Thursday, March 25, 2010

Redistribution and retrenchment

Two graphs from today’s IFS Budget briefing stood out for me.

First, the effects across the income distribution of all tax and benefit changes since 1997:

This is something I’m pretty pleased with. The Telegraph, hilariously, reports this as showing that “Ten million middle-income households have lost out because of Gordon Brown’s repeated tax rises”. This is the sort of comment that Chris Dillow might describe as “the Middle England error” and that I might describe as a steaming great lie.

Second, the scale of the tax rises and spending cuts to come:

This one, I’m not not so pleased with.

Given the looming fiscal tightening, it’s hard to see how as much direct redistribution as we’ve seen can be repeated any time soon. Clearly, anti-poverty measures over the next decade are going to have to be more focused on getting people into work and making that work pay.

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