IPPR Still Doesn’t Get It

ipprLeft-wing think tanks the IPPR and the Resolution Foundation have a joint report out advocating higher “living wages” forced on employers by regulatory diktat. Guido doesn’t dispute their claim that low pay increases the welfare bill by billions. Brown’s blizzard of redistributive bureaucracy and welfare transfers effectively left taxpayers subsidising low paying employers. Low paid workers pay taxes which they then get back in benefits…

Apart from the obviously wasteful tax-to-pay-benefits merry-go-round their policy has another fundamental flaw completely ignored by the wonks; it will increase wage costs and reduce corporate competitiveness, further undermining economic growth. Wouldn’t it be better instead to just raise the personal income tax threshold to £12,500 – as advocated by the LibDem’s Danny Alexander – effectively taking minimum wage earners out of income tax. It will have the same outcome – raising take home pay – without undermining competitiveness.

Raising the tax threshold is simple, has popular appeal and will benefit those on low earnings proportionately more than those on higher earnings. It will take some pressure off the “squeezed middle” and won’t increase the welfare trap. It isn’t a perfect policy, prominent Orange-booker Mark Littlewood, a wonk at the rival Institute for Economic Affairs, is wary that it will result in millions of voters being unaffected by the basic rate of income tax who therefore won’t be incentivised to vote for parties and policies that favour lower taxes. He fears that low-earners will have no reason to buy-in to tax cuts if they are taken out of the income tax bracket entirely.

IPPR’s wonkish sophistry may well appeal to Ed Miliband, IPPR’s Will Straw is likely to become a Labour MP at the next election. If in 2015 the coalition parties are both standing on a platform of reducing taxes on the working poor with the Labour Party standing on a platform of taxing the poor and increasing welfare benefits, Miliband will be on the wrong side of the dividing line. “Vote Labour and tax the poor” is a winning campaign slogan – for the coalition parties…



Tip offs: 0709 284 0531
team@Order-order.com

GuidoFawkes Quote of the Day

Rod Liddle:

“Family of 12 from Luton – including a baby and two grandparents who are suffering from diabetes and cancer – feared to have joined ISIS… yay – result! That’s saved us all quite a few bob, no? Carry on like this and we might clear the national debt.”

Top Posts This Week

Guidogram: Sign up

Subscribe to the most succinct 7 days a week daily email read by thousands of Westminster insiders.

Facebook

MEGA INTERCONTINENTAL ROBOT WARS MEGA INTERCONTINENTAL ROBOT WARS
Dave Meets UKIP Dave Meets UKIP
Secret Fracking Report Doesn’t Reveal Much Secret Fracking Report Doesn’t Reveal Much
Environmental Advantages of Airport Expansion Environmental Advantages of Airport Expansion
PMQS SKETCH PMQS SKETCH
“Dodgy” Dave v “Jurassic” Skinner “Dodgy” Dave v “Jurassic” Skinner

Missed PMQs? Catch Up in Full Here Missed PMQs? Catch Up in Full Here
Do you have what it takes to join a GCHQ hacking SCHOOL? Do you have what it takes to join a GCHQ hacking SCHOOL?
IDS Expenses Row: Was Credit Card Suspended Or Not? IDS Expenses Row: Was Credit Card Suspended Or Not?
Questions Channel 4 News Don’t Want to Ask Questions Channel 4 News Don’t Want to Ask
Zac and Boris Warn Dave Zac and Boris Warn Dave
NHS UN-APPY NHS UN-APPY
MP Shagging His Secretary on Highest Paygrade MP Shagging His Secretary on Highest Paygrade
Owen Jones Gets Owned Owen Jones Gets Owned
Read Sajid Javid Speech Slamming CBI Read Sajid Javid Speech Slamming CBI
Watch: BBC3 Greatest Hits Watch: BBC3 Greatest Hits
LORD DEBEN’S CLIMATE ALARMISM LORD DEBEN’S CLIMATE ALARMISM
WATCH: Terror Training Exercise in London WATCH: Terror Training Exercise in London
Meet the Next Generation of Troughing MPs Meet the Next Generation of Troughing MPs