There were lengthy discussions of the challenge on Left Foot Forward itself and on Liberal Conspiracy here and here.
There has been a spirited defence of the party's policy from Liberal Democrat bloggers. LibDemVoice has a round-up. Indeed, the challenge has united bloggers from different wings of the party, with James Graham of the Social Liberal Forum and Alix Mortimer, on the libertarian wing of the party, both challenging the critique as unfair.
The main points from LibDem bloggers have been that it is unfair to take the tax threshold policy in isolation, when the revenue is raised progressively as part of a revenue neutral package, and that an income tax threshold change can't be expected to help those who pay little or nothing in income tax.
Guido Fawkes weighed in on the LibDem side of the argument, arguing that the idea of relative inequality is a "left-wing myth".
I think that three central concerns about the policy remain valid.
(1) I think it is common ground that the tax threshold change itself does more for better-off than poorer households. As James Graham wrote: "The fact that raising the tax threshold helps people on higher incomes more than people on low incomes is not, believe it or not, a startling revelation. We know. The party has never tried selling this policy in isolation".
The debate is between those who think that is justified because of the progressive way that the money is raised in a revenue-neutral package, against the challenge that there would be considerably more progressive ways to use that revenue for fairness goals.
(2) It seems clear that implementing the overall LibDem manifesto package would decrease income inequality between the top and the middle, but increase the gap between the bottom and the middle.
While the money is raised at the top, there do not seem to be any significant measures in the overall manifesto package to prevent the position of those who don't get much or any of the £700-£1400 tax breaks from getting worse. Hence the concern that the package would deepen relative poverty. I am not sure anybody has challenged this point, other than from a position that inequality or relative poverty don't matter (which would be very much a fringe position among LibDems).
The defence that an income tax threshold change can't be expected to help non-income tax payers does surely not adequately address a challenge as to whether to choose to put almost all of the resources available into an income tax threshold change.
The reason the poor pay a higher proportion of their incomes in taxation is primarily about indirect taxes, not income tax. An alternative proposal like the Solidarity Society report's universal tax credit could address this, in a way that an income tax threshold change can not.
(3) What is the opportunity cost in public spending given the current fiscal position?
Nick Clegg told the Spectator that the LibDems intend to have the toughest approach on spending cuts to close the deficit, contrasting his approach with the willingness of other parties to consider spending rises. (Note that his rationale was the claim that the party's tax breaks focus on lower earners).
“We’re saying “purely spending cuts”, and for a number of reasons. If you want the economy to grow, you must stimulate demand. Any economist will tell you that the best way to do this is by giving tax breaks to the people who tend to spend more of their money. That is to say people lower down the income scale”.
Clegg's interview seems to make clear that, while the current policy package is revenue neutral, the opportunity cost of the tax threshold policy will be £17 billion of unidentified spending cuts. The LibDem leader suggests that the tax rises which fund the threshold change and the pupil premium exhaust the possibilities of tax rises altogether. None of the parties have been at all clear about the content of their deficit reduction plan, but these spending and taxation decisions need to be considered together. The choices made will have important distributional consequences too.
The debate over the weekend has shown that the LibDem party is pretty much united around the tax threshold plan, though some acknowledge the virtues of a universal credits or basic income approach too.
But the emerging debate over spending cuts, tax rises and deficit reduction is just beginning. The idea of the LibDems being toughest on cuts will be contested within the party. The Social Liberal Forum is challenging the leader's suggestion that the party should rule out further tax increases to close the deficit.