In the last few months we may have given the impression that someone earning \u00a350k, with three children under 18, faced a marginal tax rate of 68%. We may have suggested that this was a disincentive to work, contributed to a shortage of key workers and even held back economic growth. We may have used words like “indefensible” and “disgrace”.<\/p>\n\n\n\n
We now realise that our analysis failed to take into account the uprating of child benefit, and in fact the marginal rate in this scenario will be 71%, not 68%. A graduate in this position repaying a student loan can face a marginal rate of 80%.<\/p>\n\n\n\n
We also wrongly suggested that someone earning \u00a350k and with six children under 18 faced a marginal rate of 90%. The correct marginal rate is 96%.<\/p>\n\n\n\n
We can only apologise for what is an unacceptable error, and would like to make clear for the record that a marginal rate of 71%, 80% or 96% is absolutely fine, and the effect on the individuals involved and the economy as a whole is completely unimportant.<\/p>\n\n\n\n
The corrected chart showing the child benefit withdrawal\/CBHIC effect:<\/p>\n\n\n\n
And including student loan repayments:<\/p>\n\n\n\n
The spreadsheet model is available here<\/a>. Note these figures are for the UK excluding Scotland. The Scottish rates are higher.<\/p>\n","protected":false},"excerpt":{"rendered":"