Tax Credits

martinsurrey

Moby wrote: »

So tax credit reform is symbolic of us all living within our means and part of a bigger package! Really?
http://www.theguardian.com/commentisfree/2015/oct/28/2008-crash-government-economic-growth-budgetary-surplus

that article is bewildering in its ineptitude.

written by an anarchist activist so hardly surprising.

did you read the comments, the people agreeing come across as tin foil hat wearers or idiots, while the ones with some thought in them are pointing out hole after hole.

here is one I like

a : This is such a helpful piece of writing: thank you!
More like this, please, so that we are able to make more informed decisions about the big factors affecting our lives, ones that 'commentators' and 'pundits' speak about as though we know as much as they do (or maybe it's just me being a bit thick?).

b : Why would you take such an obviously partisan piece of writing at face value? Don't you have any skepticism about the author's motives?

At the very least a piece from another pov should have been printed alongside (preferably from an actual economist).

c : The Left only question the Guardian when it agrees with the Conservatives, or dares to question the proclamations of Saint Corbyn.

"I’d like to talk today about the greatest taboo of all. Let’s call it the Peter-Paul principle: the less the government is in debt, the more everybody else is. I call it this because it’s based on very simple mathematics. Say there are 40 poker chips. Peter holds half, Paul the other. Obviously if Peter gets 10 more, Paul has 10 less."

so I guess from that he believes the nation, as a whole in as much total debt as it has ever been as its a zero sum game...

beecher2

MFW_ASAP wrote: »

Holy moley! No wonder we can't afford tax credits!

What on earth was Brown thinking when he introduced them???

Jeeze, it makes you wonder why anyone works anymore

Think he was thinking 'they'll always vote labour if we do this'.


The stories of 'I'm losing £1k in tax credits' need the context of how much tax credits are being received in the first place.

The Guardian article here
https://www.theguardian.com/money/2015/oct/26/tax-credits-cuts-those-set-to-be-hit
gives a bit more context to some of the individuals concerned, and maybe I am just very hard hearted but it was hard to feel sorry for some of them.

zagfles

Moby wrote: »

So tax credit reform is symbolic of us all living within our means and part of a bigger package! Really?
http://www.theguardian.com/commentisfree/2015/oct/28/2008-crash-government-economic-growth-budgetary-surplus

I don't think I've ever read a bigger load of drivel in my life! Seriously, I thought the Guardian had some standards, obviously not!

For a start, the symmetrical graph at the top is stating the bleeding obvious. Obviously, for every £1 extra of debt, there is £1 extra of credit. You can't borrow money unless there is someone to borrow from. The only interesting aspect of that graph is we are getting more and more owned by foreigners!

This quote is unbelievable

If the government reduces its debt, everyone else has to go into debt in exactly that proportion in order to balance their own budgets.

Does he actually understand the difference between deficit and debt? If the govt reduces it's debt by running a surplus, that means it takes more in taxes than it spends, and obviously that is balanced by a so called "private sector deficit", not that that concept really makes any sense in that the "private sector" consists of millions of different entities here and abroad.

But anyway, lets go with this block "private sector" concept. As we all know, the govt is in debt. But lets think about that symmetry again. The govt is in debt which must mean the "private sector" is in credit! Obvious really. Total debt must equal total credit. If you owe £1, there must be someone you owe that £1 to.

So the govt running a surplus means that govt debt is reducing and "private sector" credit is also reducing! Now obviously, within the private sector, there will be those in debt and those in credit. But overall, the "private sector" must be in credit if the govt is in debt.

So the govt reducing debt doesn't mean that debt must be pushed elsewhere, unless you think every single taxpayer is in debt overall, which is clearly rubbish if we remember the private sector must be overall in credit if the govt is in debt.

Credit & debt get created and destroyed all the time. The fractional reserve banking system does it. Everyone does it, eg when they lend their mate a tenner, £10 of credit & debt is created. And destroyed when he pays you back. Unless he tries to wiggle out of paying you back as it would be bad for the economy :rotfl:

And equally, debt is destroyed, not transferred, when the govt pays down its debts.

This bit is even funnier:

Note how each surplus is followed, within a certain number of years, by an equal and opposite recession

Let's look at the graph supporting this point. Big surplus in 1948-51, then another surplus in around 1971, then a recession in about 1975, then, wait, another recession in around 1981, a surplus in around 1989, recession around 1992, surplus around 2000, recession in 2008.

Is he really trying to convince us that this shows a correlation between govt surpluses and recessions? Seriously? When it shows a massive surplus in 1948-51 and no recession till 1975? When it shows two recessions in the 70's/80's with no surplus between them? When it shows vastly different timescales between surpluses and recessions?

There is no correlation whatsoever. I might as well say my singing causes it to rain. Because whenever I sing, some days later it rains. Maybe the next day, maybe a month later. But it happens eventually, so it's proved :rotfl:

coastline

MFW_ASAP wrote: »

Holy moley! No wonder we can't afford tax credits!

What on earth was Brown thinking when he introduced them???

Jeeze, it makes you wonder why anyone works anymore

Goes back along way to 1988 when the Tory government reformed the taxation of marriage.
The Married Mans allowance was phased out over 10 years from 1990 to 2000.

http://www.margaretthatcher.org/document/111449

http://www.taxhistory.co.uk/Income%20Tax%20Allowances.htm

In 1986 the Tory government introduced Family Credit..

https://en.wikipedia.org/wiki/Family_Credit

then called Working Tax Credit..

https://en.wikipedia.org/wiki/Working_tax_credit

Even today the cost would be substantial including Family Credit and the Married Mans Allowance which was a fair bit of the individual tax allowance...
The figures given by todays goverment dont take all the changes into account...

zagfles

coastline wrote: »

Goes back along way to 1988 when the Tory government reformed the taxation of marriage.
The Married Mans allowance was phased out over 10 years from 1990 to 2000.

http://www.margaretthatcher.org/document/111449

http://www.taxhistory.co.uk/Income%20Tax%20Allowances.htm

In 1986 the Tory government introduced Family Credit..

https://en.wikipedia.org/wiki/Family_Credit

then called Working Tax Credit..

https://en.wikipedia.org/wiki/Working_tax_credit

Even today the cost would be substantial including Family Credit and the Married Mans Allowance which was a fair bit of the individual tax allowance...
The figures given by todays goverment dont take all the changes into account...

Actually it goes back to 1971 with Family Income Supplement. But FIS/FC/WFTC etc were nowhere near as generous - see this IFS report from 1999:

http://www.ifs.org.uk/bns/bn3.pdf

By the end of the century, the government expects to be spending £5 billion per year (1.5% of government budget, 0.6% of GDP) on WFTC, almost £2 billion more than was expected under
FC.

So WFTC cost £5 billion in 2000, FC would have cost £3 billion. In today's money, about £8 billion for WFTC and £5 billion for FC.

Tax credits now cost £30 billion. Over 3 times WFTC and 6 times FC in real terms.

The loss of the married couples/additional personal allowance is more than made up for by the increases in the personal allowance - the MCA/APA was around 50% of the personal allowance and the personal allowance has gone up by about 50% in real terms - and of course couples get 2 of them.

ProudDad

martinsurrey wrote: »

Well, look at any of the economies which had a bail out, they know what true austerity feels like, look at France now, 11% unemployment, these are the nations our deficit is in the league of, (as a % of GDP) we can afford our deficit for now, as we intent to reduce it.

http://blog.thomsonreuters.com/index.php/european-government-debt-graphic-of-the-day/

Our economy is more resilient as the international community believe our Government will do the necessary to ensure we don't go belly up, which means living within our means.

.


Universal credit.



Labour and the Tories are agreed on keeping the NATO 2% of GDP military spend.


Again you are mortgaging your Children's future, we give them a deficit of 80% of GDP and when their times are tough, they cant borrow any more, what then?

I know we are fortunate not to live in one of the countries that has been bailed out. Their initial situation was a lot worse than ours however and their economys a lot less varied than ours is. I am not saying we shouldn't be paying the deficit off but to do it slower would do us no harm in the long run. Referring to what you mentioned I am not mortgaging my children's futures. Unfortunately government deficits and surplus are a fact of life and will happen again regardless of what we do its how we deal with them that will provide lessons for future generations. We need to lead by example and show them how to look after the finances while maintaining a society that never forgets about the people at the bottom.

Universal credit - More of an example of how not to do it. I would keeping the exisiting benefits but streamlining them and generalising them. Possibly renaming them to reflect the change.

I don't disagree with the spending on defence it's how it's spend. For example is a like for like replacement of trident necessary and justifiable in today's world. I am not saying we do or don't need nuclear weapons that's a different argument but to flippantly ignore alternatives and go straight into spending £100 billion on a replacement(although the final vote hasn't actually happened so I know that full commitment hasn't been made yet) and to start spending on that commitment that hasn't been agreed yet. Or too waste a tonne of money developing a new plane(nimrod mr4) that is delayed several times and then cancel it just before completion and have to spend more than would be saved on an alternative

ProudDad

Sapphire wrote: »

Agree – and moreover think that child benefits, also paid for by the taxpayer, should be limited to the first two children only (or one or none). I don't see why taxpayers who choose to limit their breeding and so live within their means should pay for those who churn out offspring, then expect others to pay for them. I also think situations in which males have several wives (official/unofficial) that give birth to multiple offspring (I've heard there are sometimes 20 or more) should be dealt with.

Only those who really need benefits should receive them – like the (truly) disabled, the elderly who have contributed all their lives and didn't have the types of benefit that people do today, and soldiers who have problems readjusting to life as civilians. Otherwise, the 'deserving' 'poor' need to organise their lives in such a way that they won't need to scrounge from hard-working taxpayers – which often means limiting the amount of children they bring into the world.

Agree with you regarding child benefit in fact am surprised it has been universal for so long and feel the current government is going down the right road of limiting this and could go further than it has as you suggest.

Also agree that it is only those who really need benefits who should get them however your assessment of who needs them doesn't sit quite right with me. Certain benefits targeted at the elderly could be limited like a winter fuel allowance that is universal and giving bus passes/taxi cards to every over 60. I know they have worked all their lives often through harder times that we have ever experienced and should be applauded for that however shouldn't be rewarded to the detriment of everyone else, however I do agree with ring fencing all other old age benefits. I also find your punishment of the deserving poor rather harsh it is these who deserve our help and they shouldn't just be shoved into the gutter and told to reorganise their lives, you never know a flip of a coin and that could be you one day and I am sure you would want the help of the state. I for one believe the transfer of income from the wealthy to the needy is a core function of the state especially to those who need it. It's those who don't we need to clamp down on.

martinsurrey

ProudDad wrote: »

Referring to what you mentioned I am not mortgaging my children's futures. Unfortunately government deficits and surplus are a fact of life and will happen again regardless of what we do its how we deal with them that will provide lessons for future generations. We need to lead by example and show them how to look after the finances while maintaining a society that never forgets about the people at the bottom.

They are not a fact of life they are a fact of choice. Every £ we spend today is a £ that isn't there when the bad times come, and a £ extra that has to be paid back by someone else.

I do understand your heart is in the right place, but I find your "everything will be alright Dave" attitude bewildering.

And maintaining a society that never forgets about those at the bottom?

the government plan isn't to kick people out on the streets

as has been shown by these treads, even after these changes without earning a penny a UK family would be in the top 10% of income earners in the world (£8,000 a year), so that's 5.4billion people worse off than them...

andrewmp

martinsurrey wrote: »

with inflation at 0 and wage growth at 2.7% we've got 2.7% real wage growth, its as high as it ever was between 2002-2007

http://www.theguardian.com/money/2015/jun/17/uk-wage-growth-four-year-high-april-inflation-productivity

It doesn't feel like that to me. Nobody where I work has had a pay rise for at least 5 years.

missyrichards

I was just looking at the Guardian article, why is someone with a masters degree only earning £15k a year?