The CPS got a fair bit of coverage for their report yesterday, which reminded us that "39.6 per cent of [working age] households received more in benefits than they paid in taxes in 2010/11 compared to 31.7 per cent in 1979 and 29.0 per cent in 2000/01.".
In their 'Questions for policy makers', they ask "Is there too much “churn” – taxing people and then returning many of the same funds to them in benefits?" to which the answer is almost certainly yes, but apart from that, so what?
Here's their Table 4 on original and final incomes, which is original income minus tax plus cash benefits and benefits in kind such as 'free' state education and NHS:
If you put those figures in a chart with a line of best fit, it looks like this:
So once you've done the netting off, what it all boils down to is a flat tax on incomes of 41% and benefits worth £12,825 for each household.
Now, you would be correct to argue that even a flat tax of 41% has huge deadweight costs, and that it would be far better to reduce this to a flat 20% and collect the balance with a tax on the rental value of land (perfectly do-able, as I showed at the weekend). And while there is a lot of evidence to show that allowing the state to be the monopoly provider of education or healthcare does not lead to the best outcomes, that does not mean that these cannot be funded out of taxes (via a voucher system - see plenty of European countries, schools in Sweden or nursery vouchers in the UK).
But the bold statistic that "39.6% of working age households receive more in benefits than they paid in taxes" itself is fairly meaningless.
Two Birds, One Stone!
2 hours ago
4 comments:
If only because not all working age households have the average number of kiddies. I'm somewhere between the "middle" and the "fourth" quintile on that table and I receive virtually nothing back from the state because I have no kids, pay my own rent, and rarely touch the health service. So their "final average income" figure is worse than useless.
BE
BE, yes, single, working age people in a job and in good health just pay, pay, pay.
As ever Mark, you are completely right on LVT and Basic Income. As I see it, we have 2 problems - 1. People have never even heard of these ideas mainly because the mainstream media almost completely ignore them (I wonder why wealthy landowning businessman and corporations that own the press would do that eh?). and 2. The virtual impossibility of selling the ideas in the 5 seconds most people will give you. They think you are mad, which is made worse by media that poo poos the idea when they do mention them at all.
NH, yup, hence and why we are going for broke and have formed YPP, there are plenty of people who'd vote for LVT-CI out of naked self-interest (i.e. younger people and higher earners who are tenants or who only own a small-ish home, as well as welfare claimants who want to be left in peace).
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