child benefit..

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  • child benefit..
  • Premier Icon totalshell
    Subscriber

    Rather than have a universal benefit paid to billionaires and paupers and all between with a dreaded cutoff point, why not scrap it all together?
    Add £20 pw for each kid to working tax benefit.. it’d save a bunch of cash and give those with the least the most.
    isnt that what benefits are for?

    What about those who are not working for one reason or another?

    Universal benefits reduce the poverty trap of high marginal tax rates nad increase uptake

    Premier Icon GrahamS
    Subscriber

    Isn’t one of the main points of universal benefits that they are less costly to administer as they require far less checking and policing?

    Not much point* in adding new entitlement rules if those rules cost more to administer than they save.

    * other than political point scoring.

    druidh
    Member

    Do away with it and add it to Child Tax Credits. Why have two benefits when one would do?

    Premier Icon binners
    Subscriber

    isnt that what benefits are for?

    You fool! Have you not been reading your Daily Mail? Benefits are there to keep contraceptive-averse, workshy layabouts in Carlsberg and Lambert and Butler

    rkk01
    Member

    Some interesting points on this discussed on R4 this am.

    Including the comment, IIRC, “modest incomes” in relation to those just over the 40% threshold – such thoughts bound to be incendiary on here!!!

    FWIW I agree, it’s about time the spotlight was shone on the 40% threshold. Lots of ordinary folk caught by this now are by no means well off. Too much focus on the very influential 50% tax payers.

    UK tax needs a root and branch review and overhaul

    elzorillo
    Member

    Yep.. scrap it and increase the benefit threshold to cover the difference.. no extra costs would be involved and a massive saving in payouts and administration.

    Premier Icon Lifer
    Subscriber

    elzorillo – Member
    Yep.. scrap it and increase the benefit threshold to cover the difference.. no extra costs would be involved and a massive saving in payouts and administration.

    Let’s see your sums then.

    jp-t853
    Member

    The child benefit as we have it today has been in force since the 70’s as I understand it. I did hear a couple of years ago that the UK has had some sort of universal benefit since the 1700’s in one form or other, to recognise the cost in bringing future resource in to the economy.

    It is cheap to administrate and is a benefit to people on a wide range of salary levels and the way that it is paid directly to the mother lifts the welfare standards of millions of kids.

    I do think it should be capped at two or three children but I would hate to think that it fundamentally changed.

    rkk01 £40 000 pa puts you in the top ten percent of earners so by definition very well off as 90% of the working population earn less

    Elzorillo – that leads to massive marginal tax rates as you hit the benefices threshold. IE every £ you earn you only get a few pence this destroying incentives to work.

    Rikk01 – I do agree major overhaul is needed and massive simplification with an integrated tax and benefits system – or positve and negative income tax perhpas ( but not freidmans flat rate 🙂 )

    http://en.wikipedia.org/wiki/Negative_income_tax

    Do away with all of the directly paid benefits and adjust your tax code to take account of kids etc.

    This would mean that some people end up with a negative tax code (in which case they get money back) – for everyone else, they just get a reduction in tax collected form their wages.

    easy peasy.

    Or why not have a phased reduction leading to withdrawl over the next ten years?

    Jesus – me and TJ in agreement 😯

    (and we must have been typing that at the same time…)

    don simon
    Member

    rkk01 £40 000 pa puts you in the top ten percent of earners so by definition very well off as 90% of the working population earn less

    1+1=5 😕

    Premier Icon jam bo
    Subscriber

    £40 000 pa puts you in the top ten percent of earners so by definition very well off as 90% of the working population earn less

    Surely it’s relative to where you live (and which side of the property boom you were on). I don’t feel very well off…..

    elzorillo
    Member

    Lifer – Member

    Let’s see your sums then.

    So an increase in the benefit threshold increases admin costs?

    Premier Icon binners
    Subscriber

    Oh Dear God! Run! Run! Save yourselves!!!! I think the interweb may be about to implode

    Premier Icon maccruiskeen
    Subscriber

    Do away with all of the directly paid benefits and adjust your tax code to take account of kids etc.
    This would mean that some people end up with a negative tax code (in which case they get money back) – for everyone else, they just get a reduction in tax collected form their wages.
    easy peasy.

    Nobody in my household has a tax code

    Premier Icon binners
    Subscriber

    Do you live in Greece?

    Premier Icon GrahamS
    Subscriber

    rkk01 £40 000 pa puts you in the top ten percent of earners so by definition very well off as 90% of the working population earn less

    Doesn’t the 40% higher rate tax start at £35k?

    I believe Median UK wage is £26,200.

    So seems to me you could be earning £35,001 and be a higher rate tax payer but, due to regional pricing, have less disposable income than someone earning the median wage in a cheaper area, who will also then qualify for these benefits.

    Premier Icon jam bo
    Subscriber

    35k over tax free allowance

    £35 000 taxable income – so its £35 000+ your basic few thousand ie well over £40 000.

    You are still in the top 10% (roughly)of earners therefore well off.
    http://en.wikipedia.org/wiki/Income_in_the_United_Kingdom

    rkk01
    Member

    rkk01 £40 000 pa puts you in the top ten percent of earners so by definition very well off as 90% of the working population earn less

    Let’s separate fact from interpretation… Yes, in terms of percentile groupings on earnings, but that approach only looks at earned income.

    As someone posted (on the 50% upper rate thread???) that upper decile is where the net tax take starts to outstrip the “benefits” received…

    BUT, that top decile covers a very long statistical tail, from “modestly” well off / comfortable to the super-rich. Being just in to the 40% bracket is not a very comfortable place to be.

    Premier Icon jam bo
    Subscriber

    £35 000 taxable income – so its £35 000+ your basic few thousand ie well over £40 000.

    You are still in the top 10% (roughly)of earners therefore well off.

    And what about assets…

    Be nice to be sitting on mostly mortgage free property, I could afford to earn less then….

    Being just in to the 40% bracket is not a very comfortable place to be.

    Better off than 90% of the population tho.

    Are you really trying to claim that only the richest few % of the population are “well off”

    Premier Icon GrahamS
    Subscriber

    Ah right, sorry forgot about “taxable” bit.

    Point stands though, £42k in London is a considerably more “average” wage than £42k in the North East.

    And we’ve not even got into the whole rankle of households with two incomes just below the higher rate, which seems to be the major flaw in the proposed child benefit change.

    rkk01
    Member

    Are you really trying to claim that only the richest few % of the population are “well off”

    I can only comment on my own experience. I suspect a strong polarisation – both of opinion and of actual feeling of “well-off”.

    My guess would be, that at earnings somewhere above 80-100k, the additional disposable proportion of income really does start to manifest itself. Depends where you live of course, and whether property is paid for / mortgaged etc.

    I also suspect that at the other end of the spectrum, whilst certainly not “well-off”, there will be families who might be “surprised” at the level of provision that they receive compared to others who are earning…

    After all, the furore about the £26k (?) benefits cap was quite enlightening. What does 26k after tax equate to as an earned gross salary equivalent? – must be somewhere in the mid 30s????

    One place I would not envy being is single and earning mid-low £teens – and there are plenty of jobs in the uK economy within this bracket

    No the point does not stand at all. £42 000 puts you into the well off bracket wherever you live.

    Premier Icon GrahamS
    Subscriber

    You are still in the top 10% (roughly)of earners therefore well off.

    Didn’t a recent IFS announcement say that something like 25% of workers would be paying higher rate tax within the next few years?

    “It’s not so long ago that only about one in 20 taxpayers were paying the higher rate. We think that within three or four years that’s going to be one in four or one in five, so this is a very, very big change.’”
    — Paul Johnson, Director at IFS as quoted in, ahem, The Daily Mail

    druidh
    Member

    Having gone from 40% to 20%, I can assure you that the former is a lot more comfortable.

    Premier Icon GrahamS
    Subscriber

    No the point does not stand at all. £42 000 puts you into the well off bracket wherever you live.

    A typical London Weighting is 15-20% of basic salary, to account for increased living costs. Hence £42k – 20% leaves you with less money than someone on the lower rate in a lower cost area who does receive the benefits.

    rkk01
    Member

    No the point does not stand at all. £42 000 puts you into the well off bracket wherever you live.

    I’m afraid this argument does not stand up at all…

    42k in part of the country where accomodation costs are measured in hundreds, then yes, quite likely that person will feel comfortably off.

    42k in an area with very high accomodation costs – then no, not well off.

    My BiL left the UK for the US as he could not afford to support his family. He was above the 40% threshold, and his wife was working parttime around childcare / nursery hours etc.

    The industry he works in coalesced around SE England, and he was forced to move there with his job. He could not afford to buy, and private rents on family homes were stupid money.

    So yes, his earnings were top 10%, but his disposable income was very low.

    typical london weighting is not 15 – 20 % of salery! Nor are london costs that much higher than many other cities.

    Its still irrelevant – £42000 earnings put you in the richest 10% of the population therefore very well off.

    surfer
    Member

    If you earn £40k in 2011/12 from all sources and you are under 65 then your taxable income is £40k minus your basic allowance of £7,475.
    You wil then have £32,525 taxable income.
    You are in the 20% tax bracket not the 40% so you will pay 20% on £32,525
    You need to be earning about £42,500 to get into the higher rate.

    jb79
    Member

    My main objection to the proposals is that it’s one person over the 40% threshold. I’m just over but my wife is unemployed. We can’t use her tax allowance at all, she can’t claim benefits and we’ve lost child tax credits. In January we’ll lose child benefit too.

    Also, wealth isn’t solely about income – my wage is good now but the costs I’ve incurred getting here are high and are still being repaid. They weren’t tax deductible either (in the main).

    Premier Icon GrahamS
    Subscriber

    typical london weighting is not 15 – 20 % of salery!

    Isn’t it? Seemed to be about that on my quick Google of salaries of civil servant and other public service roles that offer a weighting.

    rkk01 makes the point well. You can be taking home £3000 a month, but if your rent/mortgage is £2000 and your bills £750 then you’re not really as “very well off” as someone on less income in a cheaper area.

    Rikk – sorry it does add up – its just your expectations are unrealistic as are your comparisons.

    How on earth do you thing public servants and manual workers survive? You know – people earning half what you think is not well off?

    surfer
    Member

    Didn’t a recent IFS announcement say that something like 25% of workers would be paying higher rate tax within the next few years?

    Thats because the 40% tax band starts at £35,001 in 2011/12 wheras previously it was £37,401.

    druidh
    Member

    and £34,371 for 2012-13

    Of taxable income – allowances are rising as well so you will still need to be earning £42 000+ to pay 40%

    rkk01
    Member

    Rikk – sorry it does add up – its just your expectations are unrealistic as are your comparisons.

    BiL’s expectations were to be able to feed his family, and at just over the 40% threshold he struggled – so much so, that he took his expertise out of the UK. He was earning a good salary, but it wasn’t sufficient in terms of family housing availability and cost.

    I don’t think his expectations were unrealistic. His lifestyle was pretty modest, ran 2 old cars, no foreign holidays. IIRC his budget for going out / mtb / other hobbies etc was £50pm!!!

    Any discussion of wealth HAS to consider both income and outgoings.

    ETa – Just to put some estimated numbers to this…

    42k – approx 2576 pm take home
    26k (median) approx 1670 pm take home

    So about 900 pm difference – which could very easily be swallowed up in fixed costs

    OTH, if that 26k is at the benefit cap level, and not taxed, surely that is close to 35k pa of earned, taxable income…..

    So how do you think people in the south east living on average or below average earnings manage?

    sorry – to claim not to be able to live on his £42 000+ and her few thousand on top is ridiculous

    Premier Icon jam bo
    Subscriber

    Rikk – sorry it does add up – its just your expectations are unrealistic as are your comparisons.

    How on earth do you thing public servants and manual workers survive? You know – people earning half what you think is not well off?

    Yep, it sucked.

    And I thought when I earnt more I’d be better off. Bills just get bigger.

    The most significant differentiator in my experience is when someone got on the property ladder. I know people who earn a third of what I do and have far more disposable income.

    rkk01
    Member

    So how do you think people in the south east living on average or below average earnings manage?

    I dont doubt some / many will be struggling. I’m just trying to illustrate that being a 40% tax payer does not equate to “wealth”. You need to look at income and expenditure.

    From my experience many people on lower salaries do have a higher level of disposable income, despite lower earnings. I guess their fixed committments are less

    Meanwhile, back to child benefit, one thing is sure…

    The Govt have painted themselves into a pretty messy corner

    Premier Icon GrahamS
    Subscriber

    So how do you think people in the south east living on average or below average earnings manage?

    Median Gross Weekly Wage in the UK is ~£500

    But it is lower than that in every region in the UK, except South East and that London. In that London the median is £651 !

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