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I think you have misread or misunderstood this. Under the old system, it was possible to take a job, and then have less actual income than you did before. Und

I think you have misread or misunderstood this. Under the old system, it was possible to take a job, and then have less actual income than you did before. Under the new system, _every_ extra hour of work you do causes you to have more money in your pocket, and you are always incentivized to do more work, or start a job that pays less now but might pay more as your experience grows. I'm not sure how else you'd want this to be designed.

SilasX 7y ago
My point was that 63% is still very bad, and if it’s supposed to be an improvement, then the existing system is abysmal from an incentive perspective.
- crooked-v 7y ago
  It's not 63%, it's a reduction of £0.63 in benefits (not in your total income) for each extra dollar you earn in income over the cutoff level. This prevents situations where it's better to stay under a cutoff of X in income until you can jump straight to an income of X income + Y in benefits, while staying on benefits until then.
  - deleted 7y ago
    [deleted]
  - johnday 7y ago
    Surely if benefits are part of your income, a £0.63 reduction in your benefits is a £0.63 reduction in your total income (up until the benefits are zero)? In other words, an effective tax rate of 63% on earnings while you receive a nonzero amount of benefits?
- peteretep 7y ago
  How else would you see this working, exactly? You've got to make sure people who need the benefits and can't work get supported, you need to not discourage people from working (and most people _do_ want to work), and you also can't just (afford to) unilaterally extend benefits to a whole bunch of people who don't currently get them. So, concrete proposal on how you'd structure this?
  - Dylan16807 7y ago
    The exact same way as the new system, except instead of 63% it's a much smaller number. Edit: Why are people downvoting this? I don't understand what's so confusing about SilasX's argument. Removing cliffs and changing it to a smooth dropoff is good. But that dropoff doesn't have to be £.63 in benefits per £1 earned. That's a pretty big effective marginal tax rate! Why not £.50 or £.30? It should be extremely easy to understand how this proposal works, right? It would technically bring more people into the system, but they'd be at the top end, and therefore only be receiving a small fraction of the current levels of benefits. It's totally doable.
    - peteretep 7y ago
      > The exact same way as the new system, except instead of 63% it's a much smaller number. If it's less than 63%, you "unilaterally extend benefits to a whole bunch of people who don't currently get them". Let's say benefits for the unemployed are £1,000 a month (chosen to be an easy number to work with). You lose 63p of benefits per extra pound you earn. The government gives you (some) benefits up to the first £1,587 you earn. If you go to 50%, the government gives people earning up to £2,000 a month benefits, and so on, which probably includes a bunch of people who don't currently get any. You can't change 63% without either paying much more in the way of benefits overall, or without reducing the benefits of those who can't do any work. > It would technically bring more people into the system, but they'd be at the top end, and therefore only be receiving a small fraction of the current levels of benefits That's not how the maths works. Assuming an even distribution of people at each wage level, changing this to 30% effectively doubles overall spend.
      - Dylan16807 7y ago
        The people making between £1,587 and £2,000 are getting £206 or less though. That's not an unsolvable expansion, especially because those people probably do in fact need the help.
        peteretep 7y ago
- RHSeeger 7y ago
  I have a hard time following this argument. It's not a tax, it's a limit to benefits. If the government comes along and says > You need $30,000 / year to live at a minimum in our society. We will make sure everyone that makes less than that gets enough in benefits to make up the difference. That's not a 100% tax rate for any money earned under $30,000 / year. It's reduced benefits because the definitions of the system (the minimum amount needed to survive) indicate the system only needs to make sure everyone is at a specific minimum level. You can argue that working costs money (transportation, child care, clothing, etc), and that's a valid argument against working if the amount you make would mean you wind up with less money available for other things. However, it's still not a tax. It's a limitation in the analysis of cost of living requirements. Calling it a tax is disingenuous.
  - kazagistar 7y ago
    It behaves the same way from the perspective of the worker. For every hour I work of a minimum wage job, I see an increase to my spending abilities of 35% of minimum wage or whatever. It's only not a tax technically, but it still cuts into your direct benefit from working exactly like a tax.
    - RHSeeger 7y ago
      > It's only not a tax technically In the same way that any benefit program being cancelled (eg. movies for kids for free every Friday on the town green, etc) are stealing. It's a benefit that had some or all of it taken away.
      - Dylan16807 7y ago
        If it's part of your pay structure, and then suddenly it's not given to you, that would be stealing.
        RHSeeger 7y ago
        It's a benefit provided by the taxes of all. It's not part of your pay structure.
- rsync 7y ago
  "My point was that 63% is still very bad, and if it’s supposed to be an improvement, then the existing system is abysmal from an incentive perspective." This is fascinating. There is an entirely separate debate about tax rates and incentives for high income tax payers wherein it is suggested that marginal income tax rates almost identical to the 63% you are speaking of are fair, equitable, common-sensible and could not possibly deter earners from pursuing extra marginal dollars. I have no comment to make about either debate. I simply find it fascinating that an exactly opposite conclusion is made depending on the subject involved ...
  - SilasX 7y ago
    I think 63% marginal tax rates for high earners are stupid too, and their proponents similarly mistaken. So I haven’t changed my opinion based on the context and am not responsible for such advocates.

SilasX 7y ago

My point was that 63% is still very bad, and if it’s supposed to be an improvement, then the existing system is abysmal from an incentive perspective.

crooked-v 7y ago
It's not 63%, it's a reduction of £0.63 in benefits (not in your total income) for each extra dollar you earn in income over the cutoff level. This prevents situations where it's better to stay under a cutoff of X in income until you can jump straight to an income of X income + Y in benefits, while staying on benefits until then.
- deleted 7y ago
  [deleted]
- johnday 7y ago
  Surely if benefits are part of your income, a £0.63 reduction in your benefits is a £0.63 reduction in your total income (up until the benefits are zero)? In other words, an effective tax rate of 63% on earnings while you receive a nonzero amount of benefits?
peteretep 7y ago
How else would you see this working, exactly? You've got to make sure people who need the benefits and can't work get supported, you need to not discourage people from working (and most people _do_ want to work), and you also can't just (afford to) unilaterally extend benefits to a whole bunch of people who don't currently get them. So, concrete proposal on how you'd structure this?
- Dylan16807 7y ago
  The exact same way as the new system, except instead of 63% it's a much smaller number. Edit: Why are people downvoting this? I don't understand what's so confusing about SilasX's argument. Removing cliffs and changing it to a smooth dropoff is good. But that dropoff doesn't have to be £.63 in benefits per £1 earned. That's a pretty big effective marginal tax rate! Why not £.50 or £.30? It should be extremely easy to understand how this proposal works, right? It would technically bring more people into the system, but they'd be at the top end, and therefore only be receiving a small fraction of the current levels of benefits. It's totally doable.
  - peteretep 7y ago
    > The exact same way as the new system, except instead of 63% it's a much smaller number. If it's less than 63%, you "unilaterally extend benefits to a whole bunch of people who don't currently get them". Let's say benefits for the unemployed are £1,000 a month (chosen to be an easy number to work with). You lose 63p of benefits per extra pound you earn. The government gives you (some) benefits up to the first £1,587 you earn. If you go to 50%, the government gives people earning up to £2,000 a month benefits, and so on, which probably includes a bunch of people who don't currently get any. You can't change 63% without either paying much more in the way of benefits overall, or without reducing the benefits of those who can't do any work. > It would technically bring more people into the system, but they'd be at the top end, and therefore only be receiving a small fraction of the current levels of benefits That's not how the maths works. Assuming an even distribution of people at each wage level, changing this to 30% effectively doubles overall spend.
    - Dylan16807 7y ago
      The people making between £1,587 and £2,000 are getting £206 or less though. That's not an unsolvable expansion, especially because those people probably do in fact need the help.
      - peteretep 7y ago
RHSeeger 7y ago
I have a hard time following this argument. It's not a tax, it's a limit to benefits. If the government comes along and says > You need $30,000 / year to live at a minimum in our society. We will make sure everyone that makes less than that gets enough in benefits to make up the difference. That's not a 100% tax rate for any money earned under $30,000 / year. It's reduced benefits because the definitions of the system (the minimum amount needed to survive) indicate the system only needs to make sure everyone is at a specific minimum level. You can argue that working costs money (transportation, child care, clothing, etc), and that's a valid argument against working if the amount you make would mean you wind up with less money available for other things. However, it's still not a tax. It's a limitation in the analysis of cost of living requirements. Calling it a tax is disingenuous.
- kazagistar 7y ago
  It behaves the same way from the perspective of the worker. For every hour I work of a minimum wage job, I see an increase to my spending abilities of 35% of minimum wage or whatever. It's only not a tax technically, but it still cuts into your direct benefit from working exactly like a tax.
  - RHSeeger 7y ago
    > It's only not a tax technically In the same way that any benefit program being cancelled (eg. movies for kids for free every Friday on the town green, etc) are stealing. It's a benefit that had some or all of it taken away.
    - Dylan16807 7y ago
      If it's part of your pay structure, and then suddenly it's not given to you, that would be stealing.
      - RHSeeger 7y ago
        It's a benefit provided by the taxes of all. It's not part of your pay structure.
rsync 7y ago
"My point was that 63% is still very bad, and if it’s supposed to be an improvement, then the existing system is abysmal from an incentive perspective." This is fascinating. There is an entirely separate debate about tax rates and incentives for high income tax payers wherein it is suggested that marginal income tax rates almost identical to the 63% you are speaking of are fair, equitable, common-sensible and could not possibly deter earners from pursuing extra marginal dollars. I have no comment to make about either debate. I simply find it fascinating that an exactly opposite conclusion is made depending on the subject involved ...
- SilasX 7y ago
  I think 63% marginal tax rates for high earners are stupid too, and their proponents similarly mistaken. So I haven’t changed my opinion based on the context and am not responsible for such advocates.