Tax Credits

setmefree2

WHA wrote: »

Yes, that's what people have been saying for years, but it's coming to a head now as more and more people become aware of it and due to the need to cut the welfare bill. But it's like an addiction and will take years to wean people off welfare and into proper work to earn their own money. Brown should be struck down for creating such a monster.

So I'm guessing if you're Hungarian say, you can have quite a nice life living on tax credits and housing benefits?

Another reason to get rid of Tax Credits?

setmefree2

WHA wrote: »

Brown should be struck down for creating such a monster.

And Osborne needs to stick with it.

Look at these examples, and at the numbers in bold (the effective gross pay) in particular, and you will see something shocking. In most cases the effective gross pay of the family working 24 hours a week is higher than that of the family working 70 hours a week. And the net pay ends up slightly lower for the skivers than the hard workers – but only very slightly. In the end, the effect is that for every hour past the first 24 hours a week, the working couple (who let’s not forget are working nearly three times as many hours as the other lot) are between them getting an effective extra take-home wage of just £1 or so per hour.
We haven’t just made these numbers up for political effect. They are what they are. That’s something that explains an awful lot about the UK. It explains just why so many people work part time (why wouldn’t you?) and it makes a damn good start at explaining why our welfare bill is so utterly out of control.
We aren’t encouraging people to work full time in productive jobs – and to work their way up within them paying tax as they go. No, we are actively incentivising people to take low paid part time jobs and to stay in those low paid part time jobs, taking benefits as they go. The way the system works, they’d be crazy not to. After all, there aren’t many things you can do that make you £50,000 plus for working 24 hours a week.

http://moneyweek.com/merryns-blog/the-truth-about-tax-credits/

setmefree2

Figures released by Downing Street for the first time say 224,000, or 43%, of EU migrants are claiming benefits within four years of entering the UK at a cost of about £500m a year.

Of these, about two-thirds are claiming in-work benefits such as tax credits and housing benefit, the figures say.

http://www.theguardian.com/politics/2015/nov/10/fallon-half-eu-migrants-claiming-benefits

New EU migrants add £5bn to UK, report says

http://www.bbc.co.uk/news/business-29910497

dktreesea

setmefree2 wrote: »

And Osborne needs to stick with it.
http://moneyweek.com/merryns-blog/the-truth-about-tax-credits/

A great blog and thanks for posting it. But surely that is the whole point of tax credits, to acknowledge there isn't enough work to go around (I wonder if this is true given the hundreds of immigrants who arrive on our shores every single day, many of whom get work) and to persuade people to work less hours and not hog the work that is going, so more people have a chance of getting some work, even if they only get 3 days a week per family?

gadgetmind

dktreesea wrote: »

there isn't enough work to go around

I guess it depends. Most of those needing skilled workers (even if only to graduate level) are really struggling to find them, but I'm sure that at the unskilled end there is more supply than demand.

CLAPTON

dktreesea wrote: »

A great blog and thanks for posting it. But surely that is the whole point of tax credits, to acknowledge there isn't enough work to go around (I wonder if this is true given the hundreds of immigrants who arrive on our shores every single day, many of whom get work) and to persuade people to work less hours and not hog the work that is going, so more people have a chance of getting some work, even if they only get 3 days a week per family?

no, WTC were introduced at a time when the economy was booming and there was plenty of work if people wanted it.
The situation now is that there are positives incentives not to work but to play the system.

dktreesea

CLAPTON wrote: »

no, WTC were introduced at a time when the economy was booming and there was plenty of work if people wanted it.
The situation now is that there are positives incentives not to work but to play the system.

I don't know about booming. They were introduced in 2003, at the end of the 1999 to 2001 recession. That was around the time we came home. As I recall there weren't that many jobs even then, even for skilled workers, and plenty of people chasing what there was.

CLAPTON

dktreesea wrote: »

I don't know about booming. They were introduced in 2003, at the end of the 1999 to 2001 recession. That was around the time we came home. As I recall there weren't that many jobs even then, even for skilled workers, and plenty of people chasing what there was.

the essential points were that it was 'peak' time rather than recession and that working 70 hours pays less than working 24 hours

there needs to be clear blue water between these to encourage people to work rather than rely on benefits

Dird

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

Are those figures the same if it's 2 adults e.g. a stay at home mom?

zagfles

Dird wrote: »

Are those figures the same if it's 2 adults e.g. a stay at home mom?

Yes exactly the same. Tax credits take no account whatsoever of the extra adult. This is the "couple penalty" which the coalition promised to reduce but which they did nothing about.

(It's not really a "couple penalty", it's a lone parent premium since they get the second adult element (renamed) even though there's no second adult).