AIBU to think that sugggesting Tax Credits should be replaced by higher wages hasn't been thought through

[minkGrundy]

I have seen several threads where posters have suggested that TC should be done away with because they are a subsidy for low wages.

However, a lot of people on TC work PT. Many have no option to work FT as although employment is relatively high, under employment is also very high (plus there may be issues around childcare). So, even if their hourly wage was increased this still might not lift them out of poverty and it isn't that their employer is underpaying.

Also, a lot of TC are used to pay for childcare. If you increase the hourly wage of those using childcare you also increase the hourly wage of those providing childcare, which in turn pushes up the cost, meaning it is no more affordable.

Finally, TC replaced the increased tax allowance that families used to get if they had children. Why should a single childless person get the same tax allowance as someone whose wage has to support 3 people. TC should not be seen as a benefit but as a means tested tax rebate.

Any changes to TC will disproportionately affect women, children and women's wages. Many people I know myself included were only able to continue in their careers post having children because they were able to work PT when there children preschool and use TC to help with childcare. Otherwise they would have had to take carer breaks which would have resulted in them finding a return to the work place extremely difficult. Thus further increasing female unemployment, underemployment and the gender pay gap. Higher hourly wages would not have helped.

I think people suggest this because some employers get away with paying low wages and pocketing lots of profit whilst the benefits system has to top up peoples income. I do not know the solution but certainly think employers should be paying a living wage to their employees.

TC should not be seen as a benefit but as a means tested tax rebate.

TC are a benefit, not a tax rebate. The amount people get is usually a lot more than the tax back on their income. TC are benefits for people who are in work, their purpose is to ensure no-one is better off not working.

Employers SHOULD be paying a proper living wage.

As for childless people.....those same childless people are sometimes the ones who have last dibs on holidays in the workplace and also cover the work of parents who need time off.

Which is fair enough. You cant help kids being ill/ childcare problems etc. BUT to then turn around and treat childless employees like second class citezens .......... a third of 45 year old women in 2018 will have chosen to remain childfree.

Employers SHOULD be paying a proper living wage.

As for childless people.....those same childless people are sometimes the ones who have last dibs on holidays in the workplace and also cover the work of parents who need time off.

Which is fair enough. You cant help kids being ill/ childcare problems etc. BUT to then turn around and treat childless employees like second class citezens .......... a third of 45 year old women in 2018 will have chosen to remain childfree.

You can't see tax credits as a tax rebate when most of the people that claim them don't pay tax.

You can't replace tax credits with higher wages when many of the people who claim them don't earn a wage. They are a benefit like any other, the labour government just did a good job on the marketing campaign.

I think child tax credits should be done away with because they encourage people to have children they can't afford. I agree with the state providing help with childcare, but doing that via tax credits seems odd to me, and an unneccesary complication.

Working tax credits are a neccesary evil while wages remain disproportionate to the cost of living, but in the long term the government should be working towards them not being needed any more.

Not against tax credits at all, just against employers who page low wages and pocket all the profit. We need the living wage to be enforced.

Ptolomy: Governments of all colours have used Tax Credits (Labour) and Family Credit (Conservatives) to top up inadequate wages.

The original benefit was introduced by the Conservative Government in 1970.

What Fluffcake said!

Yep we are all subsidising the large profits of big companies who refuse to pay a living wage. Some of whom also refuse to allow workers to work enough hours to make ends meet because they would then also have to make contributions to employees pensions.

Helenadove - the number of 45 year olds remaining childless you quote there are wildly incorrect.

Nearer 20% and slightly declining.
www.ons.gov.uk/ons/rel/fertility-analysis/childbearing-for-women-born-in-different-years/2013/stb-cohort-fertility-2013.html

And that includes childless and child free together , while no robust estimates of childfree exist for the UK , it's likely to be less than 10%.

Yes but if we want companies to have their businesses based here we need to give them incentives.

Also the government gives people benefits to keep the economy going! Is that not obvious?

Similarly small businesses cannot afford to pay super high salaries - no point in deterring entrepreneurs. It's about balance.

The government benefits sector also employs lots of folk. Without the benefits these people would lose their jobs!

It's about getting the balance correct.........

I'd venture that any wage less than around £12/hour is a manifestation of a market disequilibrium, either a corporate monopoly or worse. Bring on the living wage.

Absolutely about the balance, it seems mightily wrong at the moment. Somehow there needs to be a system for fair taxation on profits generated here regardless of where the company is based to fix the 'attracting companies to be based here' problem. Don't think it will ever happen though.

You can't see tax credits as a tax rebate when most of the people that claim them don't pay tax

do you have any evidence that says most people that claim Tax Credits don't pay tax?

Because in the present position the Government is allowing some employers to get away with not paying their staff a living wage, and maximising their own profits, by subsiding their staff with a benefit. In what way is that logical? Especially when we are told, endlessly, that our Government (and every other political party) are there to support "working people". Well, most working people would prefer to earn a living wage that they can use to support themselves and any dependents they may have - whether that is children, elderly parents, or a menagerie of pets.

And while we're on the childless bashing - it is naive, hurtful and downright incorrect to assume that all single childless people are able to support themselves. Remember that they do not receive child benefit, lose out on some social housing, often isolated and lonely and that may well have a detrimental effect on their health. How lovely of you to suggest that they may not need working tax credit.

It's not just about companies, there's all the public sector employees to think about as well. As soon as you raise minimum wage, everyone else's wages have to go up too otherwise what's the point of trying to work your way up? It's probably cheaper for the government to pay tax credits than to raise the wages of all their employees.

It would make sense if there was some sort of requirement for larger companies to pay a % of wages to staff. So they could no longer employ thousand of people on the mim wage knowing they need top ups but would have to increase the mim wage each year. So if you have been at tescos for 10y you are earning more than the mim wage.

I think it makes some people stop trying to improve themselves if they have children and can work 16h a week. If they are on mim wage or £12 their take home pay will be the same.

Surely topping up the bottom layer of public sector wages with tax credits = paying a living wage to all public sector employees? So then it's back to the private companies that are being subsidised?

Tax allowance my eye. It was the Labour government's feeble attempt to create a client state of benefit-dependent sheeple by extending benefits to people who were in work and giving it a name like "tax credits" to convince the feeble-minded it's not a fucking benefit. Except it is.

And nice bashing of single and childless people btw. Why should I, as a child-free HR taxpayer, donate yet more of my disposable income to HMRC so other people can spray out kids they can't afford? People with no kids already pay a higher proportion of their income in tax, receive no benefits and use fewer services.

I applaud the tax credits system but it shouldn't have to exist. A fair days work for a fair days pay should mean exactly that not a pittance you can top up if you'Re fortune enough to have children.
If someone is working 40 hours a week and they can't put food on the table or pay their rent with out tax. Credits to hold their hand then quite frankly the system stinks!

Blisterface: No, Family Credit was introduced by the Conservatives in 1986. It replaced the Family Income Supplement that the Conservatives set up in 1970.

If we hadn't relied on asset prices to keep rising as the backbone of our country's wealth we may be in a better situation all round.

I agree that a fine balance is needed now, as it's a knife edge at the moment. A living wage is needed, but many advocates ignore the elephant in the room that is inflation and that it will be effectively a can kicking exercise, unless we do something drastic.

Not sure what that drastic measure could be, but I guess it would not be well recieved.

"Why should I, as a child-free HR taxpayer, donate yet more of my disposable income to HMRC so other people can spray out kids they can't afford?"

It's so society continues to function when you have stopped being a functional part of it. Poor people should be able to have kids too. Perhaps they might also grow up to be HR tax payers. Or indeed, contribute to society in another way other than tax.

I guess it's so that there are still poor people around your area to be bin men, cleaners etc. blisterface