Reform and That £20,000 tax Threshold

The Manifesto, or “Contract” as Reform branded it, was not a serious document, nor intended to be. Like the whole of their approach, it was intended to simply get headlines, and be disruptive, but there are elements of it that expose just how bankrupt the “centre” politics of Blue Labour, have actually become, as the material basis of that centre-ground, in the real economy, has collapsed.

Take, for example, the position of Blue Labour on not removing the two-child limit on Child Benefits. Reform say they would remove it, and, unlike Blue Labour, they would, also, significantly increase the Minimum Wage. Reform can say it, because they know they will jot have to implement it, and it, effectively, challenges Blue Labour’s attempts to portray itself, still, as any kind of social-democratic party.

Now, I’ve set out before why Marxists do not support these kinds of welfarist measures, for example, as Marx set out in The Critique of The Gotha Programme. Rather than systems of bureaucratic taxes and benefits, the much simpler measure is to have a Minimum Wage, adequate to the reproduction of the working-class, and its up to workers, then, how they spend that money. However, if you are a liberal/social-democratic welfarist, who does support such concepts, the quickest way of reducing child poverty, here and now, which is what Blue Labour claims to want, is to raise Child Benefits, and to scrap the two-child limit, as well as to raise the Minimum Wage. The fact that Reform propose this malevolently does not mean that its wrong.

But, similarly, Reform have proposed raising the Income Tax threshold to £20,000 a year. It would cost a lot of money, and, of course, Blue Labour, along with the Tories and Liberals, therefore oppose it, even though Blue Labour can, at the same time, propose spending billions more on armaments, and fighting imperialism’s war in Ukraine against Russia etc. However, a simple bit of reason shows that the proposal is eminently sensible, and only seems irrational and extravagant, because the economic model of conservative social-democracy, upon which that so called “centre-ground” is based, has collapsed! It is only so expensive to do because, over the last 30 years, and the last ten years in particular, tax thresholds have not risen in line with inflation, bringing more and more low wage workers into the tax net, and imposing ever more tax on them.

In what rational world does it make sense to have a Minimum Wage of £10 an hour, which for a 40 hour week, is £20,000 a year, but, then, to reduce this minimum significantly by taking a third away from it in Income Tax and National Insurance?!!! The current tax threshold is £12,000, which means that £8.000 is subject to 20% Income Tax, or £1,600, on top of which there is National Insurance, which is just Income Tax by another name, and should be scrapped, to save the cost and bureaucracy of administering it.

It clearly makes eminent sense that a Minimum Wage, should be just that, and not reduced by tax and national insurance, so that, even were we to accept that £20,000 a year is a reasonable Minimum Wage, which it isn’t, and should be at least £30,000, so that all the other nonsense of the cost of collecting tax from workers to, then, have the cost of paying out to workers as child and other benefits could be ended, it clearly makes sense to have the tax threshold set at that minimum level, just as, also, it should exceed the level of state pensions.

That would not only save the cost of those benefits, but would also save the cost of the bureaucracy required to take in taxes from workers with one hand, only to employ more bureaucrats to assess and pay out benefits to workers with the other, a lot of which don’t get claimed, put serf-like conditions on claimants, and can be cut or removed when the government of the day decides its an easy way to save money.

No one should be taken in by the flim-flam of Fartage, but that doesn’t mean accepting the nonsense of the likes of Starmer and Reeves either.

Originally published at https://boffyblog.blogspot.com.