Replacing welfare with a negative income tax would solve Osborne’s problems | Ben Southwood for Conservative Home
Head of research at the ASI, Ben Southwood, wrote for Conservative Home on why a negative income tax may be the solution to Osborne's tax credit problems.
Though barely anyone predicted it at the time, George Osborne’s 2015 budget looks like it will be defined not by his vaunted hiking and rebranding of the minimum wage, but by his massive cuts to tax credits. This is because everyone has suddenly realised that these cuts will take large sums of money—thousands of pounds in many cases—out of the pockets of blue-collar and sometimes Tory-voting workers.
Britain’s welfare system is overcomplicated, wasteful and counterproductive. In Free Market Welfare: A case for a Negative Income Tax, Michael Story makes the case for merging most working-age benefits, including tax credits, into a Negative Income Tax – a single, tapered payment that tops up the wages of the working poor and guarantees that work always pays.