A key argument in the welfare debates this week has centred on ‘making work pay’. The Government argues that changes to tax and welfare will improve the lot of low and middle income working households. Though curiously, this came as suggestions surface the minimum wage could be frozen or cut.
Alongside others, we have shown that the increase in the personal tax allowance is roughly cancelled out by reductions in tax credits and other benefits. But there is a more fundamental flaw in the way this argument has been conducted. It has focused purely on the role of the tax and benefit system with no discussion of how to make work itself pay.
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