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The squeezed middle are NOT earning over £225,000 a year

Screen shot 2012-12-06 at 17.30.59
By Paul Goodman
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Ian Cowie at the Daily Telegraph has reproduced a graph from Smith and Williamson showing the impact of George Osborne's proposed child benefit changes on "traditional families – where one parent goes out to work and the other stays at home to look after children".

As I've written before, I believe that it is right to implement the Chancellor's plan as a short-term deficit reduction measure (though there are questionmarks over its practicability), but that it would be wrong to extend it as part of a longer-term plan to cut family allowances.

So I have some sympathy with what might be described as the politics behind the graph.  But what struck me more than the illustration was a quote that accompanied it.  Richard Mannion of Smith & Williamson is quoted as saying:

“...those with incomes between £60,000 and £200,000 are worse off – which clearly illustrates that once again it’s the squeezed middle who are having their pips squeaked.”

The Guardian's income comparison tool doubtless has its faults, but I will give it a whirl in the absence of a reliable median household income figure.  It shows 50% of households having a lower income than a couple with an after-tax income of £33,000 a year.

It is arguable that someone earning a pre-tax income of £60,000 a year is not in a very different bracket from someone earning a post-tax income of £33,000 a year.  But in no way can someone earning over £200,000 be described as part of the "squeezed middle".

Memo to Conservatives: don't make the same mistake.  The squeezed middle (or the strivers, if you prefer) are not, repeat not, top rate taxpayers.  Nor are they higher rate taxpayers - not most of them, anyway.

Indeed, more of them would doubtless gain from a new 10p tax band.  I put arguments for and against its introduction earlier this afternoon.  But whichever way you call it, the Conservative Party will be damned as "the party of the rich" until we grasp the point.


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