How the tax system crushes families
by Nola Leach, The Conservative Woman:
THE UK is a freezing place to be for families. Our anti-family tax system traps low-income families in poverty with little hope of ever escaping. Despite the Government’s often-stated desire to make work pay, until our absurdly high effective marginal tax rates are addressed, the current situation looks set to continue. It is surely ironic that after eight years of a Conservative Government, the burden of recognising family responsibilities has not been more equally shared out between the tax and benefits system.
Thankfully, there are some signs that more MPs are looking into this issue and are prepared to do something about it. Today sees the publication of the Making Work Pay for Low-Income Families Report, which might not win any prizes for a snappy headline, but directly engages with the whole issue of how the UK’s current effective marginal tax rates (EMTR) are aspiration crushing. It’s been launched by the Strengthening Families Manifesto (SFM) group, led by former MP David Burrowes.
The report itself follows an inquiry where a panel of MPs took evidence from a number of groups, including Tax and the Family, the Resolution Foundation, the Child Poverty Action Group, and Iain Duncan Smith MP. The launch of the report is timed to coincide with a debate being held today in Westminster Hall, which will give MPs the chance to discuss how the current problems can be solved.
The situation really is awful. At the moment, according to research by CARE, a UK one-earner married couple family with two children on between 50 per cent and 75 per cent average wage face an EMTR of 73 per cent. At this level of income, families keep just 27 pence from every additional pound they earn. So, rather than making it easy for families to aspire to increase their earnings, the UK’s current fiscal arrangements are completely suffocating social mobility and leaving families trapped in poverty.
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