We, the undersigned, petition the Prime Minister to ensure that the maximum effective marginal income tax rate is 40% even for those on low incomes, by disregarding for means testing purposes any income upon which 40% income tax has been paid.
Those who cannot earn sufficient to provide themselves and their family with a basic standard of living may receive means tested benefits including tax credits.
If those who receive tax credits manage to increase their earnings, the effects of income tax, national insurance and tax credit clawback can combine to create an effective marginal income tax rate of approximately 70%.
The tax credit system attempts to encourage employment but does this with so many conditions that it can be seen as de-motivating, bureaucratic and unreliable.
Rather than devise ever more complicated incentives and penalties to move people out of the “Poverty Trap” we ask that the government allow all its citizens the right to a maximum marginal effective income tax rate of 40% and ensures the delivery of that right by ignoring for all other purposes any income upon which 40% of tax has been paid.
This petition closed on Monday 11 June 2007 without having attracted any support at all. The creator was left in a minority of one. Here’s your chance to comment on this petition.