August 26, 2005

Absurdities of the current tax system

we currently have tax system that discourages people from working harder. This is the obvious conclusion that can be drawn from Stumbling and Mumbling's analysis of the current state of UK taxes, and he has numbers to back it up using data from The Department for Work and Pensions not less.
Here’s a question: Take a married couple with two children under 11 and pre-tax earnings of £200 a week. If they get a better job, raising their earnings to £300 a week, by how much does their net income rise?
Yes. £8.52. That’s a marginal deduction rate of 91.5 per cent.
So you do £100 of more work to recieve £8.52. Deduct the effort that was expended to get this extra £8.52 and you are making a net loss of £91.48 on your investment in extra work that could be placed elsewhere for a much greater gain. He claims that this
strongly supports the principle of a flat tax and citizen’s basic income.
I haven't read the data so I cannot confirm this despite liking flat tax and citizens basic income, but what I can say for certain is certainly supports not using the current system.


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