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Not as dumb and not something that catches everyone but a similar problem in the UK is free childcare. 22 hours of free childcare a week is worth ~£9k a year p

Not as dumb and not something that catches everyone but a similar problem in the UK is free childcare. 22 hours of free childcare a week is worth ~£9k a year post-tax. If either you or your partner earn a penny over £100k then you're no longer eligible for any of your children. So with two kids in nursery a penny pay rise might lead to a £30k pre-tax pay cut.

djmcmerlin 7y ago
That is a different situation, since a family with one partner earning £100k is assumed to be well enough off to provide childcare for their kids. Another way to look at this is that it's providing more to the poorer families who need it more by cutting away costs for richer families.
- detaro 7y ago
  You could apply the exactly same argument to the other example. And regarding the second line, in both cases the problem isn't that richer people get less, but that there's a sharp cutoff instead of a gradual scale.
- byefruit 7y ago
  The similarity is that there's a discontinuity which discourages you from increasing your gross pay because your net pay will be reduced. That a single £100k salary is enough to maintain a household of two kids is neither here nor there (and also depends very much on where you live).
username90 7y ago
This is why I never understood means tested aids like this. Why isn't childcare free for everyone? Is it really that expensive to give this to those who earn more than £100k as well? All this does is create an unnecessary rift between rich and poor people.
- jobigoud 7y ago
  Isn't it the opposite? It fills the gap by providing poorer people free child care where richer ones can afford it by themselves?
  - pluma 7y ago
    So someone making £100k can afford it more than someone making £99.999k? Means-tested only makes sense if you have a progression instead of a hard cut-off, otherwise it creates these pits of despair. It's similar with welfare in Germany: if you have an extremely low-paying job, welfare will "top up" your income up to the same level as someone with no job. So until you break even, working an extra hour or taking a job that pays slightly more is economically pointless because it has no effect on your bottom line: every extra Euro you earn gets deducted from the welfare benefits. This encourages undeclared work, losing the government money via taxes.
jankiehodgpodge 7y ago
> Not as dumb and not something that catches everyone but a similar problem in the UK is free childcare. > 22 hours of free childcare a week is worth ~£9k a year post-tax. If either you or your partner earn a penny over £100k then you're no longer eligible for any of your children. So with two kids in nursery a penny pay rise might lead to a £30k pre-tax pay cut. Means testing is usually fairly expensive to administer too. It's more political point scoring than anything else.

djmcmerlin 7y ago

That is a different situation, since a family with one partner earning £100k is assumed to be well enough off to provide childcare for their kids. Another way to look at this is that it's providing more to the poorer families who need it more by cutting away costs for richer families.

detaro 7y ago
You could apply the exactly same argument to the other example. And regarding the second line, in both cases the problem isn't that richer people get less, but that there's a sharp cutoff instead of a gradual scale.
byefruit 7y ago
The similarity is that there's a discontinuity which discourages you from increasing your gross pay because your net pay will be reduced. That a single £100k salary is enough to maintain a household of two kids is neither here nor there (and also depends very much on where you live).

username90 7y ago

This is why I never understood means tested aids like this. Why isn't childcare free for everyone? Is it really that expensive to give this to those who earn more than £100k as well? All this does is create an unnecessary rift between rich and poor people.

jobigoud 7y ago
Isn't it the opposite? It fills the gap by providing poorer people free child care where richer ones can afford it by themselves?
- pluma 7y ago
  So someone making £100k can afford it more than someone making £99.999k? Means-tested only makes sense if you have a progression instead of a hard cut-off, otherwise it creates these pits of despair. It's similar with welfare in Germany: if you have an extremely low-paying job, welfare will "top up" your income up to the same level as someone with no job. So until you break even, working an extra hour or taking a job that pays slightly more is economically pointless because it has no effect on your bottom line: every extra Euro you earn gets deducted from the welfare benefits. This encourages undeclared work, losing the government money via taxes.

jankiehodgpodge 7y ago

> Not as dumb and not something that catches everyone but a similar problem in the UK is free childcare. > 22 hours of free childcare a week is worth ~£9k a year post-tax. If either you or your partner earn a penny over £100k then you're no longer eligible for any of your children. So with two kids in nursery a penny pay rise might lead to a £30k pre-tax pay cut. Means testing is usually fairly expensive to administer too. It's more political point scoring than anything else.