We appear to be getting the trades unions on board

From Sharon Graham at Unite:

If the tax threshold of around £12,500 hadn't been frozen for the past few years it would have moved up to over £16,000. People at the lower end are paying eye-watering amounts of tax and it needs to change.

We have long insisted that the personal allowance is far too low. Indeed, between us and the CPS we managed to get it raised to that £12,500 back a decade or two. On very simple grounds, it’s an abomination that we charge income tax (and NI, but for another day) to the incomes of those we define as poor. We are with Adam Smith on this, taxation should be more than in proportion to income - should be progressive. We’re going to use consumption and sin taxes for we simply will, which means that it is income taxes which have to provide that progressivity. This means that the poor pay less than the richer in said income tax. Obviously.

We went on to point out that we have a defined minimum wage. That’s the minimum at which it is allowable to sell your labour. Or, if you prefer, the minimum morally just and righteous amount that society as a whole can allow labour to be sold for. If that’s true, given that’s true legally, then the Lanyards don’t get to dip their wick in that amount. It’s the minimum just amount, see? That the allowance became that £12,500 was because we did win this argument. For that was the full year, full time, minimum wage at the time the target for the allowance was announced. Today that would be, on a 37.5 hour week, £24,784.50. Therefore that’s what the personal allowance should be, £24,784.50.

As all know the foundational volume of modern economics is Theory of Moral Sentiments therefore we see no problem in approaching taxation - an economic issue - from that basis of moral sentiments. We should not be charging income tax to the incomes of those we have already defined as poor. Of course, because we contain multitudes, there are those slightly more radical here who insist that income tax should only start on above median incomes: £39,039.

We also know that the peak of the Laffer Curve - given NI - is 40 to 45% for income tax so there’s no point at all in having rates higher than that. Which does indeed mean that a moral and just - as well as efficient - income tax system would raise substantially less than the current one. Which, in turn, means smaller government, but then there often are practical benefits, over and above mere smugness, with operating on a moral and just - as well as efficient - basis.

Now that we’ve got the unions on board with this who’s next?

Tim Worstall