tag:blogger.com,1999:blog-6214838.post7241736468859649437..comments2024-03-04T17:54:32.559+00:00Comments on Iain Dale's Diary: A Good Budget for Gordon Brown... But...Iain Dalehttp://www.blogger.com/profile/03270146219458384372noreply@blogger.comBlogger11125tag:blogger.com,1999:blog-6214838.post-27891871478916770912007-03-22T02:40:00.000+00:002007-03-22T02:40:00.000+00:00Eddie, It is true that increased tax credits will ...Eddie, It is true that increased tax credits will compensate most low-earners for their increased tax bill (though some more than others), but my point was not the effect on their household budget, but the effect on their incentives. A withdrawal rate of 39% for WTC plus an income tax rate of 20% and a NI rate of 11% means that low earners face an effective marginal rate of taxation of 70%, even without taking into account the withdrawal of any other benefits. That's a deterioration of 12 percentage points (the loss of the 10% bracket plus the increase in the withdrawal rate by two percentage points), and rather contradicts Gordon's claim that tax credits are an incentive to work - quite the opposite. What Gordon has never understood is that extension of means-tested benefits increases the number of people trapped in poverty by disincentives to work. Hence a growing problem with a frustrated underclass who have little hope of working their way out of their situation.bgpriorhttps://www.blogger.com/profile/00628170401069060830noreply@blogger.comtag:blogger.com,1999:blog-6214838.post-85522718898929142762007-03-22T00:24:00.000+00:002007-03-22T00:24:00.000+00:00People who say that the Budget makes low-paid earn...People who say that the Budget makes low-paid earners (i.e. those previously in the 10% income tax bracket) worse off are ignoring the effect of tax credits. Virtually everyone whose income fell entirely within the old 10% bracket would have been eligible for some sort of tax credit; taking into account these transfer payments, the bufget is broadly redistributive.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6214838.post-60993541998208146912007-03-21T22:17:00.000+00:002007-03-21T22:17:00.000+00:00Richard Havers,I think it would be far more apposi...Richard Havers,<BR/>I think it would be far more apposite to compare Brown to Machiavelli. Interestingly the Italian was eventually accused of conspiracy and arrested. On second thoughts I maybe muddling up my comparisons here.<BR/><BR/>You are; the comparison for Brown would be with Ernest Honecker. (Machiavelli was brave and clever).Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6214838.post-7781103638030643732007-03-21T21:13:00.000+00:002007-03-21T21:13:00.000+00:00I'm not convinced this is bad for middle-income ea...I'm not convinced this is bad for middle-income earners. It is worst for low-income earners (in the range £5-18k p.a.), who have seen their effective marginal rate of tax increased yet further by the increase in the withdrawal rate of Working Tax Credit, and also suffer disproportionately from the loss of the 10% starting rate. Middle-income earners above that level (£18k), by my calculations, gain more from the 2% cut in the basic rate than they lose from the abolition of the starting rate, and are not affected by the increase in the UEL for NI unless they earn over £33k. Above that level, they do less well again, until at around £38k they are very slightly worse off, but shortly after that, the increase in the threshold for the higher rate of income tax kicks in, and people are significantly better off. In fact those in the bracket £40-60k seem to me to be the group who have (proportionately) benefited the most from this budget. <BR/><BR/>Not that it's a good budget, but if those calculations are right (and like you say, it's not easy to be confident one has fully understood the changes, so I may well have got this wrong), I would say the problem with the budget, apart from the contemptible increase in the poverty trap for lower-income earners, is that it is <B>not</B> balanced, contrary to the publicity, and will increase inflationary pressure, leading to higher interest rates, which will take back any gains and more.bgpriorhttps://www.blogger.com/profile/00628170401069060830noreply@blogger.comtag:blogger.com,1999:blog-6214838.post-67825534743600437302007-03-21T19:49:00.000+00:002007-03-21T19:49:00.000+00:00But I think once the small print is read, many peo...<I>But I think once the small print is read, many people, including Labour MPs, may come to revise that opinion.</I><BR/><BR/>Isn't that always the way with Brown budgets? Even the Great Pensions Swindle was presented in the speech as a simple 'reform' of ACT, but it took two days of close study of the releases to work out the implications for pension fund tax credits.Rush-is-Righthttps://www.blogger.com/profile/12860467341217977185noreply@blogger.comtag:blogger.com,1999:blog-6214838.post-84260977620743639482007-03-21T17:01:00.000+00:002007-03-21T17:01:00.000+00:00Iain, one swallow etc and one tax cut doesn't make...Iain, one swallow etc and one tax cut doesn't make him a cutter. Of course we live in the era of spin and short-term attention spans for public and media alike but nothing, absolutely nothing can turn Broon into the person he would love us to believe he really is.<BR/><BR/>I've never seen Gordon as a great leader. It seems to me that he's spent most of his time stalking the shadows. Sure his record as the Iron Chancellor is in some respects impressive, but as anyone who's worked in business knows, a No.2 often finds it hard to step up to become leader.<BR/><BR/>I think it would be far more apposite to compare Brown to Machiavelli. Interestingly the Italian was eventually accused of conspiracy and arrested. On second thoughts I maybe muddling up my comparisons here.<BR/><BR/>Finally Gordon Brown needs to be careful for what he wishes for. In waiting so long for it methinks it will all go even more horribly wrong than some commentators have dared to anticipate.Richard Havershttps://www.blogger.com/profile/15309594787689405779noreply@blogger.comtag:blogger.com,1999:blog-6214838.post-30109037714950349142007-03-21T16:28:00.000+00:002007-03-21T16:28:00.000+00:00I don1t think it will take long Iain .. you forget...I don1t think it will take long Iain .. you forget the extent to which Labour are not trusted on tax. The cut on the basiuc rate lasted about a minute of thought in our office...really people aren`t thay stupid.<BR/><BR/>The ineresting thing here is the way you notice that he has to please the left . He does not have to room to change enough to get elected I `m sure the ciurrenbt polls are flattering but i cannot see a Labour GovernmentNewmaniahttps://www.blogger.com/profile/11922161971821380803noreply@blogger.comtag:blogger.com,1999:blog-6214838.post-70086151601703274382007-03-21T16:22:00.000+00:002007-03-21T16:22:00.000+00:00As far as I can see, the increase in NI contributi...As far as I can see, the increase in NI contributions won't have much impact on the self-employed, which is very good news for high-earning partners in professional service firms.<BR/><BR/>The changes in capital allowances rules will probably kill off what's left of the leasing industry, but I wouldn't expect them generally to have a huge effect on most company tax bills.Ibn Battutahttps://www.blogger.com/profile/13330662101231315756noreply@blogger.comtag:blogger.com,1999:blog-6214838.post-78668710780066803352007-03-21T16:04:00.000+00:002007-03-21T16:04:00.000+00:00Also in the budget notes, look at the changes in t...Also in the budget notes, look at the changes in the capital allowances rules, which increase company tax bills by more than the 2p rate cut reduces them.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6214838.post-18987677031894005112007-03-21T16:02:00.000+00:002007-03-21T16:02:00.000+00:00Look for an increase in NI contributions in the su...Look for an increase in NI contributions in the subsequent detailed budget proposals.<BR/><BR/>Give it away with one hand and take it back with another (stealth tax).Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6214838.post-20980759799063084702007-03-21T15:39:00.000+00:002007-03-21T15:39:00.000+00:00That Politix Show looks like it will generate a ri...That Politix Show looks like it will generate a rip-roaring "me too" of a debate. A bit like a Doughty PMQ review where everyone has to pretend to have mild differences when all three are raving Tory loons.Chris Paulhttps://www.blogger.com/profile/15679067503215414300noreply@blogger.com