Anyway, Peter's original comment painted a couple of scenarios...
While I agree personal rates should be high enough to slim down the tax base by several million low earners this does not address the benefits issue.
Person a) is eighteen, lives with his parents, earns £15,000 per annum and gets by tolerably well.
Person b) is a single mother of two also earning £15k but has to meet rent, commuting, utilities and childcare costs. Why should she not get child benefit when she / her children clearly need some help? (Arguments about life style choices are a separate issue here - maybe she was widowed or something).
Working tax credits had the germ of a good idea but its implementation was poor.
Er... I'm not quite sure that I understand the point. In this scenario,
- Person A is not entitled to any benefits.
- Person B is entitled to Child Benefit (£18 for first child, £16 for second, pw), Child Tax Credit (around £50 pw), and Housing Benefit (depends entirely where she lives, but let's call it £150 pw).
So, despite working as hard as Person A, Person B actually takes home an extra £12,168 (tax free).
There are other issues: let us say that,
- Person A does not wish to live with his parents (perhaps they're abusive), but cannot afford to move out.
- Person B, on the other hand, cannot afford to live independently but refuses to move in with her parents (who have offered).
Why should everyone else have to pay for Person B's preferences? Why, in fact, should Person A not be entitled to benefits so that he can move out of his parents' home?
Anyway, I think that your question is phrased entirely wrongly: the question shouldn't be "why should this person not get benefits"; it should be "why should this person get benefits"?
Let us assume that no one gets benefits by default; let us imagine that each person must, in fact, plead their individual case in order to get benefits.
Now, let us imagine that they must plead their case to a body whose mission is to help those who cannot get by on their own; a local body that understands the needs of the person, and the environment in which they live.
This body might be called... oh... let's call it a "charity". This "charity" might have a special tax status, granted by the government, in recognition of the good that it does, etc.
This "charity", within the limits of its funds, would be able to help those who really need it. Instead of entitlement based on spurious circumstances, help would be dispensed based on individual needs and cases.
This charity would be able to help Person A get away from his abusive parents, and it would help Person B with her bills.
It would be able to do this by choosing not to fund the fags, beer and Playstation lifestyle of feckless Person C, who just cannot be bothered to get off his fat arse.
Of course, the husband of Person B might have taken out a life insurance policy which would allow her to live without receiving benefits; in an alternative society, the husband might even have bought such a policy through his local Friendly Society—this could, of course, be the same "charity" that the mother appeals to for extra help.
Should either Person A or Person B be entitled to pick the pockets of other people as a matter of course? No.
Does Person B's impoverished state give her the right to impoverish others? No: or not, at least, in any just society.
"Ah," you might say. "But we aren't impoverishing anybody: we are only going to tax the rich in order to pay for these benefits."
First, of course, in making that argument, you are agreeing with Lord Tebbit—you are agreeing that we shouldn't tax the poor, only the rich.
The second problem though, is who are you or I—or the state—to decide who is "rich" and who is not? On both a practical and moral level, who are we to decide who deserves to be taxed, and who does not?
This gets even more difficult when you start to factor in regional variations: £15,000 would be enough to get along with in Yorkshire, but not in London.
Given this, is it not totally unfair that we set taxes at a national level: why do we not raise tax at a local level? This would make local politicians more responsive to local people too, and would lead to fairer levels of taxation.
But to come back to the main point of the article: someone earning £15,000 (which is not an awful lot in this day and age) pays £1,705.00 in tax and £1,021.35 in NI—total deductions of £2,726.35 (just over 18%). And that's before we even mention the £1,188.48 paid in Employer's NICs which might—might—go to slightly increasing our wage slave's pay packet.
To put it even more starkly, let us assume someone on the National Minimum Wage of £5.83 (I think?). Working full-time at 40 hours per week, they earn £12,126.40 per year: they then lose £1,835.53 in tax and NI (roughly 15% of their wage).
This is insanity: we, as a society, have said that the NMW is the minimum that people need to get by—and then we steal 15% of this mimimum wage off them again.
"Ah," but we decide that the NMW is the minimum that they should earn after tax. Well, we might but perhaps someone should tell the government that: where is the guarantee that the state will set the level of taxation to be responsive to the requirements of these Minimum Wagers? And if you think that the government is so responsive, perhaps you should ask yourself what the effect of abolishing the 10p tax rate was on those earning only the NMW.
An employer pays our National Minimum Wage Slave (NMWS) to do a job; then the NMWS pays someone to collect his tax; then, if he's lucky, society pays someone else to assess whether NMWS is entitled to get some of his money back.
All of this is not only morally wrong, it is completely nuts in practical terms.
So, stop taxing the poor because it is a colossal waste of everybody's money.
However, what this means, of course, is that the government is running a bit short of cash. Raising the Personal Tax Threshold to just over £12,000 (so our NMWS pays no tax) would cost something in the region of £30 billion (if anyone has a more precise figure, please let me know).
SO, all other things being equal, the government's tax take this year—with that one alteration—would be about £450 billion. Servicing the National Debt is currently running at about £35 billion, which leaves us with £420 billion.
So, assuming that we make no effort to pay down the debt capital but we are also not going to borrow any more either, what would you do with the £420 billion per year?
As a indication, here are some extremely rough costings for you to consider:
- NHS: £120 billion
- Social Security: £180 billion
- Education: £80 billion
- Defence: £35 billion
- Total: £415 billion
Now remember: there's to be no borrowing...