Sunday, January 27, 2013

Benefit debate - politicians at their worst - part 2

If one extreme of the argument was arguing from the gutter of politics, they would not have had to look too far for their Labour opponents.  You know who they are, they say something along the lines of 

You're taking money off vulnerable people whilst cutting taxes for millionaires".

Any Labour politicians who say this either have a very short memory and therefore so thick they would be dangerous if given power, or they are so dishonest they are not deserving power.  The statement is wrong on so many levels it is hard to know where to start.

Firstly the millionaires thing.  This is about the governments decision to put the top rate of income tax at 45% from April 2013.  As we know it was never more than 40% in any full year under Labour, so high earners will pay more now that they ever did under Labour because of the coalitions tax cut!

Next issue, A millionaire has assets of over £1m.  They don't necessarily earn anything like that in a year. Imagine a man (we'll call him Ed) with a house worth £2.3m and a mortgage of £400k - he is a millionaire, however his salary (as leader of the opposition)is £137k per year.  It's a good wage but no over the £150k threshold for the top rate.  Someone in this position wouldn't have seen their income tax change at all, (but would have lost some benefits).

It is only a minority of millionaires who pick up a payslip at the end of every month.  Most will own their own property, business and other investments and therefore subject to things like capital gains tax - under Labour the higher rate of Capital Gains Tax was cut from 40% to just 18%, that move halved the tax bills for mega rich (well those who paid tax in the first place).  It has now been increased to 28%.  

In summary.  If you earn more than £150k a year you pay more tax now than you did under Labour.  If you receive a high income from your investments, you will pay much more tax now, than you did under Labour.  

I am really struggling to find where a millionaire has received a tax cut!  It is probably impossible for a millionaire to be paying less tax now than they would under Labour, unless they are evading tax, which of course was much easier under Labour as well!

Then we get to the 'vulnerable person'.  The Oxford dictionary defines this as (of a person) in need of special care, support, or protection because of age, disability, or risk of abuse or neglect.

Just as it is wrong to label all benefit claimants as scroungers, we can't label them all as vulnerable.  

Beveridge would look now in horror at how the governments over the years have destroyed the welfare stated he started.  Rather then being a system to support the poorest in society, it hands out money it hasn't got to everyone. The last government got very good at taking extra money out of your pay packet in tax and then expecting you to be grateful when it gave half of it back, as long as you'd filled out the 48 page form properly and sent it back on time.

The biggest losers from benefit changes announced in the 2012 budget were the richest 10% - how are these people vulnerable?  Families with an individual earning over £60k a year will lose child benefits, they're hardly 'vulnerable'.

Breaking the link between inflation and benefits, setting the increase at 1%, against a backdrop of inflation higher than that, is it fair?  Equally when those working for the state have had no pay increase, those on benefits have had bumper increases due to inflation, is that fair?  Is it fair to attach out of work benefits to inflation when the cost of commuting to work has pushed inflation rates high in recent years?

These have a place in a sensible discussion. Sadly politicians decided to repel the public with lies and nonsense, the same politicians who will pack out the studios on election night looking puzzled by the voter apathy. really sad.  

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