To think that too many people rely on Tax Credits?

[workhardplayhard]

Reading many of the threads on Mumsnet it seems that a large proportion of contributors rely on Tax Credits to top up their incomes.

I don't know anyone who claims Tax Credits IRL but if I did I don't think it would change my opinion - I think people should be fully responsible for providing for their own offspring without any benefits.

I have stated on a previous thread that I DO believe that people should get some assistance if their circumstances change ( Redundancy/Ill Health) but only for a set period.

I don't think the government should pay for people to have multiple children that they can ill afford to provide for.

I would be interested to hear other views.

I'm a teensy bit bitter that some people can afford to have more than one DC thanks to tax credits, whereas we can't.

We're not poor by any means, but the mortgage on our (modest, ex-council) house is too large for one of us to give up work or for both of us to work and to pay FT nursery/CM fees. Nothing to rent nearby either (although rents are the same as mortgage repayments). We earn too much to claim anything helpful TCs-wise.

In a way we're victims of our own success I suppose.

I don't see an alternative though - for us or in policy terms. Housing is the bugger for us - if it wasn't so ridiculously dear we'd be OK. We'd also be OK if we'd been in a position to buy years ago when many of my friends did (allowing them to have a few DCs and have a SAHP - and on one income claim TCs). Ho hum.

If all jobs paid enough to live on, then there would be no need for Tax Credits.

We live in an area where wages are generally low. The average house price is almost ten times as much as the average salary. Commuting isn't the answer as it is a rural area and the nearest city is 100 miles away, with no motorways or dual carriageways locally.

DH and I both work, he works about 45 hours a week and I work 16. Our household income is less than £25k. I think the average household income here is around £19k.

Maybe the OP could explain how we could survive without TC?

Meant to say that I don't begrudge them. But that doesn't stop me feeling a little put out. Bad life decisions on my part I guess.

Can't be bothered to read whole thread, have read first few pages. Please advise which of the following you consider to be my most reasonable course of action, now you have drawn to my attention how unreasonable you on your above 40K income consider me on my below median of 25K income to be in reclaiming some of the tax I have paid in order to pay for my childcare. Should I

(a) continue to claim, thus giving you an excuse for the cats-bum face which is presumably your most frequently used facial expression?

(b) jack my job in, thus costing you more in income tax to pay my benefits for the total cost of existing rather than just childcare?

(c) put my child up for adoption by a nice, deserving, sufficiently rich family?

(d) send him to sweep chimneys, thus solving my childcare and low income issues at one fell swoop?

(e) take a more Swiftian approach? (If so, please post your favourite recipes for fricasseed poor child - you may wish to note that due to an absence of fruit shoots and Maccy-Ds in his diet, he will not provide the level of crackling your preconceptions may lead you to expect).

Awaiting your answer by return!

I don't know if this is relevent to anything but I don't understand the option aspect of "claiming" TC.

When I moved in with DP I was sent a form to complete & then suddenly was paid a lot of TC I wasn't expecting (which turned out to be overpayments I now owe back but never mind).
I didn't know anything about TC before this, so assumed I had to complete the HMRC form, & they didn't then ask if I'd like some TC, just paid them.

Our household income is aprox £9,500 gross & we get about £300 tc p/m - I've failed to find work so am a student, will be living off TC while I get a degree & hope that I will have a better chance of getting a job thereafter.

Lurcio, I think I love you

I have 3 children. I may need a bigger Slow Cooker to cook them all...

Lurico I couldn't have put it better myself!

We lost our business 18 months ago (we have 3 DC)for just over a year we were on full benefits, eventually DP got a job in September, he works an average 55 hour week and brings home £850pm. I'm a SAHM but will be returning to work in 6 months, although we already know that my wages won't even cover the childcare costs.

Rent(HA)- £360pm
CT - £135pm
Gas and Elec £120pm
Water £45pm
Home Insurance £23pm
Travelling Expenses (work related) £160pm
Shopping £430pm

£1273 Now that's just basic needs How the hell would we live if we didn't have tax credits?

Riven I'm sure it must be horrendously stressful.

But at least you re sensible. You can see what's likely to be coming and can brace yourself.

So many seem deluded that things will just continue...a family member of mine who can barely manage as she is, told me at xmas, she wants another baby

meant to add, haven't had a holiday for 7 years and run an old banger of a 15 year old car!

The downside to tax credits was that people had children that they could not afford knowing the amount they would get from the state. Thousands either stopped working (and let partner claim) or cut down their hours to the 16 min needed and let the state pick up the difference.

I'd rather see a higher income tax threashold and free childcare rather than tax credits. That way we wont see a reliance as much on benefits and become more self sufficient than many are now.

Emjy - have you shopped around for your household insurance? I'm only paying £14.50 a month (I could have got it cheaper though).

Wow Em, that makes me realise I have it easy - what a nightmare for you. It also reminds me of something my DSis (RIP) once said about her husband who was a carpenter - they lived in a remote part of the UK, where most of his work was renovating holiday cottages for rich folk from Edinburgh. She pointed out that they all knew (courtesy of their tax accountants) that he could get income support, so paid him a pittance instead of a going rate for the job, and since there was no other work up there he had no choice. And similar things happen down here in the South West (lowest average wages in England) - some local employers run cartels such that if an employee complains about low wages they're told to suck it up or never work in that industry again. And I rather suspect that of the 40K plus people complaining about the existence of tax credits, more than a few may happily pay tradesmen a pittance, be members of the CBI/IOD who'd like to have minimum wages removed and pay their accountants a fortune to find tax avoidance loop holes.

BaroqueAroundTheClock Yes shopped arnd did comparison sites and then phoned those not on them and looked all through the internet, it used to be cheaper where I lived 3 years ago, so maybe geographical?!that's with 8 years no claims as well! It's due up again in May will be looking arnd again would like to knock a tenner off it.

Lurico We're in the SW and a friend of mine her DP has come across these cartels, he's a tradesman and one of the companies he works along side of fired all 10 of it's employees for complaining about a 25% pay cut and then hired another 10 people and paid them even less!

People need tax credits because low wages are not enough to live on. End of story. We can't all be high earners.

If only higher earners had kids there would not be enough workers to support you in your old age.Besides I would not like to live in a country where only the rich can have children.

I think you have a very prejudiced view of families on tax credits.Most are hard working families with ordinary numbers of kids.

Have a for the multiple children comment.

Hmmmm, so many people dream of a living wage in this country. Direct your wrath towards the government propping up industry paying low salaries vicious cycle.

Em - all ten! That's even worse than some of the stories I've heard. I'd also heard that a lot of the estate agents in Exeter went into a cartel when various big organisations re-located, and hiked rental prices up to match those in the SE (the hike in rental prices is a matter of record - it really did happen), never mind the fact that those moving weren't necessarily high earners (public sector, call centre work), and the pre-existing local population (mostly on very low wages) got completely stuffed.

Jemima :)

www.mumsnet.com/Talk/politics/1121431-Can-somebody-explain-the-theory-of-tax-credits-to-me seems to be shaping up as a reasonably intersting discussion of tax credits (without some of the "throw another poor person on the fire, would you, darling" attitudes of some of this thread. (Actually, for poor person read not ridiculously rich person - I for one would not think of myself as poor, though I've been there in the past, and feel deeply sorry for the people on this thread who are having a real struggle making ends meet, or worse finding the ends won't quite meet no matter how hard they try).

Not read the whole thread but would love to know if any economist has done the maths of the following

At the moment some people paying tax get part of it refunded as TC. I have read enough threads on hear to know TC can create problems when it is clawed back due to overpayment (or paid late etc etc)

Would it be cost effective to raise the level of tax free income to, say, £10,000 a year for everyone except the very wealthy ( we can argue about what that means) and save the cost of TC and all the admin and red tape that goes with it?

I guess the effect might be to depress wages as employers might be tempted to think as workers keep more of the paypacket, let's make the paypacket smaller.

I always think TC's help prop up low wages, but can't calculate if my idea would help or hinder lower paid people. Taking the politics out of it, what works best for everyone (greatest number of people)?

Interesting posts, Em!

You've made me think more about our circumstances now. Just taking into account the basic costs of our living, the things we really cannot cut back on further:

£16pm home insurance
£120 1 bus pass/petrol (work related plus one trips to supermarket each week)
£50 pcm avg repairs to car/house in the last year
£38.50 car insurance (we shop around LOTS, pay annually)
15 car tax pcm
£400 food/toiletries (family of 2 adults, 3 children)
£110 energy bills
£10 ish line rental + £3.50 free calls so we can call GPs every week easily
£120 council tax + water rates
£5 school trips (we refuse expensive ones, but looking back in the last year it's worked out to about £5pcm)

That's £884.50 a month for the utter basics of running a family with a single old banger +travel costs to get to work. I haven't added in mortgage or rent into that, nor childcare.

Now think that to earn £884.50 after tax, you need to earn about £1180.66 a month before tax.

By the time you've added in rent or mortgage, plus life's other bills (birthday card stamp? not free. haircut? not free. need a new pair of cheap black trousers for work? not free. new glasses? not free. new PE kit for kids? not free. and so on. it all has to come out of some after-tax earnings somewhere).... this is why someone on £6.50 an hour working 42 hrs a week above the minimum wage like my BIl cannot afford to support his family without tax credits.

That's living within the absolute basics of modern day life - no cinema ticket, no large school trip allowed, no extra to save for a pension or cover when the washing machine breaks down.

I believe the term is "the working poor". Welcome to a small insight into it.

Yes, work hard, I suppose the "living wage" is a valid part of the debate on tax credits.

We have a very unequal way of dishing out money...Think Beckham and a soldier serving
abroad....

Or Rooney and an essential refuse collector....I like footie, but we need to get civivised on dosh and leave the rat race
to the four legged variety.

Bloodyhell!!! working people are considered scroungers now are they?

What seriously pisses me off about tax credits is that they are a way for the government to subsidise the wages bill for business. If the minimum wage was closer to a proper living wage, then there would be no need for tax credits to exist at all. But companies save on their bottom line, shareholders benefit from increased profits, and the government ends up paying for it all.

Better wages would get rid of this need for he government to continually prop up the working poor.

I think the cost of housing comes in to it too.
In my area house prices are unaffordable on the the average salary, private rents are very high and there is a shortage of council housing. Wages would have to rise quite considerably to meet the cost of living.

frgr I didn't know there was a term for it! "working poor" eh, I will have to remember that! Is that worse than working class? or is that a completely different thing?

and yes you are so right, no rainy day fund here, I can't even begin to imagine what we would do if the cooker broke, or the washing machine or something went wrong with the car.