Tax Credits system makes no sense sometimes!?

Question

OK I thought that the Tax Credit system (UK) was supposed to encourage people to go out and find work, by topping up the earnings of the lowest income workers to a decent level, making them better off than if they were on benefits? Yes? No?

We get both Working and Child Tax Credit as my other half is on a low wage and I'm at home with our 9 month old son. I've been told that if you are in receipt of WTC you can get up to 70% of your childcare fees paid if you want to find a job.

OK, so I start looking for a part time job to get me out of the house and bring in some extra money. And what do I find?

Only that, if I get a part time job our income as a "household" goes up which means we either lose our WTC entitlement or have is significantly reduced to virtually nothing. Plus in doing so we also lose our entitlement to Childcare so in essence I would be working but would be worse off.

How does this make sense? I love being at home with my baby but the extra £ would help.

Answer 1

Completely agree, I'm currently serving in the RAF and my wife wanted to go back to work now our daughter is 1, but we found the same with the childcare issue - they give with one hand and take away with the other. We worked out that all my wifes wages would do is pay for childcare after the government took other benefits away, and at the end of the day my wife, like yourself would rather have the time with her daughter. It sucks *** that those in this country who want to get off their backside and contribute to the economy are forced to stay at home by an inappropriate and ill-devised system. Now consider the long term effects, in the event my wife and I separate in the future - 10 years from now say - after a decade of living on my income she is now untrained, unqualified, unable to get a decent job and will then have to rely on the government for benefits to support herself, adding further strain to a crumbling system that is already struggling to support a large number of immigrants. All this because they wouldn't support her drive to work and contribute. Take this on a nationwide scale and in a few years the country will be on it's knees.

Answer 2

Actually, its not about creativity to screw people over, its more like creativity by people to screw themselves over. The people elect presidents who say they will lower taxes, this is because the people want their taxes lowered. The result is that a president gets in office and actually does what he said he would do and reduces taxes. That reduction has to come from somewhere, so he says "Why dont I encourage home ownership by making interest paid on mortgages be tax free?" and then it gets implemented. And the people rejoice, now they pay less taxes than they should. Then the IRS reports government income from the year, and.... shockingly... its down from last year. Now schools get less money and roads get less money and everything else the government does gets less money. And people complain again, they wonder why schools are getting less money when its directly their own fault. Every problem in the tax code is because of this. As far as estate taxes go, they are fair. In order for the economy to improve people have to spend money. Only, rich people dont have to spend that much money as a percentage of what they get. Bill Gates might get 5 Billion in a year and give half of that for taxes and spend maybe a few hundred K per year to survive, thus his bank account might get bigger at a rate of 2 billion a year plus. The government doesnt want bank accounts to get bigger by 2 billion a year plus, because that holds back the economy. This is the same reason that interest from bank accounts is taxed. The best way around that for rich people is just to tax them on the way out the door, IE the estate tax. If somebody like Bill Gates is looking at a 50 Billion tax bill when he dies, at least the government will be able to give the schools more money that year. Raiddinn Beatdropper

Answer 3

You are learning how it really works!

Many people are on the low end, the bottom 1/2 of tax-paying families make 25,000 a year or less! Couple that with child-care and medical care! It really means that over 1/2 of America lives in poverty!

They deal with a system that devalues children and parents!

Answer 4

I think it is wrong of people to take money from their government and vice versa. If you are able to work then you should, never take hand outs it demeans your individual freedom.

Answer 5

It doesn't make sense - but there are druggies and immigrants to pay for