Thanks for this Duncan. Super interesting. I'd been about to calculate some of this myself when I was sent your piece. One comment, which may affect calculations: Employer NI is actually now at 15%, not 13.8%.
Super article, I know it's a few months late that I came to this, but child benefit now tapers off from £60-80k, halving the impact on effective marginal tax.
Thanks for this Duncan. Super interesting. I'd been about to calculate some of this myself when I was sent your piece. One comment, which may affect calculations: Employer NI is actually now at 15%, not 13.8%.
Thanks! Changes the headline numbers a little:
Weighted average MTR: 56.3% complete vs 40.5% restricted (was ~56% and ~40%)
DWL distribution: 72% below £50k, 92% below £80k, 97% below £125k (essentially unchanged)
Wedge costs at ε=0.6 shift slightly:
- HICBC: +£2.9bn (was +£2.5bn)
- PA taper: +£1.2bn (was +£1.1bn)
- AA taper: +£3.5bn (was +£3.7bn)
- Childcare cliff: −£0.6bn (unchanged)
- Mechanical total: £7.4bn (was £7.7bn)
- Total net cost at ε=0.2: £2.6bn (was £2.9bn)
MCPF is still 1.8-2.2
Agree. Any spending with BCR<2 is likely a net negative.
Interesting discussion about ETI. I wonder if this is why people in Asia tend to eat out more.
Is this why their food is better as well?
LOL
Super article, I know it's a few months late that I came to this, but child benefit now tapers off from £60-80k, halving the impact on effective marginal tax.