The Taxpayer's Alliance have a new report out
about how to reform welfare. They claim to have spent a lot of time on the report, and it includes detailed calculations for things like the computation of negative income tax (if rG – T >= 0, then N = M – rG + T and so on). It is an attempt to simplify the benefits system and improve financial incentives for people to take a job, while reducing the overall cost of the system.
The way that it seeks to do this is by making lots of middle and lower income taxpayers considerably worse off. There are pages of pseudo-scientific gibberish and hand waving designed to obscure this point, but the report couldn't find any space to set out, for example, how many people would see their income reduced or by how much under their plans. But using their figures, it is clear that very many families with children would see huge cuts in their income, as would anyone in an area where housing costs are high.
They are very keen to claim that one problem of the welfare system is that it looks at relative poverty (defined as 60% of the median earnings), and that instead we should look at measures of absolute poverty. For all the work they put into their research, however, they didn't realise that the Joseph Rowntree Foundation has already done a lot of this work, developing a "minimum income standard based on what people said is needed to achieve an acceptable standard of living in Britain today"
. Instead, the Taxpayer's Alliance use examples about how to measure absolute poverty taken from America. (It is worth noting that more taxpayers were involved in the Joseph Rowntree Foundation's research than in this or most other pieces of Taxpayer's Alliance research).
When the Joseph Rowntree Foundation asked people how much people in Britain needed to have an acceptable standard of living, the people came up with an amount which is far higher than the amount that the four (wealthy) authors of the Taxpayer's Alliance report think is enough for millions of people to live on.
Just one small example of the principles underlying the Taxpayer's Alliance proposals to reform welfare. They appear unconcerned with the problems caused by slashing support for families with children, or making people homeless when they can no longer pay the rent. But they are very concerned about the lack of support from the welfare state for people who have assets over £16,000, and propose to scrap asset tests which reduce benefit payments for people who have lots of money saved.
So someone who has tens of thousands of pounds in the bank and who owns one or more homes will be entitled to receive more than £6,000 through their "negative income tax", the same as someone who is out of work and who doesn't have a penny in savings. And if you think that is fair, you are probably rich enough to be one of the tiny number of people who the Taxpayer's Alliance actually speaks for.