Explaining Tax Credits

Frank Field, the former welfare reform minister, once compiled a list of changes to the system made by the Kirkcaldy wizard: over a four-year period from 1999, the Government abolished family credit, introduced working families\’ tax credit, introduced the disabled person\’s tax credit, introduced a childcare tax credit, introduced an employment credit, abolished the married couple\’s tax allowance, introduced the children\’s tax credit, introduced a baby tax credit, abolished the working families\’ tax credit, abolished the disabled person\’s tax credit, abolished the children\’s tax credit, abolished the baby tax credit, introduced a child tax credit, abolished the employment credit and introduced a working tax credit.

Got that?

Good, because that\’s the morass you have to wade through, you as a low paid (and presumably not all that wonderfully educated) worker looking for the aid that this government promises you.

It might just be simpler to raise the personal tax allowance, wouldn\’t it? So that we\’re not taxing and subsidising the very same people, with the bureaucracy taking its chunk on the way around?

Once we\’ve done that we can then look at how to help those who still fall through the cracks, eh?

3 thoughts on “Explaining Tax Credits”

  1. FF has been totally misled here. All The Goblin King has done is to eternally repackage the same old crap.

    Read Hermione Parker’s book of 1995 – all the names are different but the perverse incentives and high marginal withdrawal rates are no different.

    As I wrote elsewhere…

    Patricia Morgan “The War Between the State and the Family”, Institute for Economic Affairs, 2007, http://www.iea.org.uk/record.jsp?type=book&ID=406 … explains with examples how the “government divides and impoverishes”.

    Hermione Parker “Taxes, Benefits and Family Life”, Institute for Economic Affairs, 1995, http://www.iea.org.uk/record.jsp?type=book&ID=70 … highlights similar problems to Patricia Morgan, and recommended replacing means-tested with universal benefits.

    It is interesting to note how little has changed in the last dozen years and how few lessons have been learned!

  2. “Hermione Parker”: thanks to JK Rowling, a whole generation has learned how to pronounce that christian name.

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