Working Families Tax Credit / Child Benefit.

[View From The Top]

Excluding the Child Care Element, which is accepted by all sides as a major success as it's linked to the Early Years Strategy, where should the limit be on "entitlement" for WFTC?

 

In addition, should the universal entitlement of child benefit be removed for people earning over £XX?

 

£50,000+ of taxable household income would appear fair to me (I fall into this bracket so It's turkey voting for Xmas).

[trousers]

Excluding the Child Care Element, which is accepted by all sides as a major success as it's linked to the Early Years Strategy, where should the limit be on "entitlement" for WFTC?

 

In addition, should the universal entitlement of child benefit be removed for people earning over £XX?

 

£50,000+ of taxable household income would appear fair to me (I fall into this bracket so It's turkey voting for Xmas).

Yep, £50k sounds like a fair cut off (it's always going to be an arbitrary decision for the exact cut off)

 

If I was cameron I'd make a potential smart move and for the first year, make the cut optional. So, say to those over £50k: "we're stopping paying this automatically to you but if you really feel you need the extra £50 a month (or whatever it is) then you can apply to get it reinstated.

 

I would be surprised if many on over £50k would go to the trouble to claim it back.

 

I would also limit child tax credits to a maximum of two children per famil (for all citizens, not just those over £50k)

[stevegrant]

Given that a £50k annual household income goes much further in some areas of the country compared to others, would it be worth making the cut-off level different depending on where you live?

 

For example, in somewhere like South Wales, where it's relatively cheap to live, £50k goes a hell of a long way. Contrast that to London, where it doesn't really get you very far at all...

[trousers]

Given that a £50k annual household income goes much further in some areas of the country compared to others, would it be worth making the cut-off level different depending on where you live?

 

For example, in somewhere like South Wales, where it's relatively cheap to live, £50k goes a hell of a long way. Contrast that to London, where it doesn't really get you very far at all...

 

Sounds reasonable. Maybe the sum should be: "average regional wage + £20k" or such like?

[EastleighSoulBoy]

Given that a £50k annual household income goes much further in some areas of the country compared to others, would it be worth making the cut-off level different depending on where you live?

 

For example, in somewhere like South Wales, where it's relatively cheap to live, £50k goes a hell of a long way. Contrast that to London, where it doesn't really get you very far at all...

 

I can just imagine the Tories salivating at that Steve. "Even better still, in those areas where money goes further let's cut NHS spending (because they can afford it) and pump it into areas where it doesn't go so far."

 

Oh look! Poor Welsh families struggling to get on an NHS list while more affluent inhabitants, of let's say London (not perfect I know), use NHS facilities from their Private Hospital.

 

I know, I know! Me and my loony left thinking.

[View From The Top]

Given that a £50k annual household income goes much further in some areas of the country compared to others, would it be worth making the cut-off level different depending on where you live?

 

For example, in somewhere like South Wales, where it's relatively cheap to live, £50k goes a hell of a long way. Contrast that to London, where it doesn't really get you very far at all...

 

But if it is currently a universal benefit shouldn't the cuts reflect that as well?

[Whitey Grandad]

It used to be a tax allowance but they were concerned that the father would not hand over the money to the poor, struggling mother so they decided to get rid of the allowance and hand out money instead. All means-tested benefits are a disincentive to work and should be abolished.

[View From The Top]

It used to be a tax allowance but they were concerned that the father would not hand over the money to the poor, struggling mother so they decided to get rid of the allowance and hand out money instead. All means-tested benefits are a disincentive to work and should be abolished.

 

So are you saying that WFTC should be abolished for everyone along with family allowance?

[benjii]

Anything which is aimed at financially incentivising "families" is silly IMO.

 

The average cost of a wedding is something like £20k. You can't apply the drone-rationality of economics to something as complicated, as supra-economical, as human, as whether or not family units will exist and remain strong.

 

Targetted help to ensure kids are kept out of poverty is fine but it should be in the form of children's clothes vouchers, food vouchers and heating allowances etc...

[GenevaSaint]

It used to be a tax allowance but they were concerned that the father would not hand over the money to the poor, struggling mother so they decided to get rid of the allowance and hand out money instead. All means-tested benefits are a disincentive to work and should be abolished.

 

How can the Working Families Tax Credit be a disincentive to work?

[GenevaSaint]

Targetted help to ensure kids are kept out of poverty is fine but it should be in the form of children's clothes vouchers, food vouchers and heating allowances etc...

 

I agree with that Benji, benefits going to families should be along these sort of lines. I've not doubt it would be difficult to do BTW. The money should not be used to pay for Cigarettes & Alcohol for the parents.

[Thedelldays]

 

Targetted help to ensure kids are kept out of poverty is fine but it should be in the form of children's clothes vouchers, food vouchers and heating allowances etc...

 

 

they get this too..my missus works in this area, when she is not giving out free laptops and bus passes, she sometimes goes shopping with struggling famililes..

they get vouchers that can be used for milk, fruit and veg..

 

wednesday she was with one single mother shopping, the mother in question never bought a single item of fruit and veg and instead used the vouchers to get 34 pints of milk, which she then sells to her friends..

 

what is the point...seriously...

[benjii]

they get this too..my missus works in this area, when she is not giving out free laptops and bus passes, she sometimes goes shopping with struggling famililes..

they get vouchers that can be used for milk, fruit and veg..

 

wednesday she was with one single mother shopping, the mother in question never bought a single item of fruit and veg and instead used the vouchers to get 34 pints of milk, which she then sells to her friends..

 

what is the point...seriously...

 

Well I suppose she will be one of tomorrow's business leaders, employing thousands and contributing to the Treasury's coffers in an almighty way.

 

Or not.

[Saint George]

Great bit of Socialist re distribution of wealth there....Can anyone explain, why it is that tax payers are expected to directly contribute towards the raising of every other Tom, **** and Mohammed's kids?....If you can't afford to have kids then don't have them.....A good lesson in 'accountability' there.

 

Had completely forgotten about those infamous 'Great British, Tax Payer funded, Baby making machines'. Heh.....Only in Britain do peeps plan to have kids, so they can be financially better off.

 

 

graphic by *_deuce_*

[View From The Top]

Some people clearly don't understand the concept of working families tax credits.

[Whitey Grandad]

So are you saying that WFTC should be abolished for everyone along with family allowance?

 

It should be restored as a child tax allowance. There is no family allowance?

 

How can the Working Families Tax Credit be a disincentive to work?

You don't have to be working to receive it. Giving anybody money 'discourages' them from working for a living.

[Whitey Grandad]

Some people clearly don't understand the concept of working families tax credits.

Since when has working been necessary?

[View From The Top]

Since when has working been necessary?

 

If you're not working you can't claim working families tax credit so I guess working is quite a key element of it.

[Thorpe-le-Saint]

Excluding the Child Care Element, which is accepted by all sides as a major success as it's linked to the Early Years Strategy, where should the limit be on "entitlement" for WFTC?

 

In addition, should the universal entitlement of child benefit be removed for people earning over £XX?

 

£50,000+ of taxable household income would appear fair to me (I fall into this bracket so It's turkey voting for Xmas).

 

I would say that is a fair cut off. It's possible that before the missus and I both pass through threshold (for non teaching types that means before our salaries go beyond the 30k ish mark) it is likely that we'll be starting a family and with our combined household income at the moment arouind £43,500 with it potentially rising to about £47,000 by the time we have kids, any extra income to supplement giving our children a decent upbringing is a vote winner in my book.

[View From The Top]

It should be restored as a child tax allowance.

 

So scrap the universal and replace it with one that is based on household income?

[Thorpe-le-Saint]

Great bit of Socialist re distribution of wealth there....Can anyone explain, why it is that tax payers are expected to directly contribute towards the raising of every other Tom, **** and Mohammed's kids?....If you can't afford to have kids then don't have them.....A good lesson in 'accountability' there.

 

Had completely forgotten about those infamous 'Great British, Tax Payer funded, Baby making machines'. Heh.....Only in Britain do peeps plan to have kids, so they can be financially better off.

 

 

graphic by *_deuce_*

 

Oooh, I almost bit and would have got myself banned, luckily I then remembered that you're a troll, phew!

[Lord Duckhunter]

How can the Working Families Tax Credit be a disincentive to work?

 

It discourages some of the people who work for me doing overtime, and in one instance a promotion which involved a pay rise.

 

WFTC is a benefit and I dont think people who pay 40% tax should be on benefits. I also think that people subject to the new 50% should not get Child benefit.

 

The whole thing should be simplefied. It is possible for somebody to pay £350 a month in tax, and get £80 per month in WFTC.Surely we should just tax them £270, rather than take the £80 and then give it back via their bank account.It's another example of the crazy public sector. If it's a tax credit, then knock it off the tax paid, leaving only the people who dont pay enough tax to receive the benefit directly into their banks.

[Whitey Grandad]

So scrap the universal and replace it with one that is based on household income?

It's not universal, it's based on houdsehold income already. The more you earn the less you get and in some case the marginal rate is 70%.

[Whitey Grandad]

WFTC is a benefit and I dont think people who pay 40% tax should be on benefits. I also think that people subject to the new 50% should not get Child benefit.

 

Why should you pay extra tax and also receive less 'benefit'? That's double taxation. The extra marginal rate should be sufficient in itself to make the tax system 'fairer', although personally I believe a flat tax system is the fairest of all.

 

I agree wholeheartedly with you about simplifying this crazy system.

[buctootim]

It discourages some of the people who work for me doing overtime, and in one instance a promotion which involved a pay rise.

 

WFTC is a benefit and I dont think people who pay 40% tax should be on benefits. I also think that people subject to the new 50% should not get Child benefit.

 

The whole thing should be simplefied. It is possible for somebody to pay £350 a month in tax, and get £80 per month in WFTC.Surely we should just tax them £270, rather than take the £80 and then give it back via their bank account.It's another example of the crazy public sector. If it's a tax credit, then knock it off the tax paid, leaving only the people who dont pay enough tax to receive the benefit directly into their banks.

 

The working families tax credit takes into account how many children you have, how much you pay for childcare so that you can work, and if anyone is disabled and needs additional care. So everyones circumstances are diffrent and you cant (and shouldnt) have an identical payment to everybody. It is a progressive scheme designed to ensure that no-one will be worse off by working (or doing over time).

[Whitey Grandad]

If you're not working you can't claim working families tax credit so I guess working is quite a key element of it.

They keep changing its name. There's also family tax credit.

 

Just simplify everything. The more you work, the more you should recieve.

[Whitey Grandad]

It is a progressive scheme designed to ensure that no-one will be worse off by working (or doing over time).

But that's where it falls down spectacularly.

[buctootim]

I agree wholeheartedly with you about simplifying this crazy system.

 

What do you suggest? Giving everyone the same tax credit regardless of how many children they have; whether or not they have to pay for childcare; or if one child is disabled and needs equipment to be able to function?

[buctootim]

But that's where it falls down spectacularly.

 

er no it doesnt. I have actually received it in the past when the kids were pre school. I know it works. Show me one real life example where it doesnt (rather than Daily Mail 'Bureacratic Broken Britain crap).

[Lord Duckhunter]

The working families tax credit takes into account how many children you have, how much you pay for childcare so that you can work, and if anyone is disabled and needs additional care. So everyones circumstances are diffrent and you cant (and shouldnt) have an identical payment to everybody. It is a progressive scheme designed to ensure that no-one will be worse off by working (or doing over time).

 

I have unlimited overtime going this time of year, my guys on WFTC do not do as much as they want to because it will affect next years credits.

 

I'm sure you could adjust people's tax code to suit their individual circumstances. I have people who work for me with 1 or 2 other jobs, their codes are all differant. In this computor day and age it cant be that difficult to factor in your entittlement and adjust you tax code..

[Lord Duckhunter]

Why should you pay extra tax and also receive less 'benefit'? That's double taxation. The extra marginal rate should be sufficient in itself to make the tax system 'fairer', although personally I believe a flat tax system is the fairest of all.

 

.

 

By taxing someone at 40% or 50% the state is making a statemet that you are a high earner (compared to the average). If the state then sees the need to give you benefits, surely your tax rate should come down.

 

Only the Labour party could devise a system where you place someone in a higher tax bracket and then give them benefits

[View From The Top]

It's not universal, it's based on houdsehold income already. The more you earn the less you get and in some case the marginal rate is 70%.

 

That's WFTC.

 

The universal one is what used to be called child allowance I think. It gets really confusing.

[Whitey Grandad]

er no it doesnt. I have actually received it in the past when the kids were pre school. I know it works. Show me one real life example where it doesnt (rather than Daily Mail 'Bureacratic Broken Britain crap).

http://www.ifs.org.uk/bns/bn3.pdf

[Whitey Grandad]

By taxing someone at 40% or 50% the state is making a statemet that you are a high earner (compared to the average). If the state then sees the need to give you benefits, surely your tax rate should come down.

 

Only the Labour party could devise a system where you place someone in a higher tax bracket and then give them benefits

Indeed. Of course, the 40% and 50% is without the NI contributions from both employee and employer. If you add the employer's contributions to the gross salary and then look at the marginal rate it is frightening.

[Whitey Grandad]

That's WFTC.

 

The universal one is what used to be called child allowance I think. It gets really confusing.

And that's part of the problem. There was also family allowance, family tax credit, and all the others.

 

There is also the crazy system of credits for the pensioners. There is a range of income with punitive effective marginal rates which efectively means there is no point in having any savings or investing for a higher pension whilst working.

[GenevaSaint]

Great bit of Socialist re distribution of wealth there....Can anyone explain, why it is that tax payers are expected to directly contribute towards the raising of every other Tom, **** and Mohammed's kids?....If you can't afford to have kids then don't have them.....A good lesson in 'accountability' there.

 

Had completely forgotten about those infamous 'Great British, Tax Payer funded, Baby making machines'. Heh.....Only in Britain do peeps plan to have kids, so they can be financially better off.

 

Two issues here Mr Troll, the Tories are also going to keep this benefit, nothing to do with socialism.

 

You can also be better off in Switzerland if you have more kids. The more kids you have the lower the income tax rate (at least in Geneva canton). They also give you tax benefits for being married. And it's not in massive sweeping tax bands either, it's very very progressive in £1000- £3000 increments. So you don't jump from 20% to 40% in one foul swoop.

[GenevaSaint]

And that's part of the problem. There was also family allowance, family tax credit, and all the others.

 

There is also the crazy system of credits for the pensioners. There is a range of income with punitive effective marginal rates which efectively means there is no point in having any savings or investing for a higher pension whilst working.

 

Child Benefit, Childrens Tax Credits and Working Tax Credits, does seem a little over the top!

[EastleighSoulBoy]

Two issues here Mr Troll, the Tories are also going to keep this benefit, nothing to do with socialism.

 

You can also be better off in Switzerland if you have more kids. The more kids you have the lower the income tax rate (at least in Geneva canton). They also give you tax benefits for being married. And it's not in massive sweeping tax bands either, it's very very progressive in £1000- £3000 increments. So you don't jump from 20% to 40% in one foul swoop.

 

Shhhh! You're not being very helpful with the agenda!

[Lord Duckhunter]

I want to know why after 13 years of a Labour administration Brown is still giving a benefit to the richest 1,000 families in the Country

 

Brown's policy appears to be,you're so rich we'll tax your inheritance (which you've already paid tax on) when you die, but while you're alive here's some child benefit to help you bring up your children.

[buctootim]

I want to know why after 13 years of a Labour administration Brown is still giving a benefit to the richest 1,000 families in the Country

 

Brown's policy appears to be,you're so rich we'll tax your inheritance (which you've already paid tax on) when you die, but while you're alive here's some child benefit to help you bring up your children.

 

Because means testing is expensive - leading to the bureaucratic waste the tories want to eliminate. For relatively small amounts of money - £20pw - in practice its usually cheaper to have a universal system where every family is entitled to it, knowing that in practice the 1,000 richest familes in Britain mostly wont bother to claim.

Edited 30 April, 2010 by buctootim

[buctootim]

http://www.ifs.org.uk/bns/bn3.pdf

 

That 11 year old report was very supportive of the scheme. Your point is?

[Whitey Grandad]

That 11 year old report was very supportive of the scheme. Your point is?

Figure 1 shows how the incentive to work tapers off. The only incentive to work should be money in the pocket. All these credts and variable marginal rates distort the labour market to the extent that for alot of people it is not worth going out to work, or earning a little bit extra.

 

Don't even get me started on lone parent benefit. A wife can find a boyfriend, decide to get divorced, have all her legal bills paid, keep all the tax credits and lone parent benefits and still expect the innocent ex-husband to pay child support. Financially she is better off than being married.

[View From The Top]

Figure 1 shows how the incentive to work tapers off.

 

 

It doesn't show that at all. I would suggest you read the text that goes with it.

 

Still, if it suits your bizarre agenda fill your boots.

Edited 30 April, 2010 by View From The Top

[Fuengirola Saint]

I have unlimited overtime going this time of year, my guys on WFTC do not do as much as they want to because it will affect next years credits.

 

 

 

Thats their problem, if they love overtime so much, give up some of their benefits, simple!

[Whitey Grandad]

It doesn't show that at all. I would suggest you read the text that goes with it.

 

Still, if it suits your bizarre agenda fill your boots.

 

That would be the bit with the negative slope. I've looked at this again and it supports what I have been saying:

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

 

Above £6420 the withdrawal rate has the effect of 'making an effective marginal tax rate of 70 percent'. For every £1 earned above the threshold, 39p of tax credit is withdrawn.

 

(It's now just called 'Tax Credits', WFTC ended in 2003)

[buctootim]

That would be the bit with the negative slope. I've looked at this again and it supports what I have been saying:

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

 

Above £6420 the withdrawal rate has the effect of 'making an effective marginal tax rate of 70 percent'. For every £1 earned above the threshold, 39p of tax credit is withdrawn.

 

(It's now just called 'Tax Credits', WFTC ended in 2003)

 

So what would you do differently? Have no scheme so that there is no incentive to work because the costs of childcare outweigh the wages that could be earned, or have a scheme whereby the recipient continues to recieve the full credit even though their wages far outweigh the childcare costs? The reason for the taper is to provide an incentive to work whilst not using taxpayers money to those who dont need it.

[View From The Top]

So what would you do differently? Have no scheme so that there is no incentive to work because the costs of childcare outweigh the wages that could be earned, or have a scheme whereby the recipient continues to recieve the full credit even though their wages far outweigh the childcare costs? The reason for the taper is to provide an incentive to work whilst not using taxpayers money to those who dont need it.

 

I'm glad someone else reads it the same way. I was worried for a moment!

[Whitey Grandad]

So what would you do differently? Have no scheme so that there is no incentive to work because the costs of childcare outweigh the wages that could be earned, or have a scheme whereby the recipient continues to recieve the full credit even though their wages far outweigh the childcare costs? The reason for the taper is to provide an incentive to work whilst not using taxpayers money to those who dont need it.

Well, I'm in favour of a parent being at home to look after the children. There's something not right about going out to work to earn money to pay for someone to look after your children. What are you advocating? Taxpayer A gives money to parent B so that they can pay a childminder and go out to work? It's the phrase 'those who don't need it' that I always have trouble with. Does that include those who saved their money instead of smoking or drinking it? To them that have shall be taken away, and to them that have not shall be given.