[wdmmg-discuss] child benefits for higher tax-payers

[Julian Todd]

On Mon, Oct 4, 2010 at 11:11 AM, Donovan Hide <donovanhide at gmail.com> wrote:

> The problem lies with the anomalies that get thrown up by assuming a single
> source of income is a better judge of need than means-testing. A single mum
> with a good job, paying £44,000+ in 2013 and three children will be affected
> much more than a wealthy couple both earning £40,000 with the same amount of
> children.

Exactly.  This is a boundary problem.  It's very easy to pose a
boundary example.  Much harder (though it really matters) to determine
how many examples are actually near this boundary.  Who knows?  But I
am sure it should always be the first question.  Is this
representative?

And is talking about it obscuring an assessment of things that are far
from the boundary?


Eg, here's my council leader complaining about the proposal to publish
all invoices over £500.

http://www.liverpooldailypost.co.uk/liverpool-news/regional-news/2010/07/12/liverpool-council-blasts-tory-plans-for-publishing-all-invoices-over-500-92534-26832421/

What he doesn't mention is the invoice for £70million from BT.
Meanwhile, an internal report about this contract has leaked here:

http://www.liverpoolecho.co.uk/liverpool-news/local-news/2010/09/29/finance-select-committee-chairman-demands-answers-over-secret-liverpool-direct-limited-report-100252-27361424/


theo:
>It depends on what you think the fair rates of tax should be.  If you
>think a fair rate for high earners is 40%, but actually after benefits
>they end up paying 39% net, you might think they should pay more.  If
>you're happy with the high rate being 39% then I agree with you.
>(Obviously these numbers aren't accurate, but you get the principle.)

Another boundary issue here.  Say my mother is on £38k.  "It's a
disgrace I am taxed at 40%", she proclaims.  But actually her tax bill
is:
    (38000-37400)*40% + (37400-6475)*20% = 6425
which looks a lot like 17% to me.  What was the problem again?

I guess we could test this with a simple public poll.  The government
wants to cut taxes.  Which is better for you:  Taking the 20 to 19 or
the 40 to 39?

There are objective answers.  How wildly are people off the mark, and
what are the consequences, since politics works on opinions, not
facts.

I can very easily see an experimental psychology quiz asking a series
of straightforward questions like this about one's own finances.  I
wonder if there is a correlation between the systematic mistakes and
political views.

Politicians necessarily have to work with perceptions.  The question
is whether they use and abuse them -- as they used to with racism.
Sure there is racism out there among the population, but we don't any
longer put up with politicians fomenting it, as they used to.

Fomenting financial misunderstandings -- doesn't have the same ring to it.

Julian.