Tuesday, March 6, 2012

Conservatives in Britain Start to Act More Like Conservatives – To Hit Working Poor with $5,000+ Tax Increase

They Can’t Help It – That’s What Conservatives Do

The Dismal Political Economist is not an expert on British tax law, so it came as somewhat of a surprise that the British have the equivalent of what in the United States is the Earned Income Tax Credit.  In the U. S. the EITC results in a refundable tax credit for low income people based on how much wage and salary income they have.  The purpose of the credit is to make working far more preferable to not working, and the program had the strong endorsement of former President Reagan.

In Britain the program is known as a working tax credit.

Working tax credits are paid to those on the lowest incomes – typically a couple with children earning less than about £17,700 a year. Many parents choose part-time work because of the rising cost of childcare

But the Grinch of British government, Chancellor George Osborne who apparently delights in inflicting austerity on everyone else wants to harm the working poor.

New Treasury figures show that 212,000 families across the UK, including 424,000 adults and 470,000 children (a total of 894,000 people) will be affected by the changes, announced by George Osborne in his Autumn Statement last year. Those concerned will either have to find the extra work or forgo the money.

And how much will that change be

From 6 April, a couple with children must between them work 24 hours a week before qualifying for the annual £3,870 working tax credit, an increase from the current threshold of 16 hours.

Now all of this could be okay, except the government is also pursuing policies to raise unemployment, thus denying extra hours to low income workers even if they wanted to extra work and were able to find the child care so they could do it.  Now no one can say for sure what the results of all of this will be, but here is one opinion that sounds about right.

Labour argued that many families who lose the £3,870 would be better off claiming benefits, the opposite of what the Government was aiming for with its Welfare Reform Bill.

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