Tax Credits

Mistermeaner

chewmylegoff wrote: »

Cos it can cost that much.

With 8 month old twins we have been quoted £3,000 a month full time by the only nursery that we can reasonably use and still get to work on time. That works out as £275 a week for 2 days of care. There is no discount for multiple children so if we had 3 children in the same nursery it would be £415 for 2 days a week which is what you would need to cover 16 hours a week.

As it is we will get no CTC, but can buy £140 a month of childcare vouchers which avoids tax of £60 a month. Even factoring that in, if OH goes back to work full time at the end of her maternity leave I calculated it would cost us about £700 a month net after childcare and travel to send her to work! We will probably have to do this to stop her from becoming obsolete and unemployable in her profession.

A nanny is cheaper on the face of it but then you have to pay employers NI, pension contributions etc, and give them 4 weeks' paid holiday a year so you have to use up all your holiday to cover that (and then hope they don't ever get ill as if they do you can't go to work).

Must be lucky where I am; lots of nursery and school club places at 3/hr

Call 16 hrs of work a week 4 hrs a day with 2 hours travel = 24 hours child care at 3/hr 72quid a week

I can understand it being more if you work more hours but how on earth would someone working 16 hrs a week need 300quid of child care - if it was 10/hr which it's not that is still 30 hours.

Don't get it. And you must be getting ripped off - or is this some fancy nanny service?

CLAPTON

I suppose it makes the Greens' policy of giving simply everyone a ciizens income seem almost sensible.

zagfles

Graham_Devon wrote: »

Most who face losing money cannot simply say "oh well, I'll fall back on my 60k+ income then".

Most don't have anywhere else to turn as they are using the system as intended.

What do you mean "as intended"?

Prior to 2006 michaels couldn't have done what he's doing now, as there were very strict limits on what you could put in a pension, something like 15-20% of earnings. Company contributions were also strictly limited.

The Labour govt in 2006 decided to liberalise the rules and allow everyone to put all their income into a pension if they wanted, and get tax relief and tax credits relief on the whole lot, subject to a massive annual allowance of something over £200,000.

Do you think they changed the rules intending no-one would use them?

zagfles

CLAPTON wrote: »

I suppose it makes the Greens' policy of giving simply everyone a ciizens income seem almost sensible.

It is sensible, probably their only sensible policy!

andrewmp

zagfles wrote: »

It is sensible, probably their only sensible policy!

It would eithet cost loads more or make people at the bottom a lot worse off.

lisyloo

Are you sure there are nursery places for very young babies at £3 per hour.
With the low ratios required, health & safety etc. I'd be surprised if anyone could run a business on that.

After school is different as the allowed ratio for children would be different than for babies.

zagfles

andrewmp wrote: »

It would eithet cost loads more or make people at the bottom a lot worse off.

It's a redistribution, so saying it will cost more misses the point. The cost is paid by those who will get it, through taxes. It's a zero sum game.

For instance, I see it working as follows:

CI is set at about the amount you'd get now if you were out of work. Maybe a bit less. Usual stuff - personal/couple element, child elements, disability elements, housing element (would probably have to be regional differences). Everyone gets it regardless of income, no means testing.

Then you have a flat rate of income tax set at whatever level is necessary to make it fiscally neutral. No personal allowance, not needed as everyone gets the CI. No progressive tax rates, not needed as the CI makes it progressive overall.

No benefit withdrawal rates, so common, consistent marginal deduction rates for everyone. Everyone will benefit exactly the same for a job paying the same wage, whatever their situation. So no perverse disincentives to work for certain groups.

You might need conditionality eg as now for working age adults. But probably not as there will be a big incentive to work, as there is no benefit withdrawal. You'd obviously need some sort of residency test, hence the "citizen".

antrobus

zagfles wrote: »

It's a redistribution, so saying it will cost more misses the point. The cost is paid by those who will get it, through taxes. It's a zero sum game. ...

No, it isn't a zero sum game.

Ballpark numbers; the UK has 40m people of working age; 30m work, 5m are on benefits, and 5m are on neither. Paying any level of Citizen's Income involves the additional cost of paying those 5m who are currently neither paying tax or receiving benefits. Therefore you will need to increase taxes on the 30m that are in work in order to balance the books.

Paying for CI normally involves some combination of jiggery-pokery such as abolishing NI thresholds or pension tax relief, in order to generate the necessary billions.

Generali

antrobus wrote: »

No, it isn't a zero sum game.

Ballpark numbers; the UK has 40m people of working age; 30m work, 5m are on benefits, and 5m are on neither. Paying any level of Citizen's Income involves the additional cost of paying those 5m who are currently neither paying tax or receiving benefits. Therefore you will need to increase taxes on the 30m that are in work in order to balance the books.

Paying for CI normally involves some combination of jiggery-pokery such as abolishing NI thresholds or pension tax relief, in order to generate the necessary billions.

In addition there is a dead weight loss from any form of taxation which is a terrible burden on an economy and makes all of us poorer.

Regarding the childcare thing, this was the local childcare to me when I lived in London:

http://www.smithfieldnursery.co.uk/fees-and-registration/

Cost is £77.90 per child per day including food. Assuming 2 days a week required for 2 kids, that's £155.80/week which is £675/month. That's a grand of pre-tax income on inflexible childcare (open 8am-6pm which was my basic day when I was in investment banking) for 2 days a week.

zagfles

antrobus wrote: »

No, it isn't a zero sum game.

Ballpark numbers; the UK has 40m people of working age; 30m work, 5m are on benefits, and 5m are on neither. Paying any level of Citizen's Income involves the additional cost of paying those 5m who are currently neither paying tax or receiving benefits. Therefore you will need to increase taxes on the 30m that are in work in order to balance the books.

As I said - you could have some form of conditionality, similar to the WTC & JSA conditionality. You only get it if you are working a certain number of hours, or seeking work. Obviously with the current exceptions such as over state pension age, disabilities, caring for a young child etc.

Paying for CI normally involves some combination of jiggery-pokery such as abolishing NI thresholds or pension tax relief, in order to generate the necessary billions.

You don't need any thresholds. You probably don't need NI at all, it serves no purpose without contributory benefits. It would be rolled into income tax. CI would apply to pensioners too (at a higher rate).

Pensions tax relief wouldn't really serve any purpose in a flat rate tax environment, you get relief on contributions but then pay tax at the same rate on your pension. Other than the PCLS, that could be preserved in some form as an incentive to save for old age.

It's all theoretical anyway - no chance of it happening. Politicians on all sides are obsessed with getting headline tax rates down, this would be a massive hike in tax rates. They prefer underhand ways of increasing marginal rates such as benefit/tax credit withdrawal rates, NI on both employers and employees (real "tax rate" on a basic rate taxpayer in a normal job is 45%), withdrawal of personal allowance for high earners etc.

As long as headline tax rates are kept low to con the gullible into thinking their taxes are low.