Very strange Polly

It amounts to a tax rise of £2,500 for a high-earning family of three children.

But I thought that there were supposed to be tax rises on the rich to pay for everything?

8 thoughts on “Very strange Polly”

  1. The idiocy of the policy is it is exactly the opposite of what ‘everyone’ thinks should be done, which is to simplity the system and prevent very high marginal rates. For many families this creates a new 100% rate over a fair chunk of the income distribution.

  2. The policy is badly flawed; it penalises couples where one stays at home; it also blunts marginal incentives to earn more.

    The Tories need a re-think on this. Allister Heath in CityAm has a good analysis on it today.

  3. Johnathan: Couples where one stays at home need less support, as they don’t need to pay for childcare.

    Also: a household where one earner is on £50k vs one where two earners are earning, say 2x£30k; the £50k household is already paying more tax than the £60k household. And yet no-one seems to think this is odd, or unfair. This is just more of the same.

    There’s always going to be some discrepancies in a tax/benefit system that sometimes works on a household level, sometimes on a personal level.

  4. yeah, I’ve been struggling with that at LC. Conclusion is that there are some efficiency arguments (see WWCI) and also political arguments (aka services for poor will be poor services) to treat taxes and benefits asymmetrically and want to retain universal benefits. Corollary of this is that lefties are dishonest saying “we wouldn’t cut your benefits” without adding “we’d raise your taxes instead”

  5. What i said elsewhere and i admited i knew nothing of it’s worth.

    Base whether you get it or not on your council tax band.

  6. Lots of people do think the extra taxation of a single earner houshold is unfair – primarily the Conservative Party and its supporters who are pledged to reduce it (I note, as Luis did on LC, that this debate has seen many people, pro and against, reverse positions).

    Universality is, of course, the main argumet in favour of the CBI, so it must have something in its favour.

    But from a different angle, Luis – do you think there is a case for a straight subsidy of having children (which obviously would favour tax and spend of the same people)? After all having children has a major positive externality for the State and old people which isn’t caught in the private benefits?

  7. Stuart,

    “…a household where one earner is on £50k vs one where two earners are earning, say 2x£30k; the £50k household is already paying more tax than the £60k household. And yet no-one seems to think this is odd, or unfair.”

    I think people do think this is unfair.

    In the US, a couple has the option to have their tax thresholds merged, which allows a couple with a single wage-earner earns twice as much as a single person before taxes kick in.

  8. Matthew,

    I have been thinking about this … yes maybe there is a case for the tax/benefit system offsetting the cost of raising children.

    this is just one possibly dumb idea that occurred to me, but if you are childless and you have a state pension, other people’s children are going to be financing it by paying taxes when you are retired, and if you have a private pension, the value of the equity and other assets you own also depend on the existence of future generations (i.e. other people’s children). Is that a case for subsidy?

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