Institute for Fiscal Studies says chancellor's plan will cause 10% drop in family living standards

'Cogito, the reality already is that couples are assessed jointly for things like tax credits. The family income is taken into account for other stuff too and soon if one of you is a higher rate tax payer, the other may well lose child benefit.'

There are many families like mine, where CTC have never been claimed, as we've never qualified, nor can I think of anything else that HMRC would have to have a picture of our family income, as we are taxed separately, and there should not therefore be any linking of our accounts.

I think that the Govt are going to have to tread very carefully here.

My dh is a Higher Rate taxpayer. I earn, by marking GCSEs once a year, about £2k. I get all my tax refunded. We are posted abroad, so we let the house, but make a loss each year so no tax due.

My only other income is CB. It goes into a joint account, but it is paid nominally to me.

How are HMRC going to know if we declare it or not? I am taxed as an individual away from dh's tax office; it is HMRC policy not to send out returns to those HRTs earning under about £100k pa with simple affairs (ie PAYE and not a lot in savings, so are they going to suddenly send out lots of ITRs?), and dh only does one because of the rental income. My tax affairs should not be linked to dh's; neither should my NINO, and my info should be data protected i.e. his tax office should not be able to look at my tax affairs. For all HMRC know there might be a brick wall between us for finances; I might not know if he was Higher rate, he might not know if I got CB or not. If either of us refused to disclose details to the other for the purposes of an ITR, would HMRC prosecute, and whom? The person who completes the form, or the person who refused to give the information?

They should perhaps tax the recipient of the cb; in which case, they wouldn't get huge amounts in, as many like me, have no income. Furthermore, not everyone who gets cb will get tax credits etc, so there will be no record of the household income anywhere for a joined up system to say yes or no to taxing it.

As I understood it, the cb is not being withdrawn, but the Higher Rate payer is being taxed on it. I hope the £422 pa they get from us will help! We are stil almost £600 better off pa with getting it though.

"....how do we legislate for child benefit so you don't have two parents earning £39,000 getting it ....."

Simple. We dispense with CB all together and enhance CTC instead. Result: one simple payment for the additional cost of raising children based on household income rather than the messy two-pronged approach we currently have.

My personal belief is that this will happen when the 'Universal Benefit' is introduced anyway. There will be no 'Housing Benefit', 'Disability Benefit', 'Child Benefit,'Tax Credits' etc., etc., but one monthly payment that is higher or lower depending on the particular make-up of the household.

The education system does need an overhaul but make no mistakes. If we are to attract high quality work from large companies then we do need more graduates. One of the things my company does whenever we look to a new country is investigate the amount of bi-lingual graduates in the job market. Thankfully our native tongue is English so the lingual part matters less.

It does become a bit of a chicken & egg situation though. More graduates means more people expecting graduate level jobs but without graduates, companies will prefer to invest in places where they're being churned out.

For those who are not graduate material, I think there should be a single qualification standard for vocational training. At the moment it's a mishmash of various courses which are 'cough' GCSE equivalent. Very confusing.

Cogito, the reality already is that couples are assessed jointly for things like tax credits. The family income is taken into account for other stuff too and soon if one of you is a higher rate tax payer, the other may well lose child benefit.

Lastly, other countries not only provide tax breaks but also we get deals with the government who will also pay for our staff training, set up transportation (many countries driving is not the norm for staff) and give us grants for computers which is ironic as we're one of the biggest IT companies in the world. Before our last office went live, we were visited by their IT minister & later the prime minister. All in return for the promise of a few hundred jobs.

My point is that competition to get our business is fierce so doing stupid things like putting taxes up to 50%, raising corporation tax and having the attitude of "companies are all tax dodging & exploiting staff" are totally counter-productive.

OK - unlike most Governments I'm prepared to listen to sense ;) so.....

Individual tax it is - but how do we legislate for child benefit so you don't have two parents earning £39,000 getting it while one parent earning £42,000 does? Do we return it as a universal benefit? Maybe each household should nominate a main childcarer. Then we should base it on the main childcarer's income. If they are earning over £30,000 they get no CB.

All suggestions gratefully welcomed as we know they all read this in a desperate bid to connect!

Rather than joint tax, and I totally agree with Cogito, introduce tax allowances for having children, for being married for instance, or allow personal allowances to be transferred between spouses if not used.

I get indignant enough that I have to disclose my financial situation for my dh's security clearance. I don't really want to have to do it for him each year for his tax return. Just because I'm married doesn't mean that I want him to know what I've got stashed where.

"If you are living together as a couple - it's a joint income, joint tax, joint responsibility...."

Women fought for decades to be treated separately financially and not as a possession of their husband. Your proposal would be a retrograde step

niceguy2 Interesting ideas. I also think that the school system has a lot to do with our current jam. We've essentially got education factories turning out kids to fit a graduate mould. Sir Ken Robinson did a really interesting talk about it - look on TED if you are interested - saying we basically crush the imagination and spark out of every kid that doesn't fit this mould. Trouble is, no-one wants the end product at the minute as evidenced by the number of neets and graduates out of work. The jobs just aren't there for that sort of person.
I think we need our politicians to suck it up and be brave. Change the education system radically so it encourages each kid to follow their interests and engages them. Start primary learning at 6-7 like they do in Wales and Finland etc. Get rid of the summer holidays - lighten up on the targets and help teachers follow their kids rather than desperately trying to cram them full of stuff they don't care about. We need to let go of the idea of quantifying success through results tables.

Then, what you said about a £15,000 tax threshold, but we need to reform the tax system so it takes into account family groups rather than just individuals. If you are living together as a couple - it's a joint income, joint tax, joint responsibility.... then you can improve the benefits system because you get a true picture of family situation.

Aldd that to making it attractive to companies to remain onshore so those middle jobs are still there and making it attractive to companies to employ women with families. Tax breaks on company perks like on-site nurseries, extended maternity leave etc.

It might help but I don't think they are brave enough or bright enough, which is sad.

Oh ttosca? I,too,want to have your babies!

Oh God...he's male
Name your place and choice of weapons,Alice!

aliceliddell
I will fight you...only fair to tell you that

crazy get your filthy paws off ttosca. S/he's mine. The future mother of my children. Together we will enjoy a golden future of gin drinking funded by child tax credits. ttosca - btw are you male or female? I don't mind either way.

NG2 - interesting ideas.

If the problem is mainly structural, then this has wide-ranging implications:

So, perhaps restribution of income via tax, achieves little real equality as the highly skilled rich just negotiate even higher wages and companies can pay the low skilled even less, knowing it'll be topped up in benefits.

High tax allowances [10k Plus] and a widening of 'the living wage' movement would help. But, we need to raise 'low skilled' workers into 'semi skilled jobs'.

Now I'm going to get controversial. IMO our education system has concentrated on educating pupils for this decreasing 'middle space' of the workforce. e.g Schools have been 'rewarded' for getting pupils 5 GCSE's at c grade.

But what we need is a significant number of very highly educated, highly skilled people. And the rest numerate and literate with excellent practical skills (including basic business and ICT).

Manufacturing isn't dead by a long shot - it just replaced it's low skilled workers with technology and a small number of skilled workers.

Also, the service industry continues to grow and we still need: plumbers, electricians, builders, child carers, hairdressers......

A 10% drop is absolutely awesome ! How have they managed to only get living standards to drop by 10% considering the country and the masses have over-spent for decades at a considerably larger value? Well done GO!

"I would like to see your source for these amounts..."

No problem... this simple income tax calculator isn't a bad one. I wasn't saying that £10k is living wage. Naturally, someone on that low a wage will qualify for tax credits and other benefits to bring their total income up. I was using the example of the relative difference paid in tax between people on £10k and £100k to question the argument that the 'burden' falls solely on the poor. Yes, the person on a high income has quite a lot left after paying their tax, but I think there needs to be some perspective.

Actually its not something I've thought about before but my gut instinct says there could be an element of truth here.

Let's face it, skilled manufacturing jobs are being done abroad now. Where are our TV's, fridges, etc. all made nowadays? South Korea, Japan, China. Cars, generally Germany, Japan, again South Korea. Yes we have some capacity here but generally its in assembly.

Skilled office jobs are more and more being offshored. IT was a prime example. Nowadays more back office jobs such as finance/admin and human resources they are often offshored to India. My company's HR is done out of Hungary.

At the top end, the bosses of these companies who have grown big in the western world are able to pay themselves big bonuses by a mixture of company growth and reducing costs via offshoring. So they're fine.

All the unskilled manufacturing was lost decades ago to China.

So what remains? Well the only things that seem to still being built at an unrelenting pace are supermarkets! Seemingly every other street nowadays, there's a Tesco or Asda. And that's never going to add wealth to our country. Workers are always going to be at the lower end of the spectrum.

What can we do? Well personally I think we have to start looking at things like tax breaks for companies to hire onshore staff. Tax breaks for companies who invest in new UK jobs. Perhaps subsidies for setting up new offices or training staff.

Yes, in the short term it will cost us and companies will be seen to "get away with paying taxes". But bear in mind these staff then pay income tax and once the breaks run out, companies will pay corporation tax.

All the above are tactics other countries use to lure my company into setting up shop in their country.

We have to stop assuming that the UK is some panacea for companies to invest in. The world has moved on. We haven't enough.

We have to start competing for multinational corporations to invest just like any company needs to compete with others for their business.

Has anyone been listening to R4's 'Class Ceiling' with Polly Toynbee? It is actually pretty good.

There was one explanation of rising 'income inequality' on the program (although I think Toynbee missed it's significance).

This chap explained that over the last 20 years the structure of work has changed. There has been an increase in the number of highly paid jobs and an increase in low paid, low skilled jobs. With a large decrease in the number of middle income jobs (which used to be stepping stones upwards).

If this is right - then it could be an explanation for reduced social mobility and growing income in-equality.

But if the problem is structural - what can be done?

For once Ttosca i find myself agreeing with you. Raising taxes on the rich alone isnt going to fix anything and certainly will just make an already bad situation worse.

Ditto with just slashing taxes, that won't work either. Personally I'm in favour of a flat rate of tax along with a decent (say £15k) tax free allowance. Whilst i think £10k is certainly a start, I agree that £10k isn't a lot in the grand scale of things.

We also need to sort out our welfare system which currently just does not incentivise people to work at all. I'm hoping the universal credit will be better.

The report states that the bottom 30% are hardest hit. Followed by the top 10%. Interesting since we are always hearing about the 'squeezed middle'.

FWIW - any recession is bad news for the poorest. They have little financial cushioning. And are most likely to suffer when public services are cut.

I know Ttosca isn't a fan of 'trickle down' but it's sadly often the low skilled whose jobs go when middle-class belts are tightened.

When the report is actually published - it'll be interesting to see how the UK has done compared with other countries.