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.

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.

This would be a good argument if we didn't already have too many people on the planet. In the absence of any other information - a child is more likely to grow into a net-taker than a net-giver. And more likely to become a homicidal maniac than a Jonas Salk.

The name taz credits should definately go as it's misleading. Some people think of it like a tax refund, when in relaity some families get way more in tax creidts then they ever pay in tax and others get them when they have never paid a penny in tax in their lives. An 18 year old single mum who has never worked can claim child tax credits.

"This would be a good argument if we didn't already have too many people on the planet."

No, it's still a good argument. Society as it stands needs balance. Quite apart from the fact that removing financial support from poor parents would increase child poverty. For some reason, people like having kids. It's like there's some kind of mysterious force driving them towards it. Very odd...

Removing financial support from poor parents would increase child poverty
is a more honest argument than Perhaps they might also grow up to be HR tax payers.

Tax credits should never have happened. They have allowed employers to pay less and let the state pick up the bill. All that said, we are now in a position where they can't really be taken away. People have mortgages granted where TC were taken into account in the equation for what they were allowed to borrow. It'll be a royal fuck up if families are left high and dry.

DH is 61, he's worked physical jobs all his life, he works 20 hours a week as a caretaker. He comes home after 4 hours, makes and eats his lunch and crashes out on the sofa. He couldn't work any more hours. I've just started looking for work again after DS started school.

BathshebaDarkstone

Not sure the relevance of your post as most of Gen X/Y will be working until 68-70, with globalisation we can import as many workers as we require.

Tbh making the. Minimum wage higher to replace tax credits would mean that more money would remain in the uk economy - when the large corps often outside uk are making extra profit subsidised by the British government and .'. Taxpayer the money flows out of the uk, people spending - paying vat on that, saving and paying tax, buying property and paying stamp duty. Plus the large corps avoid uk tax.

On the flip side - we cannot compete with global wages and global standard of living being lower and cheaper.

Sorry: the higher wage would keep people spending.....

I wasn't bashing childless people. I was suggesting that people who wages support more people should get a higher tax rebate. I.e. tax rebate should take into account the people in a household who are too young to work. It used to before.

And I'd like to see the figures for proportion of those on TC who pay no tax. I have always paid tax. I pay more tax than I get in TC.

I also support a living wage. But giving a living wage hourly rate to PT workers won't remove the need for TC or some other form of help with childcare costs.

I worded that part of my OP badly, I apologise. I was not suggesting that single people without kids have their tax allowance reduced. I was suggesting that those with kids have theirs increased.

However, that increase, as with all increases in TA applies to everyone. Even those who earn very high salaries. Making it very costly to apply.

Does it not make more sense to target the allowance to those on lower incomes, hence TC.

goodbye In the absence of any other information - a child is more likely to grow into a net-taker than a net-giver. And more likely to become a homicidal maniac than a Jonas Salk.

What on earth are you basing that on?

More likely? Really?

So are you suggesting the kids of people on TC are more homicidal or all kids are?

And if the proportion of net takers is higher than net givers, why are we not grinding to a halt?

That makes no sense.

Well I'm glad one person's mentioned unemployed parents on this thread. The suggestion of scrapping all tax credits pops up often as a solution to benefits issues. Without tax credits my daughter would grow up in grinding poverty. I'm looking for work, but there's so little about, and what there is is part time and zero hours. Scrapping tax credits and replacing with a living wage isn't going to help anyone who can't find work to supplement the loss of tax credits. If they're scrapped, child benefit would need to go up dramatically.

The reason that many people who claim tax credits don't pay much tax (or any at all) is because their wages are so low in the first place. Their earnings are below the threshold for paying income tax.

As far as I remember, one of the reasons they introduced tax credits was to replace the "Married Man's allowance" which was then viewed as discriminating against those families where the couple weren't married, and against lone parents.

If employers were made to pay a much higher 'living wage' then the cost of living and the rate of inflation would shoot up, leaving people in the same position as before. They'd be earning more money, yes, but prices would be higher and they'd be no better off.

stormy totally. Getting people into employment is not as simple as telling them to get a job if there is no work, or not enough hours. This is not a full employment economy.

And I would point out before I had dc I was childless. Once my dc reach 18, I will again for the purposes of tax/benefits be considered childless.

The 18 yr old lp may not have paid tax yet but it is unliklely that she will remain a sahp until 68. At some point in that 50 year period, chances are she will pay tax. That's how it works.

What I mean by not thought through, is if you cut TC for everyone you have to consider everyone who gets TC not just those mostly made up instances that you or the DM for whatever reason consider unworthy. And you also need to consider the effect on society.

Children in poverty don't have the option of working. If they grow up in poverty it can affect their the rest of their life and therefore, has a knock on cost on society.

Childcare TC go towards paying for childcare. They keep parents in work and they also contribute to the wages of those who provide the childcare.

The term tax credits is a misnomer - as they're not necessarily a credit against tax. I think that this was to make them sound more socially acceptable. My sister has never had a proper job and has since her late teens had a child every 5 years right at about the time she's invited back to the job centre to look for work She receives tax credits despite never having paid any tax.

That said, I'm not against benefits per se and I do think that people need to understand the effects of removing this subsidy. I live in a (cheap) part of the country where the majority of jobs are minimum wage food processing type roles. the vast vast majority of the people in those roles will be eligible for tax credits. In the event that this subsidy was removed, wage inflation would ensue (not a bad thing) and the chances of joe public getting 2.5kg of spuds for 1.50 would be nil.

I think there needs to be a gradual withdrawal (which I think is already sort of underway). Years ago I earned a decent wage. I was still eligible for tax credits (a few pounds per week). I never bothered claiming becasue I didn't think that we needed it, and I didn't want the hassle of having to pay it back if/when they realised they made a mistake.

'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 always amazes me how such haters spend time on a parenting site.

We'll be screwed when UC comes in anyway. What with conditionality and sanctions, anyone who isn't working full time can kiss their tax credits goodbye. But that's by the by.

Cut tax credits, and I've got £35 left a week after rent and bills. Cut child benefit, I've got £15 a week left. Cut the HB boost a child brings, and I'm short by £25 a week. Tax credits matter.

As for the sister having a kid every five years - I wonder if she'd have bothered if they'd not lowered the age at which one stops qualifying for IS?

It always amazes me how such haters spend time on a parenting site.

There are many people who use this site who are non-parents expat, as you well know.

And far from being a "hater" I was simply responding to the OP's rather obnoxious suggestion that childless people pay more tax because their wages don't have to support 3 people. DH and I pay enough tax (I read recently that it was equivalent to 55% marginal rate?) and I would really rather not pay any more, thanks all the same. The whole TC thing is a ridiculous money merry-go-round with the government robbing Peter to pay Paul. It's daft and inefficient.

Mink, it's true that there are more net takers than net givers. You have to be in the top 40% of earners to be a net contributor. The reason we're not imploding is because high earners contribute disproportionately.

I didn't google how the population of murderers (or hardened criminals) vs scientists having made major medical breakthroughs i.e. Saulk, but I suspect that the former exceeds the latter. I'd be delighted to be proven wrong.

I make no judgement about children of TC recipients vs non-recipients, I'm speaking of the general population. We all know that the future is significantly less bright for children born into poverty, though.

The original post seems to suggest people are suggesting doing away with TC first then hoping companies increase wages. This clearly won't work and will be very harmful to women and children.

What I want is the NMW to increase to living wage level. TCs are means tested so naturally by doing that many many people will be lifted above the threshold where they need TCs.

The affordability of childcare is a separate issue and should not be used to stop all businessness (including childcare providers) from having to pay a living wage to their staff. There are many many models around the world of state subsidised childcare to consider.

Consumers could refuse to patronise businesses not paying a living wage. Problem is, people also like cheap goods.

I don't understand why those on low wages who happen to not have children do not receive tax credits. If it is a low wage, it is a low wage. It is discriminatory to people without children.

It is discriminatory to people without children.

This. Exactly.

I agree with the imposition of a living wage in principle, but I don't see how it can work in a global market where many workers willingly accept lower wages and a lower standard of living that we expect.

The point I was making was that if Companies raise their wages (which I think they should) this inflation will feed through into the goods and services we buy (particularly in the foods and service sectors) - leaving the employee no better off. The shareholders certainly won't take less.