The wasteful process by which money is taken from taxpayers only to be returned to them later.
Keynesian economists thought that jobless people should be employed by the taxpayer to dig holes in the ground and then fill them in again.
But such a soul-destroying waste of energy couldn’t happen today… could it?
Unfortunately a form of ‘churning’ does happen within Britain’s fat system of government.
Much of the civil service bureaucracy is employed in returning money to taxpayers. The cost of staffing that bureaucracy means that taxpayers only get a fraction of their money back.
Janet Daley, noted one particularly regressive example of churning in her Daily Telegraph column:
“It is absurd that those on the minimum wage should be paying income tax, and even more absurd that the Government should then be paying them a state benefit (called, misleadingly, a tax credit) to compensate for their low wage (which would not be so low if they were allowed to keep all of it).”
Churning has increased because of Gordon Brown’s reliance on expensive-to-administer means-testing. Tax cuts focused on the low-paid might be one of the best ways to eliminate the worst forms of this wasteful form of recycling.
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