population (the same technique used by organisations like the Tresury and the Institute for Fiscal Studies).

You guys at LFF will appreciate this

The Guardian reading spider…

And I still say your entire argument is tautologous. Your graph shows that households (whether double or single earner) who pay more tax stand to gain more from a tax break (up until £40k per earner). Well, yes. You want to up welfare as a separate exercise, up it. This is a tax policy which aims to flatten out the tax system.

Owen, I like your scheme for its simplicity, but in an ideal world I would not tamper with the base rate because it’s a bit of a blunt instrument. Part of the point of this tax reform in particular and Lib Dem tax reform in general is that economically productive work should be penalised less and wealth more. That is why I like the idea of interventions like removing the double relief on pensions enjoyed by higher rate taxpayers. By paying in those sums to their pensions, they are explicitly acknowledging that they earn enough in proportion to their circumstances to not need to keep it all in circulation; they are hoarding it instead. A high-earner, on the other hand, who happens to have 17 children and two sick parents (to take it to reductio ad absurdam) may well use all their income and hoard none of it. Even the rather clunky Mansion Tax is a more precise way of targetting accumulated wealth than moving the base rate around.

Will, I’m not sure I understand.

A very detailed discussion on @LeftFootFwd re the paper on regressive effects of LibDem tax plans http://bit.ly/bCo4V4

RT @nextleft A very detailed discussion on @LeftFootFwd re the paper on regressive effects of LibDem tax plans http://bit.ly/bCo4V4 <- !!!

RT @nextleft: A very detailed discussion on @LeftFootFwd re the paper on regressive effects of LibDem tax plans http://bit.ly/bCo4V4

wins headline test, but fails the fairness one. @LeftFootFwd on regressive effects of LibDem tax plans http://bit.ly/bCo4V4

RT @BevaniteEllie: wins headline test, but fails the fairness one. @LeftFootFwd on regressive effects of LibDem tax plans http://bit.ly/bCo4V4

RT @BevaniteEllie: wins headline test, but fails the fairness one. @LeftFootFwd on regressive effects of LibDem tax plans http://bit.ly/bCo4V4

The definition of regressive taxation is taxation that falls disproportionately on lower earners. Raising the personal allowance reduces the current level of disproportionality. It makes the taxation system less regressive.

What definition of regressive are you using?

I asked co-author Howard Reed if he had any response to the point about marginal tax rates, and whether the LibDem threshold proposal does anything about this. He says:

“The assessment criteria for tax credits are completely separate from the assessment for income tax – the current tax credit system is assessed on gross incomes so the cut in income tax does not take anyone out of the tax credit eligibility (as their GROSS income is unchanged, it’s their net income which changes. It does of course take people below £10,000 gross income out of the income tax system but the PAYE side of this is mostly done automatically anyway – there is very little admin hassle from the point of view of the employees who are being taxed”.

While there is probably a separate case for simplifying the tax credit system and making it easier to claim, the simplification arguments that some people are making are complete red herrings”.

RT @nextleft: A very detailed discussion on @LeftFootFwd re the paper on regressive effects of LibDem tax plans http://bit.ly/bCo4V4

[...] The Fabian’s Tim Horton and IPPR’s Howard Reed have jointly authored a paper for Left Foot Forward designed to undermine the case for raising tax thresholds on low income earners.  Clearly they are [...]

I suggest that LibDems arguing against a household analysis ask Steve Webb and/or the Institute of Fiscal Studies whether is the main and long established basis for analysing poverty, inequality and distributional impact of tax changes across society, and report back to us on what they say.

Owen Meredith,

We have analysed the current LibDem policy proposal which they will take into the General Election. This is what they are proposing. There is no suggestion at all that the party will increase the basic rate to offset the gains higher up the income range than those earning £10k.

Were they to do so, they would have a less expensive policy, and it would be focused on taking those earning less than 10k out of tax.

“I suggest that LibDems arguing against a household analysis”

Eh? You’ll have to look to Tim Worstall for someone arguing against a household-based analysis, and last time I checked he was not a Lib Dem. If you’re talking about me, I was simply pointing out a basic truth. I said:

“Your graph shows that households (whether double or single earner) who pay more tax stand to gain more from a tax break (up until £40k per earner). Well, yes.”

Nothing factually incorrect in there. The graph is a great illustration of how tautologous your overall point is. You’re standing there shouting that households who pay more tax stand to benefit more from a tax break, and expecting it to mean something. It doesn’t, it’s just a fact. You want to give low earners extra help, you up their benefits. This is a tax reform. Your argument is tautologous because you persist in confusing the tax system with the benefits system.

“We have analysed the current LibDem policy proposal which they will take into the General Election. This is what they are proposing. There is no suggestion at all that the party will increase the basic rate to offset the gains higher up the income range than those earning £10k.”

Erm. You haven’t analysed it very well, then. And by “analyse” I mean “read the relevant policy papers”. The original proposal (2006/07) was to introduce green taxes on pollution, reform CGT and shutting down particular tax breaks for the wealthy, reform notably getting rid of the double relief on pension payments enjoyed by higher rate taxpayers. The aim at that time was to lower the basic rate, which I did not consider progressive enough (and I said so on CiF). Fortunately, the party saw the merit of my proposal (!) and ditched the basic rate cut in favour of raising the personal allowance.

The proposed savings mentioned above nonetheless remained, and remain, in place to pay for it. If you do not understand this, I suspect it arises from a simple ignorance of how the Lib Dems construct policy. Once a policy is passed by conference, it is party policy until it is replaced by another, or superceded by events. Members of parties with a more fast and loose grasp of internal democracy tend to not get this. In this instance, the CGT reform was superceded by Brown’s shocking axing of the Lawson system in order to curry favour with the wealthy. Both the green taxes and the restrictions on pension relief remain party policy and for my money the latter is one of the most important strands of reform.

In addition to that, the Mansion Tax was in fact initially floated as a way of paying for raising the personal allowance (so, in fact, forget the policy papers, you’ve not even read the news reports! Sheesh.) Now, the mansion tax is clunky, like I said. But it’s a tax on accumulated chunks of wealth, and if it’s used to pay for tax breaks on economically productive activity, especially when the greatest proportionate beneficiaries are the lower earners – well, I’m all for it, on every level. I don’t understand why you’re not.

So, why have you omitted pension relief reform and the Mansion Tax from your analysis? Is it because they would fall on the rich and inconveniently disprove your partisan point? If you are in earnest, I’m sure you will want to issue an immediate correction to your “research”.

Fabians in “tax cut doesn’t help non-taxpayers” shock discovery.

Alix,

Not sure if you had read the paper after your earlier post. Section 3.14 (p13-14) does discuss the distributional impact of the whole LibDem package: this would retain the regressive gradient across the bottom nine deciles, while the top decile would lose income. It is of course possible to raise those resources from the top decile using the other proposed policies, and it is a separate decision as to choose what to do with that.

Again, I don’t understand your use of the term “regressive”, Sunder. People paying more tax in the first place will, obviously, stand to benefit more from a tax cut. So they look “better off” on your graph. You cannot give higher tax cuts to people who do not pay tax. (You can give them more benefits – but that is a different thing. This is an income tax break.) For this proposal to be “regressive” it would have to *actively favour* higher earners over lower earners. It does not. It taxes higher earners (over £40k) in order to pay for tax breaks for lower earners. Your bottom nine deciles are – I am assuming – made up of people who earn 40K (being the higher rate threshold) or under in various permutations. All of them get some help as a result of this proposal. The lowest earners in taxable bands get proportionately the most help of all (and I notice no-one has taken my proportionality point on board, which is a shame as I think this is where the true ideological difference lies).

“We have analysed the current LibDem policy proposal which they will take into the General Election. This is what they are proposing.”

I remain interested in why you did not mention the mansion tax, pension relief reform or green taxes in the course of making this point (even if only to dismiss them as insignificant). You had every opportunity to do so. Why not? Again, did it interfere with the overall message of “regressive tax” you wished to convey?

I think Alix has shown up this “shocking report” for what it is – an attempt to discredit the Lib Dems on what is, to anyone not blinded by partisan ties, their strongest policy. “does nothing to help those who don’t pay tax” – durrrr, it’s supposed to help those who do pay tax, not all of whom are rich! you’ve really let the side down, Sunder – and I expected better of you, Will. The only reason Labour is attacking the Lib Dems on this is because they didn’t think of it first.

[...] illiteracy makes his program for ‘fairness’ nothing more than hot air; something Left Foot Forward expose with their unpicking of the policy [...]

Yet more reasons why progressives should not vote for the Lib Dems: http://bit.ly/9KPWKf

I know it’s been said, but “Rob: the reason why they analyse it on a household basis is simple” is utterly idiotiarian. Income has been assessed on a houshold basis for decades, if not longer, simply because it’s the most obvious unit in which to do so.

I think Alix makes some good arguments, but they aren’t conclusive. The reason one considers taxation policy with expenditure and with income distribtion measures is because they are all about money – raising the personal allowance by 3,500k directly means you can’t spend the money on, say, housing benefit. Alix is right that whether someone on 9,000 pays income tax or not is a moral issue, but wrong insofar that there’s no obviously liberal answer.

Sorry, it is a moral issue, but it’s not morally obvious it’s a bad or good idea.

fabians attack lower taxes for the low paid – http://cli.gs/BynM9

* The objection to a household analysis: can anybody point me to Institute of Fiscal Studies analysis of tax changes which doesn’t do this?

* On the partisanship point:
- we are confident that the modelling is accurate. So it is not in the power of the authors to decide what the distributional impact will be.
- can it be a bad thing for policy and public debate for such evidence to be in the public domain? Perhaps the LibDems’ political opponents don’t want to draw attention to the scale of the middle-class tax cut for higher earners; the LibDems have not emphasised the £17 billion cost of the policy. Everybody can take their view as to whether it is good or bad.

- Guido Fawkes is in favour of the policy, because he wants to see middle-class tax cuts and is happy that they are larger “Middle earners pay disproportionately more tax after all”. He argues this because he is philosophically in favour of flatter taxes (perhaps a flat tax). This is one idea of “fairness” on the libertarian right: it would be fairer to pay the same rate, so you pay more tax, but not a higher rate at higher incomes. The argument for progressive taxes (banded rates) is opposed to this:, based on higher earners having more disposable income and ability to pay.

- The Fabians have a long record of detailed analysis of tax plans, since the Fabian Tax Commission in 2000. Labour’s flagship proposal in 2001 and 2005 was pledging not to increase the upper rate. We produced evidence and arguments against it, and advised Blair to drop it. By contrast, we praised the LibDems on the 50p rate. When Labour emulated much of Osborne’s policy on inheritance tax in 2007, we published critically on that. We then advocated freezing the thresholds last year, and that was adopted.

The Fabians have consistently analysed and argued positions based on their distributional impact, not on which party is proposing them.

The charge of not mentioning the other proposals: “I remain interested in why you did not mention the mansion tax, pension relief reform or green taxes in the course of making this point (even if only to dismiss them as insignificant). You had every opportunity to do so. Why not? Again, did it interfere with the overall message of “regressive tax” you wished to convey?

===
This falls on the grounds that the paper does discuss the other proposals: both page 4 and section 3.14 (p13-14)

“- we are confident that the modelling is accurate. So it is not in the power of the authors to decide what the distributional impact will be.”

You still don’t get it. No-one’s querying your numbers. What’s wrong is your basic premise that a tax cut should behave like a benefit. You can’t make a tax cut do that. It’s a tax cut, designed to make the tax system fairer and flatter. To say it’s “regressive” is simply untrue – regressive would be, for example, lowering the basic rate but getting rid of the 10p tax band, which actually made the poorest worse off. Your graph just reflects the fact that the lower down the deciles households fall, the less tax they will be paying in the first place. I just don’t know how to put this any more simply.

Sunder, I get that the paper discussed the proposals. I was asking why you didn’t, right there, in that sentence I quoted. Seemed an odd omission is all.

Would it be fair to say that you’d just rather the £17bn was spent on benefits and/or public services? (as suggested somewhere above)

Basically, the implications of Wilkinson et al are that we need to do everything we can to increase equality across the board. This means first increasing the income / wealth of the poorest (and/or decreasing the income / wealth of the richest), and then doing the same for the poor more generally (and the rich more generally). The problem with increasing the income of (say) the second least-well-off quintile without increasing the income of the poorest quintile is that you ARE increasing inequality among the less well-off in general. So I agree with the thrust of this post.
[However, there is a catch: we need to ensure that there are at least some government interventions which enable the better-off to feel that they too benefit from 'the social contract'. Otherwise, they will be able to feel fine about opting out from government, privatising everything and paying for everything, etc - and that way lies disaster for the welfare state.]

I ask because, if that is essentially what you want, then at least we have arrived at a point of ideological difference that I can respect, if not agree with. You want a bigger safety net, I want a fairer tax system. I can deal with that.

What is insupportable is your apparent belief that people who don’t pay much tax should somehow magically and by sheer force of will be enabled to benefit from a tax cut more than people who pay more tax. And this “regressive” nonsense. Again, a “regressive” tax means a tax that takes proportionately more from a low income than a high income. I’m very sorry, but I didn’t invent this definition. This proposal actually improves on the current situation.

Matthew, you’re right to say I don’t mention the perfect liberal solution here, but there’s a whole ragged band of land value taxers would disagree with your assertion that no perfectly liberal solution exists

Incidentally, if, as you suggest, you would rather the £17bn was spent on benefits amongst other things, I would plead with you (assuming we are playing magic chancellor) to reconsider prioritising Housing Benefit. I’ve been on this bastard, and I’ll tell you, it very quickly becomes clear who the “benefit” really accrues to. I’m not anti-benefit on principle but HB is about the only one which seems to me to do more harm than good. The inequality-increasing effects of HB are so well known they even made it into a storyline in Our Friends in the North.

Thanks for all the comments (and especially to Sunder and Alix for such an informed argument).

I’m really pleased that this report has sparked such a fascinating debate although disappointed that some people (rob for example) saw this as a partisan attack – it certainly wasn’t. Tim and Howard give a great deal of credit to other Lib Dem policies in their paper and I have given credit the Lib Dems on a range of policy fronts, most recently in my assessment of their other 3 tests last week.

The analysis was intended, as a critical friend, to show that against its own objectives to “cut taxes for people on low and middle incomes” it fell short. If Clegg had said we want to cut taxes for low income tax-payers it would have been a different story but excluding the 3m poorest people is a significant failure.

I think Alix and Sunder eeked out a significant philosophical divide. Alix says “designed to make the tax system fairer and flatter”. That’s a very legitimate and consistent statement if you’re a libertarian but not if you’re a social democrat. To social democrats, a flatter tax system is by its nature less fair.

Also, since the policy would widen inequalities, it is by nature a regressive move. As Rupert points out, that has a number of damaging consequences. This is not a tautological argument.

Finally, beware support for any tax policy from Guido Fawkes!

This is very interesting – and excellent food for thought.

Forgive me if this doesn’t follow, as I’ve only pondered it briefly – but couldn’t the same criticism that is being aimed at this policy be aimed at the 10% basic tax band, the removal of which caused so much anger among progressives? After all, that too only helps those who earn above the tax threshold, and also provides a benefit to rich households as well as poor?

Matt

P.S. For the record, I am very much on the ‘spend the £17 billion on public services, not on a tax cut’ side of the argument – but I am intrigued by the ramifications of this paper for other policies which are traditionally championed by the centre-left…

[...] Don Paskini     March 14, 2010 at 3:19 pm Our friends at Left Foot Forward are hosting an excellent debate in the comments on this post between critics and supporters of Lib Dem plans to raise the starting threshold at which people pay [...]

Alix, housing benefit was just an example. I could have said ‘nuclear defence’.

I think Sunder’s terminology is OK, if the policy was to scrap the higher rate tax then that would make the tax system flatter (not something raising the personal allowance to £10k does) but it would be peverse if a cricitism of the move as being mainly of benefit to the rich was consider illegitimate.

[...] income decile graph, and a quick eyeballing of whether the poorest 2-3 deciles get the most. What LeftFootForward call the Fairness Test is not the only test to be applied, as the dismal quality of some Robin Hood Tax arguments has [...]

An interesting paper but a pity that these “experts” could not get their numbers right. Graph 4 was obviously ridiculous so I looked at the ONS paper and I find that income tax is 3.2% of gross income and 3.6% of disposable income for the bottom quintile not the 1.6% shown on the graph. The HMRC figures quoted in the latest Social Trends show that £1.5bn not £1bn would be spent on lifting the lowest earners out of tax altogether.
Their comments about the percentage of income consumed by indirect taxes is based on data that ONS HAS STATED TO BE WRONG and ignores the facts that (i) a significant proportion of those in the bottom decile/quintile by income at any point in time are those with no/negligible income because the state has decided that they should live off their savings until they run out.(ii)if you look at those with income the percentage is lower, (iii)the only reason why indirect taxes are regressive are taxes on alcohol, tobacco and petrol, all of which have been jacked up by Gordon Brown. The simplest way to level up would be to abolish mean-testing on benefits – NO, I am not advocating that, just pointing out the fallacy in their argument.
There IS a moral reason why the income tax threshold should be raised which is that income tax is levied according to ability to pay and those with incomes below than the minimum wage are not able to pay. It is also beneficial because it saves a vast amount of hassle for low-earners in filling in tax returns and, for low-earning self-employed keeping detailed accounts down to recording buying a book of stamps. Howard Reed thinks we all have our PAYE sorted out by our employer – in fact there are more self-employed than full-time employees in the bottom decile although full-time employees outnumber the self-employed by more than 5 to 1. Again a gap in his research.
Owen Meredith makes the point that more benefit for the lowest earners (albeit not for non-earners) would have been achieved by raising tax thresholds in line with earnings than reducing basic rate tax. Nick Clegg is trying to reverse this but ducks advocating a rise in basic rate (which could be political suicide despite being economic sense)
The paper says that it has looked at the impact of the LibDems proposals to pay for the raising of the personal allowance by taxing the rich more heavily but then does not tell us the result – this is unfair, like saying Italy scored more points than France in the last half-hour and omitting the overall score!

So three lots of tax allowance is more than one lot of tax allowance, but if you contort it into an arbitrary graph you can mislead the casual reader. Lumme, who’d've thunk?

Meanwhile I’m failing to find the equivalent article condemning every year’s uprating of basic JSA/dole over the last umpty years of Lab-Con rule for failing this “fairness test” o’yours, on which basis no government has lifted a finger to help the poorest for as long as I can remember. I’m sure those blog posts will be along any day now.

.@leftfootfwd hilariously think taxing "wealthy" activities to provide 6% overall redistribution to poor = "regressive" http://cli.gs/BynM9

RT @leftfootfwd: Lib Dem tax policy "fails the fairness test": only 6% goes to poorest families http://cli.gs/BynM9

[...] access over the weekend at Lib Dem conference, I’ve been itching to get my paws on the latest Left Foot Forward report on the Lib Dem proposal to raise the income tax threshold to £10,000. “Think Again, [...]

[...] his speech, Clegg mentioned his policy to raise the personal tax threshold to £10,000 three times. Left Foot Forward published analysis on Saturday of how only 6 per cent of the £17 billion would go to helping the [...]

Right. I’ve now started to unpick it properly (so have others by the look of it). I cannot believe how shifty that graph is! The actual text admits it doesn’t take into account the tax rises the Lib Dems propose to pay for the raise in PA! The impact of those would throw the “gain” to the top decile into reverse. The others would stay the same (but then we knew that, because as you persist in failing to understand, people who pay very little tax won’t benefit from a tax break as much as people who pay for tax).

Your graph, presented in isolation here, is a shocking piece of partisan propaganda. I’m really trying not to sound hyperbolic, but, well, you’ve actually disgusted me.

LFF "analysis" gets more hilarious. Seems their "regressive" graph really does show rise in PA & not rises to pay for it http://is.gd/aGLU2

So, what you’re basically saying is, cutting tax will benefit taxpayers?

Good – where do I sign?

I find it amazing that LFF is still trying to peddle their brazenly anti-Lib Dem agenda despite the evidence to the contrary. The fact is that a tax cut is being planned that will cost £17bn, and it will be entirely funded by £17bn of extra taxes in other areas that are almost exclusively going to be felt by medium to high earners (with the emphasis being on high earners). What is happening, in effect, is a small redistribution of wealth from the richest to the poorest where almost exclusively the middle to high earners will be putting an extra £17bn in to the pot and, if we’re to believe your figures (a practice a little hard given how devious you’ve already been in this report), only take £16bn back out AT WORST. It’s probably more likely that those actually funding the tax cut take even less out of the pot as I fail to believe that the second and possibly third decile would pay much in these extra taxes either. Meanwhile the lowest decile get an extra £1bn, paid for by taxes on the middle-high earners…and yet this is supposedly regressive and widening the gap?

You’re having a laugh.

You can (as Alix has most eloquently put across) disagree with the idea of using the £17bn raised to provide a tax cut, but that’s besides the point. Lib Dems believe that sorting out the tax system so that at the point of taking home a salary no-one earning less than what is considered by the public to be the income that breaks the poverty barrier will have any of that money taken away from them by the state. This is *completely independent* of the welfare situation that they would still receive because neither Nick Clegg nor the Lib Dems have stated anywhere that they’re going to be cutting welfare OR front-line services, something that can’t be said for either Labour or the Tories.

Lee,

“What would you spend £17 billion on” is a refreshingly counter-zeitgeist debate.

The LibDems have a revenue neutral package of reforms. They spend £20 billion on the tax threshold change and the pupil premium. They mostly raise that money at the top, except the air taxes.

But they also think the structural deficit will be in the region of £80 billion, and they propose to close all of that through spending reductions – “purely spending cuts” according to the party leader last week, in explicitly stating they would have the toughest spending line in this respect. (I have seen some suggestions this is not quite party policy, but am not clear about that, and it has not been publicly nuanced or corrected).

And the other major parties are equally or more opaque about their deficit reduction plans. So the point to all parties is that questions about tax, spending, deficit and debt levels need to be taken together. (This is a point about tax “connection” the Fabians have been making since the 2000 tax commission, but it is more pressing now).

The opportunity cost of the tax threshold plan is a similar amount of public spending cuts, which go beyond areas the party has already earmarked. It would be difficult for those attracted by the policy to make a final judgement without knowing what they are trading off.

It is important and good that the LibDems have identified some fair and popular ways to increase revenue. Having done that, and used the revenues, Clegg is saying that they do not think it is possible to deal with deficit reduction through a mixture of both tax increases and spending cuts, since they have made and used all the tax increases they think feasible.

***

I am sure that everyone agrees that the LibDem proposal does mean £1400 for double-income households with two earners over £10k; £700 for single-earner households over £10k; less for those earning under £10k and nothing for those in part-time work earning up to £6800.

Taking into account how this is funded, this increases income inequality across the bottom 90%, with 70% going to the top half and 30% of the bottom half of the household distribution.

There are numerous fairness claims or defences of this – ‘the rich pay more tax and taxes should be flatter, not more progressive’; it is right to ‘reward hard work’ and not prioritise those not in work – but the claim that it is progressive in terms of its impact on the income distribution is not true. (There were objections to a household analysis on Saturday: it is just bizarre to claim this is not the normal approach).

If the goal is “cut taxes to particularly help the bottom, while doing something for everybody”, then progressive alternatives would include the universal tax credit proposed by the Fabian Society in ‘The Solidarity Society’, which would be a flat payment across everybody which would be worth proportionately more at the bottom, or the tax credit system, which would have a pro-poor bias because it is based on household income, and because of its progressive distributional impact.

Sunder. I like the first half of your comment. By all means, try to make the case that the money would be better spent elsewhere. Obviously, we will disagree, but at least that will be an honest argument.

However. Do not try to cling to this wreck of an “analysis” and expect your reputation to remain intact. Reading the second half of your comment, I am starting to think you are deliberately obfuscating. Do you, or do you not, accept that the report appears to state that the graph shown above only models the raise in the personal allowance, and not the rises in tax on the wealthy which would pay for it?

Here is the relevant passage:

“So let us for the moment assume that the revenue to pay for the proposed
increase in the personal allowance comes solely from those in the top decile.
What would the distributional impact of this combined package then look like?

For the first nine deciles (from poorest up to second richest), the impact would be the same as that shown in the graphs above; the difference would be for the richest decile, which would now have a significant net loss of household income (since they are funding the whole package).”

In the light of this, do you have to alter your claim that “Taking into account how this is funded, this increases income inequality across the bottom 90%, with 70% going to the top half and 30% of the bottom half of the household distribution.”?

If not, and you have actually used the text and not the graph as the basis for your observation (which obviously, I would question the significance of anyway, because it does not take into account the relative value of a tax cut in relation to income), do you have any comments on the defensibility of presenting only half the proposal in the graph?

“the claim that it is progressive in terms of its impact on the income distribution is not true.”

Back to this again. You STILL have not taken on board my two core points.

1. By calling this proposal regressive you are simply not using the correct definition of “regressive”. For the third time, a regressuve tax is one which falls more heavily on a lower income than a higher income. This proposal alters the tax system so that the tax burden falls less heavily on a lower income and more heavily on a higher income. Nothing else is tampered with. Tax credits remain, as you pointed out yourself. This proposal makes the tax system more progressive.

2. You still have not taken on board the simple fact that people who pay very little tax cannot benefit as much from a tax cut as people who pay more. You are being (wilfully?) mislead by the above graph into ignoring the fact that many people in the bottom deciles are not paying enough tax to benefit from the tax cut. That’s why they can’t get as much back as people who are paying more tax.

The average household income is about £30k? So say that falls into the middle of your deciles. It’ll be made up in a huge number of ways. It might be one person earning £30k. It might be two people earning £15k, or one earning £23k and the other earning £7k. All these households will benefit from a tax cut differently, because tax is assessed on individual income. That’s just how tax works. To put its results into household form doesn’t “prove” anything about the “regressive” nature of the tax cut. It just shows in graphic form that it’s a tax cut. Tax isn’t assessed by household, it’s assessed on individuals. There’s nothing *wrong* with displaying income by household. But it won’t tell you anything you didn’t already know about tax cuts. They work best for people who pay tax.

“a flat payment across everybody which would be worth proportionately more at the bottom”

But…but…hang on! This is what a tax cut does! It’s just that it does it with earners. So why do you not admit the significance of proportionality in the case of a tax cut if you admit it in the case of a flat payment?

Sunder Katwala,
I suggest that you sit down and read the data published by HMRC and ONS before slagging off the LibDems and then use some correct numbers. Your 70:30 split in benefit between the the top half and the bottom half (of those outside the top decile) is incompatible with ONS data – and is pretty obviously wrong anyhow. If the bottom quintile of household paid no tax at all (NOT so, according to HMRC and ONS) the split of benefit would be 50:30 not 70:30. The claim that richer households are more likely to have two (or three) earners while superficially plausible is not – except in the case of single pensioner households who make up a large proportion of the bottom quintile – supported by the data, in fact the top quintile of households has a disproportionately large number of single adults.
A proper debate should use accurate data

[...] his speech, Clegg mentioned his policy to raise the personal tax threshold to £10,000 three times. Left Foot Forward published analysis on Saturday of how only 6 per cent of the £17 billion would go to helping the [...]

I am sorry to say that the Left Foot Forward analysis is inadequate (it totally ignores key aspects of Lib Dem tax and beneift policy) and the graphs you use are EXTREMELY misleading.

However, before I go on with my critique, I do acknowledge that your article makes SOME good points about Lib Dem tax policy – namely it is not as redistributive or as many of us on the Lib Dem left would like. I, for example, would like to see a far more redistributive package that helped people right at the very bottom – perhaps through a Citizen’s Income policy for example.

However, although I belive Lib Dem tax policy could be better (MUCH better) – I will attempt to explain why you are wrong to condemn it in full.

Concerning the graphs – you only analyse the effect of the raising of the threshold and the changes to the 40p rate. You do not include graphs which show the effect of the tax changes at the top (changes to Capital Gains Tax, Pension Relief and Mansion Tax). If you did, it would show clearly lower and middle deciles benefiting, at the expense of the very top. This would give the casual reader a very different impression of what Lib Dem tax policy implies.

Now, I recognise you do mention this in the text – though you still choose not to put a large emphasis on it. It remains the case that lower income earners DO benefit at the expense of high income earners. This is redistributive and progressive.

However, more worryingly, you miss some of Lib Dem tax/benefit policies entirely – both from your graphs and your text. Many of these address your concerns that Lib Dem policy is biased towards the middle.
Key aspects of this are:
- The Local Income Tax: Which I believe benefits the lower deciles at the expense of the middle and the top.
- The removal/reduction of tax credits from middle income earners. (Lets leave aside the debate over long vs short tapers for the moment and just focus on the pure, immediate distributive consequences)
- The introduction of higher rate child benefit. (Party policy, which will hopefully still be in the manifesto)

As you said in your text it is stupid to look at income figures before all tax/benefit policies have been applied – yet that is exactly what your own analysis does.

Taking these factors into consideration would show very different (and far more progressive) distributive consequences. It would show the poor benefiting more, the middle benefiting less and the rich really getting even more of a hit!

I hope that you can accept these points… then go back any redo your pamphlet showing the the effect of Lib Dem tax/benefit policy as a whole.

Leaving your article as it is can only mislead voters and lead to a seepage of votes away from what are actually the most progressive tax/benefit policies of any of the 3 major parties.

We can all say the policies could be better but don’t condemn everything wholesale on a partial and misleading analysis.

Peter Kunzmann

Picking up some of the other comments – this ‘analysis’ only looks at half of the policy package. It looks at the savings to high earners from raising the basic threshold but ignores the extra taxes they will pay. It is therefore simply not credible.

[...] seems to be the only explanation for their slanted weekend posting that Lib Dem tax policy “fails the fairness test”, which appears to rest on two points: 1) that people who don’t pay tax won’t benefit [...]

Surely according to the reasoning of this piece, the starting rate 10p tax band would “fail the fairness test” – and more so. It did exactly the same thing, except that:

1. It was much lower, and so anything over £7455 was taxed at 22%.
2. It still taxed anything from £5225 to £7455 at 10%. Someone earning £50,000 would get more back from it than someone earning £6,000.

This really does strike me as fairly naked partisanship.

According to the Lib Dem proposals:

1. Almost everyone* earning £10,000 or more will (automatically) receive £705 from the increase in the PA from £6475 to £10000. There’s no problem with form-filling, bureaucracy, take-up rates, or the horrendous repayments that many people have to pay when HMRC (frequently) makes mistakes on tax credits.

2. People earning £6475-10,000 will receive less, but they’ll certainly still benefit, and will end up much better off than they were when the 10p tax band existed. They will also benefit from greater positive incentives to move from benefits to work (rather than the negative path taken by, for example, the Welfare Reform Bill).

3. It’s an extra 7% of income for someone earning £10,000.

4. For someone earning £50,000 it’s about 1.4% of income.

5. This is being paid for by tax increases at the top, but overall is revenue-neutral.

6. How is that regressive?

* excluding pensioners, who already have a higher PA, but they’ll still be about £100 better off

[...] types choose regressive policies at the drop of a hat’.  They fail the test of fairness, says a blog, and will stop at nothing in their mad quest to get the Gini coefficient up to 1.  Or even [...]

I think expecting a fair critique of any Lid Dem policy from a Labour-based organisation just a few weeks before a General Election was always going to be a Bridge too Far. This analysis is little more than looking at one half of an equation and saying “The sum is unbalanced”.

As has been pointed out, a more honest way of critiquing it would be to argue that the £17bn raised in the other half of the equation should simply be spent on public services. Then a serious discussion could have ensued. But the headline “Labour to raise taxes by £17bn” wouldnt have made very good attack material, compared to “Regressive Lib Dem tax-cut.”

[...] http://www.leftfootforward.org/2010/03/lib-dem-tax-policy-fails-the-fairness-test/comment-page-1/#co... [...]

[...] and so forth. There is a tendency to argue that policies that help such people are regressive, and should not be supported by left-wingers (this fictional couple would be, I think, in the seventh household income decile) [3]. That’s [...]

[...] up Will’s offer to reply to some of the comments that have been posted in response – both on Left Foot Forward and on other sites, best summarised at Next Left or Liberal Democrat [...]

[...] Member of Parliament for Inverness, Nairn, Badenoch and Strathspey. He writes in response to “Think again, Nick” by Tim Horton and Howard [...]

[...] while back, Left Foot Forward ran a piece attacking the party’s tax policies for not being progressive. That results in many responses [...]

[...] is actually a bit of a rehash of a (quite misleading) debate that has been taking place on the Left Foot Forward blog, due to some wholly inadequate research [...]

@EvanHD this is alexander response http://bit.ly/be8YLA to challenee that threshold claim had regressive impact http://bit.ly/bCo4V4

Any Lib Dems want to tell me why making rich people even richer is a good use of money in a recession? http://bit.ly/ajPXzZ #libdemfail

RT @ralasdair: Any Lib Dems want to tell me why making rich people even richer is a good use of money in a recession? http://bit.ly/ajPXzZ #libdemfail

[...] would save £700 a year. He did not directly answer Gibbon’s question. But Will Straw did, in a post on Left Foot Forward yesterday. It includes a chart showing who will gain from the Lib Dem proposal, by income group. Straw said: [...]

[...] would save £700 a year. He did not directly answer Gibbon’s question. But Will Straw did, in a post on Left Foot Forward yesterday. It includes a chart showing who will gain from the Lib Dem proposal, by income group. Straw said: [...]

[...] would save £700 a year. He did not directly answer Gibbon’s question. But Will Straw did, in a post on Left Foot Forward yesterday. It includes a chart showing who will gain from the Lib Dem proposal, by income group. Straw said: [...]

[...] would save £700 a year. He did not directly answer Gibbon’s question. But Will Straw did, in a post on Left Foot Forward yesterday. It includes a chart showing who will gain from the Lib Dem proposal, by income group. Straw said: [...]

[...] would save £700 a year. He did not directly answer Gibbon’s question. But Will Straw did, in a post on Left Foot Forward yesterday. It includes a chart showing who will gain from the Lib Dem proposal, by income group. Straw said: [...]

When the Fabians first mounted this argument, they got comprehensively demolished http://is.gd/bsUr5 Why are they still tarting it about?

@BenCooper86 have you checked out this report? http://ow.ly/1yAqi

to the Lib Dems: http://ow.ly/1yAqi Oh Snap

RT @alixmortimer: When the Fabians first mounted this argument, they got comprehensively demolished http://is.gd/bsUr5 Why are they still tarting it about?

@BenCooper86 Have you read and understood the comments here? http://is.gd/bsUr5

@stop_jump it's unreal, check out this report: http://ow.ly/1yAqi

[...] it’s also important to look at some other areas. Regardless of whether their costings stack up, this blog has previously questioned whether the £17 billion intended for their flagship tax policy is the [...]

@Kopmatt09 not convinced about that http://bit.ly/9KPWKf

[...] on the progressive blogosphere Left Foot Forward, Tim Horton and Howard Reed show quite how regressive Liberal Democrat Tax policy truly is. [...]

Why Nick Clegg is plain wrong on tax. His plans are regressive, and he should know it. For more see-> http://bit.ly/bf6SeD #GE2010 #GE10

RT @leftfootfwd: Lib Dem tax policy "fails the fairness test" http://bit.ly/9veG2B

@WarrenPearce 10k tax is not redistributive http://bit.ly/9lAsfQ; AV is majoritarian not PR; agreed to Tory cuts; Europe/immigration

[...] – as we pointed out in our analysis of this tax cut before the election – this claim is totally [...]

[...] – as we pointed out in our analysis of this tax cut before the election – this claim is totally [...]

The 10K tax threshold rise doesn't help the poorest earners, dissection here: http://www.leftfootforward.org/ and http://bit.ly/9KPWKf

Will the new £10K tax band help the poor? http://bit.ly/9KPWKf

RT @leftfootfwd: Lib Dem tax policy "fails the fairness test" http://bit.ly/9veG2B
#takeitback #ukvote #condem

RT @leftfootfwd: Lib Dem tax policy "fails the fairness test" http://bit.ly/9veG2B

Will Staw, Have you taken in account the effects of the national insurance rise? The allowance and national insurance seems to create a balance…
http://www.telegraph.co.uk/news/newstopics/politics/7721618/Coalition-government-tax-cuts-of-140-for-workers-on-basic-rate.html

RT @leftfootfwd: Lib Dem tax policy "fails the fairness test" http://bit.ly/9veG2B

[...] Lib Dem tax policy “fails the fairness test” – Nick Clegg’s planned policy of “tax cuts for people and families on low and middle incomes” would be deeply regressive according to a detailed analysis by Tim Horton and Howard Reed for Left Foot Forward. Tags: economics liberaldemocrats coalition electoralpolitics [...]

[...] Tory original, though even superficially laudable ideas such as a higher tax threshold are actually regressive in their impact. More importantly, when it comes to the big fiscal issue, the tax changes are small [...]

[...] tax system, by initially increasing personal allowances to £10,000 (a highly regressive policy, as explained in detail by Left Foot Forward), funded through departmental cuts on ‘waste’ and raising CGT [...]

[...] March, Left Foot Forward published a report – “Think Again Nick – Why spending £17 billion to raise tax thresholds [...]

[...] economic future are not sacrificed in his attempt to balance the books.” A report for Left Foot Forward earlier this year showed that raising the tax threshold in this manner would do nothing for some 3 [...]

[...] IFS analysis on who gains from raising income tax thresholds was very similar to the earlier critique published by Left Foot Forward and the [...]

@asilbs2 "Some pros of this budget include the elimination of tax for 850,000 of the poorest of the poor" http://bit.ly/a3LkNb

[...] IFS analysis on who gains from raising income tax thresholds was very similar to the earlier critique published by Left Foot Forward and the [...]

[...] Second, he could change the ratio of tax rises to spending cuts so that they reflect the 2:1 ratio favoured by Labour or the 1:1 ratio favoured by Norman Lamont and Ken Clarke in the 1990s and by a number of countries embarking on similar deficit reductions. The Chancellor opted against this route in order to announce tax cuts for big businesses including the banks; cuts to employers’ national insurance; and for the Lib Dems’ regressive tax threshold rise. [...]

Just in case there are any starry eyed LibDems out there. Tax threshold proposal IS regressive too http://j.mp/bf6SeD

[...] month, Left Foot Forward posted a blog highlighting research by the two of us, which argued that the Liberal Democrats’ manifesto pledge [...]

[...] it must be progressive. This means seriously re-considering the merits of personal allowances. Analysis conducted by Left Foot Forward has demonstrated the regressive nature of income allowances, which [...]

[...] reducing the size of the public sector. The likely dividend of a balanced budget will be poorly targeted tax cuts like the rise in personal allowances, not increased spending on redistribution or improved public [...]

@TiggerTherese found link:
http://www.leftfootforward.org/2010/03/lib-dem-tax-policy-fails-the-fairness-test/

[...] is a very poor way of helping low-income households – see our earlier posts on this policy from March, April, May and June 2010. Nor are any of these regressive effects unknown to the Lib Dems, whose [...]

[...] it must be progressive. This means seriously re-considering the merits of personal allowances. Analysis conducted by Left Foot Forward has demonstrated the regressive nature of income allowances, which [...]

@faisalislam And it's a very expensive (and regressive) way to target support for the low paid: http://bit.ly/9KPWKf

RT @wdjstraw [taking the poor out of tax] a v expensive way to target support (http://bit.ly/9KPWKf ) >but simpler/more popular than credits

[...] cost the average family £389 per year – more than double. The policy is also – as Left Foot Forward has previously shown – an expensive and regressive way to target help at the lowest paid. Share | Permalink | [...]

@DrEvanHarris @edballsmp Ok! Could start by stopping £17bn give away to everyone except the poorest in society – http://tinyurl.com/6ho83pp

[...] Left Foot Forward has repeatedly pointed out, raising the tax threshold – a key plank of the Liberal Democrats’ [...]

[...] the allowance is usually talked of by Nick Clegg has a way to help the low paid and struggling, but as analysis by Howard Reed and Tim Horton pointed out in 2010, the distributional gains are hardly progressive. • the measure would do [...]