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There’s nothing patronising about workers keeping more of their earnings

    If you want an insight into the psyche of many on the British left, then look no further than an article published in the last 24 hours.

    Exhibit A is Lynsey Hanley’s piece for the Guardian website.  In the blog she attacks the Coalition’s policy of raising the personal allowance for those earning up to £10,000, claiming that taking 3 million people out of income tax altogether amounts to a ‘sop’ and ‘their disenfranchisement’. In fact she goes further, claiming ‘Tax cuts are always a sop, no matter who you’re giving them to’.

    She claims: “More fundamentally, it suggests that people on low wages are effectively earning pin money, not "proper" money that requires being taxed, and therefore that the low-waged aren't full citizens. It also throws those on low incomes further to the wolves in terms of their perceived entitlement to public (or perhaps that should be once-public) resources.”

    So let’s get this straight. Allowing people to keep more of the money that they have earned, for themselves and their own families, is somehow disenfranchising because it breaks the link between taxes paid and benefits received. What Lynsey then is effectively saying is that it is better for low income workers to have to pay income tax so they can feel part of the system when they receive back some of their own money in benefits because the money they have earned is not sufficient to keep them to a sufficient standard of living. What a bankrupt view of how society should operate.

    What Lynsey ignores, deliberately or otherwise, is that as people move into work the effects of paying tax for the first time alongside withdrawal of benefits and tax credits creates extremely high marginal tax rates which means that incentives to work are diminished. By creating a generous allowance at which the marginal income tax rate is zero, people have stronger incentives to move into employment, acquiring skills and workplace disciplines which are quickly eroded if trapped at home on welfare.

    The key question here is: what is the welfare state for? Most people would claim a safety net, to help those in genuine need provided there are strong incentives built-in to engender self-help and to encourage people to move into employment. Not Lyndsey. She envisages a state in which we all chuck our hard-earned cash into the Treasury coffers to be redistributed, often straight back to us, so that we can all feel grateful to the state for the social benefits our own resources provide. In effect, a society where earnings are socialised.

    I’ll let you make your own minds up about which view is more patronising: the idea anyone going out to work should be able to provide for themselves and their own families, paying tax as they become more successful, or the idea that low earners should be dependent on the state giving back their own earnings in various benefits.

    I have little doubt that if Lynsey and co want that debate, she will lose and we will win.

    Ryan joined the Centre for Policy Studies in January 2011, having previously worked for a year at the economic consultancy firm Frontier Economics.

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    Comments

    Perry Offer - About 2681 days ago

    Ryan,

    Give up - you're thinking too rationally. You're assuming that as with yourself the left's intention is to make life better. It isn't - they want to create failure and make life worse.

    Why? Given that failure is the source of political power why would any left-winger who believes they are entitled to exercise control over your life wish to create success?

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