2010-04-26

The Real Benefit Of The Lib Dem Tax Policy

I read Stephanie Flanders religiously, and it's rare that I make a criticism of her writing.

However, in her piece on the Liberal Democrats' plan of raising the income tax threshold to £10,000, I felt she missed the point.

I think that the main point of the policy is to remove the benefit trap. At the moment it's financially beneficial for a lot of people to stay on benefits rather than get a job, because any job they could hope to get wouldn't give them an income greater than their benefits. If the income from a job isn't taxed so heavily though, it means that the benefit trap is removed.

So the main point of the Liberal Democrats' raising of the threshold is to reduce unemployment, and thus reduce the benefits bill and increase GDP.

I'd encourage the Liberal Democrats to go further, and stop taxing the poor altogether.

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