Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
How to Capitalise on the Robots - 20th June 24
Bitcoin, Gold, and Copper Paint a Coherent Picture - 20th June 24
Why a Dow Stock Market Peak Will Boost Silver - 20th June 24
QI Group: Leading With Integrity and Impactful Initiatives - 20th June 24
Tesla Robo Taxis are Coming THIS YEAR! - 16th June 24
Will NVDA Crash the Market? - 16th June 24
Inflation Is Dead! Or Is It? - 16th June 24
Investors Are Forever Blowing Bubbles - 16th June 24
Stock Market Investor Sentiment - 8th June 24
S&P 494 Stocks Then & Now - 8th June 24
As Stocks Bears Begin To Hibernate, It's Now Time To Worry About A Bear Market - 8th June 24
Gold, Silver and Crypto | How Charts Look Before US Dollar Meltdown - 8th June 24
Gold & Silver Get Slammed on Positive Economic Reports - 8th June 24
Gold Summer Doldrums - 8th June 24
S&P USD Correction - 7th June 24
Israel's Smoke and Mirrors Fake War on Gaza - 7th June 24
US Banking Crisis 2024 That No One Is Paying Attention To - 7th June 24
The Fed Leads and the Market Follows? It's a Big Fat MYTH - 7th June 24
How Much Gold Is There In the World? - 7th June 24
Is There a Financial Crisis Bubbling Under the Surface? - 7th June 24
Bitcoin Trend Forecast, Crypto's Exit Strategy - 31st May 24
Zimbabwe Officials Already Looking to Inflate New Gold-Backed Currency - 31st May 24
India Silver Imports Have Already Topped 2023 Total - 31st May 24
Gold Has Done Its Job – Isn’t That Enough? - 31st May 24
Gold Stocks Catching Up - 31st May 24
Time to take the RED Pill - 28th May 24
US Economy Slowing Slipping into Recession, But Not There Yet - 28th May 24
Gold vs. Silver – Very Important Medium-term Signal - 28th May 24
Is Gold Price Heading to $2,275 - 2,280? - 28th May 24
Stocks Bull Market Smoking Gun - 25th May 24
Congress Moves against Totalitarian Central Bank Digital Currency Schemes - 25th May 24
Government Tinkering With Prices Is Like Hiding All of the Street Signs - 25th May 24
Gold Mid Tier Mining Stocks Fundamentals - 25th May 24
Why US Interest Rates are a Nothing Burger - 24th May 24
Big Banks Are Pressuring The Fed To Losen Protection For Depositors - 24th May 24
Another Bank Failure: How to Tell if Your Bank is At Risk - 24th May 24
AI Stocks Portfolio and Tesla - 23rd May 24
All That Glitters Isn't Gold: Silver Has Outperformed Gold During This Gold Bull Run - 23rd May 24
Gold and Silver Expose Stock Market’s Phony Gains - 23rd May 24
S&P 500 Cyclical Relative Performance: Stocks Nearing Fully Valued - 23rd May 24
Nvidia NVDA Stock Earnings Rumble After Hours - 22nd May 24
Stock Market Trend Forecasts for 2024 and 2025 - 21st May 24
Silver Price Forecast: Trumpeting the Jubilee | Sovereign Debt Defaults - 21st May 24
Bitcoin Bull Market Bubble MANIA Rug Pulls 2024! - 19th May 24
Important Economic And Geopolitical Questions And Their Answers! - 19th May 24
Pakistan UN Ambassador Grows Some Balls Accuses Israel of Being Like Nazi Germany - 19th May 24
Could We See $27,000 Gold? - 19th May 24
Gold Mining Stocks Fundamentals - 19th May 24
The Gold and Silver Ship Will Set Sail! - 19th May 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Child Benefit Cut Cliff Edge Tapered, Middle Class Can Continue to Have Babies

Personal_Finance / UK Tax & Budget Mar 21, 2012 - 01:15 PM GMT

By: Nadeem_Walayat

Personal_Finance

Best Financial Markets Analysis ArticleAs widely expected, George Osbourne performed a major u-turn today on the proposed cliff edge Child Benefit cuts that would have seen any family with a higher rate tax payer (Gross income of £42k) have their child benefit scrapped (£2,450 per year for a 3 child family) whilst a family with two joint earners on £41k per annum (total £82k) would have retained their child benefit payments in full.


The change in implementation of Child benefit cuts positively impacts 90% of families that faced the cliff edge cut, where now families with single tax payers earning upto £50k per annum will retain child benefit in full, thereafter child benefit cuts will be tapered by 1% for every £100 earned over £50,000. Therefore an income of £55,000 would result in a 50% cut, and £60,000+ would result in a 100% cut. However this still results in anomalies such as a couple earning £49k each to total £98k would retain their child benefit in full against a single earner family on £60k who would receive no child benefit.

How to Beat Child Benefit Cuts

The only way to beat the child benefit cuts in totality is for gross taxable earnings to be below £50k per earner. The system of tapering for earners upto £60k will result in a cut of 1% for every £100 earned, which means a £10.56 cut for 1 child per £100, 2 children £24.50, 3 children £31.47, 4 children £38.44. and so on at the rate of £6.97 per each additional child per £100 earned.

Some of the options available to maximise child benefit payments are:

Pension - One of the best way to cut ones income is by boosting pension contributions so as to reduce gross taxable income to towards or below £50,000.

Salary Sacrifice - Taxable pay can be cut by sacrificing part of your salary in exchange for extra days off work, company cars or childcare vouchers.

Self Employed - Have a variety of options to ensure that profits during a tax year do not exceed £50k such as buying extra stock, machinery or the scheduling of business income receipts across tax years, or employing ones spouse.

End Discrimination Against Families with Children, and Scrap Child Benefit

At the end of the day child benefit for higher rate tax payers is not a benefit but a tax rebate, they are only getting back some of the money that is being taken via income tax. The same holds true for changes to tax credits that means many basic rate tax paying families are seeing it being scrapped for them. The UK tax system is designed to punish families, and very heavily those with one earner as the child benefit cliff edge illustrates. Instead of taxing individuals the family should be taxed as a single unit, this would at stroke do away with the cliff edge anomaly.

However from an economic point of view, It is far better and cheaper to manage if child benefit were scrapped in totality and the money saved to result in tax cuts. This would save a huge amount of money that is currently being wasted on administering the child benefit system. The government likes to employ people who do nothing more the shuffle paper in administering and managing, monitoring and evaluating systems such as the child benefit system, instead all of these workers could be put to productive use in actually performing work that generates positive economic activity rather than act as a drag on the economy, and it is only then that the economy will actually start to grow! Scrapping many more benefits coupled with cutting taxes would also result in greater incentive to work as workers would be retaining more of every extra pound earned rather than relying on the likes of tax credits and child benefit via expensive administration to give them some of the money back that they have had taken away from them.

The bottom line: Cut government spending, Cut benefits and CUT TAXES and you will see the economy boom.

Source and Comments: http://www.marketoracle.co.uk/Article33729.html

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2012 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 25 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of three ebook's - The Inflation Mega-Trend; The Interest Rate Mega-Trend and The Stocks Stealth Bull Market Update 2011 that can be downloaded for Free.

Stocks Stealth Bull Market Ebook DownloadThe Interest Rate Mega-Trend Ebook DownloadThe Inflation Mega-Trend Ebook Download

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 600 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in