On the topic of the Tories' proposal for a Married Couple's Allowance worth £150...
Mr Clegg said:
"I have never understood the virtue of a policy that basically says to people who are not married: you will pay more tax than people who are married(1) or, more particularly, married according to the particular definition of marriage held by the Conservative Party.(2)
"If you have got hundreds of millions of pounds to spend on tax breaks like that then I would much rather spend it on all working families to improve the tax breaks we are going to give them on childcare, for instance. We have offered, from 2015, tax-free childcare for working parents worth about £1,200 per child. I would like to see that expanded.(3)
"Instead, for reasons that I have never quite understood, the Conservatives want to basically say to a widow...you are not going to benefit from a tax break even though you were married and you lost your husband.(4) A woman who has been abandoned by her husband suddenly doesn't get the tax break even though she believes in marriage.(5)"
The £150 MCA is a stupid Tory gimmick of course, that is the first thing to be pointed out. Most people (two-thirds?) are married anyway, they will end up paying two-thirds of the extra tax needed to fund it, so actually they will only be £50 better off than now.
1) In the tax system, there are a lot of marginal situations where married couples are at a disadvantage (relative to unmarried ones) and plenty of marginal situations where married couples are at an advantage, and nobody knows what the overall net plus or minus of all these tax breaks/burdens is. The £150 is quite simply not big enough to clearly tip the balance in favour of marriage.
But the welfare system is absolutely and completely biased against couples, particularly married ones. If the Tories had any brains, that is what they would be focussing on.
2) Woah! Spiteful! We had the gay marriage debate a couple of months ago and it was nodded through (word on the street is, it's an EU thing which all governments have to nod through) by a majority Tory government. And on the whole, the Tories made it clear from the start (at a time when only "civil partnerships" existed but not "gay marriage") that gay couples would get the MCA as well.
3) Irrelevant. It's always easy finding An Even Worthier Cause. I'm sure that there are stories which tug the heart strings even more than the thought of a "hard working family only getting £1,200 tax-free childcare" and so on, until we finally establish The Single Most Worthy Cause Of All. Should the government should only ever spend its entire budget on that Single Most Worthy Cause Of All?
4) Ah yes, but widows get something called Bereavement Allowance, which is like dole money for widowed housewives. This starts at £32.49 week, so is worth a lot more than the proposed Married Couple's Allowance. And the fine details of the scheme have not been outlined, it's just a mad idea to keep the back benchers happy, and there's nothing to stop there being a rule that widows can't continue to claim it. And widows can claim all the same goodies as other single women (if they have kids).
5) Ah yes, but an "abandoned woman" (how come nobody talks about men being abandoned?) can claim all manner of benefits, just like any other single woman, which she wouldn't be able to claim if she were still married. These can be worth tens of thousands a year. And she'll have the whole machinery of the state on her side screwing every last penny out of the errant husband, more or less at no cost to her. The value of these benefits are worth rather more than £150 a year to her, I think you'll find.
Thinking ahead
2 hours ago
16 comments:
The bit that really, really annoys me is - "If you have got hundreds of millions of pounds to spend on tax breaks like that then I would much rather spend it on all working families to improve the tax breaks we are going to give them on childcare, for instance." By saying that tax breaks are spending he is implicitly assuming that all the income of all citizens belongs to the bloody government. It's a basic assault on the whole idea of private property. The moment the twerp says that I automatically discount everything else he says. For the last time, tax breaks are not and cannot be 'spending'. It is a foul deceit by a shit of the first water.
I met an 'abandoned woman' once. Her name was Gay.
L: Depends on how you look at it. Ofcourse the political class view all privately earned money as something they are cool enough to let us have. But in a way, I agree that specific tax breaks are, if not spending, they are definetly subsidies to whatever/whoever the break is for. If we assume the state takes what it needs/wants, any "tax breaks" will increase the rate for everyone else/make someone pay more of their income than if they belonged to the favoured group of the day.
L, I'm with Kj on this.
From our point of view, they are not "spending their money", they are transferring money they take from some people's earned income and giving it to other people, whether you call this a subsidy or a tax break or a welfare payment is neither here nor there, it is "spending" nonetheless.
Now, whether you would call a universal tax break for all (like a lower rate of tax or a higher personal allowance) to be "spending" in that sense is debatable, but that is not what they are talking about.
BTW, I have to admit that I was under the impression that you were taxed as couples in the UK, and could use both allowances on one income? When did that change/was it ever so?
I think transferrable allowances, as long as we have an allowance, are fair enough, and could go some way replacing maternity pay. Only the ones who don't get to transfer them to anyone are disadvantaged, hence a CI is better.
Kj, no, the UK is unusual in this - a married couple is treated as two separate people. It is not like most civilised countries where husband and wife put all their income on one tax return and get two personal allowances etc.
In the UK, you can transfer allowances and bands by the back door by putting investments into the name of the lower earning spouse and so they go on that spouse's tax return, but that is very unofficial.
MW: a politician aquaintance has told me that the way they view tax breaks as spending, when amongst themselves, not as proaganda rhetorics, is that everything that is not taxed at the headline rate because of an allowance, is considered spending. In the US I believe it's a budget requirement to list tax breaks as "expenditures" as well.
The change was about twenty years ago, and it makes things a right old faff, because when you are doing tax returns for a couple, you have to divide all joint income by two and put half on each return.
Kj, yes, they do that in the UK as well, there is a list of "the cost" of various tax breaks.
MW KJ - Yes, I do see that as a 'tax break' you might say it is spending , that is a transfer payment from one class of citizens to another. But, the other way to think of it is that you are taxing someone less than another.
My favourite is 'unfunded tax cuts'...
MW: Aha, ta.
Will be interesting to see what the withdrawal rate is and hence another new marginal tax rate. For those on 50-60k, there are new marginal tax rates depending on how many children you have, now for a married couple with one member making just over the basic rate threshold, there will be a new rate to taper off the married couple allowance
I think tax breaks are spending too. In the extreme case, say you have a corporate tax rate of 35%, but a litany of tax breaks that mean that some companies pay $zilch. This happens in the US - GE paid no corp tax on $11bn profits in 2010 I think. Revenue has to come from somewhere so the gvmt will raise it from other people. And in addition, GE's tax avoidance operation is a giant dead-weight loss for the entire economy. Now if you have taxation with no dead-weight costs, you don't have to worry about any of this. There will inevitably be some tax expenditures, e.g. deferral or reduced LVT for pensioners/charities/etc but no avoidance industry and much less distortion
I hate to say this, but I'm with the idiot on this one. I think the state should get the hell out of marriage (apart from keeping a register for the benefit of future ancestor-hunters) and that married people should be taxed the same as single people.
M, ooh, that's a good idea. You can design something which it is mathematically impossible to get, so the "£150 MCA" could be a £150 tax reducer which is tapered by £1 for every £50 the couple has in total income, so if either partner earns enough to actually pay tax, the £150 will have been tapered to zero anyway.
B, yes, that's fine and correct in principle.
What makes him a fucknut is that he then lists a load of people who will VASTLY BENEFIT from the welfare system.
Fair enough, I do absolutely agree that tax breaks as listed (which are effectively subsidies) are 'spending'. But, in the mouth of the Cleggster even universal tax cuts are spending, as in 'unfunded tax cuts'. I really think he sees all of other people's income/capital as the property of the state.
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