Negative Tax Rates
“Putting Tax Credits through PAYE, grading benefit rates and means tested eligibilities ensuring financial advantage from moving between income based benefits & low waged work.”
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2. How does it fit with Compass’ core beliefs of equality, solidarity, democracy, freedom, sustainability and well being?
Encourages labour and social mobility from long term unemployed & marginally employed. Removes need for recipients to inform Inland Revenue of wage fluctuations. Improves incentives to move into work.
3. How does it build the institutions of social democracy, like social groups and collective and cooperative forms of ownership and control?
Improved relations between arm of a social democratic state and working class citizens. Incorporation of income from small business start ups and cooperatives reduces barriers into local and social enterprise, particularly if linked with externality based negative taxation or tax offsetting.
4. How much will it cost or raise and where will any cost come from?
Time and money invested in consultation and preparation of specifics. IT and practical implementation e.g. staff reallocation and training. May be largely achievable within present structures and contracts. Can be included in terms when contracts a re-negotiated. Off sets can be made by recruiting additional staff from existing unemployed.
5. Which groups in the electorate are likely to support or oppose this measure? Is there any polling evidence you have on this?
Unemployed, those in short term or insecure work, non fixed contract workers,low paid with fluctuating incomes, parents.
6. Is there a place or country where it’s worked? Please provide some information.
Aspects in Switzerland with phased reduction of incapacity benefits vs tax rates over transition into work; Norway balances local tax and benefit rates; Polish benefit structure provides smooth progressive benefits from transitional earning increases.
7. What are the three main arguments in favour/against it?
1 Calculations made over each pay period reduce risk of over pay or underpay and subsequent recoupment
2 May be less complex to administer than current Tax Credits system
3 Cash flow problems between benefit cessation and accrual from wages
1 Time and effort involved
2 Still complex and difficult to achieve effectively across all cases.
3 Institutional resistance
Comments
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felix
I think this is a great idea. A sensible solution to gradually breaking benefit dependency cycles that recognized the time and effort required to get long term unemployed back into work. Must be combined with fuklly supportive personal back to work help and a continued focus on tackling the underlying social factors which lead to benefit dependency in the first place.
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Posting Comment...
December 8th, 2008 at 11:44 am
I think this is a great idea. A sensible solution to gradually breaking benefit dependency cycles that recognized the time and effort required to get long term unemployed back into work. Must be combined with fuklly supportive personal back to work help and a continued focus on tackling the underlying social factors which lead to benefit dependency in the first place.