Readers will be aware that Guido and Danny Finkelstein have been squabbling for years about raising the tax thresholds for the working poor. Guido was even christened a “punk tax cutter” by Fink and at one point Nick Clegg himself intervened in our argument. Fink generously gave Clegg the space on his blog to tell Fink that he was wrong saying “I’m not sure I’ve ever been called a “punk tax cutter” before. I quite like the label… Danny Finkelstein is wrong, and cutting taxes is right… Growth is what we need now.” Fink gave a fair summary of his argument in January:
Is raising the income tax threshold, paid for by other rises, a good reform?
First, there are those who argue that it is a tax cut aimed at the working poor. This misunderstands who would actually gain from the measure. The vast bulk of the money goes to those earning more than £10,000. It is a very expensive tax cut, very poorly targeted on the working poor.
Second, there is an interlocking relationship between income tax and working families tax credit. Many of the working poor would find the money they gained from the tax cut clawed back because their increased income attracted less tax credit. Those of us who believe in lower taxes are always attracted by proposals to reduce tax bills. But there are good reasons to argue that this is neither the moment, nor the measure.
So Fink is squarely against the coalition government’s key tax pledge and we should expect to see columns and blogs by Fink resisting this policy using the rationale he has advanced time and time again.
Fink also argued in “Why the Tories Can’t follow the Lib Dems” that if the Tories followed them down the tax cutting route, it would be a total disaster, in “The tax debates: A response to Guido“ Fink argued that “the Lib Dems are in a fundamentally different position to the Conservatives. They are not offering to be the next Government and their credibility doesn’t matter. Nick Clegg has been hilariously unconvincing on the question of where the money for his tax cuts is coming from.” Is Fink laughing now?
One final claim that Fink never deigned to justify, despite repeated attempts by Guido to get him to, was that:
If the Tories were now to cut taxes immediately upon on entering office, what would happen? It would, erm, destabilise the economy, wouldn’t it.
Gilts are up a point since the coalition agreement, including Clegg’s tax cuts, was published. Game, set and government to Guido.