I gave up work to care for my mum for two years together with my brother…we cared for her 100 hours a week each…she could not be left as she was bed bound so we could not work at all. Only one of you can claim carer’s allowance I believe.
Footnote 2 deserves a full post of its own. If this government is serious about growth and productivity, it’s worth shining a spotlight on silly policies that disincentivise those things.
"simply withdraw the benefit by 1 pound for every two pounds earned"
That's a marginal tax rate of 50%, isn't it? And is it 70% once you go over the income tax threshold? I can see why having no means testing at all is not a comfortable solution. I can see that the majority of people on this benefit will work the extra hours because even a crap hourly rate helps if you're struggling to pay the bills (unlike with a marginal rate > 100%), but if we're going to have tapers, it feels to me like they at least ought to be less steep than this. Your argument was that a progressive tax system should mean richer people face higher marginal rates of taxation, but tapered benefits affecting mostly people on low incomes create a system that's regressive at the bottom, don't they?
Yes, marginal tax rates of 50% (or 70%) are bad, but infinite rates are even worse.
There's a real case for going to a taper rate of 33%, but the shallower the taper, the more some people currently getting the full amount will lose something (if it's a fiscally neutral change), so it's a trade-off.
I mean, I agree, and it should not be a complicated principle to say that cliff-edges are bad and economically distorting.
I suppose though the counter argument is that a taper becomes a highly complex administrative burden, particularly where earnings are inconsistent, which is very likely to be the case. A fairly likely scenario is, for instance, cleaning jobs (self-employed), or flexible retail or caring (I know multiple families where the mother puts in a full day caring for a family member and then works the overnight shift in a carehome or private care arrangement - again self employed - or does an evening shelf stacking, while the father is home from a 9-5 (ish) job to take over caring duties). You might get a shift for a couple of weeks while someone else is on holiday, or do some one-offs at a new house, or holiday let changeovers in the summer, then drop it again. Trackable if it's via PAYE to ease the taper but not so easy if it's self employed. (Clearly not impossible, but more for everyone to do, track, check up on and get wrong.)
I don't think a taper is that complex - most benefits, including UC and child benefit, already have tapers, so this is definitely something we can do.
And someone who has that sort of job with intermittent income already has to fill in their income regularly and send it back (I know, because we do), because they want to make sure your average earnings are under the limit, even though in any given week it might not be.
Yep, absolutely not insurmountable. I guess the wider point though is that complexity carries its own costs, regardless of whether it is in the aim of something beneficial. (Which applies to an awful lot of our tax and benefits system!)
I gave up work to care for my mum for two years together with my brother…we cared for her 100 hours a week each…she could not be left as she was bed bound so we could not work at all. Only one of you can claim carer’s allowance I believe.
Footnote 2 deserves a full post of its own. If this government is serious about growth and productivity, it’s worth shining a spotlight on silly policies that disincentivise those things.
Absolutely!
"simply withdraw the benefit by 1 pound for every two pounds earned"
That's a marginal tax rate of 50%, isn't it? And is it 70% once you go over the income tax threshold? I can see why having no means testing at all is not a comfortable solution. I can see that the majority of people on this benefit will work the extra hours because even a crap hourly rate helps if you're struggling to pay the bills (unlike with a marginal rate > 100%), but if we're going to have tapers, it feels to me like they at least ought to be less steep than this. Your argument was that a progressive tax system should mean richer people face higher marginal rates of taxation, but tapered benefits affecting mostly people on low incomes create a system that's regressive at the bottom, don't they?
Yes, marginal tax rates of 50% (or 70%) are bad, but infinite rates are even worse.
There's a real case for going to a taper rate of 33%, but the shallower the taper, the more some people currently getting the full amount will lose something (if it's a fiscally neutral change), so it's a trade-off.
I mean, I agree, and it should not be a complicated principle to say that cliff-edges are bad and economically distorting.
I suppose though the counter argument is that a taper becomes a highly complex administrative burden, particularly where earnings are inconsistent, which is very likely to be the case. A fairly likely scenario is, for instance, cleaning jobs (self-employed), or flexible retail or caring (I know multiple families where the mother puts in a full day caring for a family member and then works the overnight shift in a carehome or private care arrangement - again self employed - or does an evening shelf stacking, while the father is home from a 9-5 (ish) job to take over caring duties). You might get a shift for a couple of weeks while someone else is on holiday, or do some one-offs at a new house, or holiday let changeovers in the summer, then drop it again. Trackable if it's via PAYE to ease the taper but not so easy if it's self employed. (Clearly not impossible, but more for everyone to do, track, check up on and get wrong.)
I don't think a taper is that complex - most benefits, including UC and child benefit, already have tapers, so this is definitely something we can do.
And someone who has that sort of job with intermittent income already has to fill in their income regularly and send it back (I know, because we do), because they want to make sure your average earnings are under the limit, even though in any given week it might not be.
Yep, absolutely not insurmountable. I guess the wider point though is that complexity carries its own costs, regardless of whether it is in the aim of something beneficial. (Which applies to an awful lot of our tax and benefits system!)