Fairer by design: efficient tax reform for those on low to middle incomes
Paul Johnson: 31st July 2012
The current system of redistribution through taxation and welfare is inefficient and could be reformed to give more support to those on low and middle incomes whilst reducing economic costs according to a new report for the Resolution Foundation Commission on Living Standards.
The report, written by Paul Johnson, Director of the Institute for Fiscal Studies, draws on the Mirrlees Review of efficient taxation to identify key reforms that could help to ease the squeeze on living standards by making the UK tax and benefit systems both more efficient and fair.
The report, Fairer by design: efficient tax reform for those on low to middle incomes, argues that the tax-benefit system must do more to ensure work pays for key groups that will be key to living standards:
• For mothers of school age children, cash benefits could be made more generous for younger children and less generous for older children when mothers are more likely to want to work
• For second earners, the proposed Universal Credit system could introduce a separate disregard for second earners, allowing them to keep more of the money they earn
• For older workers, National Insurance Contributions (NICs) could be reduced by either bringing forward the age at which people stop paying NICs to 55 or by or increasing the NICs threshold past this age
Other related Reports
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Creditworthy: Assessing the impact of tax credits in the last decade and considering what this means for Universal Credit
Date: 27 June 2012 | Author: Paul Gregg, Matthew Whittaker and Alex Hurrell