FFS, whether we scrap the National Minimum Wage, leave it as it is or increase it to the Living Wage, it will make precious little difference to anything.
The main driver for low earners' net incomes (which is what really matters) is the amount of means-testing and taxation, and as a rule of thumb, if you're on the various benefits, then up to something like the median wage of £20,000 - £25,000 a year, you actually only keep about 20p for every £1 you earn. So whether you keep 20% of £6.19 (£1.24) or 20% of £7.45 (£1.49) is more or less irrelevant in terms of work incentives.
Do these people not realise this? And do they not realise that means-testing is more or less exactly the same as taxation? So whatever the revenue-maximising tax rate is (top of the Laffer curve) is also the cost-minimising benefit withdrawal rate? We'd probably end up paying out less to current welfare claimants if the means testing were made less savage, because more of them would be working.
And then there's the point that higher net wages just flow through into higher rents anyway, but that's best dealt with by replacing as many taxes as possible with LVT, or in the short term, just building more council housing. For sure, low-rent council housing is a kind of weird indirect subsidy to low-paying businesses in high-rent areas, but so be it, I'd rather subsidise businesses and their employees than banks and landowners.
Forbidden Bible Verses — Genesis 42:1-17
9 hours ago
6 comments:
Re Laffer, I still don't see why anyone should try to maximise tax revenue. It's an overhead and just greases bad politicians and corrupt entitlement seeking functionaries. How about seeking to minimse tax revenue?
L, yes of course, but let's focus on the narrow issue of minimising welfare costs and encouraging people to work, even if that means a low paid job, but without meaning that the alternative is starvation.
MW Oh, agreed, agreed. It was just an observation.
Just build more housing. State housing is always an exercise in local politics and subsidising favoured groups.
SB, you show a startling lack of imagination:
"State housing is always an exercise in local politics and subsidising favoured groups."
If, as the Homeys agitate for, there are restrictions on the amount of council housing, then it has to be rationed somehow; as price-rationing is off the table (it would defeat the object) then we are left with a straight waiting list approach or giving it to "favoured groups". This is all very bad.
But if there were enough of it, they'd be no need for rationing and no need for special favours. You put your name down, and a few weeks/months later you get offered something, end of discussion.
It's like the roads, for God's sake, councils just try and build as many roads as are needed, and they are there for everybody to use, rich and poor alike, favoured group or otherwise.
For sure, there's always a place for some sort of price rationing, even with council housing, but that's a separate topic. It's the price differential that matters, not the absolute price.
So yes, nice council houses/in nice areas "should" cost (say) £50 more a week than not so nice ones, but that does not mean that not-so-nice is £100 a week and nice is £150 a week; it is quite sufficient to make nice £100 and not-so-nice £50 a week.
End point problem: biz and work already thinks it is subsidised with housing benefit business rate discounts and so on.
The biggest call they make is for these things. They are looking for protection rather than askong who is robbing them in the first place.
So be carefully about compromises.
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