Jeremy Hunt in plea to early retirees: ‘Britain needs you’

badmemory

diystarter7 said:

You have a point as do I.
Would you agree that someone working then getting benfits as millions do is not a cost effect use of taxpayers money, ie the admin costs etc, and taxpapers money?

Surely there must be a better system

There is a better system.  Stop employers underpaying & taking advantage of our benefits system & then people wouldn't need to claim benefits.

Malthusian

zagfles said:

Loads of better systems in other countries. The problem here is that taxation is based on the individual rather than family, so no account it taken of dependants in the tax system (other than the tiny married allowance). This means someone supporting eg a partner and two kids is taxed the same as someone who is single. The partner and kids' tax allowances are wasted. So they are overtaxed, and then have to claim benefits/tax credits to get some/all of it back.

The trouble with the alternative system, which we used to have in this country prior to Thatcher's reforms, is that when a higher earner (usually male) uses up the family's allowances, and the spouse wants to go back to work part-time, they find that they are effectively taxed at their husband's tax rate. If the wife has to pay higher rate tax on every penny of their income and they have to pay for childcare out of what's left, it's very likely that it won't be worth it, and they will be heavily incentivised to remain stay-at-home mothers. In our current system a low-earning spouse is taxed as a low earner.
You could of course argue that it should be possible to arrange "family-based taxation" in a cost-neutral way so that the couple is just as well off with both of them working and the husband using all the allowances than if they both use their individual allowances. But realistically, if the Government changes the system, the tax take is only going to go one way as a result.
If the over-50s need to be encouraged not to retire and waste their potential contribution to the economy (allegedly), we wouldn't want to waste the potential contribution of half the married-with-children population either. 

diystarter7

badmemory said:

diystarter7 said:

You have a point as do I.
Would you agree that someone working then getting benfits as millions do is not a cost effect use of taxpayers money, ie the admin costs etc, and taxpapers money?

Surely there must be a better system

There is a better system.  Stop employers underpaying & taking advantage of our benefits system & then people wouldn't need to claim benefits.

Hi
That what I was saying but got berated for it

Thanks

zagfles

Malthusian said:

zagfles said:

Loads of better systems in other countries. The problem here is that taxation is based on the individual rather than family, so no account it taken of dependants in the tax system (other than the tiny married allowance). This means someone supporting eg a partner and two kids is taxed the same as someone who is single. The partner and kids' tax allowances are wasted. So they are overtaxed, and then have to claim benefits/tax credits to get some/all of it back.

The trouble with the alternative system, which we used to have in this country prior to Thatcher's reforms, is that when a higher earner (usually male) uses up the family's allowances, and the spouse wants to go back to work part-time, they find that they are effectively taxed at their husband's tax rate. If the wife has to pay higher rate tax on every penny of their income and they have to pay for childcare out of what's left, it's very likely that it won't be worth it, and they will be heavily incentivised to remain stay-at-home mothers. In our current system a low-earning spouse is taxed as a low earner.
You could of course argue that it should be possible to arrange "family-based taxation" in a cost-neutral way so that the couple is just as well off with both of them working and the husband using all the allowances than if they both use their individual allowances. But realistically, if the Government changes the system, the tax take is only going to go one way as a result.
If the over-50s need to be encouraged not to retire and waste their potential contribution to the economy (allegedly), we wouldn't want to waste the potential contribution of half the married-with-children population either. 

I wasn't talking about the pre-"independant taxation" situation here, but about a system like France, where tax allowances are transferrable so eg someone supporting a partner and 2 kids gets 3 tax allowances (IIRC the kids get half an allowance). Equally tax bands are 3 times as wide.

Otherwise people complain about workers having to claim benefits because they're overtaxed.

zagfles

badmemory said:

diystarter7 said:

You have a point as do I.
Would you agree that someone working then getting benfits as millions do is not a cost effect use of taxpayers money, ie the admin costs etc, and taxpapers money?

Surely there must be a better system

There is a better system.  Stop employers underpaying & taking advantage of our benefits system & then people wouldn't need to claim benefits.

A single person on full time minimum wage would generally earn too much to claim benefits. Similarly a couple with no kids who both work full time min wage almost certainly won't get benefits.

In work benefits are almost exclusively claimed by people with children or disabilities or part timers. Do you suggest employers should pay people with children more, or a part timer the same as a full timer?

michaels

We also encourage both parents to work regardless of the economic benefit  - consider two parents, each with 2 kids - if they stay at home looking after their own kids this counts as zero for GDP - if they both work as nursery assistants looking after each other kids then 36k is added to GDP (we only allow each nursery worker to look after about 2 kids in the UK, a much lower ratio than most of Europe). 

Of course the govt then ends up paying most of the 36k through incentives to support the low earning parent with their childcare so the deficit gets larger but the all powerful god of GDP is appeased.

zagfles

michaels said:

We also encourage both parents to work regardless of the economic benefit  - consider two parents, each with 2 kids - if they stay at home looking after their own kids this counts as zero for GDP - if they both work as nursery assistants looking after each other kids then 36k is added to GDP (we only allow each nursery worker to look after about 2 kids in the UK, a much lower ratio than most of Europe). 

Of course the govt then ends up paying most of the 36k through incentives to support the low earning parent with their childcare so the deficit gets larger but the all powerful god of GDP is appeased.

Yes it's strange how looking after other peoples' kids is a job and so "economically active" but looking after your own kids isn't and is so "economically inactive". I remember a discussion many years ago about how two single parents could become childminders, swap children, and be far better off financially! Due to the massive subsidies for "childcare" but zero subsidy and often tax penalties for the best childcare of all, ie a parent looking after their own child.

Sea_Shell

So, if me and a like minded neighbour, both became self employed cleaners, could we clean each others houses, charge each other £££ which would enable us to both pay reduced (class2?) voluntary NI contributions??

That can't be right (or legal?) Surely?

Grumpy_chap

Sea_Shell said:

So, if me and a like minded neighbour, both became self employed cleaners, could we clean each others houses, charge each other £££ which would enable us to both pay reduced (class2?) voluntary NI contributions??

That can't be right (or legal?) Surely?

Erm, yes, that is how it is.

There are limits though.  A while back, there was someone who suggested employing their wife for domestic services at home.  The thread meandered as always but concluded that was not permitted.  IIRC, the suggestion was to pay from the individual's Ltd Co.

Sea_Shell

Grumpy_chap said:

Sea_Shell said:

So, if me and a like minded neighbour, both became self employed cleaners, could we clean each others houses, charge each other £££ which would enable us to both pay reduced (class2?) voluntary NI contributions??

That can't be right (or legal?) Surely?

Erm, yes, that is how it is.

There are limits though.  A while back, there was someone who suggested employing their wife for domestic services at home.  The thread meandered as always but concluded that was not permitted.  IIRC, the suggestion was to pay from the individual's Ltd Co.

Having given it some more thought, of course that is exactly how it is.    That's commerce.

It does however mean that if you have a circle of services, all used by each other, say hairdresser, beautician, dog walker, then they can all get paid with the same £££, that just goes round and round.     

3 x £££ is then effectively GDP, everyone's a winner!!!?

I suppose that's why its called GROSS domestic product, not NET ?