Tuesday, July 18

Why do only fools and horses work?

“A family on £14k/year has fully 75 percent of the net income of the £70k family? Even if housing benefit is disregarded, the family on minimum wage still has 50 percent of the net income of the £70k family, despite earning only a fifth as much. The reason for the anomaly is that any increase in income results in a lower tax credit payment which is then countered by increased housing benefit. This interaction means that the increasing gross earnings from £20k to £60k only increases net income by £7k – only £130 extra per week despite trebling your gross salary. Why would a company offer their staff a pay rise when the staff themselves will see little benefit? Why would an employee seek to move to a higher-paying job? Why would an employee increase their productivity? Why is home ownership declining? There is also the matter of fairness to taxpayers. The family earning £70k will pay the same total amount through taxation as the family earning £14k receive in benefits.”

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