RSS feed Howard Reed's Archive

Howard Reed

Howard Reed

GUEST POST: Howard Reed is the author (with Stewart Lansley) of “The Red Tape Delusion“. He is Director of the economic research consultancy Landman Economics, which specialises in complex econometric modelling work and policy analysis. He is also a research associate for both ippr and Demos. Previously, Howard has worked at the Institute for Fiscal Studies (where he was responsible for the TAXBEN microsimulation model) and IPPR (where he led a project on the impact of immigration on wages and employment in the UK). His recent projects include a publication for Compass, “In Place of Cuts”, which argued for a package of progressive tax increases as an alternative to large scale public spending cuts in the next parliament.

  • Economics

    Did the 50p tax rate really raise less than £1 billion in 2010/11?

    22nd March 2012 — Filed under: Economics

    Howard Reed Howard Reed

    The main justification used for the reduction in the top rate of income tax from 50% to 45% (effective from April 2013) in George Osborne’s Budget yesterday was an analysis by HMRC, published on the same day, which claimed that the top rate was raising very little money – less than £1 billion on an annual basis, rather than the £2.7 billion projected in the March 2010 Budget. In this blogpost I assess the evidence presented by HMRC in support of this claim. Based on the HMRC research as well as other recent evidence on the revenue impact of increases in top tax rates, I reach two conclusions:

    (1)    the methods used by HMRC to assess the yield from the top rate are likely to produce an underestimate of the revenue-raising potential of the 50p rate in the tax system as it currently stands;

    (2)     even if the HMRC estimate is correct, for the most part it reflects easily correctible anomalies in the tax system which allow a large proportion of high income individuals to avoid paying 50% tax relatively easily. Reforming the system to close these loopholes would ensure that the 50p rate raises substantially more revenue than it does now.

    Continue Reading →

  • Working Life

    What to do about employers’ tax relief on training?

    1st December 2011 — Filed under: Working Life

    Howard Reed Howard Reed

    In the current environment of fiscal austerity, most areas of government spending – including financial support from the government for work-related training – are under unprecented scrutiny. The training policy which carries the highest costs to the Exchequer – much more than subsidies for apprenticeships, for instance -  is tax relief on employer-provided training. This consists of relief on employees’ training costs and foregone wages for corporation tax (for incorporated businesses) and income tax (for businesses run by self employed people), plus self-employed people’s own training costs.

    At Today’s TUC/unionlearn “Skills Investment” seminar in Congress House, I will be outlining the results of a recent research project carried out by Landman Economics, funded by unionlearn, which looks at the extent of current tax relief on training and the options for the future.

    Continue Reading →

  • Economics

    Inequality and prosperity

    14th July 2011 — Filed under: Economics

    Howard Reed Howard Reed

    The UK is a very unequal country, and this extreme inequality is the result of major changes in the income distribution over the last thirty-five years, in particular large increases in inequality under the Thatcher government in the 1980s At the same time, according to recent data from the British Social Attitudes survey, three-quarters of people in the UK believe that the gap between rich and poor in the UK is too high.

    But would a more equal distribution of income reduce the level of efficiency in the economy and hence make us worse off overall? Conventional economists have often argued that it would, because of the effects of progressive taxation on reducing the rewards for work and entrepreneurship, and reduced returns to investments.

    Next week the TUC publishes a new Touchstone Extra report, Fairness and Prosperity, which addresses precisely this question; I’ll be launching the report at an online seminar on Monday together with Richard Wilkinson of Spirit Level fame (you can register here). In the report,  I ask whether a more equal distribution of income would joepardise the UK’s economic prospects. Or rather, is more equality just what we need to improve our prosperity and well-being?

    Continue Reading →

  • Economics

    The impact of the 50p income tax rate

    18th April 2011 — Filed under: Economics

    Howard Reed Howard Reed

    In April 2010, a new top rate of income tax of 50% on gross incomes above £150,000 per year was introduced in the UK, having been legislated for back in 2009. Are the right-wing bloggers who insist it has not increased revenues  correct? What evidence is there and what does it show?

    Continue Reading →

  • Public services

    Why Lib Dem criticisms of “Where the Money Goes” are wide of the mark

    17th September 2010 — Filed under: Public services, Society & Welfare

    Howard Reed Howard Reed

    Guest post by Tim Horton and Howard Reed

    Earlier this week our TUC report “Where the money goes“, which shows that the coalition government’s planned spending cuts are likely to impact much more heavily on the poorest UK households than the richest, was subject to robust criticism by Simon McGrath at Lib Dem voice.

    In this article we respond to these criticisms.

    Continue Reading →

  • Public services

    Showing the true value of public services

    12th September 2010 — Filed under: Public services, Society & Welfare

    Howard Reed Howard Reed

    Every year at Budget time, we are accustomed to seeing detailed analysis from the Institute for Fiscal Studies and other commentators on how the Chancellor’s tax, benefit and tax credit changes will affect us. For example, the recent emergency budget was subject to fine-grained analysis from the IFS which produced the conclusion that George Osborne’s claim that the tax rises and spending cuts contained therein were “progressive” did not stand up to scrutiny.

    However, analysis of the impact of increases or cuts in public spending on services where households do not receive a monetary amount, but instead ‘benefits in kind’ – for example health, education and public investment in transport infrastructure – is pretty much non-existent. Most public spending is of this type, and yet we know very little about how it is distributed among the population or what its effects are. This leads to a very one-sided public debate, with organisations like the Taxpayers’ Alliance clamouring for cuts in taxes while failing to acknowledge that if tax is cut, spending will have to be cut too – and that impacts on the provision or quality of public services.

    Continue Reading →

  • Labour market

    Tackling the Red Tape Delusion

    31st March 2010 — Filed under: Labour market, Working Life

    Howard Reed Howard Reed

    The severe recession precipitated by the banking crisis of 2008 means the economy is likely to dominate policy debate in this election to a much greater extent than for any election since 1992, or even further back. But how will the economic crisis affect people’s views on the way the economy should move forward?

    For thirty years, the mainstream economic orthodoxy was that  the way to economic success lies in deregulating product, labour and financial markets as much as possible. Given that the banking crisis was an object lesson in how deregulation could, in some circumstances, deliver not economic success, but instead near-armageddon, we might have thought that this would lead to some reconsideration of whether deregulation was always and everywhere the best policy after all.

    However, the proponents of deregulation – including the Conservative party (but also some leading politicians in the Liberal Democrats and Labour parties), business groups such as the Institute of Directors, Confederation of British Industry and British Chambers of Commerce, and right-wing think thanks such as the Institute of Economic Affairs have instead insisted that the economic crisis means we need to deregulate still further, particularly in the labour market.

    Continue Reading →