Thursday, December 13, 2012

Guido's tax claims

What's this Ed's claiming that the Conservatives are hurting the poor. Not according to Guido who has published a handy chart showing Income Tax rates from 2009-2010 and 2012-2013. Un-huh let's try this in full.

First off that's not all the tax, National Insurance has to be calculated too. So take an annual salary of £10,000 in 2009-2010 and subtract income tax of £705 and NI of £471.35 leaving £8,823.65. Let's do the same for 2012-2013 Income Tax of £379 and NI of £333 leaves £9,288. OMG Guido is right under the Conservatives the poor are better off. Um no because these are using absolute figures and there's the little matter of inflation to deal with.

Let me convert everything into Oct 2013 money (the latest CPI figures available) the calculation is quite simple take the CPI figure for the period you want to convert to subtract the CPI rate from the period you're converting from divide the lot by that last CPI figure and out pops inflation. Within a formula add 1 and then multiply. IOW:

(("CPI of Oct 2012" - "CPI of Mar 2010")/"CPI of Mar 2010")+1
(124.2 - 113.5) / 113.5) +1

So our 2009-2010 figure becomes £9,655.48 in Oct2012 money. Which is more than our 2012 figure of £9,288. So yes in absolute terms the poor have more money, but because that money now buys less than it did in 2010 they're worse off in relative terms.