To think benefit caps should relate to FAMILY income?

[TallyLo]

I decided to work out the difference in our family income that has changed by changing job roles in recent years.

A few years ago DH and I were both teachers, earning about 31K each. Now with promotion DH earns 62k and I plan look after the children after this baby as childcare costs in London will exceed my wages. Our household income therefore is the same, simply one person earns what two used to earn.

I was surprised to calculate how big the difference in take home is with both scenarios:

1. (one earner of 62k)
   

Earnings after tax: 46k (no higher tax bracket)
Childcare voucher savings: (2x930) 1860
Child benefit: 1700

Total: 49560

1. (two earner of 31k)
   

Earnings after tax: 42k
Childcare vocher savings: £600
Child benefit: 0

Total: 42600

So that's a huge SEVEN GRAND difference in budget, on the same household salary.

I'm not arguing that we should get more from the state, we're obviously in the bracket of a good household income and it's right we're not entitled to benefits in the current climate. I do however think benefits need to be brought into line based on family income. With the proposals a household with two incomes of 49k could be taking home nearly 40k more than us and receive more vouchers/ child benefit. I can't think of the reason why family income is not used to calculate entitlement.

If anyone is interested a nusery place in London i around 1100 per month, so 2 is £2200, so requiring a salary of £36,000 to cover fees (and excluding costs of commuting, similar to the savings of childcare vouchers so it balances out)

*this is my calculation, I'm no expert so someone may find errors!

[ivanapoo]

If I had the choice between being able to choose to be a SAHM and sacrificing £7k, I'd probably choose sacrificing the £7k tbh.

Like other posters have said, only one parent working means much lower living costs.

The system isn't perfect but it's not as unfair as you make out either.

[ReallyTired]

LibrarianByDay, MrsBethel I like your posts.

I also think that tax is what we pay to live in a civilised society.

I don't want people with special needs to starve or families who have disabled children to have no respite. People's worth is far more than whatever arbitary figure they earn over a life time.

Maybe we do have far too much of a benefits culture in this country and I have no idea what is the best way to tackle this. We have the greatest number of young and old NEETS in history. I am sceptical that austerity is the best way to ignite the country's economy.

[StarsGhostTail]

Of course they should!

Somewhere in being PC and giving women their own tax allowances and not giving tax breaks for being married, the system lost its way.

[LibrarianByDay]

Benefits should be calculated on household income, yes, but minus what it costs in childcare expenses to earn that income.

People without children - well, nothing is ever absolutely fair is it. So, your subsidising those who do have children. But everything comes full-circle and when you're old and decrepit those same children will be subsidising you as well as their own parents. If childless people should not subsidise those with children perhaps, in the future, people should only subsidise their own parents and leave the elderly childless to fend for themselves.

[blibbleflop]

I'm more for cranking up the personal allowance to about £15k, scrapping the top rate of tax, scrapping NI, making the base rate 35% and closing all the tax loopholes.

This way once you start paying tax, everyone pays the same percentage regardless of what they earn, but they have no way to avoid paying as they currently do.

[MrsBethel]

YANBU, a cap on family income would be fairer.

However, even that would create unfairness. Each time they come up with one of these harebrained schemes it creates a 'lump' in the marginal tax rate as it is withdrawn. A parent on £50k and might be 29p better off for each extra pound they earn, while for someone on £70k they get to keep 51p of each extra pound they earn.

If they want rich people to pay more, it would be a lot fairer, and a lot easier and cheaper to administer, to simply put up the top rate of income tax.

[OutragedAtThePriceOfFreddos]

Its a relatively short period of their working life. Most women do return to full time work eventually and they worked full time before their family. The governant expects us to work to 69. If a mother takes off 4 years to bring up children, returns part time for 3 years and then works full time the rest of her career then she will pay plenty of tax during her working life. Over her entire working life its likely that the SAHM will put in more into the system than she takes out.

Maybe, but not neccesarily. And even if they do, then they are still not contributing as much as someone childless who hasn't taken any time out of work, and they are still taking more out of the system than someone who hasn't had children.

So I still can't understand why you think childless people need to be paying more to support the ones that do have children.

[WelshMaenad]

That's interesting pickle. I wasn't sure if the intricacies if it, the couple I knew were married. Glad cohabiting parents get the same consideration.

It makes perfect sense to me. When my grandfather died my patents were able to use both their allowances to reduce inheritance tsx by sharing the money.

[ReallyTired]

ReallyTired, I cannot see any sense in your point of view at all. You are talking as if childless people don't pay any tax. They do. They pay as much tax as a childless person on exactly the same wage who has chosen to have children, except they take less back out

"So how are those people who have chosen to have children paying back what they cost when they were babies if they stay at home with their children, or work part time to be with their children? "

Its a relatively short period of their working life. Most women do return to full time work eventually and they worked full time before their family. The governant expects us to work to 69. If a mother takes off 4 years to bring up children, returns part time for 3 years and then works full time the rest of her career then she will pay plenty of tax during her working life. Over her entire working life its likely that the SAHM will put in more into the system than she takes out.

The country is in crisis because of the banks, the EURO and the bailing out of other countries. Other countries have tax allowances for children and child benefit was the UK's way of helping families.

The governant's approach is to attack the most vunerable. Child benefit has been a drop in the ocean. It is a red herring to distract attention from some of the cruelest cuts. Low income families have lost their child tax credits. Special needs children have had their respite and transport cut.

I feel rather than having cuts we should increase income tax across the board. Spending cuts have made the recession worse as it has led to more people losing their jobs.

The withdrawing of child benefit from better off families is an ill though out policy because it is going to be expensive to administer and police. It punishes hard working families and will reduce overall tax revenue as it distorts people's behaviour. For example DH has decided to put extra money in his pension to keep us under the limit.

[ilovesooty]

ReallyTired, I cannot see any sense in your point of view at all. You are talking as if childless people don't pay any tax. They do. They pay as much tax as a childless person on exactly the same wage who has chosen to have children, except they take less back out

Exactly. Why should they take a "major hit" when they don't get payments to start with?

[OutragedAtThePriceOfFreddos]

ReallyTired, I cannot see any sense in your point of view at all.

You are talking as if childless people don't pay any tax. They do. They pay as much tax as a childless person on exactly the same wage who has chosen to have children, except they take less back out.

Childless people have usually been to school and its reasonable to expect them pay towards someone else's schooling. The tax payer would have paid for costs when they were born. It is reasonable to expect babies to pay the costs back when they are adults whether they choose to have children or not.

Yes, it is reasonable to expect babies to pay the costs back when they are adults whether they choose to have children or not. So how are those people who have chosen to have children paying back what they cost when they were babies if they stay at home with their children, or work part time to be with their children?

Your point works both ways, but you only want to see the view that suits one side of it.

[ShellyBoobs]

I was using EntitledTo. I also worded it badly, I was meaning £200 including all in work benefits. I imagine EntitledTo is probably wrong...

[IneedAgoldenNickname]

£200 per week in tax credits? I bloody wish! I might be able to afford to put my heating on if I got that much!

[ReallyTired]

ShellyBoobs, I have no idea where you get your figures from. Someone on 28K does not get £200 a week in child tax credits. That is utter bollocks many families who earn 26K get no child tax credits.

www.gov.uk/child-tax-credit/eligibility

Our family gets nothing but child benefit. I think it would help parents if they could use the children's tax allowance.

"Exactly how much of a 'major hit' do you want someone else to take to help subsidise your choice of having children?"

These cuts are have been made because the coffers are empty.The cost of bailing out the banks/ Ireland should not rest solely on families. Child benefit has existed for years. If you grew up in the UK then your parents would have claimed child benefit to pay for your upbring.

No one is asking you to subsidise other people's choices. I am suggesting that childless couples should pay back the costs that the state spent on them as children.

When you are old you will need somone to change your incontinence pads and pay for your pension.

[ShellyBoobs]

What stinks is that childless people are not being asked to take a major hit in their income.

Are you having a laugh?

A childless person on a decent income is already MASSIVELY subsidising your choice to have a family.

According to online calculators, in my area someone earning £28k with 2 children using some childcare (costing £150 per week) is entitled to £200 per week in tax credits, child benefits and a small amount of housing benefit.

Person on £28k with no DCs net income = £21,572
Person on £28k witn 2 DCs net income = £31,972

That's over £10,000 per year more income to help with the cost of just 2 children!

Exactly how much of a 'major hit' do you want someone else to take to help subsidise your choice of having children?

[ChunkyPickle]

In Canada you don't have to be married to share the allowance. As an unmarried couple DP and I had all the same rights and responsibilities as a married couple.

At the time, I used his SAHP tax allowance, and the extra 10k tax free was very useful.

In this country I'm staying at home, and I'm not allowed to share my tax allowance so that just goes to waste.

On a similar point - all our children have a personal allowance too - If families could share their children's tax allowance that would certainly ease the load.

[AThingInYourLife]

LOL :o

Touché, Really

[ReallyTired]

"So the British government should be sending a portion of my taxes to Ireland to pay back the cost of my school education?"

Ireland has had the biggest bail out in history. I imagine the UK governant along with many others have sent more than enough money to pay for your education. It is the mess with the stupid EURO that has caused the financial mess we are in.

www.bbc.co.uk/news/business-11860879

Ireland has had an 85 Bn bail out from various countries. Thats ample to pay for your education.

[QueenStromba]

So the British government should be sending a portion of my taxes to Ireland to pay back the cost of my school education? That's the only way the Irish government will be seeing a penny of the money.

[ReallyTired]

"Childless people also cost the government less ReallyTired. "

We take money out of the tax pot when we need it. I was once childless and in my twenties.

Elderly people cost the state far more than young families. We don't tax the elderly more heavily.

Childless people have usually been to school and its reasonable to expect them pay towards someone else's schooling. The tax payer would have paid for costs when they were born. It is reasonable to expect babies to pay the costs back when they are adults whether they choose to have children or not.

[QueenStromba]

Childless people also cost the government less ReallyTired.

[ReallyTired]

"I'm sure I remember soneone telling me that in Canada, married couple can use each itger's tsx free earnings allowance, so if one was a sahp and the other worked, they could earn twice as much as a single person before paying tax. I'd love that to happen over here! that wouldn't really be fair on the lone parents or the unmarried!!! "

I imagine there is a school of thought that diliberately want to penalise those who have sex outside marriage or divorce.

I feel that all families deserve a little extra in the form of an allowance for children in the tax system. What stinks is that childless people are not being asked to take a major hit in their income.

[KellyElly]

I'm sure I remember soneone telling me that in Canada, married couple can use each itger's tsx free earnings allowance, so if one was a sahp and the other worked, they could earn twice as much as a single person before paying tax. I'd love that to happen over here! that wouldn't really be fair on the lone parents or the unmarried!!!

[janey68]

I agree totally that people should be taxed as individuals, not as a unit.

Also, you're not comparing like with like. You're trying to make a comparison between one job, and two jobs. A family with an income of £62k with just one person working is in a totally different situation to one which brings in £62k through two people working. A family with both parents working are likely to have childcare, extra commuting costs etc.

Also - and I think this is a really significant point - the family with one earner have the capacity to increase their earning overall, while a family with two people working don't.

Looking at it simplistically (and I know this is making it black and white for the sake of argument, but it helps clarify what I mean) family number 1 are making £62k through 37 hours work, whereas family number 2 are putting in 74 hours work to bring home the same amount. And yes I know many jobs are more hours than that, but the principle is the same.

The govt is certainly unashamedly rewarding families where both parents are in work, but that makes economic sense - two people paying tax, paying into pensions etc.

I understand why some people feel aggrieved about the fact that a couple earning, say £35k each will still get child benefit when a couple on one HR tax paying income won't, but I personally don't think it's unfair. I think families where both parents work generally have it a lot harder with the financial hit of childcare etc, and I think it's right that they are viewed as individuals rather than lumped into one unit.

[CogitoEerilySpooky]

YABU .... it's been decades since married couples were taxed as a unit and wives classed as an asset belonging to a husband. Everyone is quite rightly now taxed independently, gets the same personal allowance and then it's a level playing field for earnings after that point. The tiered thresholds for taxation make a big difference to take-home.

Unlike tax, which is based on individuals, benefits are largely linked to household income. CB is an anomaly and I fully expect it'll be phased out and any support for children rowed in with the new Universal Credit.