Clegg to push for £12.5k income tax threshold at Budget

[doodab]

It's worth bearing in mind Denmark ranks pretty favourably on economic freedom indexes, whatever those may be worth. It'd be interesting to compare the UK to the Scandinavian countries and see like for like where and how much more it taxes and regulates. They tend to tax income more heavily but are more relaxed in other respects.

The Scandinavians generally come out about the same as Germany & the UK on those.

Country Rankings: World & Global Economy Rankings on Economic Freedom

The big differences are that they have much higher taxes as a %age of GDP and lower income inequality. The latter correlates very well with measures of social "goodness" like health and education outcomes, although the debate about cause and effect is far from settled. It's quite possible that healthy well educated people are less obsessed with money and care more about other aspects of life and it's this leads to the flatter distribution of wealth.

[d000hg]

Arrangement implies artificiality to me - like arranged marriage it's not genuine and therefore should be considered null and void.

Tsk tsk. It's easy to see you're not married if you think it can happen without a lot of arrangement.

[Zero Liability]

The big differences are that they have much higher taxes as a %age of GDP and lower income inequality. The latter correlates very well with measures of social "goodness" like health and education outcomes, although the debate about cause and effect is far from settled. It's quite possible that healthy well educated people are less obsessed with money and care more about other aspects of life and it's this leads to the flatter distribution of wealth.

The problem with that sort of thing is that you're then talking about particular cultural values (e.g. keeping healthy and fit being ingrained in the culture), as in if you worry less about acquiring more and more money/goods/whatever, you are happier (arguendo.) I'm also sceptical of happiness surveys in general, but upon visiting the Scandinavian countries I wouldn't be surprised if they are happier on the whole.

Also, whilst their tax burden as a % of GDP is higher than Britain's, Britain borrows more heavily and inflates more heavily. I.e. it taxes less ostensibly than they do and derives this income from other sources. However, I agree with the thrust of your post, it could be a case of misplaced causality. Without examining the underlying cultural differences and the economies and tax systems in detail, it's difficult to say how the two compare. I'd be willing to grant, however, that their governments are probably more competent than the British one, bearing in mind their populations are fractions of the size of Britain's.

[VectraMan]

BTW the first of the Scandamania programmes was about Sweden, and said that things are getting worse there; social inequality is rising, they have more problems with poverty and homelessness, and last year there were riots. So clearly they're not getting everything right.

I think half the problem with tax is politicians trying to use the tax system to perform social engineering. If was just about raising money everything would be much simpler.

[Zero Liability]

I agree, it oughtn't be used for social engineering, at all - just to raise revenue for a defined set of services and no more. Sweden in particular had a spell of trouble in the 90s, which is when they began reforming their welfare state (scaling it down a little) and also refrained from bailing out their banks. I doubt they have dealt fully with these problems, and besides that they have a pretty open immigration policy, not too unlike Britain. My point with regard to those countries in general is it is misleading to compare aggregated figures like total tax burdens as a % of GDP or other economic indicators as they reveal very little about how they handle tax or perform against the UK more generally in terms of any specifics.

[Waldorf]

The best policy this government has come up with was raising the income tax threshold.

Whilst I agree that taking lower paid people out of paying income tax, I see little sense in increasing the income tax threshold whilst the NIC threshold hardly moves up as well.

It is surely better to remove all the taxes deducted from someones pay and that includes NIC. So perhaps a better tactic would be to increase the NIC threshold until it is at the same level as the tax threshold and then gradually increase them both in line with each other.