Tax Credits

[redvanman]

All the fuss about tax credits why don't thy the stop it of the ones that wont work.And the ones that keep having big families

[Cloverjo]

People who don't work don't get tax credits.

[jim360]

As best as I can decipher that, you're asking why they keep paying Tax Credits to the Unemployed. But the fuss is over Working Tax Credits, that only go to working people. Child Tax Credits go to any family with child aged under 20 earning below a certain amount. Current rules appear to pay, to a household earning £25,000 (before tax/ bills etc)), ~£200/year total for the first child and then about £1100/child for each extra child (I've tested this up to families of four children).

Child Tax Credit Rules aren't due to change. There has been some talk of capping it to going out only on the first two children, and the figures above show that there is some justification for this. Except that the children didn't have any say in being born and while £1100 looks like a lot it's still less than £100 per month per child, and can dry up fairly quickly.

[jim360]

I just checked and the current rules appear to keep the essentially the same basic scaling per child -- the same household earning £25k in work and supporting 10 children would get £10,500 in Child Tax Credits per year.

[Cloverjo]

I think the term Tax Credits is confusing. Before I looked into this just now I had assumed it was some kind of tax allowance that enabled you to pay less tax on your earnings, not an actual amount of money paid into your bank account.

[mikey4444]

Cloverjo has it right here !

[jim360]

The whole Tax Credit system is messed up and in some sense I agree that it should be got rid of. The main issue is the timing. Osborne's plan appears to be to replace (Working) Tax Credits with actually fair wages, but was looking to remove the first before he got around to introducing the second. That ends up costing the poorer families quite a lot of money, and it should be done the other way round, or at least in sync (so that the minimum wage increase exactly compensates for the reduced Tax Credit).

Child Tax Credits are another matter, as while it does appear to subsidise large but low-income families, it's also not possible to cut Child Tax Credits without adversely affecting the child(ren).

[hc4361]

Catch 22. Increase the wages of the lower paid and everyone up the scale will also get a rise.
Increased salaries = higher costs to the customer/consumer.

Lowest salary is then not enough to live on so either benefits will have to be introduced or salaries go up.

And the cycle continues.