‘Anti-Family’ Conservatives Ensnaring Thousands More in Middle-Class Households in ’96 Per Cent Tax Trap’: Report

The UK government’s massive ‘stealth’ tax grab will drag tens of thousands of families into a “tax trap” that could see some families face a marginal tax rate as high as 96 per cent, in just the latest punishment for the middle classes meted out by the Conservatives as they try to pay for a decade of borrowing.

In addition to actual tax rises, of which there has been no shortage in recent years, the UK Conservative government is also engaging in so-called stealth tax rises, which are engineered by keeping tax thresholds frozen in times of high inflation. Chancellor Jeremy Hunt — the knifeman dispatched by the Conservative party to take down the short-lived and would-be-tax-cutting Truss government earlier this year — has elected to freeze these thresholds until 2028, which will ensnare thousands more middle-class families in the coming years as their salaries are inflated without accruing extra real value, pushing them into arbitrarily low tax bands.

Another sting in the tail of this ‘fiscal drag’ stealth tax, normally Conservative Party-friendly newspaper The Daily Telegraph reports today, is how thresholds for family benefits are also being frozen, meaning these same middle-class families will have those handouts withdrawn in the coming years as their inflation-struck paychecks crawl past levels set in the past.

These ‘benefit cliffs’ being pushed down the social scale by the poison cocktail of frozen thresholds and rampant inflation will force on some families enormous ‘marginal tax rates’ — which is to say, the amount in tax the next pound earned is to be paid — which can tend to be as absurd as they are cruel. The Telegraph reports that 50,000 families earning what is described as normal middle-class incomes will see marginal tax rates between 80 and 96 per cent in the coming years, a shameful tax grab on those who may need most help of all.

According to the paper’s analysis, the benefit cliff which sees child benefit and Universal Credit progressively withdrawn above £50,270 of income and increases in student loan repayment rates means a family with one child can face a marginal tax rate of 89 per cent. If the family has two children the marginal tax rate is 93 per cent, and families with three children see 96 per cent, the report claims.

Expressed in cash terms, the impact of marginal tax rates and benefit cliffs in this tax band would see a parent of two children who grew their income from £50,000 to £60,000 would only actually be £800 richer in take-home pay.

The paper cites in its report tax expert Chris Etherington who calls the Conservatives’ tax plans as “anti-family”, and Tom Clougherty of the think-tank Centre for Policy Studies who called the threshold freeze a “policy failure” and “particularly unfair towards single earner households, who can be hit with big tax bills even as much better-off two-earner households keep all their child benefit.”

Indeed, this extremely punishing stance towards single-earner households — in other words, traditional families where one parent works in a paid job and the other works at home raising children — is well known to those who experience in the United Kingdom, with the tax system clearly favouring families where both parents have paid jobs and subcontract raising children to professionals.

Fiscal drag was also the key feature of a report yesterday, which also saw middle-class families dragged into paying considerably higher tax rates by the government’s stealth grabs. In one illustration, a family with two adults earning £60,000 a year each would see itself a staggering £40,000 worse off over the next ten years, a massive real-terms raid on much-needed family money by the government.

Even those on average salaries would see themselves working over a month of extra days ‘free’ over the next decade to pay their tax bill as the government dramatically increases its take by weaponising inflation.