Tax Credits = benefit-dependent society?

[Chil1234]

Seems that the scariest thing facing many people on these boards about getting rid of the Labour government would be the prospect of a drop in tax credits and other benefits.

Being cynical, I'm now wondering if Labour didn't deliberately engineer the way tax credits work not solely to help those in genuine need but also so that the maximum number of people receive a portion of their income from the state. If it wasn't in part to create a culture of dependency and entitlement why else set the ceiling for receipt up as high as £50k?

I thought tax credits were designed to help people get back to work and therefore put more into the tax system
obviously that didn't turn out great
but tax credits have helped a lot if sahp's go back to work as they help with childcare costs

It's called a client voting state - not that I'm cynical!

I accept that there is genuine need in lots of cases, but I cannot for the life of me see why someone on a joint income of £50k should be eligible for tax credits. If that was 1 income, they'd be paying higher rate tax!

someone earning that much would only be eligible if they were paying for childcare, and even then it would be very little if anything, it would depends how much their childcare costs are

Someone on a joint income of £50K would get less than £10 a week, which is a lot less than they would have had, had Labour not got rid of the married couple's tax allowance.

I can't see why people keep banging on about it, as two "average" salaries in the SE come to about £50k. Then you take into account nursery fees.. ours are £200 a week for one child. I don't know how people even on an average salary manage with 2 children in daycare.

My own gripe about TC is that you can choose to work PT and get the govt to top up your wages. I always thought it should be based on what you would earn FT in the job you are doing.

But Elvis what if you are forced to work part time? And how would they check?

You can run the numbers through www.entitledto.com. About £42/month or £500/year. Not life-changing for someone on £50k but enough to be missed if it went.

My biggest gripe is that they must cost an absolute fortune in administration. Especially as they are so complicated that they are always getting it wrong.

Instead of taking it all out in tax, and then handing it back in tax credits, why don't they just set up a fairer tax system?

Elvislives i agree with you 100%. If you dont work full time you shouldnt get it. (or at least a lot more than the current 16 hours threhold)
If you are a carer or disabled or have some other reason that means you are forced to work part time or not at all you wouldbe eligible for some other kind of benefit.

Tax credtis shouldnt be 'benefits' they should be helping working people on low incomes by giving a tax break so that they can afford childcare. That was the whole idea to start with - to help people get back to work. But under labour they turned in to benefits. People who arent paying any childcare get them.. which I find odd.

P.s 50k isnt that high for a household paying full time childcare fees.

but some parents who work pt would not be able to afford to work without it, lone parents for example, isnt it better that they work pt and pay taxes, than claim benefits

Interesting point.

I'm a single mum (didn't start out that way)- I work 30 hours per week (less than average salary) and couldn't work if I didn't get help from tax credits.

I would really hate not to work..I always have done.

For me, tax credits have been a real life saver.

Ok, I have just done an exercise which may illustrate why it is not always a good thing for a SAHM with small children to go out to work, for the individual and the taxpayer:

2 parent family with 3 children all under 5

Child 1 is disabled. Receives High Rate DLA for Care.
Man works full time. Wage £14400 pa
Woman is SAHM and receives Carers' Allowance of £53.90 per week.

Income:
Net wage £228
Carers Allowance £53.90
Council tax benefit £11.20
Housing Benefit £118.53
CTC & WTC £223.79

TOTAL £635.42 per week.

Woman gets job for 16 hrs per week at min. wage. Childcare costs £300 pw at £5.5 ph:

Income:
Net wage man: £228
Net wage woman £92.80
Carers Allowance £53.90
Council tax benefit £14.01
Housing Benefit £127.67
CTC & WTC £426.94

TOTAL £943.32
AFTER CHILDCARE £643.32

An £8 per week increase in income for the family, costing £215.10 to the taxpayer.

Lenin - I've given my answer to that (employers paying more in wages = rising costs) so I'm guessing you're after someone else's answer there. So I'm not directing this bit at you. This is for the whingers.

OK folks. So many of you on this thread I have seen elsewhere moaning about benefit-dependent culture.

What do you want?

I've seen some of you moaning that you'd like to see dolee scum working for their entitlements.

And here you are, moaning about tax credits, which is, effectively people working for their entitlements, with the costs shared by the private sector. And they're being trained/getting experience in the private sector thus lifting them out of benefits.

You're just not happy, are you? Ever.

Lou, can you run that formula again but using a more realistic salary for the man? In the South East, I doubt there are many average Joes earning less than £40k pa.

mumble I think you will find there are awful lots of main wage earners only earning between £17k-£26k in the SE - there are about 800 of the them up the road from me, all the shop staff etc etc etc

I think tax credits used as benefits and tax credits used to top up wages need to be completely seperated.

animula I totally agree!

In addition to making it financially viable for people to get back into the workplace (and all the benefits that provides, self esteem, self progression, training, education etc} it also goes someway toward ending the situation where children grow up in families where no one has ever worked and the limitations that places on the child's future.

It's not there yet, it does need tinkering with (childcare costs are still a big issue, but that's not being ignored, free nursery places etc) but it's a great principle.

"I think that tax credits do encourage dependancy on a Labour Government for many families."

of course they do
we are currently on benefits (til tomorrow yay) and we will be getting less money with dhs new wage even though its a reasonable middle of the road wage. Enough to live on (just- but I aint called scrooge by my mates for nothin)

I believe the point of tax credits was to allow people on lower incomes to pay less tax without giving a tax break to people on much higher incomes.

ie. If the tax threshold was raised to 10k then those earning £100k per year would also get this extra cash as they would also start paying tax at 10k.

Whether the administration costs associated with the system negate the benefits, well that's another discussion altogether.

sorry meant to say so I can easily see why people might not want to get out a this state inflicted trap

"Lou, can you run that formula again but using a more realistic salary for the man? In the South East, I doubt there are many average Joes earning less than £40k pa. "

What a bizarre comment.

There are stacks and stack of "average joes" in the SE earning much much less than that.

I'm genuinely by that statement.