DH and I going part time to deliberately reduce wages

[Bucketheadbucketbum]

Just working out the free childcare hours and actually DH and I will be muxh better off if we both dropped to 3- 4 day week to deliberately reduce our incomes. Would obviously be nice way to live too! Anyone else doing same? Seems mental but we've looked at it 100 times over and it's true!

[ThinkingMeat]

@Blossomtoes

Children do not get an allowance in the UK system though.

They do. Everyone, regardless of age, has a personal allowance. It’s why some wealthy people stash money away in their kids’ named.

Like I said if Hollywood film stars or something yes technically. Not transferrable though to the household so normal child will not be able to use it and household will pay tax based on the parent who earns the money alone ignoring that they have children to support. Meaningless for vast majority of families.

[ThinkingMeat]

Then there was MIRAS - mortgage

Ha! If only for the days of MIRAS. Families now could only dream. Older people complaining of high interest rates "back in the day" conveniently forget this!

[Blossomtoes]

@ThinkingMeat

Like I said if Hollywood film stars or something yes technically. Not transferrable though to the household so normal child will not be able to use it and household will pay tax based on the parent who earns the money alone ignoring that they have children to support. Meaningless for vast majority of families.

That’s exactly the point I was making. It’s a waste. Allowing it to be transferred to single parents would be sensible.

[ThinkingMeat]

Fundamentally this is the issue - the system should be structured in such a way that there is never a question of whether work pays. Regardless of whether you're talking about someone working an extra hour a week at minimum wage or someone taking a promotion at £100k - increasing your earmings should always leave you better off.

Yes. Surprising that this would be considered controversial.

Like I said: the UK is very strange. Would rather be poorer than be better off if it means someone else might be better off as well.

[ThinkingMeat]

@BashirWithTheGoodBeard

I've posted this before, but it's also relevant to this thread since we're discussing marginal tax rates.

https://www.resolutionfoundation.org/press-releases/childrens-benefits-mess-leaves-families-facing-effective-tax-rates-of-80-to-96-per-cent/

Yes. And exactly the same issue as what is happening at £100k and withdrawing childcare funding. Identical issue. Makes everyone poorer. Obviously stupid for the families affected and those benefitting from the tax they pay if they work more.

Genuinely confused why people think it's a good idea. Would love to hear.

[Xenia]

It is very very hard to make work pay. Iain Duncan Smith spent absolutely ages trying to ensure that people did not lose too much of every pound they earned when increase wages under the then new universal credit but I don't think even that with all that massive thought that went into it really did work. I have a very minority view but I would prefer much lower taxes for all and more incentives to work full time. The system still does not work quite like that and the recent vast changes against those on £100k (which is about £5500 a month after tax but before 9% student loan charge) does stop people working harder. Even for me when I stop supporting the youngest children next year given the state takes at least half in direct tax and even more when you add on insurance premium tax, £4k+ council tax a year, VAT and all the other massive taxes it gets less and less worth making the effort when more than half the year at least you are working not for your own benefit.

If the state did something ilke sending yuou a bunch of flowers for every £10k of income tax you pay or even HMRC just emailed some lovely email about how much they appreciate you that might help - they are happy to "nudge" people to disclosing they are liars but they seem very into sticks but not nice carrots.

[ThinkingMeat]

Fundamentally, means testing supportof benefits backfires un two ways:

A) Very expensive. Money that could support better living standards spent on admin staff. Particularly dumb with a labour shortage! Ironic "back to work" advisers could be reallocated to... get back to work that is actually productive.

B) Disincentives and "bottlenecks" discouraging more work at low, medium and high levels of earnings. Meaning more welfare payment, less tax revenue, high taxes, less money for services.

Great model.  Do not understand. Happy to listen to anybody who can explain the logic and why (after it being shown for many years now that this makes everyone poorer) people in the UK like the downwards spiral and think the simple changes that (for many years now) have been shown to work better in comparable countries wouldn't work here.

[Ilikepinacoladass]

@ThinkingMeat

Obviously when saying "universal" for child benefit and childcare funds I don't mean a separated couple could both claim it, only one just as now.

In terms of the tax, yes the two separated parents should get allowances as two separate households, for all of the reasons I explained already. They each have a household to fund so will have higher costs. That is "a feature not a bug". But each household will have only one person's time each day to earn to pay for that house or be with their children. It will be much harder for them to reach the same household income as a couple living together. So you don't compound the fact that their household income will be lower while trying to pay all the costs for the home on their own, by also taking them a higher % on the same household income that they have earned on their own as one person not two (while usually also needing to pay much more childcare as well!).

They will not be getting an advantage on you. They will always be at a disadvantage. As someone said (I think you?) of course it costs more to live separately and always will. Fine. But you don't have to "stamp down" on them too and then tax them more as well on the same income even though they obviously can earn less in half the time available each day. That is just crazy, which is why other countries have provisions in their tax systems to avoid increasing the disadvantage by penalising through tax like this on top of the inevitable inbuilt disadvantage that will always be there just through practical reality.

These people will never be in a better situation that a couple who can both earn, or one earn and one not so have no childcare to pay, or share it all as they see fit. Never. Of course not. Will always be poorer as they have to pay alone. Why would you tax them more on the same earnings and well?

It really is a very peculiar thing to the UK to see this kind of argument where people would be worried that a single parent might be better off than they are and should pay for a house alone but from less net income for the same earnings because otherwise it might be unfair on a family with two adults to earn or be with children, if the couple didn't also get to keep more of the same household income. Effectively you are saying you want single parent households doing the job of two parents to subsidise couples who have the same household income. That can never be ok, if you step back and be rational.

And as I have tried to explain, this "but it's mot fair to meeeeee" attitude makes everyone poorer in the end. You object to what I proposed even though it would not
make you a penny poorer because you feel it might help a household at a disadvantage to you and that would not be "fair" in your opinion. Even though all research shows that in the long term if this happened then it would make your household richer also: it would increase tax revenue and reduce the need for welfare so either mean better pubic services for your family or lower taxes for your family. But you couldn't bear to see some people in a worse situation get what you consider to be "help" (when actually it's just removing existing unfairness) even if it actually benefitted you as well in the long run.

That is what is wrong with the UK.

This whole thread shows the same thing, around the tax thresholds and making it pointless for people to work more, as well as the single parent issue.

People will reap what they sew. Tried to persuade people with facts and research but if UK mentality is that you would rather things don't get better for others and for you in case you feel they might benefit more than you then I can see how you have ended up where you are. And what will happen in the next ten years: it won't be good.

I am a single parent myself...

I just think it makes sense that it will be more expensive to run two households / live on your own, and it should be. I think it's a privilege to be able to do it! And would prefer just to be taxed as a single person, rather than half of an imaginary couple.

[Ilikepinacoladass]

What about when separated parents have 50/50 living arrangements, would both the parents get the same tax allowances as a couple, each? How does that make sense? Wouldn't it just be better to increase the UC entitlement or something like that?

[ThinkingMeat]

Of course it will be more expensive to be a single parent and run a household alone. That will always be the case. I have dealt with this point. Did you read what I wrote? Sorry if I didn't explain what I mean clearly, if you can tell me which part I can try again. (Don't want this to come across wrong or rude, really mean it! Thought I'd explained). It will always cost more. That is fine. Most countries don't then also A) try to compound that obvious extra cost by also taxing you a high % on the same income so you have less money before you even start paying those same costs a couple can split even though you earned the same income as them, and then B) take away services that should be universal in a sensible system but even if a country is mad enough to want to spend money to means test, do so at half of the income a two adult household could earn before that happens.

So you end up with no just the fact that of course it will always cost more to live alone which is fine, but with the tax system adding two disadvantages on top. This is not normal. Most countries do not choose to deliberately disadvantage households already at an inbuilt disadvantage further. Not because they are kind. Because it makes no sense, and costs everyone more if you do that.

You can never put single parents in the same position as two parent families and like you say nor should this really be a Government objective. But it makes no sense to add to the disadvantage they have with less time to earn or be with children and higher costs by also taking them a higher % of income than other households earning the same, to add to the disadvantage. Just end up then with lots of people never achieving their earning or tax paying potential, paying more welfare, lots of kids who won't achieve potential either, less tax money... an on it goes. A bad strategy.

Same as it costs everyone more if you make a tax system where it's not worth lots of people working more, especially people who pay lots of tax.

That's crazy. Nobody should even need to look at the research to be able to work out that is a bad idea.

[ThinkingMeat]

@Ilikepinacoladass

What about when separated parents have 50/50 living arrangements, would both the parents get the same tax allowances as a couple, each? How does that make sense? Wouldn't it just be better to increase the UC entitlement or something like that?

No. For all the reasons explained already: means tested benefits are counterproductive, tax/ benefit traps, lower productivity and tax revenue, more poverty. I made a post earlier specifically addressing the issue of separatex parents. Still two households to pay for, each with half the hours available and earning potential. Ultimately that argument again seems to be driven by this weird fear that someone might get more than someone else and this is bad even if it would make everyone better off too, in case a tiny minority might benefit who should not. Well that happens in any system. It happens now. You can choose a system that overall helps everyone and has better outcomes, and have some people take advantage. Or you can choose a system that costs a lot and has worse outcomes like now, and guess what? Still some people take advantage. Always some people will. Not worth bothering about. Especially when what I suggested would be simpler, cheaper and easier to enforce. UK Gov has all the data needed already.

Better to have a system that's fair and has better outcomes for everyone and actually costs less, surely? Maybe not. UK population clearly disagree. My question as yet unanswered is WHY? Not talking huge social overhaul here. A couple of very simple tax code changes. Easy to do. Positive effects proved to happen per many other countries. So what is the problem?

[ThinkingMeat]

So @Ilikepinacoladass obviously child benefit, childcare funding only available one across the separated households. Separating does not double the number of children. Tax allowances though should be per household. Two homes to pay for now, so separate. It's simple, logical, fair, better outcomes, cheaper for everyone as well in the end. Look at the studies. UK doesn't have to make up policy from scratch, plenty of evidence on what works from elsewhere.

[Blossomtoes]

Ultimately that argument again seems to be driven by this weird fear that someone might get more than someone else

I’m not sure that’s what drives it. The Tory party is very pro marriage and would be reluctant to put any measures in place that could be construed to be encouraging single parenthood. Governments try to shape society and those of the last 13 have made policies to make the traditional family group more appealing.

[Ilikepinacoladass]

@ThinkingMeat
Thanks for explaining. I guess I just think it makes sense for it to be cheaper to share a house. And couples are still 2 separate people that have their own expenses etc, so not sure if it works fairly to treat them as one person / joining their income together.

As a thought experiment, in the system you suggest, what would happen if in 50 years time say, it became the norm for 3 adults to bring up children, mum, dad and a surrogate for example (doesn't really matter who the people are), would a single parent then get even more benefits/ tax allowances or whatever, to make up for the fact that they were now a third or the 'normal family set up' rather than half?

And does it only apply to single parents what about just single people? Or when children turn 18?

[ThinkingMeat]

@Blossomtoes

Ultimately that argument again seems to be driven by this weird fear that someone might get more than someone else

I’m not sure that’s what drives it. The Tory party is very pro marriage and would be reluctant to put any measures in place that could be construed to be encouraging single parenthood. Governments try to shape society and those of the last 13 have made policies to make the traditional family group more appealing.

Interesting. Government policy surely should not be about trying to "shape" families (that is disturbing) and anybody who thinks a sane person would become a single parent for tax allowances - when as stated even making those fair would only offset a small proportion of the cost of paying for a house alone anyway - must never have done it or understand maths. Maybe many MPs don't. It certainly still would not make you better off to be a single parent even if taxes were fixed as suggested, it would just stop you being penalised on top of the obvious financial disadvantage that exists already and always will do which is far, far more. So I find that idea very odd too, that it would "encourage" people to be single! Uncomfortable idea also that a democratic Government would want to influence people about relationships by penalising financially for leaving a bad relationship. Bad for adults, bad for children. Sounds like a very messed up idea.

I would think the aim of Government should be to improve living standards for all citizens and therefore a policy that demonstrably would be fairer, improve situations of disadvantaged people AND make everyone else better off too would not be controversial. But perhaps as you say in the UK there is some kind of not rational, not economic, sort of moral (?) judgement driving these crazy and expensive and counterproductive policies so that these families must be penalised to make a point even though it will make everyone else poorer too?

Thank you for the insight. If you are right and that is what is going on, that is not good because it means that policy decisions are not being made based on evidence, but prejudice and actually some quite nasty spite about punishing people for not doing what the Government wants even if that hurts everyone else too. If so, what a mess. Coercive and damaging for all citizens. But then surely you'd expect the other side who want to be a Government next to have a different view and want to change it? From what I read they also have no intention to fix any of this. They do not acknowledge these problems in their "5 promises" or interview statements. Very odd that nobody in the whole of UK politics would have realised what needs doing with so very many research studies and real life examples in other countries "laying it out" for them. "Low hanging fruit" for a quick win! But maybe this "moral" judgement comes into it, that single parents must be punished.

[Ziegfeld]

@Blossomtoes

Children do not get an allowance in the UK system though.

They do. Everyone, regardless of age, has a personal allowance. It’s why some wealthy people stash money away in their kids’ named.

No they don’t. When you hit a certain level of income they take your personal allowance away. And that’s done on an individual basis too, so a couple with the same income as a single person would get two personal allowances while the single person got nothing.

[karmakameleon]

@Blossomtoes

Ultimately that argument again seems to be driven by this weird fear that someone might get more than someone else

I’m not sure that’s what drives it. The Tory party is very pro marriage and would be reluctant to put any measures in place that could be construed to be encouraging single parenthood. Governments try to shape society and those of the last 13 have made policies to make the traditional family group more appealing.

It’s not just about supporting marriage. Transferable tax allowances between partners have downsides. The countries that use them are more likely to have women choosing to be SAHM as the marginal benefit of working is less. This may be the right decision for some families but for the general economy it leads to a loss of skills and reduced productivity.

[Blossomtoes]

@Ziegfeld

No they don’t. When you hit a certain level of income they take your personal allowance away. And that’s done on an individual basis too, so a couple with the same income as a single person would get two personal allowances while the single person got nothing.

All right. Everyone regardless of age has a personal allowance unless they earn enough for it to be taken away. 🙄

[ThinkingMeat]

@Ilikepinacoladass

@ThinkingMeat
Thanks for explaining. I guess I just think it makes sense for it to be cheaper to share a house. And couples are still 2 separate people that have their own expenses etc, so not sure if it works fairly to treat them as one person / joining their income together.

As a thought experiment, in the system you suggest, what would happen if in 50 years time say, it became the norm for 3 adults to bring up children, mum, dad and a surrogate for example (doesn't really matter who the people are), would a single parent then get even more benefits/ tax allowances or whatever, to make up for the fact that they were now a third or the 'normal family set up' rather than half?

And does it only apply to single parents what about just single people? Or when children turn 18?

Yes if 3 people live together asa shared household unit they would get the same allowances as one person paying a house alone. Because even with that, they'd still be way better off. Far more capacity to earn more. So don't need single person to be taxed loads more as a % on 1/3 of what their total income would be (assuming for simplicity all earned the same). They have lower costs, more time, they are still better off without single people also have a tax penalty.

Yes also the same for single people with no kids in my opinion that's fair. Different in different systems though per the detailed examples I gave earlier if different countries. Some also make extra allowances for children or dependents. Adult children obviously considered separately. Many variations but the UK is a massive outlier and has definitely got this wrong, hence the very adverse effects: expensive, poor outcomes.

[stickystick]

@ThinkingMeat
Why no Govt will change this system:

1. two votes are worth more than one
   
2. they can’t afford the instant drop in tax take (it might correct in time if more single parents were able to work but no guarantees)

[Mumoftwosweetboys]

@ThinkingMeat

Fundamentally this is the issue - the system should be structured in such a way that there is never a question of whether work pays. Regardless of whether you're talking about someone working an extra hour a week at minimum wage or someone taking a promotion at £100k - increasing your earmings should always leave you better off.

Yes. Surprising that this would be considered controversial.

Like I said: the UK is very strange. Would rather be poorer than be better off if it means someone else might be better off as well.

I think in a nutshell this is the key issue and should surely be the fundamental principle that underlies the policies. Cannot see how / why it is controversial.

I'm (only just) an additional rate tax payer and am comfortable being in that small % of the population paying a high rate of tax as I feel I'm in a privileged position but never should working harder and a payrise result in less take home. It's really that simple.

[ThinkingMeat]

@stickystick

@ThinkingMeat
Why no Govt will change this system:

1. two votes are worth more than one
   
2. they can’t afford the instant drop in tax take (it might correct in time if more single parents were able to work but no guarantees)

If the UK population want to be richer and have better public services and also live in a decent society point one is fine. If they can read and have brains.

Point 2 also fine. Cost is small compared to many ridiculous things they have funded and plenty of evidence to show it will pay for itself in no time.

Markets got spooked by Trusterfuck because no economic plan, no credible explanation to pay for those tax cuts. Plenty of economic research showing this would actually improve public finances. Markets react like to a business plan, happy to lend for a credible plan, but not for Truss and her mates to go to the pub.

Think what is spent on total nonsense. Of course they could fund it, because it will fund itself in no time. Evidence is clear on that. They can have OBR run the figures. Fraction of cost of hundreds of billions wasted in the last few years with nothing to show for it.

It seems like more excuses. It's not some mad plan, it's proven economics and tried and tested systems from elsewhere with measured outcomes.

[AviMav]

I can see why it's controversial. Its similar to those working part time because money wise the majority of the time if you are a low earner your taking home a part time wage and your UC adding upto a full time salary (less work). A possible CM payment too and your laughing.

People are outraged that you would choose what's best for your family. I agree UK is strange you've got that part right.

[Blossomtoes]

Thing is it won’t win votes @ThinkingMeat. And that’s all most politicians are interested in.

[ThinkingMeat]

All right. Everyone regardless of age has a personal allowance unless they earn enough for it to be taken away. 🙄

Don't eye roll! That's exactly the problem, that kind of attitude to it without looking at the logic or fairness or the effects for those people or for everyone else who will lose tax when they stop working more.

It is like speaking to a wall at times. These are all simple issues to fix but seems most people won't consider that any should be fixed unless they personally happen to be affected by it currently. So nobody will support fixing each other's problems across the system so nothing gets fixed and everyone loses.

What a strange way to run a country.