Tories scrapping child benefit for people who earn over £44,000

[Tony]

If you accept that argument, should income tax be based on household income? (In some European countries that is effectively the case.)

Steady on old chap, next you'll be suggesting that everyone should pay an equal amount towards the local services that they receive equally.

[mj.scuba]

This is a good and fair move by the Tories imo.

 

Let's look at the two extreme cases being touted:

 

1) One parent earns £44k whilst the other is a housewife/husband. They're not rich, but they're not poor. At least one of them currently earns enough to enable the other to have the choice of staying at home. Most couples will never have that choice. The one not working could always seek work, even part time work, to make up the loss of the child benefit.

2) A couple both earning a combined income of almost £88k, still getting child benefit. Whilst this may seem unfair, the extra tax revenue gained from the other parent working and earning nearly £44k more than compensates for the child benefit.

 

 

It will be cheap to administer, no need to build an extra office block to fill with beurocrats.

[Guest sibon]

This is a good and fair move by the Tories imo.

 

Let's look at the two extreme cases being touted:

 

1) One parent earns £44k whilst the other is a housewife/husband. They're not rich, but they're not poor. At least one of them currently earns enough to enable the other to have the choice of staying at home. Most couples will never have that choice. The one not working could always seek work, even part time work, to make up the loss of the child benefit.

2) A couple both earning a combined income of almost £88k, still getting child benefit. Whilst this may seem unfair, the extra tax revenue gained from the other parent working more than compensates for the child benefit.

 

 

It will be cheap to administer, no need to build an extra office block to fill with beurocrats.

 

Almost as cheap to administer would be a requirement for a household containing a higher rate taxpayer to actually claim child benefit. It could work like this:

 

Require all higher rate taxpayers to complete a tax return.

 

Put two boxes on the form, one that says "I'm a higher rate taxpayer and I'm not claiming Child Benefit" and another that says you are claiming.

 

Set a household limit of, say £60K, above which you don't get child benefit.

 

Let the Revenue investigate those who claim it, to see if they qualify.

 

This way, you get a fair system, with minimal costs as most top rate taxpayers live in households that earn £70k+ and presumably won't claim.

 

There is a cheaper and more honest alternative. Increase both the basic and higher income tax rate and then, we are all in it together.

[Greybeard]

There is a cheaper and more honest alternative. Increase both the basic and higher income tax rate and then, we are all in it together.

 

How would that eliminate this kind of situation ? -

 

A family with two people just below the threshold with 2 x £43,875 pay £14,960 of income tax. Net income £72,790 plus tax free CB.

 

Single earner family on £87,750 pays £25,030 of income tax or nearly £10,000 more and no CB

[Rupert_Baehr]

This would take a lot of administration and hence cost the taxpayer a lot more. I suppose it would create some more public sector non-jobs though, with pensions and sick pay and . . . .

 

I suspect that's why Camel-Egg set the cutoff figure at the higher rate tax threshhold. The Infernal Retinue already know who's paying tax at the higher rate, they don't have to spend a lot of money working out whoshould be denied CB.

 

There is a possible small loophole, however.

 

Consider a household comprising 2 adults who are not married and have 2 children. She works and earns just under the higher rate threshhold. She would be entitled to claim CB.

 

He works and earns half a million pounds a year. He doesn't claim CB (and he wouldn't get it if he did.) They file taxes separately and they have different names. How is anybody going to know that the two are a household?

 

Steady on old chap, next you'll be suggesting that everyone should pay an equal amount towards the local services that they receive equally.

 

That's a good idea! - That would be very fair! - That way everybody would pay something towards the services. You wouldn't have households with a only one or two earners paying the same as households with 4 or 5 earners.

 

I wonder how they could work out who to charge?

 

I've got it! - They could get the details from the electoral roll.

 

You'd need a name for this fair tax, though.

 

'Poll tax' has a nice ring to it.

[L00b]

This way, you get a fair system, with minimal costs as most top rate taxpayers live in households that earn £70k+ and presumably won't claim.

sibon, I'm not usually one to play the Forum (unwritten) rules, but you're going to have to back that one up (and, whilst doing that, factor in the regional bias which London and 'the South' introduce in any such stats).

 

Most local households with top rate taxpayers I know personally (friends & relatives) have a single top rate taxpayer and a £48k-54k income. All caught in full by the measure.

 

mj.scuba made a (IMHO) fair point: no more CB/increased tax burden? let the housemaker go out and get a part-/full-time job to make up the shortfall.

 

The issue is -again, based on the above households I know personally- at least half of the homemakers have been working voluntarily for a good while now (charity shops and the like), and the local economy isn't exactly awash with paying job opportunities for them to take up, regardless of skills.

 

And I'll say nothing of the hard-to-impossible-to-quantify effects on kids in such households, used to and benefitting from a full-time parent, in terms of welfare/well-being/education/personal development/etc.

 

That said, I don't have the answers either. Everybody has got to help, but noone wants to be 'helping the most': I expect the Gvt is actually in the best possible situation to play their usual conquer-and-divide social games

[kimberley123]

Give me a job at £44,000 a year and i will give up my child benefits any day.

[KenH]

Can I just point out that the amount might now be £44K, but will be 42,375 in April. The likelihood is that it will be lower still by the time the child benefit is withdrawn.

[milquetoast1]

I suspect that's why Camel-Egg set the cutoff figure at the higher rate tax threshhold. The Infernal Retinue already know who's paying tax at the higher rate, they don't have to spend a lot of money working out whoshould be denied CB.

 

There is a possible small loophole, however.

 

Consider a household comprising 2 adults who are not married and have 2 children. She works and earns just under the higher rate threshhold. She would be entitled to claim CB.

 

He works and earns half a million pounds a year. He doesn't claim CB (and he wouldn't get it if he did.) They file taxes separately and they have different names. How is anybody going to know that the two are a household?

In reality child benefit is supposedly for the benefit of the child, it is just paid to the parent, usually the mother, through convenience.

 

The comparisons of "households" is lazy and misleading imho, because it makes it appear that CB is for the parents to spend on whatever they want like any other income. In reality this might be the case, but it is not the intention.

 

It is the child's position in isolation which needs to be taken into consideration, not the household, which can be difficult to define in many situations. A child will have 1 or 2 parents, and the only way I can see that the system can be kept simple is if either of those parents is a higher rate taxpayer, irrespective of household structure, the CB is removed.

 

There is enough fraudulent abuse of the system already because of parents pretending to be separated, we certainly don't need add additional incentive.

 

In your example, one parent is earning £500k, which, under the current proposals, should result in removal of CB.

[Lucy-Lastic]

Why dont they just lump it in with Child Tax credits - then it would be fairer for all families. The tax credit people already get supplied all the income information anyway.