Why is it expected that lower tax rates should compensate for lack of benefits?
Surely it is higher pay rates and not lower taxes that compensate for the job insecurity, lack of holiday, sick pay etc when someone is contracting?
If it is expected that tax should also be lower on contractors to compensate for the lack of benefits, then that is subsidising the companies who take on contractors. At the low end of the pay scale, working tax credits allow companies to pay below a genuine living wage. This is the same kind of corporate subsidy by taxpayers higher up the pay scale.
Contracting is a commercial or lifestyle choice, not some kind of public service. If employers need the flexibility then they should pay the true cost.
Obviously I'm an anonymous coward for this post because I don't expect this is the view from the contractor community...!