Thursday 17 February 2011

IDS & lies

Today's news features a whole host of articles about welfare reform: Torygraph, Daily Mail

It's not so refreshing to see that the total lie "The new universal credit, to be introduced from 2013, will ensure people keep at least 35p in every extra pound they earn" is being spouted again.

I know this has been explored previously in many places other than here but just as they keep repeating their lie in order to try and making it sink in, I wish to repeat the truth in the hopes that at least some people will use their own minds as free thinking human beings to not believe it.

The 65% withdrawal rate is stated in the white paper as applying to NET income, this means that above the disregard threshold a claimant will first be taxed on their earnings at 32% (basic rate 20%, employee's NI or in other words disguised income tax 12%) They will then suffer benefit withdrawal of 65% applied to their remaining 68p (65% of 68p = 44.2p).

So if we add all of these together, our marginal rate for households currently only eligible for tax credits increases from 73% in the 2011/12 and 2012/13 years to 76.2% from April 2013. Sounds more like we get to keep 23.8p to me IDS!

This seems like the wrong direction to be heading, punishing those who already exercise the behaviour you want (i.e. working full-time to support their family) to encourage people to work part-time and massage the unemployment figures. Sounds more like a Labour policy than a Tory one to me but then we do live in a faux democratic dictatorship where Lib, Lab & Con are merely different coloured branches of the same party.....

3 comments:

Anonymous said...

Not sure this is completely fair. You're right for people who earn enough to pay tax. In fact people will keep 35p of each pound they earn (wow) until they reach the income tax personal allowance, at which point their marginal rate will go up to 76.2 percent.

Also, in the current system, low earners aren't "only eligible for tax credits". They also get other benefits, especially housing benefit, which adds to their marginal rate in the current system but will be included in that 76.2 percent in the new system.

The UC is definitely not perfect (by a long way), but it is a small step in the right direction.

Mark Wadsworth said...

AC, I didn't post that, SW did, so see next post, the 35p is not true, it's more like 19p for people earning > £150 a week and 28p for people <£150 a week, assuming that Council Tax Benefit (which bizarrely, is not included in UC) withdrawal is calculated as before.

Scott Wright said...

"Also, in the current system, low earners aren't "only eligible for tax credits". They also get other benefits, especially housing benefit, which adds to their marginal rate in the current system but will be included in that 76.2 percent in the new system."

Ok so perhaps a little explanation into what is meant by low earners was necessary.

When I speak of low earners I mean people who work full-time jobs on low pay (£5.93 to £13(ish)/hr) who are therefore NOT entitled to anything else bar Child Benefit which is not part of this discussion as it is to remain (for now)

People who don't even earn the personal allowance are not called low earners, they are called lazy fuckers.