The Tories are getting scared by the success of the left in using the internet for campaigning. Avaaz and 38 degrees seem pretty neutral to me; Labour Left is not. All have been highly successful in using the net to campaign, and I applaud them for it.
Now the Tories are launching Right Angle. It bis horribly jingoistic, but perhaps most tellingly its first campaign is typically Tory. They're campaigning to increase the tax personal allowance - the amount each person can earn each year tax free - to £10,000. Their claim is:
This tax-cut would make most people £700 better off, every year.
The only trouble is, that as the Institute for Fiscal Studies have shown, that's just not true. As the Guardian reported on Friday:
Today, the Institute for Fiscal Studies publishes research that reveals who really benefits most [from this policy are] some of the richest households in the country.
As George Osborne weighs up the competing arguments of Tory backbenchers before the budget on 21 March, his Lib Dem coalition partners and furious middle-class mums about to lose their child benefit, James Browne of the IFS lays bare the reality of focusing the Treasury's firepower on raising the tax threshold.
One third of all adults receive no benefit from the change at all, because they already earn too little to pay any income tax. Looking across families as a whole, instead of taking taxpayers as isolated individuals, it becomes clear that because both people in a two-earner household each get to claim their own personal allowance, they would do best out of the measure. Even as a percentage of their income, it is higher earners who benefit most.
As the IFS put it:
To summarise, the common assertion that increasing the personal allowance is progressive is true if one considers the gains across individual income taxpayers. It is not true if one considers the gains across all families as relatively few of the poorest families contain a taxpayer and two-earner couples gain twice as much in cash terms as one-earner families.
And any attempt to lower the threshold for higher rate tax to get round this will mean 200,000 more families will lose child benefits.
The graph says it all:
So what a surprise! The Tories are copying the Republicans in trying to get large numbers of people to campaign against what is good for them and in favour of what is good for the best off.
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Why do you quote the IFS approvingly at times and disparage them at others? I thought you have said that it is a right wing front, or neo liberal propaganda, or any other paranoia you come out of with.
So, are the IFS reliable or not? Or are they only reliable when they agree with you?
When the IFS sticks to facts it seems pretty reliable
When it seeks to create policy it’s right wing connections with the Oxford Centre for Business Taxation become very clear – and they’re funded by the FTSE 100 amongst others
So yes, I am selective – but appropriately so. Being able to form an opinion on evidence is part of being human. It’s what I do
This is a long standing LibDem policy. When the coalition increased the tax free allowance in 2010 by £1000, they lowered the upper limit for the basic rate by £1000 so that higher tax rate earners didn’t benefit from the increase. Assuming they do the same thing with further increases, no body will change from or to the higher tax bracket as a result of this change, so the comment about child benefit is unlikely to be correct.
Also, your graph is woefully inaccurate. Everyone earning over £10K a year will be better off by £379. (10,000-8,105)*0.2 if you want to check for yourself (using the 2012/3 allowance rate as any change will probably not apply until 2013/4). The only people who will gain less than this are the people who earn between £8,105 and £10,000 a year, because they won’t be paying any income tax any more.
It’s also worth pointing out that anyone earning over £100,000 has their personal allowance reduced by £1 for every £2 earnt, so anyone earning more than £120K will not see a change.
Please feel free to point out if I have made any mistakes in my calculations.
Please read the IFS work
It looks at the real impact on families
And your claim of no impact on higher rate just has to be wrong. If you lower the point where people enter higher rates more pay it and so will lose child benefits
Sorry – but you have not read IFS point and you seem not to get higher rate tax effect
I think the child benefit argument is moot until we know the precise details of the changes. There’s currently too many unknowns, like how two parents just under the threshold will be treated compared to one high earner in a family. Also, I suspect the treasury will take that change into effect when they consider the tax allowance increase. It’s entirely possible that they may change their minds entirely about the child benefits, as it’s proving to be rather divisive.
I see now that it’s families, rather than tax payers, which means that the higher income families will have two tax payers compared to the lower deciles which will just have the one.
My main point was that any change to the tax allowance will not leave any higher tax rate payer any better off, and will only affect basic tax rate payers, removing a large number from that group all together. That last point has to be commended.
That’s not to say that more should be done to help the lowest earners. An increase in the tax credits system would be a great start.
Respectfully – there are too many imponderables in there to engage with
And respectfully – your claim is just wrong – and ion this occasion the IFS is exactly right because you ignore the family issue
Okay, I just spotted that in 2010, they reduced the higher tax rate by more than £1,000, so more people will pay the higher rate. It remains to be seen the details of the child benefit changes, but I agree these may be affected.
The Oxford Centre for Business Taxation is a very valuable organ regarding the tax debate and your intimation that it is right wing is without substance (what was right wing about last weeks conference – you may not like who funds it, perhaps the TUC would consider a contribution.
You may not wish to agree with it but I expect you will nevertheless agree that it certainly adds value to the tax discussion and does have some pretty outstanding academics attached to it.
What was
They are fundamental hard core neoliberals who argue in favour of limited tax on companies and in favour of tax havens
Not right wing at all then
Rubbish – is that what you regard last weeks conference on Tax Policy to be, a bunch of hardcore neoliberals. I’m sure some of the delegates would be delighted with that. And the GAAR conference, also neoliberals and right-wingers.
You are basing your assumption on a small portion of their research work which is disingenuous and misleading.
When was the last time they sought to offer balanced opinion?
You’ll only hear one voice there
They’ve banned all others – contrary to the rules of Oxford University
“UK Right Angle” – it’s got to be the worst name for a campaigning group ever! Pure “BrassEye” or indeed “Fairly Secret Army” (for those with memories of the early days of Channel 4).
I agree with you in principle but your judgement feels a little harsh here. The graph that you claim “says it all” is basically a bell curve – the people who will benefit most are deciles 4, 5, 6, 7, 8 and 9: perhaps not the poorest in society but not just the rich either.
Since it’s a right-wing group you can’t really be surprised if they believe that lowering taxes will stimulate growth, and thus benefit everyone. Isn’t it better that they campaign for this, rather than for the reduction of the higher rate of income tax or the abolition of IHT?
Hang on – this is their judgement – not just mine
Perhaps Right Angle should be Obtuse Angle?
But not a Cute Angle!
This is why some of us favour a Citizens Dividend over a Personal Allowance. While Income Tax with a PA is in many ways equivalent to Income Tax with an equivalent level of CD in place of the PA, the low paid or unemployed would benefit far more from an increase in a CD than the equivalent increase in a PA since everyone benefits from the full increase in CD whereas only those who earn enough to use all of their increased PA, benefit fully from the increase in PA.