whats goin on ere then?

Some have pointed out that the increase in tax on people with lower incomes is offset by new benefits. I don't know if this is correct, but I think it is unhealthy for indivduas and for society for people to be encouraged to claim benefits if they earn enough to live on.

I can get by on what I earn and I am not ambitious about money, I am happy to earn a small amount and have a lot of free time.... but if my tax bill goes up much i might as well quit working and sign on and have even more free time.

Edward said:

Some have pointed out that the increase in tax on people with lower incomes is offset by new benefits. I don't know if this is correct, but I think it is unhealthy for indivduas and for society for people to be encouraged to claim benefits if they earn enough to live on.

I can get by on what I earn and I am not ambitious about money, I am happy to earn a small amount and have a lot of free time.... but if my tax bill goes up much i might as well quit working and sign on and have even more free time.

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Not benefits (escept perhaps child benefit), tax credits. GB was on the radio the day after the budget saying that under WFTC a couple with children will pay no income tax at all on their first £25K. Someone better informed than me can say whether or not that's spin, but my mates with kids think WFTC is the best thing ever.

I'm mystified as to why simply having spawned puts you in this hallowed clique of beatific beings who deserve to have everything made as easy as possible for you at the expense of those not, ahem, blessed with gift of children. Working parents get flexi-time, which means their colleagues have to cover for them all the time. The WFTC is basically being paid for by the abolition of the 10p basic income tax rate, as far as I can see.

That woman in the Guardian was ranting about this a few months ago, but hey, sue me. Laura something, I think.

crackerjack said:

Not benefits (escept perhaps child benefit), tax credits. GB was on the radio the day after the budget saying that under WFTC a couple with children will pay no income tax at all on their first £25K. Someone better informed than me can say whether or not that's spin, but my mates with kids think WFTC is the best thing ever.

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£25k seems high, and I can't validate that figure right now, but essentially the essence of tax credits is that low income families can end up paying negative tax. Lots of low income families were paying negative income tax prior to these changes, so presumably more will be afterwards.

As to why only households with children chould benefit....a very good question. There's a good reason for targetting child poverty in and of itself, in that poor kids grow up to be poor adults all too often. But why policy should be so discriminatory towards childless adults is a mystery. Essentially, it means adults with kids are the deserving poor, and those without are somehow feckless.

'Child poverty' is defined as kids living in households with less than 60% the average national income. But on average we're getting richer all the time, so families in the lower income range are going to go from being offically not-poor to being officially poor if their income remains the same (in real terms) as the average rises. It's ridiculous - how can you ever 'eliminate' something that is defined relative the characteristics of your sample as a whole? It's like saying that you don't want anyone to achieve below-average school grades. Well, not quite that bad, but the only way you could ensure no-one had an income less than some (large) percentage of the mean would be to insure that everyone has exactly the same income, which isn't going to happen without instituting full-on communism.

Edit: I'm certainly not saying that some kids don't genuinely live in awful squalor and deprivation, and any attempt to remove them from that situation can only be applauded - I'm just saying headlines like "Child poverty worse now than 10 years ago" are misleading as the goalposts are constantly being changed.

Mr. Tea said:

'Child poverty' is defined as kids living in households with less than 60% the average national income. But on average we're getting richer all the time, so families in the lower income range are going to go from being offically not-poor to being officially poor if their income remains the same (in real terms) as the average rises. It's ridiculous - how can you ever 'eliminate' something that is defined relative the characteristics of your sample as a whole? It's like saying that you don't want anyone to achieve below-average school grades.
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That's not quite right - it's 60% of the median, not the mean, so it is at least mathematically possible to have nobody living below this line, whereas it would be impossible for no kid to get below average exams unless everyone got the same. Granted it would be near impossible in a practical sense, though.

But the question is really what sort of society do we want to live in? If we are to get richer as a society, is it not an admirable aim for that growth to be shared more evenly?

It would be possible to have no-one on less than 60% of the mean income if you had a very narrow distribution of incomes; imagine the graph looking like a thin peak with hardly any 'shoulders' to either side, rather than the more spread-out bell-shaped curve that we have in practice. (Technically, we'd need an income distribution with a very small standard deviation.)

The thing about rising inequality (which is the case in Britain) is that the phrase "widening gap between rich and poor" misleads people into thinking that while the rich are getting richer, the poor are getting poorer: however, this is not the case; the poor are, in real terms, getting richer too. It's just that they're getting richer more slowly than the rich. So it would seem the 'trickle-down' effect beloved of conservative economists does happen, it's just that the trickle is quite slow.

Of course I'd like to see everyone sharing in the wealth and prosperity that's allowing a small number of people to become very wealthy, I'm just making the point that headlines like "Child poverty on the rise" are very misleading when nearly everyone in the country lives in what would have been considered the lap of luxury by the standards of 100 or even 50 years ago. Not that that's any reason to become complacent about real poverty where it exists, espeically when it affects children who are not generally in a position to do anything about it.