To make our ritual living wage point to John Sentamu

We’ve spent more than a decade making this one same point each year. If we wish the poor to have more money we should stop taxing their incomes. Some people, like John Sentamu, still haven’t grasped this simple point:

Today, the Living Wage Foundation announced that the living wage has increased to £9.30 an hour UK-wide and £10.75 in London, to reflect higher living costs in the capital. If the living wage were paid, that would be hundreds of pounds a month back in the lowest-paid workers’ pockets.

Employers are bound by law to pay a notional minimum wage, but that’s not the same as the living wage. The living wage takes into account actual expenditure. Enlightened employers know this and I’m pleased to say there are now almost 6,000 accredited living wage employers that have chosen to pay all their workers a decent day’s pay for a decent day’s work. These companies also report significant business benefits, with higher levels of morale and lower levels of absenteeism.

It is well over a decade since we first pointed this out. Sure, the numbers change each year but the underlying basics don’t.

Assuming a 37.5 hour week that “real living wage” is £348.75 a week. Upon which employee national insurance, at 12% above the threshold, will be paid of £21.93. Income tax of 20% is charged on the amount over £12,500. This takes £2,267.36 off that £18,135 annual income.

Someone paid the “national living wage” gets £16,009.50 for the same hours.

As we’ve been pointing out if you insist that it is just and righteous that the working poor get more then the correct answer is to raise the income tax and national insurance allowances.thresholds to whatever it is that you’re defining as the minimum righteous and just wage.

If we didn’t tax the national living wage then those working poor would be gaining more income than if all were paid the real living wage. Because we’d not be charging the cost of government to those poor.

Which is why we’ve been arguing for more than this past decade that whatever the minimum wage should be that should also be starting point for taxation being levied. We even had some effect on this point. The current £12,500 allowance for income tax is a direct result of our making this case back when the minimum wage was that amount per year.

For, as all too few understand, we’re pro-poor around here. So, if you want to increase the incomes of the working poor then stop taxing them so damn much.