James Forsyth

After 12 years of Labour, the poor pay more tax than the rich

After 12 years of Labour, the poor pay more tax than the rich
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My old friend Allister Heath has just sent me over some stats which show that the poor pay more of their income in tax than the rich. Allister reports that “the bottom fifth of earners pay 38.7 of their gross income in total tax, the next fifth 32.7 per cent, then 34.6 per cent, 35.4 per cent, falling to 34.9 per cent for the top fifth of higher-earning households.”

The reason that the poor pay more in tax than the rich is that indirect taxes, especially sin-taxes, have been so jacked up under Labour. When only direct taxes are taken into account, the bottom fifth only pay 10.8 percent and the top fifth pay 24.9 percent of their gross income in tax.

Slightly counter-intuitively, as Allister argues, the more socially progressive way to get us out of the fiscal mess that Labour has landed us in is to place the emphasis on cutting spending not raising taxes. We already know that VAT, a regressive tax, is scheduled to go up to 20 percent and there is talk of it going to an even higher rate. But surely it would be better to cut spending by ending middle-class welfare and the like rather than raise the tax burden on the poor?

Written byJames Forsyth

James Forsyth is Political Editor of the Spectator. He is also a columnist in The Sun.

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