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ItsColdUpHere

Another Unintended Consequence Of Tax Credits...

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Imagine two people:

Person A on £12000 a year with 3 kids. With tax credits his take home will be £1830 a month.

Person B on £28150 a year with no kids His take home will be the same £1830 a month, no tax credits.

Note they get the same take home pay.

Now give them both a 4% pay rise on their pay.

Person A would get an extra £10.80 a month (a 0.67% increase in total renumeration), as he has a marginal tax rate of 73% on a smaller monetary increase.

Person B would get an extra £63.80 a month (a 3.5% increase in total renumeration).

Two obvious consequences of this:

1). Person A will not strive to get person B's income even if he/she could - it would take a monumental and totally unrealistic increase in pay to make ANY impact.

2). In this environment, low pay rises (as is the current situation in the UK) simply don't matter to people on tax credits, as they lose most of any rise in tax and tax credit withdrawal anyway. The freezing of tax credits will have a MUCH bigger impact on their take home pay than the current small pay rises. The increase of the child tax credit from £2235 in 2009 to £2690 now has given Person A a 6.6% take home pay increase, the equivalent of 9 years of compounded 4% pay increases on his wage

What a mess.

Discuss.

Edited by ItsColdUpHere

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Yep, I'm Mr A. Quit my above average earnings job in 2008 because of tax credits. Back then my wages didn't look too bad. However, the company I was working for has not given it's employees a pay rise close to inflation in five years. It's a no-brainer.

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It's labours socialist utopia where all workers approximately get paid the same no matter what.

The Tories are perpetuating it which I find surprising though.

It's the same system as in Cuba.

Vive la revolucion?

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Imagine two people:

Person A on £12000 a year with 3 kids. With tax credits his take home will be £1830 a month.

Person B on £28150 a year with no kids His take home will be the same £1830 a month, no tax credits.

Note they get the same take home pay.

Now give them both a 4% pay rise on their pay.

Person A would get an extra £10.80 a month (a 0.67% increase in total renumeration), as he has a marginal tax rate of 73% on a smaller monetary increase.

Person B would get an extra £63.80 a month (a 3.5% increase in total renumeration).

Two obvious consequences of this:

1). Person A will not strive to get person B's income even if he/she could - it would take a monumental and totally unrealistic increase in pay to make ANY impact.

2). In this environment, low pay rises (as is the current situation in the UK) simply don't matter to people on tax credits, as they lose most of any rise in tax and tax credit withdrawal anyway. The freezing of tax credits will have a MUCH bigger impact on their take home pay than the current small pay rises. The increase of the child tax credit from £2235 in 2009 to £2690 now has given Person A a 6.6% take home pay increase, the equivalent of 9 years of compounded 4% pay increases on his wage

What a mess.

Discuss.

Nothing other than a Citizen income (with some form of border / entitlement control) will work..

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Tax credits have replaced real wage increases for the low paid.

The big increase in personal allowances give the low paid a wage increase, I predict that this will keep on increasing YoY now whilst wages stagnate for as long as they can keep the plates spinning.

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Repayable means tested benefits: killing overtime, incentive to work full time, and enabled millions to be employed for a pittance.

Was that all mr Browns work?

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It's labours socialist utopia where all workers approximately get paid the same no matter what.

The Tories are perpetuating it which I find surprising though.

It's the same system as in Cuba.

Vive la revolucion?

Tony Blair's socialist Blue Labour?!? I can't believe people on here still genuinely believe this...

Yes everyone gets paid the same, even those without children... or who sit in boardrooms or enjoy £1million banking bonuses...oh hang on.

Maybe if workers continued to maintian their proportionate wage gains on productivity, those horrible commie instruments such as tax credits or NMW wouldn't have been needed in the first place. Just a thought.

Edited by PopGun

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Tony Blair's socialist Blue Labour?!? I can't believe people on here still genuinely believe this...

Yes everyone gets paid the same, even those without children... or who sit in boardrooms or enjoy £1million banking bonuses...oh hang on.

Maybe if workers continued to maintian their proportionate wage gains on productivity, those horrible commie instruments such as tax credits or NMW wouldn't have been needed in the first place. Just a thought.

There can be more than one thing wrong at once you know.

It IS wrong that directors etc. are getting disproportonate pay rises etc.

But i contend that a lot of the structural problems in the UK are caused by the benefit system skewing values.

You're like a burglar complaining that the police aren't off catching "murderers, they're the worst criminals".

More than one thing needs fixing in the UK, and Tax Credits are one of those things. executive pay is another.

Tax credits are socialism by the back door. if thats what you wanted, you've got it.

Except for poor people without children - they have been really screwed by the tax credit system - employers know they can get a parent for a shit wage, so none parents have to accept the same wage, but without the tax credit topup.

The key to money in the current system is to breed - thats why its wrong.

Edited by ItsColdUpHere

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There can be more than one thing wrong at once you know.

It IS wrong that directors etc. are getting disproportonate pay rises etc.

But i contend that a lot of the structural problems in the UK are caused by the benefit system skewing values.

You're like a burglar complaining that the police aren't off catching "murderers, they're the worst criminals".

Tax credits are socialism by the back door. if thats what you wanted, you've got it.

Garbage. This isn't socialism, it's throwing scraps to the proles onto the floor, hence why I stated should real wages have remained proportionate to productivity (and by proxy money supply) over the last 35+ years none of this reactionary cr4p would not have been needed in the first place.

Think about it, minimum wage, tax credits, expanded bubble credit, all would have been redundant in a true market economy. Not some rigged 'casino market' based one. The only socialism we've had over the last 30 odd years has been corporate socialism. I could turn your burglar anology around, but it's $hit so I won't bother.

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Garbage. This isn't socialism, it's throwing scraps to the proles onto the floor, hence why I stated should real wages have remained proportionate to productivity (and by proxy money supply) over the last 35+ years none of this reactionary cr4p would not have been needed in the first place.

Think about it, minimum wage, tax credits, expanded bubble credit, all would have been redundant in a true market economy. Not some rigged 'casino market' based one. The only socialism we've had over the last 30 odd years has been corporate socialism. I could turn your burglar anology around, but it's $hit so I won't bother.

You're the one talking garbage. But then you always do.

Numbers don't interest you, only socialist paranoia.

Edited by ItsColdUpHere

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There can be more than one thing wrong at once you know.

It IS wrong that directors etc. are getting disproportonate pay rises etc.

But i contend that a lot of the structural problems in the UK are caused by the benefit system skewing values.

You're like a burglar complaining that the police aren't off catching "murderers, they're the worst criminals".

Tax credits are socialism by the back door. if thats what you wanted, you've got it.

Does look like some sort of Citizen's income might work better.

Interestingly, if it were just paid out of the current benefits bill (In-work, pensions, housing benefit, etc) you are looking at £400-500 per month per person (depends exactly who is eligible and if kids get a form of CI). You'd also save a LOT on admin costs - no means testing, no NI calculations..

And any work would make you better off; the CI would also mean that UK nationals could compete with EU immigrants in seasonal/casual employment If you've ever claimed JS you'll realise how much the current system makes this impossible.

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Does look like some sort of Citizen's income might work better.

Interestingly, if it were just paid out of the current benefits bill (In-work, pensions, housing benefit, etc) you are looking at £400-500 per month per person (depends exactly who is eligible and if kids get a form of CI). You'd also save a LOT on admin costs - no means testing, no NI calculations..

And any work would make you better off; the CI would also mean that UK nationals could compete with EU immigrants in seasonal/casual employment If you've ever claimed JS you'll realise how much the current system makes this impossible.

It might work but it wont happen.

To be honest, benefits are easy to give but hard to take away, so I wouldnt have a clue how to unwind the tax credits mess.

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You're the one talking garbage. But then you always do.

Numbers don't interest you, only socialist paranoia.

I recall you getting your knickers in a twist over numbers some time ago. The only one with socialist paranoia seems to be yourself.

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I recall you getting your knickers in a twist over numbers some time ago. The only one with socialist paranoia seems to be yourself.

Im good with numbers. you just ignore them and insult people.

So i'll join in: : Basically you're an idiot.

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Im good with numbers. you just ignore them and insult people.

So i'll join in: : Basically you're an idiot.

You're making yourself look like a right tit. Regardless of your history with popgun, he made a valid point which you've failed to engage with.

Grow up.

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Child tax credit eventually expires (as the child(s) grows up and leaves full time education so this could not be a lifestyle choice and has a time limit. Sooner or later some people are going to notice a huge drop in their income.

Working tax credit for child less persons is soon to become means tested (assets or savings >£18,000 I believe) under UC.I know of some persons in low paid work who make up their wages with working tax credits with rental income from property lets. The used cash sums to pile into the property rental market when everyone else was ( You can't lose can you :).

As I say within the social circle I move in I know of 3 persons like this who have no idea of what is coming. Multiply that across the Country and it must be a huge number.

Of course those without assets will still qualify but then are these not the sort of people the welfare state should be assisting anyway?

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You're making yourself look like a right tit. Regardless of your history with popgun, he made a valid point which you've failed to engage with.

Grow up.

I didnt fail to engage, it was immaterial to what I was saing.

He basically ignored the point i was making (tell me where my numbers were wrong?) and started an idiotic rant about "the bosses".

Tax credits have destroyed incentives for a massive percentage of the population in numerous ways ,I was just highlighting another, but as normal a valid point was sidetracked by somebody with an agenda.

And IM the tit?

********.

Edited by ItsColdUpHere

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Tax credits have replaced real wage increases for the low paid.

The big increase in personal allowances give the low paid a wage increase, I predict that this will keep on increasing YoY now whilst wages stagnate for as long as they can keep the plates spinning.

....Increasing the personal allowances is a good policy, one of the better things this coalition has done whilst in power.... tax credits is not a good policy and should be scrapped, the bureaucracy must cost a small fortune even before a penny is paid.......why should low paid workers pay income tax, they are the ones that do spend all their money living for today, paying taxes here and now as they spend it. ;)

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Child tax credit eventually expires (as the child(s) grows up and leaves full time education so this could not be a lifestyle choice and has a time limit. Sooner or later some people are going to notice a huge drop in their income.

Working tax credit for child less persons is soon to become means tested (assets or savings >£18,000 I believe) under UC.I know of some persons in low paid work who make up their wages with working tax credits with rental income from property lets. The used cash sums to pile into the property rental market when everyone else was ( You can't lose can you :).

As I say within the social circle I move in I know of 3 persons like this who have no idea of what is coming. Multiply that across the Country and it must be a huge number.

Of course those without assets will still qualify but then are these not the sort of people the welfare state should be assisting anyway?

The problem with it is that most people dont think that far ahead - they optimise their work-life balance NOW, and sod the future.

This is another problem with tax credits - it causes people to make long term choices that destroy them in the end.

Indeed my favourite "example family", my wife's friend, who were getting 12k in tax credits, will have lost 9k of them by 2015 because the children are growing up. In addition they will have lost 2.5k inchild benefit. Thats half their income gone...

Edited by ItsColdUpHere

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That isnt socialism?!

My interpretation is back tracking on failed economic policy, or props even.

Besides were tax credits are concerned, where's the socialism for those without children?!

Like I said, things like nmw wtc and the credit bubble would have ever have been needed under a real market based economy that many on here argue for.

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Im good with numbers. you just ignore them and insult people.

So i'll join in: : Basically you're an idiot.

I joined in with one of your numbers games a few years ago, only for you to completely frag your basic maths up resulting in you deleting all your posts from the offending thread. Class.

I'm really not sure why you keep popping up every few months or so to start another of your tired and circular tax credit threads. Is it also lonely and empty as well as cold up there?

I'm not a great fan of tax credits I admit, but you either work the system to benefit from them (like Dom) or you just get on with it.

Edited by PopGun

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I didnt fail to engage, it was immaterial to what I was saing.

I pointed out why they shouldn't have been needed in the first place (at another poster's response), not taking exception with your 'point' that you've already made a hundred times before.

But please do carry on, as like before this is starting to become quite amusing...

Edited by PopGun

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Repayable means tested benefits: killing overtime, incentive to work full time, and enabled millions to be employed for a pittance.

Was that all mr Browns work?

Yes,and long term a disaster for the low paid.The lowe wages will remain,the tax credits/UC will be cut against inflation.

Tax credits ran along side the banks as the main cause of the disaster we are in.The Tories could of fixed it under UC,they chose not to.

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I pointed out why they shouldn't have been needed in the first place (at another poster's response), not taking exception with your 'point' that you've already made a hundred times before.

But please do carry on, as like before this is starting to become quite amusing...

Ah, the bully shows his face - "go on, we're laughing at you".

I'm sure last time i threw a hissy fit and deleted my posts because i couldn't be arsed. I never could keep my temper.

So you win again, oh wise one, if we had you obvious genius running the country we'd have no problems whatsoever.

PS, I do apologise for the needless insults, that was stupid and childish.

Edited by ItsColdUpHere

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  • 243 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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