If You Want To Reduce Poverty Cut Taxes

Allister Heath, one of the few mainstream journalists worth reading, has this to say in the Telegraph today:

Voters would be shocked if they realised how much tax is levied on their labour, including on relatively low salaries, and just how complex the system has become once income tax and both kinds of National Insurance are accounted for.

Earnings above £7,717 are briefly taxed at a rate of 12.1pc; above £7,769 this jumps to 22.7pc; then the combined tax rate shoots up to 40.2pc from £9,440, briefly reaching 57.8pc above £41,450; it then falls back to 49pc from £41,558; rockets to a bonkers 66.6pc from £100,000; falls back again 49pc from £118,880 and then settles at 53.4pc from £150,000. Labour’s 5p hike would push the combined tax rate above £150,000 to 57.8pc.

Not only is this system crazy, benefiting tax lawyers and government bureaucrats primarily, it also means that people on low incomes - the ones we want to have the most benefit from their salaries - are being scalped. Forget the 'living wage' the simple solution to making poor people richer is to stop them being taxed completely. Let them keep everything they earn. And of course if you cut taxes across the board it pumps more money into the economy, with positive outcomes for all of us.