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fru-gal

Will George Osborne Soften The Tax Credit Cuts For Low-Earners?

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I respect Frank Field and his thoughts on welfare.However i dont support this.One of the main problems with tax credits is that working the minimum is the best option.Franks idea would see people working 16 hours getting full tax credits.People earning over £13k upwards gaining zero/ziltch/nothing from their extra work/hours.His 65% taper rate +20% income tax +12% NI would mean someone earning above £13k on tax credits would see 97% of their extra earnings taken away.Take in working costs they would be paying to go to work up until the £20/25k mark (one or two children).

This would simply make doing the least even more important for people.

The new taper rates solve a lot of the problems in tax credits (once the two child limit comes in).

One option they might use though is staging the new taper rates over four years so there isnt a big hit in year one.

Lowering the allowed earnings to £3850 from £6400 was a key reform to tax credits.If they go back on it then their welfare reform is shot down.

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I respect Frank Field and his thoughts on welfare.However i dont support this.One of the main problems with tax credits is that working the minimum is the best option.Franks idea would see people working 16 hours getting full tax credits.People earning over £13k upwards gaining zero/ziltch/nothing from their extra work/hours.His 65% taper rate +20% income tax +12% NI would mean someone earning above £13k on tax credits would see 97% of their extra earnings taken away.Take in working costs they would be paying to go to work up until the £20/25k mark (one or two children).

This would simply make doing the least even more important for people.

The new taper rates solve a lot of the problems in tax credits (once the two child limit comes in).

One option they might use though is staging the new taper rates over four years so there isnt a big hit in year one.

Lowering the allowed earnings to £3850 from £6400 was a key reform to tax credits.If they go back on it then their welfare reform is shot down.

Frank's staying around to try an sort out one of Gordon's messes.

Gordon, after failing at the 'senior statesman game', is at home, dressing up in his wife's dresses.

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Interesting that Boris seems to support somethung like what Frank field is suggesting. Anything to keep the rental incomes up in London heh Boris...

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it must cost a fortune on admin to do the tax credit system. To be honest i would just chuck the tax creidt system in the bin and just let low paided keep more of what they earn. It seems easiest ,cheapest , simplest and fairest way .

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The current system is crazy it encourages you not to work. However you can't blame people for doing the logical thing and doing the bare minimum. The tax credit system is one huge mess which is not going to be easy to exit from.

Personally I think income tax should have been abolished for anyone earning under £20k, if the elite want low wages they have to accept lower prices, lower consumption and lower profits.

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On the Andrew Marr show ,

David Cameron rejects calls to mitigate cuts to tax credits due to come in at the end of the year. It's part of a plan to let people keep more of the money they earn, when the National Living Wage comes in, he says

That lower allowable earnings level of £3850 is crucial (and new 48% taper rate) and they know it.Frank is right it hits the lower paid hard but it also means tax credits run out much quicker.Under the new rules tax credits will run out with one child at £20k,two children at £25,300.At the moment for two children its about £32k.Remember two children is the limit from 2018 so in affect no household earning £25k or more will get any tax credits.

In affect if your earning £6000 a year NMW x 16 you lose £21 a week in tax credits under the new rules.You then lose an extra £6 for every £100 you earn than you do now,£48 lost per hundred instead of £42.

I would expect we see that £3850 level frozen for a long time so wages can slowly increase and push more and more people off tax credits.

Edited by durhamborn

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Gordon, after failing at the 'senior statesman game', is at home, dressing up in his wife's dresses.

I doubt Sarah's dresses will fit Gordon! :blink:

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On the Andrew Marr show ,

David Cameron rejects calls to mitigate cuts to tax credits due to come in at the end of the year. It's part of a plan to let people keep more of the money they earn, when the National Living Wage comes in, he says

That lower allowable earnings level of £3850 is crucial (and new 48% taper rate) and they know it.

Good, I'm glad he's standing firm.

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On the Sunday Politics, Sajid Javid has robustly defended the government's position using the statistics I've seen before:

Tax Credits were supposed to be costing at the time Gordon Brown introduced them £1 Billon/year - they started costing £30 Billon/year. We were at a point in 2010 where 9 out of 10 families with children were claiming Tax Credits.

It's hard to argue against an increase from 1Bn to 30Bn, and 90% claiming. That shows how monstrous the Tax Credits system is.

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On the Sunday Politics, Sajid Javid has robustly defended the government's position using the statistics I've seen before:

It's hard to argue against an increase from 1Bn to 30Bn, and 90% claiming. That shows how monstrous the Tax Credits system is.

I know TC's are wild, but 9 in 10??

I suppose it's possible but aren't TC's all but gone after 40ishK?

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On the Andrew Marr show ,

David Cameron rejects calls to mitigate cuts to tax credits due to come in at the end of the year. It's part of a plan to let people keep more of the money they earn, when the National Living Wage comes in, he says

That lower allowable earnings level of £3850 is crucial (and new 48% taper rate) and they know it.Frank is right it hits the lower paid hard but it also means tax credits run out much quicker.Under the new rules tax credits will run out with one child at £20k,two children at £25,300.At the moment for two children its about £32k.Remember two children is the limit from 2018 so in affect no household earning £25k or more will get any tax credits.

In affect if your earning £6000 a year NMW x 16 you lose £21 a week in tax credits under the new rules.You then lose an extra £6 for every £100 you earn than you do now,£48 lost per hundred instead of £42.

I would expect we see that £3850 level frozen for a long time so wages can slowly increase and push more and more people off tax credits.

Durhamborn, I am curious about the interaction between tax credits and housing benefit. Do you know what the taper rates are for housing benefit (both LHA and housing benefit) and how they interact with tax credit levels? Also, why do you think they are attacking those in work rather than the long term unemployed who will not have any cuts to their (child) tax credits? Seems a bit perverse from the party claiming to be the party of workers?

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Durhamborn, I am curious about the interaction between tax credits and housing benefit. Do you know what the taper rates are for housing benefit (both LHA and housing benefit) and how they interact with tax credit levels? Also, why do you think they are attacking those in work rather than the long term unemployed who will not have any cuts to their (child) tax credits? Seems a bit perverse from the party claiming to be the party of workers?

Durhamborn, I am curious about the interaction between tax credits and housing benefit. Do you know what the taper rates are for housing benefit (both LHA and housing benefit) and how they interact with tax credit levels? Also, why do you think they are attacking those in work rather than the long term unemployed who will not have any cuts to their (child) tax credits? Seems a bit perverse from the party claiming to be the party of workers?

HB is means tested away at 60%.Its very hard to put up the interactions on here as they are very complex.

In basic terms someone who loses £20 a week tax credits would get back £12 of it through higher HB.However as part of the small print to the budget the government is scrapping the "family premium" of £17.45 in housing benefit.In affect that means you start to be means tested on your HB £17.45 sooner than before so you dont gain back through HB what you lost in tax credits .

Im pretty sure the reason they did it the way they did was so they can remove a lot of working people from tax credits.That then means those people wont support tax credits for the "scroungers" so they can put in deeper cuts later.For the not working the two child limit and four year freeze will do a lot of the cutting.Plus for new claims from next April the "family element " of £10.20 a week is being scrapped for everyone both in and out of work.

I would expect longer term the freezes/below inflation increases stay for a long time.

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However the new 2 child limit is only for children not yet born, so surely that means it'll take ages for the full savings to be achieved?

Ie 16 years (ie the time those 3rd/4th children would have dropped out of being claimable after 16 years of claiming).

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On the Sunday Politics, Sajid Javid has robustly defended the government's position using the statistics I've seen before:

It's hard to argue against an increase from 1Bn to 30Bn, and 90% claiming. That shows how monstrous the Tax Credits system is.

To be fair these figures the Tories use are wrong.Children used to get income support when tax credits were brought in costing £6 billion.That was converted to child tax credits later.Im not defending the fact tax credits were an expensive disaster,but the system they replaced cost £6 billion,so the increase was really from £7 billion to £30 billion.50% of the claims were only getting the "family element" of £45 a month.That was put in by Brown so workers would have their eyes diverted from the massive amounts paid elsewhere because they wanted to keep their "free" £45 a month.Thats why the Tories changed the rules to make sure most of those claims lost the £45 a month by making it means tested straight after the rest of tax credits.

Edited by durhamborn

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However the new 2 child limit is only for children not yet born, so surely that means it'll take ages for the full savings to be achieved?

Ie 16 years (ie the time those 3rd/4th children would have dropped out of being claimable after 16 years of claiming).

Yes,but to be fair they would never of got a two child limit passed if it was for families already born.Its for any born after July 2017 that would push the family size to over two children.Its still a huge reform,but vital.

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On the Sunday Politics, Sajid Javid has robustly defended the government's position using the statistics I've seen before:

It's hard to argue against an increase from 1Bn to 30Bn, and 90% claiming. That shows how monstrous the Tax Credits system is.

Sargon of Akkad on the youtube has a pretty concise video on 'poverty'

Its clear what the problem is. Once bills are accounted for (unless you share a house and have only one room to yourself, which IMO is an obscenity for a full time worker in a first world nation, regardless of wage level), its very difficult to live on the minimum wage absent tax credits. However, over half your take home pay of £11,700 goes to rent (£6,500). If this was cut to where it should be (ie 40-50% of current levels, around £3k), the numbers would stack up quite well.

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HB is means tested away at 60%.Its very hard to put up the interactions on here as they are very complex.

In basic terms someone who loses £20 a week tax credits would get back £12 of it through higher HB.However as part of the small print to the budget the government is scrapping the "family premium" of £17.45 in housing benefit.In affect that means you start to be means tested on your HB £17.45 sooner than before so you dont gain back through HB what you lost in tax credits .

Im pretty sure the reason they did it the way they did was so they can remove a lot of working people from tax credits.That then means those people wont support tax credits for the "scroungers" so they can put in deeper cuts later.For the not working the two child limit and four year freeze will do a lot of the cutting.Plus for new claims from next April the "family element " of £10.20 a week is being scrapped for everyone both in and out of work.

I would expect longer term the freezes/below inflation increases stay for a long time.

Is the removal of the "family premium" for new claims or for those currently claiming HB/LHA too?

Edited by fru-gal

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Is the removal of the "family premium" for new claims or for those currently claiming HB/LHA too?

Is the removal of the "family premium" for new claims or for those currently claiming HB/LHA too?

New claims only i think.However if you move to a different local authority thats classed as a new claim.

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New claims only i think.However if you move to a different local authority thats classed as a new claim.

So doesn't it make the wtc cuts pretty pointless if most claimants will just get more in housing benefit? Just switching one benefit for another.

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So doesn't it make the wtc cuts pretty pointless if most claimants will just get more in housing benefit? Just switching one benefit for another.

It's all about political cost limitation for Osborne.

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I doubt Sarah's dresses will fit Gordon! :blink:

She's a big girl. That why she was picked.

Quick! We need to make Gordy look more normal rather than the closet case nut job he is.

Anybody know any old fat burds with a couple of years of fertility left?

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On the Sunday Politics, Sajid Javid has robustly defended the government's position using the statistics I've seen before:

It's hard to argue against an increase from 1Bn to 30Bn, and 90% claiming. That shows how monstrous the Tax Credits system is.

Or what an incompetent, innumerate, useless tw@t Gorddy is?

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There had better not be any softening. No-one ever gave me a government top-up. Why should others get free money to go cause inflation with?

If you can't rely on the Tories to be the nasty party when needed then what on earth are they for? And if they can't do something potentially unpopular now, four years out from an election, when can they?

If I was running the country I'd do it the other way around. No help for those in work. No tax credits and no housing benefit. But on the flip side I'd put in place a proper safety net for the unemployed - it's the job of those in charge to ensure the economy provides well-paying jobs. If what work there is doesn't pay enough then either wages are too low or the cost of living is too high.

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