Dan Roberts and I argued at greater length than is eventually broadcast, about whether the LibDems are introducing too much complexity into the tax system with their 10k proposal.  Dan’s argument was, effectively: doing this makes it a nightmare for journalists, commentators and those putting the manifesto under the spotlight, to work out whether it benefits X or Y.  So who wins from Lib Dem proposals? For many, it is hard to say.

I answer was and remains: that is so not the point! The complexity that matters is that which confronts the people using our tax and benefit system, not the wonks working out its implications.  Of course there is complexity – people are in a myriad of different situations.  If we choose a tax system that maps perfectly to human complexity, our tax system will be horrendous, and we won’t be thanked for it.

What we need is a tax system that is easy for its users, not for those professional wonks who work out the decile-benefit bars (ie. the IFS and the ONS).  I am all in favour of systems that reduce the number of transactions and relationships between the individual and the state. The 10k tax proposal might not improve the circumstances of everyone in the bottom income quintile, at least not seen in a static way (which is how Labour planners can see things; rather than making it more attractive to be in another quintile, of course).  It certainly makes work more attractive.

And I hope it means making it less important that people earning around 10,000 need to learn how a myriad of benefits and credits work.   What strikes people as nuts is that the bottom quintile sends a lot of money to the state, and gets a lot sent back.  Reducing that two-way flow seems unambiguously sensible, so long as not too many people are hurt in the transition.  Worrying about how hard it is to work out from a Westminster thinktank or newsroom who the winners and losers are, is a distant secondary consideration.

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3 thoughts on “Podcast: another quick observation

  1. “Worrying about how hard it is to work out from a Westminster thinktank or newsroom who the winners and losers are, is a distant secondary consideration.”

    On the other hand, if you are both (a) a voter likely to be unaffected (or only marginally affected) by the change, and (b) have a strong interest in distributional fairness, the analysis is vital and will inform your judgement about whether to support it or not. Indeed, how can you know if “not too many people are hurt in the transition” unless the analysis about winners and losers can be done?

    1. Yes, but should that be a reason for choosing the policy or not? Obviously, parties should not make too bold a claim, but let’s not have them only pursuing polices about which they can make easy analytical points.

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