Suspicious Discontinuities

Re:Suspicious Discontinuities by lmm on Thursday February 20, 2020 @11:55PM (#22381028)

63% is not necessarily so bad. Income tax rates for the well off went as high as 95% at some points in UK history, and those do not seem to have been disastrous (indeed they seem to be some of the country's finest years).

And beyond that you're letting perfect be the enemy of good here. Eliminating the cliffs and capping the marginal tax rate of the poor at 63% is valuable progress. If you want things to get better you should celebrate the small victories, not treat them as an opportunity to complain more.

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Re:Suspicious Discontinuities by crooked-v on Friday February 21, 2020 @12:05AM (#22381061)

As the reduction applies only to the benefits (not to your income), it's just a smooth reduction in benefits as you earn more money, not a tax.

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Re:Suspicious Discontinuities by lmm on Friday February 21, 2020 @12:52AM (#22381210)

Money is fungible. If a salary increase of $1 leaves you with 37c in your pocket that's a de facto 63% marginal tax rate, however it happens to be structured for accounting purposes.

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Re:Suspicious Discontinuities by DanBC on Friday February 21, 2020 @09:06AM (#22383140)

The salary increase of £1 leaves you with £1.37, because you get the £1 wage plus £0.37 benefits.

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Re:Suspicious Discontinuities by johnday on Saturday February 22, 2020 @10:14AM (#22391387)

No, because in this setting your original take home was £1.00.

To lay it out in numbers:

BEFORE £1 pay increase: £X earnings, £Y benefits

AFTER £1 pay increase: £X + 1 earnings, £Y - 0.63 benefits

DIFFERENCE: £0.37

So a pay increase of £1 leaves you with an actual total increase of £0.37. This corresponds to an effective tax rate of £0.63.

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Re:Suspicious Discontinuities by DanBC on Friday February 21, 2020 @02:21PM (#22385912)

I don't understand how this got downvoted, because it's literally what happens.

Universal credit replaces a wide range of legacy benefits. One of the legacy benefits it replaces is "working tax credits". These were payments made to people who were working and on a low income.

This part of Universal Credit "tops up" your earnings from work. They are in addition to your earnings. is.

When someone on UC starts working they get their pay from work, and on top of that they get their their universal credit minus 63 pence per pound that they earn from work.

In the past if you did more than 16 hours of work in a week all your benefit would stop, but under UC you can work over 16 hours in a week and keep the money.

Universal Credit work allowances: https://www.gov.uk/government/publications/universal-credit-...

What the earnings taper is and how this affects Universal Credit: https://www.entitledto.co.uk/help/Earnings-taper-Universal-C...

How your earnings affect payments: https://www.gov.uk/universal-credit/how-your-earnings-affect...

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Re:Suspicious Discontinuities by Dylan16807 on Friday February 21, 2020 @01:18AM (#22381290)

Bringing up the marginal tax rates of the rich is a pretty weak defense of a >50% marginal rate for someone on welfare.

Yes, it's 'valuable progress'.

That doesn't mean complaints are invalid, or "letting perfect be the enemy of good". What a rubbish accusation. You're only letting perfect be the enemy of good when you use a problem as a reason to impede the weaker solution. This is a comment hoping for better. Don't shame that!

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Re:Suspicious Discontinuities by lmm on Friday February 21, 2020 @01:40AM (#22381350)

> You're only letting perfect be the enemy of good when you use a problem as a reason to impede the weaker solution.

If your response to the weak solution is to talk about how bad it is, you're setting the wrong incentives.

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