Millions stay at home due to tangled tax system

Millions stay at home due to tangled tax system

IFS study finds workers discouraged from doing extra hours due to tax system

Millions of people stay at home rather than go to work due to the complex tax
system.

A new report by the Institute for Fiscal Studies has shown that over two
million people were discouraged from doing extra work because a huge chunk of
the income would be swallowed up because of the structure of tax credits.

Stuart Adam, who authored the report, told the Daily Telegraph that
Labour reforms had served to weaken incentives to work at all, and weaken the
incentive for people to do extra work.

‘The biggest single cause is tax credits,’ said Adam.

‘They have given a lot of money to low-income families but if they go on to
become higher-income families it is taken away from them.’

The Treasury said the number of people facing marginal tax rates of up to
100% had been reduced and pointed to the increase in employment and its
introduction of the minimum wage as means of reducing poverty. It also added
that the report confirmed work incentives worked for many people.

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