2010-10-26

Tax Child Benefit And Keep It Universal

I disagree with the government's decision to remove child benefit from higher rate tax payers. They should have taxed child benefit instead. As Stephanie Flanders writes:
Mr Osborne could have [...] raised a similar amount, £1.1bn - by simply taxing child benefit.
This would have meant that:
  • The benefit would still be universal, and money wouldn't be wasted on means testing.
  • The higher your income before tax, the higher your income after tax. In other words, you're never penalised for earning more. There must be a special phrase for this, like there is for regressive / progressive tax or flat tax. Can someone tell me what it is please?

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