Thin end of the wedge: Putting the tax burden on middle earners in an international and historical context

<jats:p>Taxes have risen a lot since the election with policy measures estimated to add around £70 billion to annual receipts by the end of the decade. So in this spotlight we dig into where this leaves the tax burden facing middle earners. International data shows that the rise in employer National Insurance contributions (NICs) last year and frozen tax thresholds in the UK have led to the largest annual rise in taxes on average workers across 33 comparable OECD rich countries. Strikingly, however, this was from a very low base – lower than the US, for example. The UK remains in the bottom third of such countries for the level of tax on an average worker, and the effective tax rate on a typical earner is still lower than it was before the financial crisis. Indeed, no country raises more in total tax as a proportion of GDP without also asking more of single average earners. This analysis strongly suggests that any politician promising a bigger state and lower taxes on middle earners is not being realistic. So if we want to increase defence spending, then there is a clear case for paying for this through broad-based tax rises that include typical earners paying more.</jats:p>