Deficit for All.

So our deficit is £2,500 per person, around £10,000 per average household. Say we pay 10% per annum, that’s £1,000 a year for 10 to 15 years depending on interest rates, or 7% of average income, or 8.5% on minimum wage, or 0.1% if you’re on £1 mill. Daunting how to collect all that tax fairly. Now this is apparently an old idea of Milton Freedman’s, and one I invented only a few years ago. A tax system where there is no unemployment benefit. The poor starve, end of. No sorry, it’s not that. There is no unemployment benefit so everyone has to find work of some sort to not starve. But this will only work if there is full employment. OK but that won’t happen unless low-end wages are very low, well below subsistence level. So make the minimum wage £1 per hour. At that level there will be millions of new jobs. Even I could employ someone to scrub my back in the bath. But £37.50 a week isn’t sufficient to live on. So agree a living wage, say £6 per hour and supplement my back scrubber to the tune of £5 per hour to make up the difference. After a while she will leave for £2 per hour and only need £4 supplement or get a better job for £6 and need no supplement, and so on. When she’s on £6 to £10 per hour she pays no tax and higher than £10 she begins to pay tax and can progress through several bands. It’s a simple system that overcomes the cut off point of the minimum wage that forces people into idleness and the government into paying for it. Idleness and the accompanying loss of self-respect doesn’t benefit anyone, and natural avarice will provoke the desire to advance. Employers won’t rely on supplements because they will want better quality workers, and it would give government greater flexibility in taxing. And then there’s the ‘Fare Tax’ system where we abolish all income tax, nice, and replace it with VAT. Interestingly this has gained a fair amount of support in the US Congress from around 2000. All the administration of income tax replaced by a simple tax administered by the shop till. Amazingly the US calculated VAT at only 23% would raise the same revenue as the current income based system. So come on Nick or Dave or Gordon, strap on a pair and lets have some fresh ideas.