Re: Wouldn't it be simpler to just get rid of NI
I have a suspicion that dividends are taxed at a lower rate, not because "it benefits the economy by fostering investment" or some such similar nonsense, but because dividends are largely the perquisite of the wealthy and influential that can exercise clout over governments.
I too can not see why all income should not be taxed identically. I've been told tax law currently occupies in the order of a million pages. Simplification would seem a good idea, but the problem (as always) is that you get rich by being greedy, and once you're rich you have the opportunity to influence tax law in your favour, while the less well off can't.
And BTW the fundamental problem with scrapping NI is that the resulting visibility of the real rate of income tax (necessarily incorporating the NI amount) would lead to riots.