AIBU about Tax Credits cuts,

[Weathergames]

Commons back Osborne plan for tax credit cuts
www.bbc.co.uk/news/uk-politics-34260902

I don't claim anymore because I now earn enough to support myself - because I could work and progress my career as well as my life while being a single parent.

AIBU to think this is a total travesty and so many single parents are going to have their life's devastated by this - and what about people in domestic abuse situations who will now be more unable to leave?

Maybe I some benefits scrounger - but the tax credits enabled me to be a good parent and role model to my kids - without their feckless father affecting that .... AIBU?!

I don't agree. It is not some kind of tax wheeze for the state to take measures to allow companies to set costs of their machinery against their tax. I might disagree that many of these tax distortions including ISAs and pension contribution tax relief and that for charitable contributions are better off abolished as the free market does better, but the fact the state chooses where it wants to incentive companies to spend their money on capital projects and machiners is not at all unusual or some huge benefit to the rich.

But the incentive is low corporation tax, so you see a high return on your investment, if we tax break the investment and have low corpoartion tax it means businesses benefit twice.

The people already pay the majority of the tax contributions in this country ( income tax is 25%, corporation 16) through VAT, excise duty etc etc, why should firms who benefit greatly from being here not contribute as much, especially when we have to "live within our means".

Business don't have money - owners do. The point of a business is to either create income for owners through dividends or invest in more profitable operations.
Tax dividends, not companies - ie only tax them when they are not investing in growth.
Rich people pay far more into society than than the poor - hence the poor benefit more. The rich could pay for what they want and still have money left over, unless you believe only net contributors to the state get any benefit?

Business is indeed just the owners. The mythical creation of limited company which I think the UK Victorians came up with has been very successful but it is just an invented creation. Until we have cyborgs BT, BP are just the sum of their owners. BT itself isn't raking in millions whilst sunning itself in some virtual holiday spot. The owners are largely pension funds - i.e. middle income earners of the UK.

I would certainly support a system where there were many fewer complex reliefs for individuals and companies under our tax system and people invested or gave to charity because they wanted to do that rather than through the distorted lense of a tax break. Let people take their own decisions and the state keep out.

"The rich could pay for what they want and still have money left over, unless you believe only net contributors to the state get any benefit?"

Everyone benefits, just the benefits are greater to those who get the most out of living in society.

And the attitude of "tax dividends" is rubbish, we should tax dividends because that's someone's income. We need to tax profits because firms benefit greatly from being part of society, and therefore so do the owners. CT is only 16% of the total tax take, if you make an investment and it makes a profit a firm gets to keep 81% from next year, a fairly good return no?

I've been reading this with interest.

Thought it might interest people that there is an 'Analysis' podcast (radio 4) looking at housing benefit that is downloadable. Looks at many of the points being debated here, and is done by the head of the IFS.

Interestingly, the housing benefit 'bill' is cited as £25 billion per annum, not £16!!

The 16 Billion is from last year's set of figures, it may have changed, or the calculations may be different, this is what is quite confusing really.

For example that letter that we got through the post from the Conservative party had more than a quarter of all spending on benefits, but it took into account public sector pensions for nurses, doctors, teachers and police etc.

IDS also claimed to have lowered it this year, I've juust done a search and two sources come up with £25 bn and two with 16 ... confusing.

What was the outcome of the podcast?

Definitely worth listening to the podcast www.bbc.co.uk/programmes/b006r4vz/episodes/downloads

The conclusion was "robin hood in reverse - taking from the poor to give to the rich" and the figure quoted was £25 bn. The most recent analysis I have seen (2012 I think) quoted HB spend per person as about £750 pa for London as against £350 for Scotland, where I live.

I found the concept of looking at HB as a deliberate decision to invest in people rather than housing stock illuminating.

On another thread I argued that below market council rents were also a subsidy to high housing cost areas. The conclusion from the podcast was that the budget changes to reduce public sector rents will in fact lead to lower headline HB but twice as great a reduction in income to housing suppliers thus putting further pressure on housing supply and upward pressure on prices.

Agree with David Willetts that businesses in high housing cost areas should be paying enough to employees to meet housing costs rather than being subsidised by HB.

Interesting that a TC cut thread has turned into a discussion about HB which is the real elephant in the room. The other point to make is that in lower housing cost areas of the country the cuts to TC are much less likely to be compensated by increases in HB.

Agree with the summary above, along with the conclusion that ultimately unless there are a lot more houses then trying to fix the problem in one results in it 'popping' out somewhere else. it also thought very briefly about the outcome of people not owning homes more and more as they reach retirement age and the impact that could have on requirements for support later in life.

Agree with David Willetts that businesses in high housing cost areas should be paying enough to employees to meet housing costs rather than being subsidised by HB." I agree too.

I would like a right for citizens to buy public unused land in cities for housing. There is a lot of it around unused and individuals could buy it and build a home.

The problem is regional. My late parents' house in the NE went up 7% over the last 5 years. My house went up 37% - outer alondon. My daughter's in zone 2 51% and other daughter zone 1 London 47% (although they haven't owned for 5 years). London is booming. It is arguably one of the most successful capitals of the world and loads of people want to live here whereas my grandmother's house which |i think she rented rather than owned near Sunderland sells today 2015 for something like £50k and houses in Liverpool have been sold of £1 each. That is why Osborne is doing so much good work in trying to get industry to the regions, the Northern Powerhouse. If we can get Chinese companies to base themselves in Manchester etc then we might ease the London problem. I feel today that the North South divide is worse than when I grew up in 1960s Newcastle with its ship yards empty and mines closed even then int he 1960s.

longtime owners get no income or benefit from a company unless they take dividends or sell shares - you then tax the income/capital gain - you could even have a higher rate compared to earned income.
There is no benefit to a company owner leaving profit in a company unless it uses it to invest in growth.
The only benefit on taxing companies is that you know where they live, so collection is easier.

"London is booming. It is arguably one of the most successful capitals of the world"

Because London effectively operates as a tax haven in comparrison to other "world" cities.

Carol, the benefit companies have is that they have LTD liability, when things go wrong the state covers their problems or they don't have to pay for the full extent of the damage caused. They need to pay tax to make up for this.

Companies are seperate entities from their owners, rightfully so, and should be taxed as such.

The state very rarely covers any problems for bankrupt companies, but used to regularly for the nationalised industries.
I accept company profits should be taxed, but why are you against taxing the owners rather then the companies? The money raised is the same.
At present companies load up on debt as it gets tax relief as an expense, thus making them more risky and allowing tax shifting to low tax countries. No corporation tax would prevent this and increase the UK tax take.

owners get no income or benefit from a company unless they take dividends or sell shares

that's not true. They are shielded from excessive losses (one of the main reasons you'd want to become a company). if your business goes under, even if you are the sole owner, you are not liable for the losses of the business and have to pay for them from your own personal wealth.

Thanks red.

Carol if what you state was the case then countries like Ireland would have become hotbeds of investment when their tax rate was 10%, instead they had small offices which doubled as "european head office" for many firms whilst the real operations went on else where.

Companies should pay tax. End of. Pay tax or bugger off, someone else will fill the gap that you leave.

Thanks red.

I told you I am a leftist at heart

The european head offices brought lots of wealth. see on google and apple
here £182bn of foreign investment and 130,000 jobs

But not as much as they thought it would! Also what if the owners of the company don't pay tax here for cg? What if the owners are entities themselves? Corporations should pay tax. End of.

I would certainly favour abolition of corporation tax.

Of course corporations should tax.

If you think corporation tax should be abolished, I assume you think all tax should be abolished in some fantasy right-wing ideology.

If corporates don't pay tax, who do you think will pick up the bill? Shareholders? Corporation tax was introduced because it it administratively straight forward.

The fiction of limited company is just something the Victorians invented. These companies aren't cyborgs out there to get you. They are owned mostly by low earners' pension funds. It is only when the money is taken from the company it should really be taxed.

We need a lot less tax all round and a much smaller state.

*should pay tax (1st post)

Ok sure, leading to no tax at all, the triumph of the elite, recreating the feudal system, I get you.

You only reap the benefits of limited liability if you extract wealth from the company. I guess that means that there ought to be a balance to strike between rewarding holding wealth in the company to maximise efficient investment and provide a risk buffer and ensuring companies pay appropriately for the benefits of doing business in an efficiently functioning economy.

How companies pay is through a mix of wage and product regulation, business rates, corporation tax, and personal taxes on dividends and capital gains. However different types of businesses will be affected differently by different mixes of taxation (depending on things like need for labour, need for capital, where the beneficial owners are based, size, price or capital or product design regulation and subsidies within the industry).

I don't know what is the best mix but I agree with the general drift of the conversation that it is simplistic to think only in terms of corporation tax when considering whether businesses are paying their way.