Tax Transparency

Guido was at a private dinner last week held by an influential think-tank; around the table sat a senior Tory tax policy expert, right-of-centre wonks and an investment banker turned MP newly promoted to the government payroll. The talk was of consolidating national insurance and income tax into one headline figure. The Mail and the Sunday Times have been given the same steer that it is on the budget agenda.

The myth that national insurance is some kind of insurance to fund the welfare state no longer fools anyone. NI is just another income tax, even if it is called “employer’s NI” it is still a tax on the employee’s income. Consolidating the taxes will make income tax more transparent, the headline starting rate  is really 32% not 20%, higher rate taxpayers pay 52% not 40% of their income in taxes. The marginal rate for those on £100,000 is 60%. Making this clearly transparent will make it easier in the long run to win the political argument that we are taxed enough already. It is politically difficult to justify taking more than half a worker’s income in taxes, Guido would further argue it is immoral for the state to take the majority of the fruit of our labour. Feudal serfs kept more of their income. Transparency on taxes will inform the argument more clearly to the public.

The bad news is Osborne is expected to bring the 40% higher rate threshold down to pay for a rise in the lower rate threshold, putting 750,000 more taxpayers on the higher 40% rate. That’ll be the squeezing of the middle…

UPDATE: From the comments:

Employer’s NI is paid on all income and Employee’s continues at 1% after they reach the upper threshold The resulting tax rates are therefore 43.8%, for basic rate taxpayers, 53.8% for middle rate taxpayers, and 63.8% for those paying top rate tax. NI is going up in April so you can add 2% to all these rates.




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

Quote of the Day

President Trump on May’s Brexit deal:

“I would say that Brexit is Brexit. … The people voted to break it up. So I would imagine that’s what they’ll do. But maybe they’ll take a different route, I’m not sure that’s what they voted for.”

Sponsors

Guidogram: Sign up

Subscribe to the most succinct 7 days a week daily email read by thousands of Westminster insiders.
Poll: Voters 2 to 1 for No Deal Poll: Voters 2 to 1 for No Deal
Paul Mason Reported to Police Paul Mason Reported to Police
Etonian Free Cabinet Etonian Free Cabinet
Tory MP Puts Letter In to Brady Tory MP Puts Letter In to Brady
Lord Carrington Lord Carrington
Poll: May’s Deal or No Deal? Poll: May’s Deal or No Deal?
Labour’s Chequers Survival Kit Labour’s Chequers Survival Kit
Whips’ Patsies in Full Whips’ Patsies in Full
Tories Will Lose Votes if They Cross Brexit Red Lines Tories Will Lose Votes if They Cross Brexit Red Lines
Remain Used Same Spending Tactics as Leave But Far Worse Remain Used Same Spending Tactics as Leave But Far Worse
Paul Mason’s Coming Home to England Paul Mason’s Coming Home to England
Penny’s Sign Language at Despatch Box Penny’s Sign Language at Despatch Box
Lefties Disappointed as England Win Lefties Disappointed as England Win
SNP Plot to Ruin England Match SNP Plot to Ruin England Match
MEPs Vote to Reject Transparency MEPs Vote to Reject Transparency
Labour Reinstate Jared Labour Reinstate Jared
Hancock Jumps on a Wall Hancock Jumps on a Wall
PM Runners and Riders PM Runners and Riders
Cabinet Brexiters Silent as Robbins Rubs Out Red Lines Cabinet Brexiters Silent as Robbins Rubs Out Red Lines