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March 23, 2008



"elasticities of tax revenue to rates (around reasonable levels)": but what's reasonable? For quite a while the Labour Party thought that 98% tax was reasonable: one year, they managed to make it above 100%, retrospectively, for some holders of Gilts.

Ken Houghton

More importantly, what's a Sarah Harding and why should we care?

a very public sociologist

Gratuitous Sarah indeed!

Mark Wadsworth

Does not compute! If you have 'big in work benefits' and 'high marginal withdrawal rates', then assuming you have the highest withdrawal rate of all, 100% (which is not uncommon in UK welfare/tax system), then working backwards, you'd have equally large out-of-work benefits, or at least large 'working-just-enough-to-qualify' benefits. Which defeats the object.

What you are proposing appears to be an extreme version of the tax credits system, which has been a total and utter disaster.

Moreover, being honest about this, if you are looking at a wage of £6 an hour, a 50% tax rate knock this back to £3 an hour so it's hardly worth bothering. If you are a superstar on £1,000 and hour with a 50% tax rate, it is still worth doing.

Personally, I'd favour low flat income tax (and more land value tax), that's a different topic.

Ewan Watt

Funny you say that. Since the budget I've switched from Nadine Coyle to Kimberley Walsh.

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