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High tax, low pay

New thinking about low pay

The way we tax the low paid and them give them back complex, means-tested benefits really does my head in. Those people in society who typically are least capable or inclined to deal with “the System” are forced to deal with it twice. Once to take money off them in tax. Twice to give them back their own cash in tax credits. This set up may suit Gordon Brown and the thousands of civil servants who have to maintain this system but it is hugely costly and just a waste of life. Low paid people waste their lives paying tax and reclaiming it and civil servants have miserable jobs doing all the admin.

Two stories tonight approach the same problem from different ends. The LibDems saying that the tax threshold should be £10,000 (see LibDem story) and David Cameron saying that the Tories should be about giving people time back as well as cash in tax cuts (see Cameron story).

Right now if you do a 37.5 hour week on the minimum wage of £5.05 per hour you will earn £9,847.50 or £10,000 pretty much. Linking the minimum wage with the tax threshold would ensue that the low paid were not mired in the tax and benefits system and would also have the benefit of keeping Government honest with the minimum wage.