high earners to lose child benefit

123457

Comments

  • Smokin Joe
    Smokin Joe Posts: 2,706
    It will be tough for anyone to adjust to a 2.5k hit, but if we accept that cuts have to be made then they have to start somewhere and an adjustment in lifestyle for someone on 44k a year will be easier to make than those who are struggling to afford the basics. I agree they have made a rickett by not taking joint earnings into account. Surely it would have been simple enough to check joint earnings just by tapping both NI numbers into a computer?

    As for what's to come, we'll have to wait and see.
  • Tom Butcher
    Tom Butcher Posts: 3,830
    It'd be a bit easier for a household with a joint income of 80k to adjust to though wouldn't it.

    When we are told we are all in it together and you see bankers bonuses at £7bn it's clear that we are not. Frankly the concentration of wealth in this country is such it'd be fairer to hit the top 1-2% for most of it.

    it's a hard life if you don't weaken.
  • turnerjohn
    turnerjohn Posts: 1,069

    Are you relying on people's judgement if they can afford it or do you think the state should get involved even further than benefit distribution?...because it is utterly un-enforceable without you coming across as a right wing lunatic, deciding who breeds according to set criteria? What do you do to prevent those with no money having kids? Sterilise them? It's a given too imo there will be well-rounded adults out there who may not have much cash but would make or are far better parents than some of those considered well off.

    Would you buy a Ferrari if you couldnt afford it ? .... NO !
  • rhext
    rhext Posts: 1,639
    turnerjohn wrote:

    Would you buy a Ferrari if you couldnt afford it ? .... NO !

    I have a feeling that there are plenty of people who would! If they could convince someone gullible (like a bank, for example) to lend them the money! Otherwise, where did the consumer debt bubble come from in the first place? Problem is that when it's kids instead of a Ferrari, simple repossession and/or bankruptcy produces collateral damage which society quite rightly finds unacceptable!
  • Use middle class kids as pie/sausage roll filling at Greggs?
    What wheels...? Wheelsmith.co.uk!
  • rick_chasey
    rick_chasey Posts: 75,660
    Use middle class kids as pie/sausage roll filling at Greggs?

    They're the future big tax payers...
  • Tom Butcher
    Tom Butcher Posts: 3,830
    turnerjohn wrote:

    Would you buy a Ferrari if you couldnt afford it ? .... NO !

    The problem with that argument is that if your financial circumstances change you can sell the Ferrari - am I allowed to sell my kids ? Nobody can predict with certainty their financial circumstances over the next 18 years or so presumably nobody should ever have kids?

    ANyway kids are not personal possessions - they are the future of the country - it's not analagous to buying a Ferrari because a Ferrari is yours to do with as you like so long as it doesn't impact on other people. The govt doesn't demand that you look after a Ferrari, educate, keep it out of trouble etc etc for 18 years and hold you legally responsible if you don't.

    it's a hard life if you don't weaken.
  • gkerr4
    gkerr4 Posts: 3,408
    rhext wrote:

    I have a feeling that there are plenty of people who would! If they could convince someone gullible (like a bank, for example) to lend them the money! Otherwise, where did the consumer debt bubble come from in the first place? Problem is that when it's kids instead of a Ferrari, simple repossession and/or bankruptcy produces collateral damage which society quite rightly finds unacceptable!

    depends on your definition of "afford" too?

    how many people actually 'own' their cars? and how many are leased or HP'd
  • Anonymous
    Anonymous Posts: 79,665
    I will be stung in this drop in money as I earn 44k a year. I have 3 kids. Its a bit gutting to lose the benefit as I am shift worker, and work pretty long unsociable hours including night and weekend work. Why should I be penalised when I have strived to better myself and my families standard of living, pay income tax at a higher rate, national insurance and am means tested for tax credits ?

    Seems the government is penalising and alienating the people who strive and put in, what I reckon is more than my fair share already ?

    Or am I just a bit naive ?
  • daviesee
    daviesee Posts: 6,386
    dmclite wrote:
    Or am I just a bit naive ?

    Naive.

    Don't you know that the masterplan is that you work for the Government and they give you pocket money :twisted:
    None of the above should be taken seriously, and certainly not personally.
  • rick_chasey
    rick_chasey Posts: 75,660
    dmclite wrote:
    I will be stung in this drop in money as I earn 44k a year. I have 3 kids. Its a bit gutting to lose the benefit as I am shift worker, and work pretty long unsociable hours including night and weekend work. Why should I be penalised when I have strived to better myself and my families standard of living, pay income tax at a higher rate, national insurance and am means tested for tax credits ?

    Seems the government is penalising and alienating the people who strive and put in, what I reckon is more than my fair share already ?

    Or am I just a bit naive ?

    I guess the other way to look at it would be that, pre-crash, you received a little something extra for having children which you now don't.

    You're not being punished, you're just not being rewarded.

    Utlimately, everyone's going to feel the pinch in one way or another, directly in their pocket. It's just the way it has to be for now.
  • rhext
    rhext Posts: 1,639

    I guess the other way to look at it would be that, pre-crash, you received a little something extra for having children which you now don't.

    You're not being punished, you're just not being rewarded.

    Utlimately, everyone's going to feel the pinch in one way or another, directly in their pocket. It's just the way it has to be for now.

    I kind of agree with this, except I've always tended to view Child Benefit not as a reward but more as the government returning a fraction of the tax I pay in acknowledgement of the fact that kids are expensive and parents therefore perhaps can't afford to pay as much tax as non-parents. Semantics, perhaps but the thing that currently seems to get lost in the discussion is that higher rate taxpayers make a significant net contribution to the treasury even if after they've claimed child benefit.
  • alan_sherman
    alan_sherman Posts: 1,157
    Add in the beuracracy of the takin of tax, only to return it as a benefit, at any level of eraning, and it is obviously ineffient. Just take less tax and don't pay the benefit.

    "Paying out" form teh government should be for those who are destitute to enable them to get back on a sustainable footing, those that require care (sick etc) and for investment in the country (roads, finacing new innovations etc).

    generaly other stuf fis just inefficient money laundering! A bit like the insurance industry but that is another topic.... :D
  • rick_chasey
    rick_chasey Posts: 75,660
    edited October 2010
    rhext wrote:
    I kind of agree with this, except I've always tended to view Child Benefit not as a reward but more as the government returning a fraction of the tax I pay in acknowledgement of the fact that kids are expensive and parents therefore perhaps can't afford to pay as much tax as non-parents. Semantics, perhaps but the thing that currently seems to get lost in the discussion is that higher rate taxpayers make a significant net contribution to the treasury even if after they've claimed child benefit.

    Sure.

    Kids are expensive for the state too. School etc.

    I don't understand why people necessarily feel they're owed something because they're net contributors? I'd rather be earning enough to be a net contributor than not, surely? Why the complaint?
  • finchy
    finchy Posts: 6,686
    I'm not quite sure about this, so correct me if I'm wrong...

    Wasn't child benefit brought in to prevent a demographic crisis due to birth rates falling to the point where the population would become so unbalanced in the future that we wouldn't have a workforce large enough to sustain the elderly?
  • Chip \'oyler
    Chip \'oyler Posts: 2,323
    I earn £44,995 a year and I'm well happy with all this
    Expertly coached by http://www.vitessecyclecoaching.co.uk/

    http://vineristi.wordpress.com - the blog for Viner owners and lovers!
  • rhext
    rhext Posts: 1,639

    Sure.

    Kids are expensive for the state too. School etc.

    I don't understand why people necessarily feel they're owed something because they're net contributors? I'd rather be earning enough to be a net contributor than not, surely? Why the complaint?

    That's quite true. I don't feel I'm owed anything because I'm a net contributor, and I quite accept that current financial circumstances dictate I'm going to have to contribute substantially more. I have two big problems with this:

    1) Honesty. Instead of saying 'why should someone on £18K pay tax so that someone on £44K can have a benefit' I'd rather they just came out and said 'we need more cash from the better off families and can no longer afford to provide them with child benefit'.

    2) Fairness: If you take a family income of (say) 80K, then a single-income family will already pay substantially more tax than a dual-income family on the same amount. One personal allowance will be sitting there unused, and the single-income family will be paying 40% on anything earned above £44K. If we can no longer afford to return cash to better off families, surely that should apply to all better off families, not just the ones which rely on single-income. To say that means testing is too difficult is b*****cks: they already do it for the child tax credit.
  • verylonglegs
    verylonglegs Posts: 4,023
    rhext wrote:

    That's quite true. I don't feel I'm owed anything because I'm a net contributor, and I quite accept that current financial circumstances dictate I'm going to have to contribute substantially more. I have two big problems with this:

    1) Honesty. Instead of saying 'why should someone on £18K pay tax so that someone on £44K can have a benefit' I'd rather they just came out and said 'we need more cash from the better off families and can no longer afford to provide them with child benefit'.

    2) Fairness: If you take a family income of (say) 80K, then a single-income family will already pay substantially more tax than a dual-income family on the same amount. One personal allowance will be sitting there unused, and the single-income family will be paying 40% on anything earned above £44K. If we can no longer afford to return cash to better off families, surely that should apply to all better off families, not just the ones which rely on single-income. To say that means testing is too difficult is b*****cks: they already do it for the child tax credit.


    Because maybe this is the next thing in the firing line.....
  • rhext
    rhext Posts: 1,639
    Am sure you're right!
  • cee
    cee Posts: 4,553
    Another ineresting observation someone made to me today is:

    Tax thresholds...for 2010/2010

    below £6475 - 0% Tax
    £6475 - £43876 - 20%
    £43876 - roughly £15000 - 40%
    > 15000 - 50%

    so someone earning 45K...exclude National Insurance

    Pays 0 on 6475 = 0
    20% on £37400 = £7480
    40% On £1125 = £450

    = a total yearly tax bill of £7930.....

    at that slary point...NI contributions effectively cease....so NI contributions would be more or less the same for someone just below the 40% rate..and someone just over....

    so a household with 1 earner...at that amount would pay say £8000 in tax.
    a household with 2 earners at 40K a year however would pay around £13410 in tax.

    maybe those numbers somewhat justify the cut off at 40% a little more....no matter what way you cut it....the two eraners pay not quite but not that far away from double the amount of tax, because the 40% part is only on a few grand.

    so surely logic would say......if you are just over the threshold...it might be cheaper for you to take a wage reduction of a £1125 (which would only cost you £550 net), but wold retain whatever CB you get...someone said about £2000...net win.

    worth remembering that the 40% rate does not apply to the whole salary....just that part which is above £43876.
    Whenever I see an adult on a bicycle, I believe in the future of the human race.

    H.G. Wells.
  • rhext
    rhext Posts: 1,639
    I think the point is that the household with two earners on £40K per year would be paying around £13410 in tax on a combined income of £80K.

    A household with one earner on £80K would be paying about £22K. But you can't ignore national insurance, because the two-earner household will be paying NI at 10% on the range between £5044 and £43,888 while the higher-rate payer will only be paying 1p on £40K. So £3,900 extra in NI contributions for the twin-income family vs £400 for the single-income.

    So you have a grand total tax+NI for a family on £80K with one earner of £22K, vs £17K if it's split evenly across two.

    As the policy was announced, if you were getting paid £43875 you'd get your child benefit. If you were unfortunate enough to receive a £1 payrise, you'd not. I suspect that bit of it will be modified to provide some sort of taper relief, however. There are a lot of very good reasons to avoid traps of that nature!
  • jedster
    jedster Posts: 1,717
    I suspect I'm going to pick up some flack here but what the hell...

    I'm fortunate to be a high earner. I say fortunate meaning I was born a bright lad to a supportive family, got a decent education at a couple of good comprehensives and a red brick university and turned out to be good at things which attract high salaries. Obviously there has been a certain amount of hard work along the way but lots of people work hard.

    IMPORTANT POINT: I AM NOT LOOKING EVEN LESS EXPECTING AN IOTA OF SYMPATHY FOR WHAT FOLLOWS SO SAVE THE OBVIOUS COMMENTS

    I say high earner because I was hit squarely by the 50% tax bracket, plus the removal of my tax free allowance plus the removal of most of my pension allowances (under the last Government incidentally, not that that matters). This has increased my income tax bill by about 20% or decreased our take home by about 17%.

    Consider also that in my line of work (not banking I hasten to add) pay is very volatile so my pay in 2008 had already fallen 25% from 2007 levels and has not recovered.

    Goes without saying that we wont be getting child benefit either.

    And you know what? I don't particularly like it but I think it had to be done. All of it. I'm not complaining.

    The business that I work in was much less profitable - they could afford to pay people like me less. The public finances are a disaster area so taxes had to go up and spending including benefits had to go down. No option.

    People who are complaining about this step on child benefit are missing the big picture. Frankly child benefit is just one of many cuts that are going to be needed to fix our problems. Everyone is going to suffer to some extent and the really tough news is still to come. There are always bits of unfairness in tax and benefit systems (like the single income/dual income issue) its just too complex to fix them all.

    No one likes it when a tax or benefit change hurts them but I think we can be pretty sure that there is going to be plenty of pain to spread around so whining about your personal share is futile and shows a lack of perspective.

    In a nutshell: as a nation, we thought we were wealthier than we really were. It turns out we were living beyond our means. Now we know the truth we have to cut our standard of living (at least in material terms) to fit what we can afford. That's not nice but we just need to get on with it and stop whining.

    Cheers,

    J
  • cee
    cee Posts: 4,553
    Thats a fair point...but reaslitically...80K is not the business end where people are going to feel the pinch...

    its the people who earn just over the threshold that will feel the difference the most...

    sure the combined 80K income get a a free benefit of the child benefit...but at that salary...its not exactly the end of the world...

    at the lower end of the 40% scale...the difference between a 50K vs 2* 25K is about the same when you take the child benefit into account (assuming both families have 2 children)

    What is not fair...is not the 80K vs 80K combined....

    but the 80K combined..vs the 50K single earner.
    Whenever I see an adult on a bicycle, I believe in the future of the human race.

    H.G. Wells.
  • cee
    cee Posts: 4,553
    jedster

    I agree with what you say.

    It is also worth pointing out that we are about to experience the biggest social change in the UK since WW2.
    Whenever I see an adult on a bicycle, I believe in the future of the human race.

    H.G. Wells.
  • finchy
    finchy Posts: 6,686
    Jedster - why exactly were you expecting a load of flak for saying that you are happy to make sacrifices? :?
  • rhext
    rhext Posts: 1,639
    Jedster, I agree too.

    Paying the extra tax will be painful, but it's necessary. Single or joint income makes no difference to me, because I'd lose it either way. My objection is not to the tax raid, it's the lying and spin which goes around it trying to pretend it's something other than what it is!

    I'm not looking for sympathy: I'm looking for clarity of communication and a degree of respect.
  • jedster
    well said indeed
  • jedster
    jedster Posts: 1,717
    why exactly were you expecting a load of flak for saying that you are happy to make sacrifices?

    well I'd not go as far as to say I was happy! "Willing" is probably a better word - not that I have a choice really.

    But the sort of flak I expected to get was "that's easy for you to say, if you are caught by the 50% band then you have loads of cash". Which, to be honest, has a degree of truth to it.

    But the other side of that is that my income has gone down 17% - I am actually chucking a chunk extra into the pot and I'm not complaining. Although it sounds a bit trite, Cameron's line about "people with the broadest shoulders have to pick up the biggest burden" is basically right. For someone on 45k, losing child benefit is a big blow but it's nothing like 17%. And someone on 45k is among the top 15% of wage earners.

    Like I said, there's no real option.
  • Did anyone see newsnight the other evening Ken Loach pointed out to Michael "Tarzan" Philestine that a very very small minority of this country have a very very mass majority of its wealth (can't be sure but the ratio was something like 3% 90%+ (could be wrong) but they are the ones who have benefited/created the financial f**k up and by taxing them appropriately on their ill gotten gains the working masses would be saved from the cutbacks which they really had no part in creating.

    Let's start at the top and work down.

    Not saying the idle poor should be saved, but neither should the stinking lousy rich beyond all of our dreams either.
    Tail end Charlie

    The above post may contain traces of sarcasm or/and bullsh*t.