The truth about the 96p tax rate

Jim Pickard unpicks David Cameron's story about the working single mother paying 96p of tax for every £1 earned.

He sets the record straight

Labour has just pointed out that in 1998 (a year after the Tories were removed from power) there were 130,000 families facing marginal deduction rates (the technical definition) of over 90 per cent.
That has fallen to 60,000 thanks to the minimum wage, tax credits and lower income tax.
In fact, in 1998 there were 5,000 families facing 100 per cent deduction rates. Every £1 they earned was then taken in tax. The number is now more or less zero. (See page 90 of the Red Book for full details).