§ Mr. Ralph Howellasked the Secretary of State for Social Services what is his latest estimate 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 this figure represents.
§ Mr. Orme,pursuant to his reply [Official Report,26th October, Vol. 918, c. 130–1], gave the following information:
The number of families with children at December 1975 theoretically subject to the marginal tax rates referred to below is estimated to be as follows:
Thousands Percentage of all wage earners 1. 100 per cent. 50 ½ 2. 75–99 per cent. 40 ½ 3. 50–74 per cent. 200 2 In addition 90,000 families without children are similarly liable to tax at the rate of 50–74 per cent. (1 per cent, of all wage earners).
There are 6.5 million families with children the head of which is employed and 10.2 million working families with out children.
1006WThis estimate is based on Family Expenditure Survey data. It is subject to sampling error.
Families subject to higher rates of tax have not been included.
It is assumed that tax and benefits are adjusted immediately the earnings rise (by £1). This will not happen in practice for the great majority of cases as some benefits, e.g. FIS, free school meals and free milk are awarded for periods of 52 weeks.
Nor is account taken of changes in tax allowance and the income limits of benefits.
For these reasons the figures given must be regarded as theoretical only as liable to mislead if quoted out of context with these notes.