If you pay tax then you should not receive benefits.

[jollydiane]

If you pay tax then you should not receive benefits.

Please explain what is the point of taxing me, only to give me money back in the form of child tax benefits? Surely it is better for me to pay less tax in the first place and not receive the benefit. The end result is less money needed to pay for bureaucrats. We then can maintain front line services. Discuss.

Only the rich want a flat tax to avoid paying their fair share, it is unprogressive in a major way and would never be introduced in a fair and equitable society so no doubt the Tories will consider it.

If a flat rate brings in a higher tax take over all, there would be more money to spend on public facilities that are used more by lower income people. Because of decreases tax evasion. And less people would be employed unproductively, as benefit officers and tax specialists. Wouldn't it be best for the country's long term economy to concentrate on increasing long term tax revenue, and cutting spending (redeploying the administrators of complicated taxes).

Most Western European tax systems are a complete mess - they are old and have been tinkered with for ages, and now they need to be completely rethought.

Loudlass; I agree there are problems with any change because the cost of living has risen so much. But I tend to think that these government subsidies don't actually help that much as they only push them up even higher. It just means that every year the government have to increase the amount of help they give again to meet the prices that have absorbed the last increase by rising because everyone can afford them to.

Obviously it would be a shocking, and probably fatal, mistake to just suddenly cut the help that people rely on to live. But there isn't any reason that I can see that the help couldn't be phased out gradually.

I do agree that as a society we should be prepared to have different rules for disabilities or long term illnesses (individuals or carers for them). But couldn't that be the exception to the rule and the benefits paid for it be linked only to the severity of the case and completely separate from tax and earnings?

jollydiane - you raise an issue that has always bemused me. Why do politicians continue with a tax system that taxes people who earn minium wage and clearly need a top up income as tax cerdits to live?

My view is every person should get given some minimum level of national income of about £10k tax free as a true universal benefit regardless of income or wealth or whether they are in work or retired or unemployed. After that they pay 50% tax rate on every penny they earn and get absolutley nothing from the state except NHS care and education for children.

Child Tax Credits are for the primary carer. Before Brown introduced them there were many women whose husbands gave them no money. The Child Tax Credits were paid directly to the parent who was responsible for the child/ren, thus freeing them a little bit from the sort of awful subjugation they were suffering.

I know because that's how it was with me. I fell in love with Brown because of it. DH hates him still.

"£10k tax free as a true universal benefit regardless of income or wealth or whether they are in work or retired or unemployed. After that they pay 50% tax rate on every penny they earn and get absolutley nothing from the state except NHS care and education for children."

Beenbeta - apart from the issue of corporation tax (if that was significantly below 50% - we'd have a big tax avoidance issue) this looks like a fast track solution to the deficit. Massive tax take and minimum costs!

Pretty drastic though!

BeenBeta, I'd support that. Are you planning on running for PM? I'll vote for you.

Jux - I am emigrating to NZ next July where tax rates are lower and they have a better grip on public finances already.

Would I fit in your suitcase perchance?

My mom was thinking of moving to NZ. I asked her why and she said she thought it was a safe place, kids riding their bicycles in the street, everyone knowing everyone else....

I told her she didn't want to live in NZ, but in the 1950s

I agree with the OP.

What can be done is what happens in the states - have tax breaks instead together with a higher personal allowance for low earners.

There is no child benefit in USA but spouse, kids and mortgage are offset against taxes making it less of an admin nightmare.

If they cannot afford the luxury on state benefits of living alone on one income they will just have to live with their extended family which could be good for the elderly . In a way it's the fact that people however poor think they have a God given right for middle class tax payers to subsidise them to live in places and in single person homes that the middle class tax payers cannot afford which is part of the problem. If 4 grandparents and 2 siblings and their families lived together as plentyo f cultures even in the UK have as a structure things are much easier - you have all that free childcare, you cook meals for 10 at a time, you need fewer homes and the elderly have care. It's a win win situation and ultimately may be all the poor can afford as we have run out of inclination or money to pay them under the current gravy train system.

thats very true and it applies mainly to the east europeans who are stealing jobs. a fact that is ignored by their supporters who go on about them paying tax, do the maths, basic wage x tax rate - child benefit and tax credits x housing and school plus nhs costs
yet again we lose out

Wrong.

I don't see why someone earning a low amount is entitled to tax credits anyway? I just don't understand it.

Surely that just means people in the lowest wage jobs can earn the same as the people who earn a few more £££ than them a year, without the extra effort?

Genuinely confused as to how it works... why should you get a handout if you can't earn enough? If you have a family to support (childcare etc) then whatever

It's basically a way of making it worth working for people who would otherwise be better off claiming benefits.

However, it's yet another way of complicating a hugely complicated tax/benefits system. Every gov sees the need to further fiddle with it to eliminate perceived injustices/anomolies in the existing system.

Agree with Xenia and Beenbeta that a simplification is long overdue. Complicated systems cost ridiculous amounts to administer, inevitably result in errors and make evasion/ avoidance easier. When your tax calc is a case of "calculate x% of your gross earnings and attach cheque here" it's far harder to weasel around. Once you get into deductions, credits , allowances etc, it all just gets murkier and murkier. Doing a CGT calc for shares makes you lose the will to live.

Also tax credits and the rest subsidise businesses IMO. If minimum wage (whatever tax rate you pick) is genuinely not enough to live on then who would take minimum wage jobs without it being possible to top their income up in some way.

The top ups allow businesses to pay low wages and still make huge profits. Simplification of the system would have to take this into account too; I'd quite like it if there was a switch (gradual) to tax credits being something that businesses claim (again?) so that the subsidy goes to small local businesses to allow them to offer competitive wages, or to self employed people for a set number of 'start up' years per business. There is no reason huge companies making millions or billions couldn't offer higher wages, especially if making the system less complicated saved them money anyway.

(Riven has convinced me in previous discussions that this would only work with special measures in place for carers and disablity allowances. So perhaps companies of any size/turnover could get special tax breaks for having policies and practice that make it possible to employ people who face these challenges when it comes to work? Or something like that - it isn't as well thought out as the rest yet!)

1. We can help businesses by abolishing national insurance totally.
2. Increase tax rates as we merge NI and tax.
3. Gradually come down to one rate of tax for all. The basic rate tax used to be 33% (people tinking the past was easy forget 12% mortgage intrest rates, no tax credits, 33% tax - the criticism of Lord Young in today's free for having said people don't know how easy they have it compared to the past is unfair because in many ways he's right)
4. Get rid of all tax reliefs and the like.
5. Cut back state provision of most things
6. Introduce a universal credit to all over 18 regardles of income and abolish all pensions, benefits and the like
7. Have more emergency care dormitories for people who cannot live off their credit and who reuse to move in with other single people or relatives so that at least they gets beds and food if they fall into dire straits
8. No tax on your universal credit whatever level we set that at £10k say but the flat rate new tax say 20% or 30% or whatever we have to set it at on all income over that.

"Have more emergency care dormitories for people who cannot live off their credit and who reuse to move in with other single people or relatives so that at least they gets beds and food if they fall into dire straits."

Bring back the poorhouse and abolish the welfare state?

Not at all. I was not suggesting getting rid of the NHS. Indeed a £10k per person universal benefit is perhaps the purest welfare state you can have and ensures no one is a "claimant" or belittled by claiming anything as everyone from rich to poor stay at home mother to idle slob to 70 hour a week working mother gets their £10k universal credit.

So France they might be getting rid of their up to £200k a year wealth tax I hear which is a socialist redistribution pernicious tax which thankfully we don't have here. Lots of French tax exiles come to the UK.

The proposed abolition of the ISF will make lots of work for tax lawyers - it has been quite easy to avoid if you have a good fiscaliste; they will no doubt be busy with all the proposed changes!

The whole point of taxing you £100 and then giving you back £100 in tax credits is precisely to pay all the administrators in between. It's appalling value for money, but it makes the unemployment figures look great.

It's just a shame it only works when you have a mad housing and financial services bubble to 'fund' it.