Something else which really pisses me off.

Janet Daley in The Telegraph highlights typical Tory muddled thinking:

In around six months’ time, £200 of unearned cash will plop into my bank account: an unsolicited gift from HM Treasury because, in spite of being a highly paid journalist, I am over 60 years old and therefore must be in need of a Winter Fuel Payment. This is clearly ridiculous. I would happily hand over my rights to this sum – as well as the value of my free prescriptions, eye tests and (unclaimed) bus pass – to those who actually need them. Perhaps more to the point, I would be particularly delighted to give them up in return for my daughters being allowed to keep the Child Benefit which the Chancellor has decided they can do without.

But what seems patently outrageous about these arrangements is precisely the fact that they are cash handouts: one is (and I am) receiving other people’s money. And ironically, it is money that has been mostly contributed by people like me – possibly even the same age as me – through tax. We are all paying in, and then we are all receiving dollops of money, or freebies. This is crazy. As Mr Duncan Smith has put it, "It’s rather daft to take tax off the middle classes and pay them a little bit back."

I do wonder how thick these people are. This sort of thing is actually very sensible. What is the point of taking away universal entitlements from the better off (as defined) if merely to fund tax cuts for the better off (as defined)?

Agreed, people don't like paying tax; but people do like claiming benefits. There are indeed some better off pensioners who genuinely say that they don't need the £200 Winter Fuel Allowance and would be happy to go without it, but I bet that most of these would gladly accept a £200 tax cut in lieu.

So let's imagine that the £200 Winter Fuel allowance were all-or-nothing. If your gross income is less than an arbitrary figure like £20,000, then you get it; and if your income is over £20,000 then you don't - but you can tick a box on your tax return to say that you'd like a £200 tax reduction instead.

Why is this system any different from just giving everybody the £200? Why do people think that the £200 tax reduction is "their" money but a £200 cash handout is "other people's money"? Doesn't Ms Daley herself [almost] say that she is getting her own money back? Would she really not tick that box and reduce her own tax bill by £200?

Or you could means-test the £200, so that for every £100 gross income a pensioner has in excess of an arbitrary figure like £15,000, the £200 cash allowance is reduced by £4. In which case, this just pushes up the marginal tax rate on pensioners with an income of between £15,000 and £20,000 to 24%, leading to a regressive tax system; pensioners with gross income above £20,000 would only pay 20% marginal.

Where people trip up is seeing the tax system (where the government takes money off you) and the welfare system (where the government gives you money) as two entirely separate things. They are not. They are quite clearly exactly the same thing, and yes, nearly everybody pays something and nearly everybody gets something but for most people there are transfers in each direction.

It would of course be much better, and would throw the issue into focus, if there were one single bureaucracy which dealt with the whole thing, then they could net off your entitlements and liabilities to give one single net figure to be either paid in tax or to be received in benefits or public-sector salary, and have done with it, in which case it would be perfectly clear that the £200 Winter Fuel Allowance is conceptually no different to the personal allowance for tax purposes, and I don't think anybody would complain if personal allowances were increased (even though higher earners would be better off if these were scrapped and tax rates reduced accordingly).