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	<title>Comments on: Lib Dem tax policy: Our response to your responses</title>
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	<description>Left Foot Forward is a political blog for progressives. We provide evidence-based analysis on British politics, news and policy developments.</description>
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		<title>By: The graph that shames Nick Clegg &#124; Left Foot Forward</title>
		<link>http://www.leftfootforward.org/2010/03/lib-dem-tax-policy-our-response-to-your-responses/comment-page-1/#comment-54325</link>
		<dc:creator>The graph that shames Nick Clegg &#124; Left Foot Forward</dc:creator>
		<pubDate>Tue, 21 Sep 2010 10:50:24 +0000</pubDate>
		<guid isPermaLink="false">http://www.leftfootforward.org/?p=10104#comment-54325</guid>
		<description>[...] June 2010. Nor are any of these regressive effects unknown to the Lib Dems, whose leadership and activists have both engaged with our research in months gone by. (And the Tories know all this too – see [...]</description>
		<content:encoded><![CDATA[<p>[...] June 2010. Nor are any of these regressive effects unknown to the Lib Dems, whose leadership and activists have both engaged with our research in months gone by. (And the Tories know all this too – see [...]</p>
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		<title>By: Clegg’s £10k tax allowance is no Tory concession; it’s a Tory dream &#171; Dnmufc&#39;s Blog</title>
		<link>http://www.leftfootforward.org/2010/03/lib-dem-tax-policy-our-response-to-your-responses/comment-page-1/#comment-24203</link>
		<dc:creator>Clegg’s £10k tax allowance is no Tory concession; it’s a Tory dream &#171; Dnmufc&#39;s Blog</dc:creator>
		<pubDate>Wed, 12 May 2010 18:39:48 +0000</pubDate>
		<guid isPermaLink="false">http://www.leftfootforward.org/?p=10104#comment-24203</guid>
		<description>[...] what about the Lib Dems themselves? When we produced our analysis in March, we were treated to a barrage of criticism from Liberal Democrat activists (even though our main points were subsequently validated by the [...]</description>
		<content:encoded><![CDATA[<p>[...] what about the Lib Dems themselves? When we produced our analysis in March, we were treated to a barrage of criticism from Liberal Democrat activists (even though our main points were subsequently validated by the [...]</p>
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		<title>By: Clegg’s 10k tax allowance is no Tory concession; it's a Tory dream &#124; Left Foot Forward</title>
		<link>http://www.leftfootforward.org/2010/03/lib-dem-tax-policy-our-response-to-your-responses/comment-page-1/#comment-24149</link>
		<dc:creator>Clegg’s 10k tax allowance is no Tory concession; it's a Tory dream &#124; Left Foot Forward</dc:creator>
		<pubDate>Wed, 12 May 2010 17:23:50 +0000</pubDate>
		<guid isPermaLink="false">http://www.leftfootforward.org/?p=10104#comment-24149</guid>
		<description>[...] what about the Lib Dems themselves? When we produced our analysis in March, we were treated to a barrage of criticism from Liberal Democrat activists (even though our main points were subsequently validated by the [...]</description>
		<content:encoded><![CDATA[<p>[...] what about the Lib Dems themselves? When we produced our analysis in March, we were treated to a barrage of criticism from Liberal Democrat activists (even though our main points were subsequently validated by the [...]</p>
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		<title>By: Lee Griffin</title>
		<link>http://www.leftfootforward.org/2010/03/lib-dem-tax-policy-our-response-to-your-responses/comment-page-1/#comment-12148</link>
		<dc:creator>Lee Griffin</dc:creator>
		<pubDate>Wed, 24 Mar 2010 12:28:46 +0000</pubDate>
		<guid isPermaLink="false">http://www.leftfootforward.org/?p=10104#comment-12148</guid>
		<description>&quot;(though its puzzling that many of the same individuals have been furiously posting other comments trying to argue the figures are wrong – they can’t both be wrong and obvious).&quot;

That&#039;s not what was said. What was said is that your figures are wrong (i.e. how it will effect those it effects) and that your statement about it not helping those that don&#039;t pay tax is obvious (as it&#039;s a tax cut). So your analysis can be wrong and obvious at the same time because your analysis covered more than one statement.</description>
		<content:encoded><![CDATA[<p>&#8220;(though its puzzling that many of the same individuals have been furiously posting other comments trying to argue the figures are wrong – they can’t both be wrong and obvious).&#8221;</p>
<p>That&#8217;s not what was said. What was said is that your figures are wrong (i.e. how it will effect those it effects) and that your statement about it not helping those that don&#8217;t pay tax is obvious (as it&#8217;s a tax cut). So your analysis can be wrong and obvious at the same time because your analysis covered more than one statement.</p>
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		<title>By: John77</title>
		<link>http://www.leftfootforward.org/2010/03/lib-dem-tax-policy-our-response-to-your-responses/comment-page-1/#comment-11651</link>
		<dc:creator>John77</dc:creator>
		<pubDate>Sun, 21 Mar 2010 21:33:56 +0000</pubDate>
		<guid isPermaLink="false">http://www.leftfootforward.org/?p=10104#comment-11651</guid>
		<description>&quot;While there was a lot of discussion about this analysis, we haven’t seen any comments that substantively challenge our figures.&quot;
I thought that saying you had got the numbers wrong was a substantive challenge. 
According to ONS, the bottom decile pays on average £190 (over 3% of net disposable income) in income tax and receives £73 in tax credits, the next decile pays £368 in income tax (again over 3% of net disposable income)and receives £303 from tax credits.
The Lib Dem proposal does more for the poorest than your suggestion of  increasing tax credits which principally help those in the middle of the income distribution (fifth decile receive £705 on average, nearly ten times as much as the bottom decile). Your alternative would do MORE to increase the differential between the bottom and the middle.
The credit that benefits the bottom decile most disproportionately is the contribution-based Job Seekers Allowance (the income-based JSA and Widows&#039; benefit decline more slowly). Also the council tax rebate is much smaller in absolute terms and as a percentage of Council tax due for the bottom decile than the second decile. So your argument about the amount of income absorbed by indirect taxes is unsound - much of this (eg the stamp duty on purchase of expensive house) is from people, often temporarily unemployed or taking an MBA course, who have considerable savings making them ineligible for means-tested benefits: those who are living on their income have much less absorbed by indirect taxes. Indirect taxes as a percentage of expenditure are lower for the bottom quintile by equivalised income than for the next quintile. 
Taking 4.34 million people out of income tax entirely would have cost £1.45bn, not £1bn in 2008/9, according to HMRC. The number and amount is practically certain to be higher now as a result of short-time working to protect jobs and the fall in self-employment income (the self-employed are a relative high proportion of the bottom income quintile). Currently over two-thirds of all adults not in full-time education including those with incomes barely one-quarter of median earnings pay income tax - this proposal would take out 14% of those who jointly pay less than 1% of the total.
Please could you look again at graphs 8 and 9 which imply that there are people paying higher rate tax in households with aggregate gross income less than £10,000? They also assume that there are more people paying income tax than there are adults in the household in the top two deciles (where one might expect some wives without paid employment).</description>
		<content:encoded><![CDATA[<p>&#8220;While there was a lot of discussion about this analysis, we haven’t seen any comments that substantively challenge our figures.&#8221;<br />
I thought that saying you had got the numbers wrong was a substantive challenge.<br />
According to ONS, the bottom decile pays on average £190 (over 3% of net disposable income) in income tax and receives £73 in tax credits, the next decile pays £368 in income tax (again over 3% of net disposable income)and receives £303 from tax credits.<br />
The Lib Dem proposal does more for the poorest than your suggestion of  increasing tax credits which principally help those in the middle of the income distribution (fifth decile receive £705 on average, nearly ten times as much as the bottom decile). Your alternative would do MORE to increase the differential between the bottom and the middle.<br />
The credit that benefits the bottom decile most disproportionately is the contribution-based Job Seekers Allowance (the income-based JSA and Widows&#8217; benefit decline more slowly). Also the council tax rebate is much smaller in absolute terms and as a percentage of Council tax due for the bottom decile than the second decile. So your argument about the amount of income absorbed by indirect taxes is unsound &#8211; much of this (eg the stamp duty on purchase of expensive house) is from people, often temporarily unemployed or taking an MBA course, who have considerable savings making them ineligible for means-tested benefits: those who are living on their income have much less absorbed by indirect taxes. Indirect taxes as a percentage of expenditure are lower for the bottom quintile by equivalised income than for the next quintile.<br />
Taking 4.34 million people out of income tax entirely would have cost £1.45bn, not £1bn in 2008/9, according to HMRC. The number and amount is practically certain to be higher now as a result of short-time working to protect jobs and the fall in self-employment income (the self-employed are a relative high proportion of the bottom income quintile). Currently over two-thirds of all adults not in full-time education including those with incomes barely one-quarter of median earnings pay income tax &#8211; this proposal would take out 14% of those who jointly pay less than 1% of the total.<br />
Please could you look again at graphs 8 and 9 which imply that there are people paying higher rate tax in households with aggregate gross income less than £10,000? They also assume that there are more people paying income tax than there are adults in the household in the top two deciles (where one might expect some wives without paid employment).</p>
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		<title>By: Peter Kunzmann</title>
		<link>http://www.leftfootforward.org/2010/03/lib-dem-tax-policy-our-response-to-your-responses/comment-page-1/#comment-11615</link>
		<dc:creator>Peter Kunzmann</dc:creator>
		<pubDate>Sun, 21 Mar 2010 15:52:05 +0000</pubDate>
		<guid isPermaLink="false">http://www.leftfootforward.org/?p=10104#comment-11615</guid>
		<description>&gt; Just to develop the point about the Local Income Tax, this would mean that under LD tax policy (assuming a 3% LIT) the personal allowance would be £10,000, the lower rate would be 23% the middle rate 43% and the upper rate 53%. This is in addition to the lowering of the 40%/43% threshold the reforms at the very top. This really does need factoring in to your equations, becuase it would significantly change the results of your analysis.</description>
		<content:encoded><![CDATA[<p>&gt; Just to develop the point about the Local Income Tax, this would mean that under LD tax policy (assuming a 3% LIT) the personal allowance would be £10,000, the lower rate would be 23% the middle rate 43% and the upper rate 53%. This is in addition to the lowering of the 40%/43% threshold the reforms at the very top. This really does need factoring in to your equations, becuase it would significantly change the results of your analysis.</p>
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		<title>By: Peter Kunzmann</title>
		<link>http://www.leftfootforward.org/2010/03/lib-dem-tax-policy-our-response-to-your-responses/comment-page-1/#comment-11604</link>
		<dc:creator>Peter Kunzmann</dc:creator>
		<pubDate>Sun, 21 Mar 2010 14:08:26 +0000</pubDate>
		<guid isPermaLink="false">http://www.leftfootforward.org/?p=10104#comment-11604</guid>
		<description>Dear Tim and Howard. Thank you for your response, especially your detailed response to my own points.

I will try to make my response as balanced as possible.

Firstly, I would like to reiterate that I believe if all Lib Dem tax and benefit changes are taken into account the results are much more progressive than those proposed by any other party. This you have not disputed (at least not yet!)

Such an evaluation may not have been your goal, but the headline on the &#039;Left Foot Forward&#039; website was &quot;Lib Dem tax policy fails the fairness test&quot;, which I think most people would take to imply you are discussing (at the very least) Lib Dem tax policy as a whole. This is certainly the impression that most of my Labour friends got. And, if I&#039;m honest, I believe was the impression that &#039;Left Foot Forward&#039; were trying to give.

Even if you ignore my issues regarding benefits. The Local Imcome Tax  remains a key aspect of Lib Dem tax policy and, I believe, would address your concerns about the middle benefiting too much.

I also think James&#039; point about the real income differentials being much greater between the fourth and fifth quintile than between the lower quintiles is also a very important point to emphasise. Even taking just the aspects of the Lib Dem Tax changes you discuss in your paper, Lib Dem policy does address what appears to be the greatest inequality.

Secondly, I would also still contend that the graphs you produce are misleading. The graphs (unlike the text) do not show the effect of the tax changes on the wealthiest. If you view these changes as worthy to inclusion in the, it should be in the graphs - especially the headline graph on the website. Such graphs would have shown all lower deciles benefitting except the very top - again giving a very different impression to the casual reader.

However, all that said, I do accept your central point that the £17 Billion the Liberal Democrats intend to raise from the wealthiest members of society could be spent better to help the poor and the poorest. I argued this myself at the time the policy was passed and have continued to argue it ever since.

Like I said, personally I find a Citizen&#039;s Income policy very attractive - which would ensure that those at the very bottom got a good boost. £17 Billion could fund a citizen&#039;s income of around £450 per year per person to the country&#039;s working age population. Other ideas, like more funding for public services would also be extremely worthy... and even, dare I say it, tax credits, if anyone could get them to work without messing up many people&#039;s lives with complication, confusion, overpayments and clawbacks.

Nevertheless, current Lib Dem policy does help those on low incomes at the expense of the very top. Sure it is not in the best way possible. And there is a case to be made for addressing the difference between the bottom and the middle.

Your comments in isolation are good... but presented in the way they are is bound to mislead people about the Lib Dem policies as a whole.</description>
		<content:encoded><![CDATA[<p>Dear Tim and Howard. Thank you for your response, especially your detailed response to my own points.</p>
<p>I will try to make my response as balanced as possible.</p>
<p>Firstly, I would like to reiterate that I believe if all Lib Dem tax and benefit changes are taken into account the results are much more progressive than those proposed by any other party. This you have not disputed (at least not yet!)</p>
<p>Such an evaluation may not have been your goal, but the headline on the &#8216;Left Foot Forward&#8217; website was &#8220;Lib Dem tax policy fails the fairness test&#8221;, which I think most people would take to imply you are discussing (at the very least) Lib Dem tax policy as a whole. This is certainly the impression that most of my Labour friends got. And, if I&#8217;m honest, I believe was the impression that &#8216;Left Foot Forward&#8217; were trying to give.</p>
<p>Even if you ignore my issues regarding benefits. The Local Imcome Tax  remains a key aspect of Lib Dem tax policy and, I believe, would address your concerns about the middle benefiting too much.</p>
<p>I also think James&#8217; point about the real income differentials being much greater between the fourth and fifth quintile than between the lower quintiles is also a very important point to emphasise. Even taking just the aspects of the Lib Dem Tax changes you discuss in your paper, Lib Dem policy does address what appears to be the greatest inequality.</p>
<p>Secondly, I would also still contend that the graphs you produce are misleading. The graphs (unlike the text) do not show the effect of the tax changes on the wealthiest. If you view these changes as worthy to inclusion in the, it should be in the graphs &#8211; especially the headline graph on the website. Such graphs would have shown all lower deciles benefitting except the very top &#8211; again giving a very different impression to the casual reader.</p>
<p>However, all that said, I do accept your central point that the £17 Billion the Liberal Democrats intend to raise from the wealthiest members of society could be spent better to help the poor and the poorest. I argued this myself at the time the policy was passed and have continued to argue it ever since.</p>
<p>Like I said, personally I find a Citizen&#8217;s Income policy very attractive &#8211; which would ensure that those at the very bottom got a good boost. £17 Billion could fund a citizen&#8217;s income of around £450 per year per person to the country&#8217;s working age population. Other ideas, like more funding for public services would also be extremely worthy&#8230; and even, dare I say it, tax credits, if anyone could get them to work without messing up many people&#8217;s lives with complication, confusion, overpayments and clawbacks.</p>
<p>Nevertheless, current Lib Dem policy does help those on low incomes at the expense of the very top. Sure it is not in the best way possible. And there is a case to be made for addressing the difference between the bottom and the middle.</p>
<p>Your comments in isolation are good&#8230; but presented in the way they are is bound to mislead people about the Lib Dem policies as a whole.</p>
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		<title>By: James Graham</title>
		<link>http://www.leftfootforward.org/2010/03/lib-dem-tax-policy-our-response-to-your-responses/comment-page-1/#comment-11501</link>
		<dc:creator>James Graham</dc:creator>
		<pubDate>Sat, 20 Mar 2010 14:28:18 +0000</pubDate>
		<guid isPermaLink="false">http://www.leftfootforward.org/?p=10104#comment-11501</guid>
		<description>&lt;blockquote&gt;I’m not sure why so many Lib Dem activists think this is illegitimate (such as James Graham at Social Liberal Forum).&lt;/blockquote&gt;
&lt;em&gt;More&lt;/em&gt; smears? That isn&#039;t what I wrote at all. Perhaps, rather than knocking down your own Straw(sic) men, you might want to address the three main substantive points in my article:

1. Raising personal allowance will be pro-jobs and help reduce inflationary pressures on wages at a time of economic fragility - this benefits the low waged most of all.

2. The difference in wages between the first four quintiles is significantly lower than the difference in wages between the fourth and fifth quintile.  It makes sense to build solidarity between people on middle incomes and low incomes.

3. It represents a shift away from taxes on income and onto taxes on wealth, thereby addressing the even bigger problem of wealth inequality.

A side point: in your article in the Guardian this week, you criticise Nick Clegg for &quot;praising Margaret Thatcher.&quot; In fact, his comments were limited to her attack on vested interests, drawing parallels between the unions of the 70s and the banks now.  On that basis, how can you remain the member of a party lead by a man who not only takes tea with Maggie but states that:

&quot;I think Lady Thatcher saw the need for change.

&quot;And I think whatever disagreements you have with her about certain policies - there was a large amount of unemployment at the time which perhaps could have been dealt with - we have got to understand that she saw the need for change.

&quot;I also admire the fact that she is a conviction politician ... I am a conviction politician like her.&quot;

Since you are at pains to emphasise how this is not a partisan attack, where is your vociferous attack on him, or on the Labour policy a couple of years ago to cut income tax by 2p and to scrap the 10p rate?</description>
		<content:encoded><![CDATA[<blockquote><p>I’m not sure why so many Lib Dem activists think this is illegitimate (such as James Graham at Social Liberal Forum).</p></blockquote>
<p><em>More</em> smears? That isn&#8217;t what I wrote at all. Perhaps, rather than knocking down your own Straw(sic) men, you might want to address the three main substantive points in my article:</p>
<p>1. Raising personal allowance will be pro-jobs and help reduce inflationary pressures on wages at a time of economic fragility &#8211; this benefits the low waged most of all.</p>
<p>2. The difference in wages between the first four quintiles is significantly lower than the difference in wages between the fourth and fifth quintile.  It makes sense to build solidarity between people on middle incomes and low incomes.</p>
<p>3. It represents a shift away from taxes on income and onto taxes on wealth, thereby addressing the even bigger problem of wealth inequality.</p>
<p>A side point: in your article in the Guardian this week, you criticise Nick Clegg for &#8220;praising Margaret Thatcher.&#8221; In fact, his comments were limited to her attack on vested interests, drawing parallels between the unions of the 70s and the banks now.  On that basis, how can you remain the member of a party lead by a man who not only takes tea with Maggie but states that:</p>
<p>&#8220;I think Lady Thatcher saw the need for change.</p>
<p>&#8220;And I think whatever disagreements you have with her about certain policies &#8211; there was a large amount of unemployment at the time which perhaps could have been dealt with &#8211; we have got to understand that she saw the need for change.</p>
<p>&#8220;I also admire the fact that she is a conviction politician &#8230; I am a conviction politician like her.&#8221;</p>
<p>Since you are at pains to emphasise how this is not a partisan attack, where is your vociferous attack on him, or on the Labour policy a couple of years ago to cut income tax by 2p and to scrap the 10p rate?</p>
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		<title>By: Trade Income</title>
		<link>http://www.leftfootforward.org/2010/03/lib-dem-tax-policy-our-response-to-your-responses/comment-page-1/#comment-11472</link>
		<dc:creator>Trade Income</dc:creator>
		<pubDate>Sat, 20 Mar 2010 09:58:00 +0000</pubDate>
		<guid isPermaLink="false">http://www.leftfootforward.org/?p=10104#comment-11472</guid>
		<description>&lt;span class=&quot;topsy_trackback_comment&quot;&gt;&lt;span class=&quot;topsy_twitter_username&quot;&gt;&lt;span class=&quot;topsy_trackback_content&quot;&gt;Lib Dem tax policy: Our response to your responses &#124; Left Foot Forward http://bit.ly/aPBRRV&lt;/span&gt;&lt;/span&gt;</description>
		<content:encoded><![CDATA[<p><span class="topsy_trackback_comment"><span class="topsy_twitter_username"><span class="topsy_trackback_content">Lib Dem tax policy: Our response to your responses | Left Foot Forward <a href="http://bit.ly/aPBRRV" rel="nofollow">http://bit.ly/aPBRRV</a></span></span></span></p>
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		<title>By: First Income</title>
		<link>http://www.leftfootforward.org/2010/03/lib-dem-tax-policy-our-response-to-your-responses/comment-page-1/#comment-11473</link>
		<dc:creator>First Income</dc:creator>
		<pubDate>Sat, 20 Mar 2010 09:57:59 +0000</pubDate>
		<guid isPermaLink="false">http://www.leftfootforward.org/?p=10104#comment-11473</guid>
		<description>&lt;span class=&quot;topsy_trackback_comment&quot;&gt;&lt;span class=&quot;topsy_twitter_username&quot;&gt;&lt;span class=&quot;topsy_trackback_content&quot;&gt;Lib Dem tax policy: Our response to your responses &#124; Left Foot Forward http://bit.ly/aPBRRV&lt;/span&gt;&lt;/span&gt;</description>
		<content:encoded><![CDATA[<p><span class="topsy_trackback_comment"><span class="topsy_twitter_username"><span class="topsy_trackback_content">Lib Dem tax policy: Our response to your responses | Left Foot Forward <a href="http://bit.ly/aPBRRV" rel="nofollow">http://bit.ly/aPBRRV</a></span></span></span></p>
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