Tax Credits

dktreesea

princeofpounds wrote: »

Even your average welfare claimant in the UK is rich by the standards of human history.

And getting poorer by each new piece of legislation, if the Tories have their way!

CLAPTON

dktreesea wrote: »

And getting poorer by each new piece of legislation, if the Tories have their way!

possible but unlikely
but what is sure is that their children will be saved from a life of ignorance, benefits handouts, lager drinking, drug taking and life of minor crime and learn instead that working at school, qualifications and working hard pays better than benefits.

So at worst their children can look after them in their old age.

The whole country will be richer.

cells

princeofpounds wrote: »

There is a huge difference between low marginal cost and zero marginal cost.

2p per kWh electricity might sound like it's nearly free. And it is in terms of keep on an LED lightbulb perhaps. But if you are using that electricity to smelt an extra tonne of aluminium - a real marginal use - it's still a vast cost, and one that is forcing aluminium capacity to close down at current prices.

That's why poorer people still have to cycle around on heavy steel framed bikes rather than picking up their zero marginal cost aluminium frames.

There is also a vast difference between no opportunity cost and opportunity cost. Watching educational videos online might be nearly-free in terms of marginal cost of the electrons.

But the opportunity cost is huge - all that time sitting in front of a computer when the person involved could be doing something else productive.

That's why we still have vastly expensive teachers and schools, rather than internet terminals we plug kids into.

Maybe this will change when we get the internet injected into our heads

Anyway, the point here is that in economics costs are always measured as real opportunity costs (when you dig down to the fundamentals; obviously for simple stuff it doesn't matter).

But I do agree that we are near the beginning of something special. In many ways, I actually think that since the industrial revolution we have been going through something, and the information revolution is very important too. Even your average welfare claimant in the UK is rich by the standards of human history.

electricity at 2p is low marginal cost. If you cut £100 from the poor and they decide to reduce their consumption of low marginal cost goods (eg they use less electricity) then you will find everyone else has to make up the £85. So what appears a £100 saving is actually a £15 saving to society. So long as the tax cuts result in a reduction of low marginal cost goods and services bought then its not going to be a direct 100% saving only a fraction of it

as for the idea of lost opportunity cost by watching educational videos online instead of working more hours. That would only be true if the person could choose to and get work for every hour they so wish. Also there are physical limits to the human body. plus I doubt I could find work paying much laying in my bed watching entertaining and interesting videos so even if you do want to put a value on it then its going to be a couple of pennies an hour.


a high tech aluminum bike is not low marginal cost. the aluminum might be (its not but I wont go into that now just pretend it is for your argument) but the labor to convert it into the bike is not low marginal cost. Typically the low marginal cost goods and services are virtually no human labor intensive.

dktreesea

CLAPTON wrote: »

possible but unlikely
but what is sure is that their children will be saved from a life of ignorance, benefits handouts, lager drinking, drug taking and life of minor crime and learn instead that working at school, qualifications and working hard pays better than benefits.

So at worst their children can look after them in their old age.

The whole country will be richer.

I'm not so sure. Restricting people's income is a way of excluding them, and their children. They end up living in poor areas, where the schools are not well resourced. In Edinburgh where take up of state school places, even by the well off, is quite high, school performance, by and large, follows the wealth of the area where the school is located.


Even in Scotland, which is about as socialist as Britain gets, where councils have tried to integrate the poorer families by insisting that developers reserve a certain percentage of their builds at a site for people who qualify for social housing, all that happens is yes, the kids get to go to a better school, but they still get excluded, by their peers.


And maybe even by teachers. This article is ten years old, but the sentiments probably haven't changed:


http://www.dailymail.co.uk/news/article-363230/Chav-names-feared-teachers.html

CLAPTON

dktreesea wrote: »

I'm not so sure. Restricting people's income is a way of excluding them, and their children. They end up living in poor areas, where the schools are not well resourced. In Edinburgh where take up of state school places, even by the well off, is quite high, school performance, by and large, follows the wealth of the area where the school is located.


Even in Scotland, which is about as socialist as Britain gets, where councils have tried to integrate the poorer families by insisting that developers reserve a certain percentage of their builds at a site for people who qualify for social housing, all that happens is yes, the kids get to go to a better school, but they still get excluded, by their peers.


And maybe even by teachers. This article is ten years old, but the sentiments probably haven't changed:


http://www.dailymail.co.uk/news/article-363230/Chav-names-feared-teachers.html

there is a huge difference between dealing with a small number of problem poor families and an army of heavily subsidised people who are specifically incentivised not to work hard.
You may call say a person working 24 hpw serving coffee, with 3 kids SAHM etc on a take home income of 30,000pm as poor and excluded but I don't.

dktreesea

CLAPTON wrote: »

there is a huge difference between dealing with a small number of problem poor families and an army of heavily subsidised people who are specifically incentivised not to work hard.
You may call say a person working 24 hpw serving coffee, with 3 kids SAHM etc on a take home income of 30,000pm as poor and excluded but I don't.

But even so, the fear imposed on the government by the House of Lords is there, that cutting tax credits for working families is cruel/mean/nasty/making "the poor" pay for any cuts required for public spending.


I wonder why a family with, say, a £25k a year earned income is entitled to any benefits at all, regardless of the number of children they have. Because rents are too expensive in places like London? Move somewhere cheaper and commute. It's as if people think a £500 a week household income for a family with children is peanuts, not enough to live on.


Never mind £25k a year household income. If you have children and a household income of under £40k, you can qualify for tax credits, according to the Telegraph in a recent article:
http://www.telegraph.co.uk/news/politics/georgeosborne/11951056/Tax-credits-what-are-they-who-claims-them-and-why-is-everyone-so-angry-about-the-cuts.html
Are there any other countries in the world which pay benefits to families earning nearly £800 a week?

Thrugelmir

dktreesea wrote: »

But even so, the fear imposed on the government by the House of Lords is there, that cutting tax credits for working families is cruel/mean/nasty/making "the poor" pay for any cuts required for public spending.

The real issues are the speed of the changes etc. There's little disagreement that the welfare system as Brown created it doesn't work satisfactorily. Change will come but far slower. There's plenty of public sector workers losing their jobs. Though doesn't make such good headlines. As in many instances there's no direct impact on services.

CLAPTON

Thrugelmir wrote: »

The real issues are the speed of the changes etc. There's little disagreement that the welfare system as Brown created it doesn't work satisfactorily. Change will come but far slower. There's plenty of public sector workers losing their jobs. Though doesn't make such good headlines. As in many instances there's no direct impact on services.

change is coming far too slowly

there is vastly better uses for that money

bad headlines aren't an excuse for cowardly decisions

Thrugelmir

CLAPTON wrote: »

change is coming far too slowly

there is vastly better uses for that money

bad headlines aren't an excuse for cowardly decisions

A degree of common sense has to be applied. You would be up in arms if GO announced that the basic rate of income tax was going up by 5p next April. People should be given time to adjust their budgets. Even the headlines alone will have some effect.

Plenty of better use for much of taxpayers money. So change is required almost everywhere. In order that the burden is equally and proportionately shared.

dktreesea

CLAPTON wrote: »

change is coming far too slowly

there is vastly better uses for that money

bad headlines aren't an excuse for cowardly decisions

Obviously, living in Scotland, I live in a socialist country, (spending on infrastructure, health and education, pretty much nothing else, no right to buy of social housing, plenty of building of new and replacement social housing and we can see where the money goes). But if I were a Conservative supporter in England, I would be well annoyed that the unelected House of Lords has been allowed to overrule a decision to speed the cuts up a bit by the elected government.

It could be that they didn't go far enough, but to try to do the right thing by the majority of the voters in England (and it must have been a reasonable majority considering the 56 (out of 59 seats on offer) seat bloc in Scotland, for instance, is SNP), and then get cancelled out by the House of Lords is a bit on the nose, imho.