We think we'll chalk this up as a win


We here at the ASI are of course politically partisan: you can't work in the think tank world without meeting many politicians and making decisions about who is worthwhile and who isn't. However, we here at the ASI are not politically partisan when we're here at the ASI. Because, as Madsen has said, our job is to be the loons howling out in the wilderness over some policy that is seemingly ridiculous and to keep arguing for it until it becomes simply the accepted wisdom of the day. It is much easier to do this without being in the pocket, or being seen to be in the pocket, of one party or another. At which point we think we'll claim a victory over one such policy for it's now in three of the four major manifestos for this coming election. That's as close to being the received wisdom as anyone is likely to get. We refer to this:

Under a Conservative government the minimum wage will be linked to the personal allowance, which the Tories want to increase to £12,500 by the end of the next Parliament.

It means that if the minimum wage increases faster than expected, workers will always be exempt from paying income tax.

We know how this got into the UKIP manifesto for when away from the ASI one of us is so politically partisan. We also know how it got into the Lib Dem one, we can track the activist who read about it here and marched it through the party's policy making process. And of course that's also how it arrived in the Tory one. We can even identify it as absolutely coming from us because of the figure being used. £12,500 was the full year minimum wage in the year that we wrote about it: it's a little bit higher now.

Our basic analysis has always been that we do not in fact have "low wage" poverty in the UK. Rather, the State makes depredations into the incomes of the lowly paid and thus causes them to fall into tax poverty. The solution to such poverty is thus to tax those lowly paid less: after all, if you want the poor to have more money then the answer is to stop taking bloody money from them.

We can also check this with the Living Wage. This is, by construction, the amount that one needs to be able to live not in poverty, that poverty level being calculated as in Adam Smith's example of the linen shirt. The difference between that Living Wage once it is taxed and what an untaxed minimum wage would bring in is roughly zero, perhaps a few pence an hour. We thus don't have low wage poverty, we have tax poverty. It is the tax taken from the lowly paid that puts them into poverty.

So, obviously, simply stop taxing those lowly paid and they won't be poor. We thus welcome this move.

At which point there are three things to note. The first is that this needs to apply to national insurance as well, raise the allowance for that to the same as the income tax allowance (while, as with the very low paid already, crediting them with amounts deemed to have been paid so that pensions accrue). Secondly, those advocating this might want to point out that this does indeed produce the Living Wage for all minimum wage workers. And thirdly, of course, we need to find something else to go and howl about in the forests in time to make it the received wisdom for the next election.