Monday, April 07, 2008

Income Tax backlash

So apparently some MPs have woken up to the fact that these 'wonderful' changes to the income tax bands are going to hit the poorest sections of the wage earners, only taken them a year to spot. It's all okay though as these people have supposedly been getting more and more in benefits over the last few years and it'll all be fine when we get the other 80% of people eligible for tax credits onto the system. Would that be these tax credits; why yes it would.

The figures bandied about in the BBC article are £18,500/annum and a maximum loss of £232/annum. My figures are break-even at £16,504.82/annum and a max loss of £181 at £7,455; so not that different.

The laughable bit is that instead of allowing people to keep earned money at source the government seems to expect them to apply for some of it back; which introduces a whole new level of bureaucracy or stretches the existing system.

Now playing with the figures I've already shown that for the median values the government is losing £1,300 over the range, the bottom earners are loosing money and the top earners gaining over £788. So can we fiddle the values about to give the top earners their dosh and boost the middle range of values?

How about this:
Note no negative axis, everyone gets more the top earners at £718 (so a little off the previous) and the loss to the government is £1,000 over the range (so more money to them). My values are quite simple: An allowance of £5,500, 10% bracket up to £2,200, 22% bracket up to £38,000, and 40% over that. Everyone gets more money, but you don't get that steady rise from £17k to £39k that I think was the whole point of the change.