Clegg: Tax Cuts Financed by a Cliché Tax
Nick Clegg is one of the worst offenders against the Banned List of clichés and jargon. His speech today on “supporting working families” (Government news release) or on “tax” (Liberal Democrat party release) was a stinker.
We cannot “return to business as usual”, he said; the UK’s weakness was a “damning indictment” of the way our economy had been run; we have got to be “hitting the reset button”, “filling the black hole” (you cannot fill a black hole, a point of such density and intense gravitational pull that not even light can escape), “wiping the slate clean”, and those three were all in one paragraph.
Not only that, “we must also rebalance our economy”. As soon as any politician starts talking about rebalancing the economy, you may safely change channels, knowing that they are not saying anything, except, possibly, “Wouldn’t it be nice if we were still Top in making things in this country and had an empire and stuff?”
After a refreshing defence of uprating out-of-work benefits, which nevertheless flatly contradicts his stated desire to increase incentives for people to move from welfare to work, it got worse.
The pressure on family finances is reaching boiling point.
Pressure does not reach boiling point; higher pressure raises the boiling point. So what he meant was that, as the pressure on family finances increased, the kettle was less likely to boil. Possibly. Or not, because he went on to say that “Household budgets are approaching a state of emergency”. Therefore, the sluggish economy increases the case for tax cuts. So he agrees with Ed Balls, who thinks we need an urgent stimulus.
Except, of course, that is not what he is arguing for. He wants a tax cut for people on middle incomes paid for by money from the magic tree. Otherwise known as:
Tackling industrial-scale [Banned List klaxon] tax avoidance as well as at the allowances and reliefs which favour those on very high incomes.
He went on:
That is how we can raise the average taxes paid by the very rich without any further rise in marginal rates.
As you may have gathered by now, that is the precise opposite of the policy he proposes. He wants to raise the personal allowance, the threshold above which you start to pay income tax, further and faster towards the goal of £10,000 a year. This has contradictory effects – it benefits the lower paid but it also benefits a lot of well paid people, especially two-earner couples. But it also has the effect of raising marginal tax rates on the “medium rich”.
At the moment, in order to prevent the better paid from gaining from a bigger personal allowance, the allowance is phased out between incomes of £100,000 and £112,000. This means that, in effect, the marginal rate of income tax (the rate applied to each additional pound of income) rises from 40p in the £ up to £100,000 a year to 60p in the £ until the allowance disappears. Then the marginal rate returns to 40p between £112,000 and £150,000 a year, when the 50p rate comes in. The effect of Clegg’s tax cut, raising the personal allowance at the bottom, is to increase the width of this hidden 60p tax band. If Clegg realises his inconsistency, I suppose he hopes that the Conservatives, who care about incentives at this sort of level, won’t notice.banned list, nick clegg
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