Tits and Tory Boy

I could be a tit and quote myself from May this year so I will “it seems like middle income bods are gonnae get clobbered left, right and centre by various VAT,NI and income tax rises and freezes and also get excluded from as many benefits as possible e.g. no more from tax credits or nursery vouchers and say the end of unverisal child benefit and what not if household income is over 40 grand a year or something, the staggered introduction of all which will progressively knock thousands off people's disposable incomes and further ghetto-ise the benefit system”.

But, aside from my having crystal balls (it was bloody obvious), what's really, and I mean REALLY impressive is how dumb the child benefit proposals are. So that’s no child benefits for any family with at least one person earning over £44k? Seems fair enough I guess, except looking thru the following hypothetical households:

Single parent earns £44k, total household income, £44k = No benefit
Two parents: he earns £43k, she earns £43k, total household income £86k = Gets benefit
Two parents: he earns £44k, she earns £15k, total household income £59k = No benefit.

So it targets higher earners not higher income households, which doesn’t strike me as being especially fair (whether the legislation will be smart enough to pick up on same sex couples will be interesting also). And oh oh, I was a schmuck on the grounds I didn't think anyone was dumb enough to conflate individual earners with households.

Then there are the raw disincentives to work it creates. In this blessed age of flexible working a bog standard two income family debate is whether someone should cut their hours to spend more time with the kids. Whereas the economics of this originally took into account the earnings forgone vs child minding costs saved, now they will increasingly need to take into account the £1,752 p.a. in benefits foregone also.

To give a practical example if Mum A on £45k p.a. dropped to a four day week, her net salary after tax and national insurance would fall from £32,860 to £26,764, however, she would keep her child benefit and potentially save c.£1k p.a. on child care costs.

And yeah, yeah, pension contributions would also fall 20%, but so feckin what given pensions are going to be raped on a continuous basis for the next decade. I mean what’s 20% less of fuck all tomorrow compared to getting 20% of your working week back today? The other funny besides stuff like people losing out when they get a promotion and/or pay rise is the potential damage it’ll do to the tax take.

So whereas Mum A on £45k for a 5 day week coughs up £12,139 p.a. in tax and NI. Mum A working 4 days only pays £9,235 p.a. and keeps her £1,752 p.a. in benefit. So a measure intended to save £1,752 a head ends up costing £4,656, which kinda matters given it indicates only a significant minority of people need to follow Mum A’s lead for the fiscal benefits to be neutralised. Eligibility needs to be tapered or banded in some way. End of.

You could at this point be cynical and suggest that actually it’s all about reworking the relationship between the state and the citizen and weening more and more people off what had deliberately become a near-universal system. Except, that’s a pile of shite because means testing household rather than individual incomes would be both a fairer and more effective means of doing so. It also implies a greater degree of vision on the part of the government than they appear to possess. I originally thought poor Danny Alexander was wheeled round the TV studios a while back to ensure the LibDems got all the stick for Tory decisions. Rather than any Machiavellian shenanigans I’d now say the more likely explanation is George Osborne really is the fuckwit “flat tax”(??@*&?!?) Tory Boy shit stain he always came across as before the election, that and he probably wears purple buckets for a bra.