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Income Tax Threshold Levels

Comment 11th September 2010

No one earning less than half the median wage should pay income tax.

Those earning between half the median and twice the median should pay standard rate tax.

Those earning twice the median and more should pay higher rate tax.

Why does this matter?

To make the income tax system simpler, fairer and less susceptible to political interference.

I have deliberately left the actual monetary levels out of this as they should change every year, but once this principle is adopted people will know their tax liability will reflect their ability to pay.

It also creates a gap between benefit levels, miniumum wage and the need to pay tax. We should not be taxing people who earn so little they receive other forms of benefit like tax credits. That is taking with one hand and giving back with the other, and we pay the cost of both.

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