Fabian Research Director Tim Horton and Howard Reed have recently published a paper for Left Foot Forward examining the distributional consequences of the Liberal Democrats' plan to lift the income tax threshold to £10,000. Their analysis showed that the change would benefit higher-income households more than those lower down the income scale, with only £1 billion of the £17 billion cost being spent on taking low earners out of taxation. The change would widen the gap between the bottom and the middle and increase relative poverty.

The paper has sparked a lively debate on the political blogosphere. Liberal Democrat frontbenchers Steve Webb and Danny Alexander were among those to defend their party's policy, and other LibDems have stressed that the threshold change is funded by taxes which affect higher earners most.

To help to extend and inform this debate, this extract from the Fabian Society book The Solidarity Society compares the distributional impact of different ways of raising allowances, investing in tax credits, or restructuring how tax allowances and reliefs work. The book argues that progressives should advocate converting tax allowances into a flat tax rebate. It also makes the case for a universal tax credit which could provide a route towards a citizens' income.

Download Tim Horton and Howard Reed's paper from Left Foot Forward

Download an extract from The Solidarity Society

Read Tim Horton's comment piece in the Guardian

Read coverage on Next Left