Marginal Tax Rates (Hansard, 24 October 1978)

§ Mr. Ralph Howell

asked the Secretary of State for Social Services (1) if he will list in the Official Report his estimate for 1976 and 1977 of the number of wage earners with marginal tax rates, taking into account increased national insurance and loss of means-tested benefits, as well as income tax, in excess of (a) 50 per cent.; (b) 75 per cent.; and (c) 100 per cent. and what percentage of all wage earners these figures represent;

(2) if he will list the number of poor families who have a marginal tax rate, combining tax and loss of social benefits, in excess of 50 per cent,; and if he will break down this number according to those earning less than (a) £20 a week, (b) £20 to £29.99 a week, (c) £30 to £39.99 a week, (d) £40 to £49.99 a week, (e) £50 to £59.99 a week, (f) £60 to £69.99 a week, and (g) above £70;

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(3) if he will update the information given to the hon. Member for Sowerby, (Mr. Madden) Official Report, 17th February 1977, columns 403–4.

FAMILIES WITHOUT CHILDREN, THEORETICALLY SUBJECT TO MARGINAL TAX RATES OVER 50 PER CENT.—DECEMBER 1976—GREAT BRITAIN
Range of marginal rax rates	Estimated number of families theoretically affected	Column (2) as a percentage of all working families without children
(1)	(2)	(3)
Per cent.
51 to 75	…	…	…	70,000	0.8
76 to 100	…	…	…	10,000	0.1
Over 100	…	…	…	—	—

Range of gross earnings	Estimated number of families theoretically subject to marginal tax rate over 50 per cent.
Less than £20	…	…	[10,000]
£20-£29.99	…	…	—
£30-£39.99	…	…	[20,000]
£40-£49.99	…	…	[20,000]
£50-£59.99	…	…	[10,000]
£60-£69.99	…	…	[10,000]
£70 and over	…	…	—
All	…	…	70,000

ESTIMATED NUMBERS OF FAMILIES WITH CHILDREN, THEORETICALLY SUBJECT TO MARGINAL TAX RATES AS STIPULATED—DECEMBER 1976—GREAT BRITAIN
	Estimated numbers in ranges of marginal tax rates
	0–25	26–50	51–75	76–100	Over 100
Families with	per cent.	per cent.	per cent.	per cent.	per cent.	All
(a) Relative net resources below supplementary benefit level	60,000	100,000	110,0001	—	—	170,000
(b) Relative net resources less than 120 per cent, of supplementary benefit level	70,000	350,000	60,000	[10,000]	[20,000]	510,000
(c) All working families	150,000	4,490,000	170,000	[20,000]	50,000	4,870,000

Notes on the tables

1. All estimates are rounded to the nearest 10,000 and consequently the sum of component parts may not equal the total.

2. The estimates are based on a Department of Health and Social Security analysis of incomes and other information recorded by respondents to the 1976 family expenditure survey and are subject to sampling error; the figures in square brackets in particular are subject to considerable proportionate sampling error.

3. Only the population living in private households is covered; institutions etc. are not included in the samples for the family expenditure survey.

4. The estimates are theoretical since they assume that all means-tested benefits are reassessd immediately on receipt of a £1 pay rise; this would not happen in practice, since benefits such as family income supplement are awarded for 52 weeks irrespective of subsequent changes of circumstances. The figures are therefore liable to mislead.

5. "Relative net resources" are defined as net weekly income less net housing costs divided by the appropriate supplementary benefit scale rate times 100. Net weekly income is defined as gross income less tax, national insurance contributions, superannuation con-

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