But what the government could do is to eliminate factors which discriminate against the poor.
They can change tax incentives so that the poor don't lose most of their extra income if they earn more.
They can break the professional closed shops and cartels that protect the better paid (and thereby make their services expensive for the poor either directly or through taxes). I am thinking here of lawyers, medics, public sector in general and and other areas of the economy that are protected from competition. It seems to me that the poor have to compete for a living and many other groups don't.
The IFS are being unusually inaccurate - and have bought into BallsBrown logic. The TRC Report clearly recommends increasing the personal allowance, which will take many of the poorest earners out of tax. In addition it will cut the basic rate.
The IFS has ignored the impact that tax has in the wider sense. Making the business tax regime more attractive will mean more jobs and many economists consider that business taxes always end up with the consumer anyway. There's no regressive agenda in the TRC's Report - its produced a wide, and commendable, set of reforms
I think they are not too far wrong. Where are the votes in abolishing inheritcance tax and stamp duty on shares? Who cares about this excpet the relatively wealthy?
Tax relief should come first for the poor, then the middle class and then the rich. getting rid of the threshold should be the centrepiece of the reform along with reductions in business taxes.
Green taxes are an ideological dead-end; they will be as regressive as VAT. Plus, what is the point without China, India and the US doing anuthing themselves?
Commenting by HaloScan
