Tax Credits

martinsurrey

CLAPTON wrote: »

so it would seem that the worker is 200 per month better off

assuming a 37 hour week then that make his pay rate about £1.20 an hour (approximately)


one can see why many choose idleness as a permanent lifestyle choice for themselves and their children and grandchildren

yes, which is why a combination of raising pay and lowering benefits needs to be done, to make work pay...

andrewmp

martinsurrey wrote: »

And I will pick holes in it.

Simply saying that their houses both cost £550 isn't enough, its a number you've picked out of thin air.

Lets assume the HB house is a private rent.

Assuming the two houses are of the same quality and an average yield on HB houses of 7% (as they are at the bottom end of the market).

The HB of £550 is enough to rent a house with a market value of £94,286

At a standard SVR of 4.5% to buy that house with a 100% mortgage would cost £353 a month in interest, not to mention the benefit of capital appreciation.

Makes the couple working better off, they also have the option of selling, and would then be entitled to housing benefit as well.

I guess it comes down to do you think home ownership is a right?

I don't, if you want to own, and benefit from the upsides, you have to pay.

Regardless, home owners would have been hardest hit by the cuts as tenants claiming Housing Benefit would have seen their housing benefit increase thus sheltering them from the tax credit cut.

With regards to the mortgage costs, I take the point that home owners will benefit from capital appreciation, but they also have the risk of losing their home and negative equity too.

Either way, a low earner with a mortgage isn't going to be much better off than an employed person renting a house. The figures I've mentioned are possible though, admittedly I doubt there are many in that exact position.

Even using a more currently realistic mortgage payment for a similar house (remember rates can/will rise) - the working person is going to work 40 hours a week for very little financial gain over the unemployed person in the example.

andrewmp

martinsurrey wrote: »

yes, which is why a combination of raising pay and lowering benefits needs to be done, to make work pay...

The unemployed were entirely sheltered from these cuts though, these cuts made work pay less for everyone.

Mistermeaner

All these arguments are legit while out of work benefits stay as they are but I got felling they'll be next, later in the term.

andrewmp

michaels wrote: »

So by your logic actually £200 of the mortgage payment is capital repayement ie saving not housing cost making the worker in fact £166 better off.

Now we need to find out if the working person gets no wtc but still earns below the free school meals cut off point as otherwise school meals cost at least £2 per child per day or £90 per month (averaged over the year) for three kids.

If these cuts went down, the free school meal cut off point would have been reduced to the WTC zero taper level of around £12k as it's always in line with that meaning that in reality, free school meals are for the unemployed, or those who work less than 16 hours per week.

andrewmp

Mistermeaner wrote: »

All these arguments are legit while out of work benefits stay as they are but I got felling they'll be next, later in the term.

He'd have had far more general support for these cuts had he targeted the unemployed too. I've spoken to many people who would have taken it on the chin had the local lazy also been hit. Obviously you'd have had a load of unemployed people up in arms too though.

Before the usual suspects shout "race the bottom" - yeah yeah I know, but it's wrong that working people are hit yet the lazy (and I know not all unemployed people are lazy) are sheltered from the cuts.

The unemployed simply shouldn't be entitled to Child Tax Credit. They should receive a per child element in their JSA IMO.

cells

andrewmp wrote: »

Regardless, home owners would have been hardest hit by the cuts as tenants claiming Housing Benefit would have seen their housing benefit increase thus sheltering them from the tax credit cut.

With regards to the mortgage costs, I take the point that home owners will benefit from capital appreciation, but they also have the risk of losing their home and negative equity too.

homeowner also needs to maintain the property whereas the renters rent includes that in the rent

andrewmp

cells wrote: »

homeowner also needs to maintain the property whereas the renters rent includes that in the rent

That's true too. The gap between those who do work and those who don't was about to get a lot closer. Surely anyone, regardless of their political persuasion can see how wrong that was!

cells

andrewmp wrote: »

That's true too. The gap between those who do work and those who don't was about to get a lot closer. Surely anyone, regardless of their political persuasion can see how wrong that was!

the solution could be to pay the unemployed even less not necessarily to pay those earning low wages even more benefits

If you paid the unemployed less there would surely be more of an incentive to not become unemployed in the first place and to find a job if you are unemployed.

Mistermeaner

Yep

As above I suspect this was coming later.

I don't think this whole thing has been rolled out or communicated very well at all

Good idea, poorly implemented.... unless there is some long term strategy we don't yet fully appreciate - all seems so haphazard and like or loathe Cameron and Osbourne for their politics they are better than this