Two Tory MPs have called for the higher rate income tax threshold to be raised to £50,000, in order to prevent 1.3 million people falling into this tax bracket.
Kwasi Kwarteng and Priti Patel, members of the Free Enterprise Group of Conservatives, want to see this dramatic rise from £41,450 next year to £50,000 to reverse the years of people being dragged into paying higher rate tax.
Their report, Motivating the Middle, also suggests that tax thresholds are increased in the future in line with wage inflation.
People are being dragged into higher rate tax as a result of the coalition strategy to increase the tax-free personal allowance to £10,000.
Whilst only 5% of taxpayers were paying income tax in the higher rate bracket in the late 1980s, around 15% now pay tax at 40%, according to figures from the Institute for Fiscal Studies.
By increasing the higher rate threshold to £50,000, this would fall to around 10% of taxpayers.
In an environment where economic growth is proving to be particularly elusive, reducing the tax burden on 1.3 million people is one way of getting some cash into the real economy.
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