Taxpayer support

[RonJeremy]

And as I've said in other posts, I think NMW should increase higher than it is, but that SMEs should be given grants to cover the increased costs to them. I know that's a bit of creative accounting almost but it means more money goes to people who can spend it helping those SMEs as they revenues are likely to increase, reduces a lot of bureaucracy, makes work ALWAYS pay etc. Oversimplified I'm sure, but the idea is there.

 

Haha - we're going to fall out again then... I am against a subsidy given to businesses - I have an SME, but can see this would be hugely open to abuse and am against it in principle.

[999tigger]

My bold - this is not true - although a few of you keep perpetuating this. There is a slight saving in EE NI but that is it. A negligible amount easily outweighed by the costs of employing an extra person.

 

If I need 40 hrs work to be done and I pay, say, £8.50 per hour it costs me £340 per week (+NI, holidays, etc etc) to employ one person. If I have 2 employees doing 20 hours each it costs me 2 x £170 = £340.

Show me where the employer is subsidised? Please!

 

You misunderstand Ron.

 

WTC acts as a cushion to low paid workers. By virtue of being low paid they get a subsidy.

This means its more attractive to work and they can settle for a lower salary from employers than they might otherwise expect.

 

Removing that subsidy will mean an employer will pay and an employee will receive the exact going rate. Its not really to do with p/t full time. Do you understand how benefits either unemployment or tax credits work?

 

---------- Post added 19-10-2015 at 17:05 ----------

 

Those mums on mumnets for a start, the employers who get cheaper labour so in effect business subsidies. Lots of people don't claim TCs even though they are entitled to them and therefore they miss out. If they were removed and people just earnt more or paid less tax and living costs were lower then there would be no scams to be had, or decisions to be made about whether you were better off working or not. Surely that's the right place for our system to be?

 

Just to add, I wasn't saying alternatives were easy, just that those were what we should aspire towards. Increased wages MUST go hand in hand with any TC cuts in a £1 in, £1 out basis.

 

The thread that was linked from mumsnet if youve read it just voices concerns about the cuts to wtc that most claimants will have imposed on them. It wasnt about manipulation of the system.

 

Im trying to understand how people think others are fiddling the system since its based on how much you earn. Knowing what the system allows you to earn is not manipulating. Coing to an accountant, lawyer, CAB is not manipulating. I can only think of people making a claim and providing false information i.e not disclosing to HMRC their true earnings. That would be fraud. In any system that covers millions of claims, then there are bound to be some false claimants, but HMRC estimate this to be a small minority. At the same time as with any system there are people who dont claim, people who underclaim as well as mistakes by HMRC. People who commit fraude should be dealth with by having to pay it all back as well as being denied the right to claim benefits for several years imo.

 

The rest about subsidy, true reflection of market rates i'd go along with.

 

Some of what 1LT said about phasing out id also go along with. Every year you cut them though you are cutting the uncome of the less well off. You are making them poorer.

 

Its a gamble to expect the market or employers will pick up the slack. It will be unpopular. Some of them will revert back to being unemployed again.

 

There are three elements to tax credits though.

 

1. For how many kids you have.

2. For being in work.

3. Childcare tax credits which enable some parents (especially single ones) to work.

 

I agree with what you aspire to, just pointing out its complicated and if you cut something then it will have an impact. Most of the people on tax credits are below £20k.

 

The ideas about more housing, lower cost of living etc are all nice, but they take time to work and really are long term as well as too expensive. Makes you winder how they survived before 2004.

[RonJeremy]

You misunderstand Ron.

 

WTC acts as a cushion to low paid workers. By virtue of being low paid they get a subsidy.

This means its more attractive to work and they can settle for a lower salary from employers than they might otherwise expect.

 

Removing that subsidy will mean an employer will pay and an employee will receive the exact going rate. Its not really to do with p/t full time. Do you understand how benefits either unemployment or tax credits work?

 

Then perhaps I don't understand it fully if what you are saying is correct. Are you saying that an employer can pay less than NMW and rest assured that the government will pay the balance. So the employer saves on pay?

 

If this is the case then I really am wrong in all that I have said.

[Bob Arctor]

I don't blame her. If I could claim as much as her, I would. It is the system that is the problem.

There are a great deal of families like this.

 

Are there? Can you supply their names and addresses?

 

I think what happens with all of this is that the Tory-aligned media puts up the most egregious examples to soften public opinion on attacks on benefits generally. When the first Welfare Reform Bill was going through the previous parliament, the right wing press was full of stories of 'benefit scroungers' and it all died down again after its safe passage through the Commons, which seemed rather too much of a coincidence.

[RonJeremy]

Are there? Can you supply their names and addresses?

I think what happens with all of this is that the Tory-aligned media puts up the most egregious examples to soften public opinion on attacks on benefits generally. When the first Welfare Reform Bill was going through the previous parliament, the right wing press was full of stories of 'benefit scroungers' and it all died down again after its safe passage through the Commons, which seemed rather too much of a coincidence.

 

Yes, Of course.... hang on I've got them here somewhere...

[999tigger]

Then perhaps I don't understand it fully if what you are saying is correct. Are you saying that an employer can pay less than NMW and rest assured that the government will pay the balance. So the employer saves on pay?

 

If this is the case then I really am wrong in all that I have said.

 

No and yes in a way.

 

Its really on a macroeconomic level and how the labor market works.

 

It says if a person enters the labor market to sell his services, then the fact they are paid an additional income by the government for working distorts the market. The additional income influences their decision on whether to accept or reject a job, it subsidises them. It also means they are willing to accept jobs at a lower rate and that subsidises the employer.

 

Obviously its illegal to pay less than the minimum wage, but it still works all the way up the chain. More people find work pays because they get the tax credit bonus.

 

The Cons say this is a nonsense because to give that support they have to take from you the taxpayer, pish it through an expensive admin system to give it back. they would prefer the market to take care of it, not give the wtc assistance and see a rise in wages.

[Bob Arctor]

Then perhaps I don't understand it fully if what you are saying is correct. Are you saying that an employer can pay less than NMW and rest assured that the government will pay the balance. So the employer saves on pay?

 

If this is the case then I really am wrong in all that I have said.

 

It's worse than that. The employer can pay NMW, not less than it, and the government will pay the balance. A 40 hour week on NMW nets you £1161 pcm. The average monthly rent is now £663 pcm in the north of England and although obviously some people will pay less than that you don't get housing benefit or council tax support on the salary quoted. So you've got to pay maybe £500 pcm rent, £120 council tax, gas, electric, water, food, possibly petrol to get to work plus insurance etc. It often doesn't add up. Lots of people on that wage will get Working Tax Credit - for now.

 

And remember that many businesses say they 'can't afford' to pay more than NMW. Now, they may be lying; the alternative is that our economic system is so broken that people in low grade jobs can't afford to live without government assistance. Which is madness.

 

The context to this is that over the last 20 - 30 years a greater proportion of the national income has gone to profits and a lower proportion to wages, which along with asset inflation (mainly property) has made wages non-livable for many.

[RickyM]

No and yes in a way.

 

Its really on a macroeconomic level and how the labor market works.

 

It says if a person enters the labor market to sell his services, then the fact they are paid an additional income by the government for working distorts the market. The additional income influences their decision on whether to accept or reject a job, it subsidises them. It also means they are willing to accept jobs at a lower rate and that subsidises the employer.

 

Obviously its illegal to pay less than the minimum wage, but it still works all the way up the chain. More people find work pays because they get the tax credit bonus.

 

The Cons say this is a nonsense because to give that support they have to take from you the taxpayer, pish it through an expensive admin system to give it back. they would prefer the market to take care of it, not give the wtc assistance and see a rise in wages.

 

It's labour!!!

 

Sorry:P

[RonJeremy]

No and yes in a way.

 

Its really on a macroeconomic level and how the labor market works.

 

It says if a person enters the labor market to sell his services, then the fact they are paid an additional income by the government for working distorts the market. The additional income influences their decision on whether to accept or reject a job, it subsidises them. It also means they are willing to accept jobs at a lower rate and that subsidises the employer.

 

Obviously its illegal to pay less than the minimum wage, but it still works all the way up the chain. More people find work pays because they get the tax credit bonus.

 

The Cons say this is a nonsense because to give that support they have to take from you the taxpayer, pish it through an expensive admin system to give it back. they would prefer the market to take care of it, not give the wtc assistance and see a rise in wages.

 

You still don't see it from an employers point of view at all do you? There is NO subsidy whatsoever to an employer. The subsidy is to the employee. So they can have more money.

 

---------- Post added 19-10-2015 at 21:25 ----------

 

It's worse than that. The employer can pay NMW, not less than it, and the government will pay the balance. A 40 hour week on NMW nets you £1161 pcm. The average monthly rent is now £663 pcm in the north of England and although obviously some people will pay less than that you don't get housing benefit or council tax support on the salary quoted. So you've got to pay maybe £500 pcm rent, £120 council tax, gas, electric, water, food, possibly petrol to get to work plus insurance etc. It often doesn't add up. Lots of people on that wage will get Working Tax Credit - for now.

 

And remember that many businesses say they 'can't afford' to pay more than NMW. Now, they may be lying; the alternative is that our economic system is so broken that people in low grade jobs can't afford to live without government assistance. Which is madness.

 

The context to this is that over the last 20 - 30 years a greater proportion of the national income has gone to profits and a lower proportion to wages, which along with asset inflation (mainly property) has made wages non-livable for many.

here you go...

http://www.rightmove.co.uk/property-to-rent/property-55497008.html

I've saved you £105 already - and you haven't even started negotiating on the rent.

Edited October 19, 2015 by RonJeremy

[999tigger]

You still don't see it from an employers point of view at all do you? There is NO subsidy whatsoever to an employer. The subsidy is to the employee. So they can have more money.

 

You havent understood it from a macroeconomic point of view. Tax credits distort the market. It benefits employers indirectly in the way I mentioned.

 

Your problem is you can only see it in microeconomic terms and from an employers perspective. I could persevere, but I dont think its worth the effort. Although ive taken the time to try and explain the benefits system and the way it works it doesnt seem to have made an impact on you. I give in.