Coming late to this thread (admittedly not reading every single post so apologies for repetition,) I see lots of people mentioning an income of £44,000 as high but little recognition that income tax, NI and basic pension contributions remove at least £10,000, while childcare costs for just one child at day nursery (to enable someone to work in the first place) are about £7-8,000 per year.
All this takes the 'high income' down to a take-home/useable income of £26,000. Strangely same as the maximum benefit cap! As a reward for their industry, the ?just over the limit? 'high earner' loses child benefit, pays all the incidental costs of working; travel, work clothes, higher food costs through less time to shop/cook, struggles and juggles child and employer time and generally experiences very considerable levels of stress!
I consider single parents to be worst hit by this ridiculously unfair policy, followed by working parents (married or unmarried), where one earner is a HRTP and the other partner working and below HTRP.
Taking families with three chn as an example, both the above groups will lose i.r.o £2,500 a year. The HRTP will have to earn in the region of £4,000 extra to replace this within the family budget.
Married SAHM's are being promised eventual compensation by a transferable tax allowance which could actually make them better off if husband is a HRTP - saving around £4,000 pa from the family tax budget (not to mention being a nice windfall for married households without children!)and of course we all know that high income households lucky enough to have both partners hovering below the threshold get to keep all their CB, even if they have just the one child.
Moving beyond the obvious single parent issue, how on earth can a system where a family earning say £60,000 a year (say HRTP on £44,000, partner on £16,000), who may be paying two or three sets of daycare and after school club fees in order to work and with a likely household income left after tax/NI/childcare of £36-£38,000 (be told they have 'broader shoulders' to absorb this loss than a family earning £86,000 (lets say with one child at secondary school and no childcare fees, a likely household income of £79,000?
I appreciate these must all seem huge amounts to families on benefits, low salaries but families in the middle income bands do not get tax credits, support with childcare or assistance with school meals, milk, clothing, fees, trips, concessions etc. Once tax, NI, the costs of going out to work and all these extras are factored in, the difference between benefits/lower salaries and middle incomes is far less than is being touted to justify this policy.
How to move forward? - keep CB as a universal benefit but maybe introduce a reducing rate per child - £20 for first, £15 for second, £5 for third £0 for fourth and beyond.
Raise the tax rate slightly for all to keep CB as a universal benefit. We are losing sight of the fact that children are not ours and ours alone but our future society and workforce. Raising children well costs much more than the current CB rates so parents are already making huge sacrifices for the greater good. This should be recognised and the existing support continued.
I suspect neither of these is likely; the government probably have higher tax rates up their sleeve anyway so my final pref. would be for CB to be means tested on a combination of household income, number of children, childcare costs (if this is too tough to administer then bundle it up with tax credits).
Phew - glad to offload that lot!!