Tax Credits

andrewmp

Graham_Devon wrote: »

Just heard a tory MP commenting that the house of lords is overstepping the mark. "How do they know George Osbourne will implement the full changes" he asks before suggesting there is no need for all of this.

Seems somewhat poor, and looking like the beginnings of a U-Turn.

I can see the lords voting for the motion which just makes them talk about it a bit more and then Osborne watering it down a bit next month.

lisyloo

Should there be an exemption for people who could fully afford to have children but due to a change in circumstances might be a bit worse off?

They could always think about doing some sensible planning and getting insurance for events that might occur.
You know - like life insurance.
I would have thought that was sensible for a family to have.

I appreciate you can't get insurance for all changes in circs - like abandonment, divorce etc. but it seems like there is no moral hazard whatsoever as tax payers will pick up the tab.

andrewmp

Because tax credits reduce entitlement to other benefits, 57% of tax credit savings will be offset by increased Housing Benefit and Council Tax support. These savings will not by spread evenly. Some on Housing Benefit will see their support increase by up to 85p for each pound lost in tax credits. Many owner-occupiers will not have their tax credit cuts mitigated and may find themselves pushed into crisis.

andrewmp

lisyloo wrote: »

They could always think about doing some sensible planning and getting insurance for events that might occur.
You know - like life insurance.
I would have thought that was sensible for a family to have.

I appreciate you can't get insurance for all changes in circs - like abandonment, divorce etc. but it seems like there is no moral hazard whatsoever as tax payers will pick up the tab.

Life insurance only pays out if you die, or if you're about to die. A lot of things can change your financial circumstances too you know?

There's no an insurance product in the world that could cover you if the industry you work for goes down the pan, or if there's an economic meltdown and your earning power halves. Also, nearly all, if not all, insurance plans for loss of work only cover you for a short period of time, often stopping at all if you find any other work in the meantime, however comparatively low paid that work may be.

wotsthat

Graham_Devon wrote: »

The solution, as far as I can see it is to reduce tax credits at a much lower rate, while working on the wage side of things.

The overarching point from the tories is a decent one. Employers should pay the wages, not the public purse. It's just the way they are going about it that's causing so much fuss.

The solution is simple - don't cut so hard and so fast. Cut gradually.

The infographic you posted covers the impact of the tax credit changes by 2020 - how gradual should these changes be?

The only way to reduce tax credits is to reduce them - people getting less free money are going to be livid however it's done.

Graham_Devon

lisyloo wrote: »

They could always think about doing some sensible planning and getting insurance for events that might occur.

Is there such an insurance product that will cover you for loss of income in the following circumstances?

- Less hours
- Redundancy from any part time job (when looking at run of the mill jobs such as working in a high street store etc)

The insurance products I know exist cover for death and illness to protect income?

andrewmp

http://policyinpractice.co.uk/five-reasons-the-lords-should-vote-to-block-tax-credit-proposals-today/

Graham_Devon

wotsthat wrote: »

The only way to reduce tax credits is to reduce them - people getting less free money are going to be livid however it's done.

I think the majority generally agree that tax credits should be reduced hand in hand with raising the minimum wage.

However, to receive £10 extra a week because the minimum wage has increased and to lose £50 a week from tax credits is where people take issue.

It's the sheer size of the income drop that's the issue. This isn't about "people being livid" or whatever other meme you wish to create. Even those not getting a single pound from the tax credit system can see the issue.

andrewmp

wotsthat wrote: »

The infographic you posted covers the impact of the tax credit changes by 2020 - how gradual should these changes be?

The only way to reduce tax credits is to reduce them - people getting less free money are going to be livid however it's done.

You'd think it would make more sense to phase the reductions in over the next 4 years, in line with increases to minimum wage and the introduction of free child care. Instead everyone takes the hit straight away in April, don't worry though, you'll be no worse off in 2020*


*unless you already earn in excess of minimum wage, or have no child care costs, or own your own home.

Dird

Linton wrote: »

So from a % point of view who loses the most?

Another way of looking at it: people need a roughly fixed amount to cover the barest essentials, anything left over provides a better living. Knocking £1550 off someone on £11000 is far more significant than someone on £25K losing £2.5K.

Without knowing what they get it's hard to say.
Is the person on £11k losing £1550 of £12k of government subsidy?
Is the person on £25k losing £2500 of £3k of government subsidy?

The person on £11k should have a worse quality of life regardless unless the £25k person is reproducing a football team

zagfles wrote: »

Quick example - two children, no childcare costs.

Person on £11k, £10567 after tax/NI, add £9007 tax credits, £1789 child ben, total £21363.

Person on £25k, £20087 after tax/NI, add £3267 tax credits, £1789 child ben, total £25143

Where did you find those tax credits? £9k?! I need to churn out a couple sprogs