Minimum wage vs pension & benefits levels

[Loubbe]

Another reason is that a host of studies show income inequality is damaging to society.

 

 

We should take income inequality far more seriously and the NMW is just one tool at our disposal for doing that, but one that unquestionably should be used.

 

I agree. Income inequality is damaging, hence studies that concentrate on relative poverty (Joseph Rowntree Foundation etc) make the distinction between poverty in the West, and that in the third world, where poverty is absolute. We are one of the richest countries in the world, so should be able to provide a decent standard for all.

 

After all the threads on here about benefit layabouts, posters of the opinion that people should HAVE to work to be able to live, then surely those same people should be paid a fair wage? Just because the job may be unskilled, does not mean the employee does not work hard.

[Guest]

Another reason is that a host of studies show income inequality is damaging to society.

 

We should take income inequality far more seriously and the NMW is just one tool at our disposal for doing that, but one that unquestionably should be used.

 

I agree. Income inequality is damaging, hence studies that concentrate on relative poverty (Joseph Rowntree Foundation etc) make the distinction between poverty in the West, and that in the third world, where poverty is absolute. We are one of the richest countries in the world, so should be able to provide a decent standard for all.

 

After all the threads on here about benefit layabouts, posters of the opinion that people should HAVE to work to be able to live, then surely those same people should be paid a fair wage? Just because the job may be unskilled, does not mean the employee does not work hard.

 

Exactly! ... ...

[Ms Macbeth]

Thanks, you're right, he misunderstood my point.

 

I've just checked and the basic tax allowance 2010/11 seems to be roughly £6,500, so everyone should be paying tax on anything over that? But when certain benefits aren't liable for tax, it makes a nonsense of the basic tax allowance and discriminates against people who've made the effort to save or pay into a private pension, which as you rightly remark sometimes just isn't worth it.

 

Surely it'd make more sense to increase the tax allowances substantially, substantially reduce the rate of tax for lower paid, including pensioners, and dispense with the WTC, PC, WFA, etc etc? It only makes sense if you want to keep a lot of civil servants in jobs?*

 

*Admits to knowing nothing about claiming benefits and waits to be corrected by more experienced heads.

 

Thats the allowance for under 65s. Once you're 65 its £9,490. IMO it should be around £10k for all.

[Cyclone]

The lack of intelligence does not necessarily mean stupid.

 

Did you not start the thread "better off on benefits"?

Were you not benefit moaning or has someone stolen your identity?

 

Maybe you should read it and find out.

[Cyclone]

After all the threads on here about benefit layabouts, posters of the opinion that people should HAVE to work to be able to live, then surely those same people should be paid a fair wage? Just because the job may be unskilled, does not mean the employee does not work hard.

 

Increase the pay for the unskilled and those with a marginal skill will expect more, just a little, than the unskilled. And those with a moderate skill will expect more than the marginally skilled, and so on.

All you'll create is a massive burst of inflation as everything adjusts to the new level of income. I doubt that you'd achieve any kind of narrowing of social inequality, but the burst of inflation would destroy the savings of many and cause economic turmoil that would harm more.

[chem1st]

Thanks, you're right, he misunderstood my point.

 

I've just checked and the basic tax allowance 2010/11 seems to be roughly £6,500, so everyone should be paying tax on anything over that? But when certain benefits aren't liable for tax, it makes a nonsense of the basic tax allowance and discriminates against people who've made the effort to save or pay into a private pension, which as you rightly remark sometimes just isn't worth it.

 

Surely it'd make more sense to increase the tax allowances substantially, substantially reduce the rate of tax for lower paid, including pensioners, and dispense with the WTC, PC, WFA, etc etc? It only makes sense if you want to keep a lot of civil servants in jobs?*

 

*Admits to knowing nothing about claiming benefits and waits to be corrected by more experienced heads.

 

If you earn £6475 on minimum wage you start to pay tax, and NI.

That's the equivalent of £124.52pw. Or 21.5 hours worked at NMW.

 

Pension credit pays more than this, without taking into account HB and CTB, disability benefits etc.

These payments come from the communal pot. People can earn less an be contributing to the pot, for many it is uneconomical to contribute to the pot! Even those on the lowest rate of JSA, when HB and CTB come into play.

 

Tax is too high for the poor, CTB is high and regressive upon the poor, HB is a complete scam and keeps the poor it their place whilst benefiting the BTL class at all our expense

 

A flat rate of benefit for all (including billionaires) and a flat rate of tax would be much fairer for everyone in society.

 

The flat rate of benefit stops people from starving, the flat rate of tax, allows all the opportunity to escape poverty, rather than being condemned to it via regressive taxation.

[Cyclone]

A flat rate of tax is by definition regressive as the poor have to spend more of their income on the basic necessities to survive. This is why we have 2 higher rates of tax for higher earners.

The tiered tax system is progressive, it rewards the lower paid more when they increase their income than it does the higher paid.

 

I'll agree that the benefits system can trap people and could be reformed.

 

Pension is not a benefit though, and I've seen no justification yet for linking NMW and pensions.

[chem1st]

What's the deal with someone who didn't work. They won't have paid any NI, so what are they entitled to?

 

It appears to be justified to me that someone who has (in most cases) worked for 40 years and contributed to the economy is given (has paid for) more than someone who has no valuable skills and is only being paid as much as they are due to labour market manipulation by the government.

Pensions and NMW are not comparable, one is a defined minimum pay to stop advantage taking of the low skilled. The other is a payment (for which most have actually paid in) to allow people to live a reasonable retirement.

 

Income based JSA (which is the same as NI funded JSA), pension credit, etc. etc.

 

It is fair to reward people, but its clearly not fair a person who never works can get more than someone who does. They are comparable.

[Cyclone]

We aren't going to agree, pension isn't a benefit and it's not comparable IMO with NMW.

[chem1st]

A flat rate of tax is by definition regressive as the poor have to spend more of their income on the basic necessities to survive. This is why we have 2 higher rates of tax for higher earners.

The tiered tax system is progressive, it rewards the lower paid more when they increase their income than it does the higher paid.

 

I'll agree that the benefits system can trap people and could be reformed.

 

Pension is not a benefit though, and I've seen no justification yet for linking NMW and pensions.

 

We have a flat rate of tax of 31% for people earning more than £125 per week.

 

At which point benefits have been withdrawn at an EMTR of 100%, housing benefit and council tax benefit at 85%, when NI is payable it becomes 96%.

 

And a few unfortunate few have to pay NI, and 20% tax, whilst having HB and CTB reduced, leading to an EMTR of an astonishing 116%.