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

Quote of the Day

Angela Rayner on Labour’s economic policy (via Speccie):

“It is a bit of a sh*t-or-bust strategy…”

Sponsors

Guidogram: Sign up

Subscribe to the most succinct 7 days a week daily email read by thousands of Westminster insiders.
Sick Jared Back to Work Sick Jared Back to Work
Ann Black Purged by Red Terror Ann Black Purged by Red Terror
Parole Board Admit Processes Breached Parole Board Admit Processes Breached
Paul Mason: Aggressive and Intimidating Paul Mason: Aggressive and Intimidating
James O’Brien’s Carillion Fake News Goes Viral James O’Brien’s Carillion Fake News Goes Viral
O’Mara Hasn’t Helped a Single Constituent in Months O’Mara Hasn’t Helped a Single Constituent in Months
Credit Where Credit’s Due Credit Where Credit’s Due
Osborne on Carillion: Then and Now Osborne on Carillion: Then and Now
Paul Mason’s Column Axed Paul Mason’s Column Axed
Lord Pannick Backs Gauke’s Judicial Review Lord Pannick Backs Gauke’s Judicial Review
“Get On Your Knees, B*tch” Clive Lewis Returns to Labour Frontbench in Reshuffle” “Get On Your Knees, B*tch” Clive Lewis Returns to Labour Frontbench in Reshuffle”
Vulnerable Children’s Data Breached at Labour-Run Leicester City Council Vulnerable Children’s Data Breached at Labour-Run Leicester City Council
Dover Traffic at Record Levels Dover Traffic at Record Levels
10 Times Chris Williamson Wasn’t Sacked 10 Times Chris Williamson Wasn’t Sacked
Watch: Baroness Jenkin Drops C-Bomb in Lords Watch: Baroness Jenkin Drops C-Bomb in Lords
Worboys Victims Formally Ask CPS to Reassess 93 Unprosecuted Cases Worboys Victims Formally Ask CPS to Reassess 93 Unprosecuted Cases
BBC Reined In Over False Climate Claims BBC Reined In Over False Climate Claims
Corbyn Said Davos “Conspiracy” is “Cause of World’s Problems” Corbyn Said Davos “Conspiracy” is “Cause of World’s Problems”
Khan’s ‘Independent’ Brexit Study Written by Leave-Bashers And Corbynistas Khan’s ‘Independent’ Brexit Study Written by Leave-Bashers And Corbynistas
Press-Hating Peers Pave Way for Leveson 2 Press-Hating Peers Pave Way for Leveson 2