Tax Credits

Thrugelmir

michaels wrote: »

Note I am not arguing over whether tax credits are a good thing or not, only whether they subsidise employers.

We currently enjoy high levels of employment in the UK. This suggests employers are being subsidised. Rather than paying at a rate that attracts people to work for them. May also be a contributory factor in the UK's low productivity levels.

CLAPTON

gadgetmind wrote: »

The government have now deemed that a private pension pot can't exceed £1m, which could produce an income of around £40kpa even before SP age.

Over a 45 year working life, that's not silly given underlying investment growth.

unlikely to produce a guaranteed inflation linked income of 40k below retirement age


underlying investment growth since 2000 seems to be negative

gadgetmind

zagfles wrote: »

You may as well argue the personal allowance is only for the poor and anyone else should be ashamed to get it.

Well, quite. It's only for those earning less than £100k/£120k, so is clearly a means tested benefit. Some people make pension contributions to avoid losing their personal allowance, so they are clearly taking money away from those POOR people earning less than these sums.

Sorry, HMG makes the rules, we work within the rules, so if the rules suck rocks, then criticise the rules.

Yes, people slag off the feckless who have countless kids and claim masses of benefits, but the new cap will address this. Push for and support rule changes rather than taking a pop at hard workers who work the system intended for those working less hard.

kinger101

Thrugelmir wrote: »

We currently enjoy high levels of employment in the UK. This suggests employers are being subsidised. Rather than paying at a rate that attracts people to work for them. May also be a contributory factor in the UK's low productivity levels.

Exactly. If you look at the graph setmefree posted, you can see that the combined benefit bill we have is now greater than ever, even through unemployment is relatively low.

michaels

Thrugelmir wrote: »

We currently enjoy high levels of employment in the UK. This suggests employers are being subsidised. Rather than paying at a rate that attracts people to work for them. May also be a contributory factor in the UK's low productivity levels.

I still don't see how tax credits are moving the 'supply curve' of labour. In this country there really isn't an option of not to work so people will work whatever amount is offered rather than starve. Thus tax credits subsidise the employee not the employer.

I guess there might be a few people who could afford not to work and still survive (retirees?) but choose to still work because of the higher income resulting from tax credits but I am sure the vast majority work because they have to not choosing to work base don the income.

kinger101

CLAPTON wrote: »

underlying investment growth since 2000 seems to be negative

What are you basing that on? The FTSE 100? You've not included dividends. FTSE 250 has done very well even without the dividends.

kinger101

michaels wrote: »

I still don't see how tax credits are moving the 'supply curve' of labour. In this country there really isn't an option of not to work so people will work whatever amount is offered rather than starve. Thus tax credits subsidise the employee not the employer.

Not really. You think you're the only one playing the system? A company has a duty to it's shareholders to pay pi5s poor wages if they can get them topped up by tax credits. Tax credits are nothing more than state aid.

CLAPTON

kinger101 wrote: »

What are you basing that on? The FTSE 100? You've not included dividends. FTSE 250 has done very well even without the dividends.

if one is paying oneself a pension from the investments then presumably that is being funded by the dividends

cells

higher pay doesn't need to mean employers paying more it could mean the government taking less

So for example if the tax credit cuts are saving £5 Billion that probably enough to up the zero tax band by £1500 (and down the higher rate band by an equivalent amount so higher rate payers don't benefit)

kinger101

CLAPTON wrote: »

if one is paying oneself a pension from the investments then presumably that is being funded by the dividends

I agree that you're not likely to get 4% a year indefinitely, but at the same time, who'd have had everything in just FTSE 100?

I don't take the view that you should be 100% out of equities at 65, given there will be plenty of stock market cycles within your remaining life. But I'm not a fan of FTSE 100 funds in particular. If you want dividend stocks, pick a basket of your own. If you want growth, go for FTSE 250 or funds targeting smaller companies.