IN THE DOCK: George Osborne

The charge: That George Osborne’s new cuts are unfair and badly calculated – and a way to sneak in tax breaks for married people through the back door.

Is it deliberate that the Conservative party have rearranged child benefit so that anyone around the tax threshold is better off partnered up? Is it deliberate that they also seem to be hinting that middle class families can get their taxes back through marriage tax breaks, instead of child benefit? Is this George Osborne’s way of telling us that far from rolling back the state, he’s going to use it to reach into your home, to needle and nudge people into the ‘correct’ lifestyle choices?

The idea that the ‘squeezed middle,’ as Ed Miliband puts it, should get some sort of recompense from the system they disproportionately pay into is not unreasonable, even when cuts are happening – indeed, perhaps especially when cuts are happening and taxes are going up. This is especially true of the lower part of the ‘squeezed middle,’ who fall into the middle when you calculate the mean average, but if you work out a median average they are far, far below it.

Whether this ‘giving back’ to the middle is best done by child benefit or tax breaks (or, as some may prefer to think of it, just not taking quite so much of their money from them in the first place) has become a seemingly endless point of discussion.

The idea that someone earning £44k per annum should be entitled to a handout per child regardless of how many children they have does seem, to some people, understandably ridiculous. While £44,000 is hardly a fortune, neither is it dire poverty. It seems we have the opposite problem to America, where there are huge numbers of extremely poor people who support economically masochistic policies because they believe themselves rich – or believe they soon will be.

On the other hand, those lower-middle earners fork out an awful lot of their money in tax for other people, and those taxes do, in part, fund child benefit. If the lower-middle earners are taxed to the point they can’t afford to have as many children themselves as they would wish (something which is not uncommon), it’s hardly unexpected that they will eventually grow to resent those taxes paying for someone else to have as many as they like. Unless we’re going to start limiting the number of children for poor families on benefit, it isn’t wholly unreasonable for middle-earners with kids to get back a bit of their own tax money.

So where does that leave Osborne?

Well, it leaves him with the perfect smokescreen for doing something he has no electoral mandate for; something the Liberal Democrats negotiated away as part of their conditional parliamentary backing. George Osborne has devised a policy whereby a single person raising a family on only £45,000 a year would no longer be entitled to any benefit, yet a couple with a joint income of £80,000 would. He either can’t add up, or he’s giving married people tax breaks through the back door.

Meanwhile David Cameron is hinting that marriage tax breaks are not off the agenda, and that this policy will be their likely way to grease the skids of these new middle-class cuts.

The problem is, the people who need the most support are surely single parents. There are all sort of hidden costs involved in raising a child alone – not least, childcare.

While it makes sense to argue that it’s preferable for middle-income earners to keep a little more their own money if it means they don’t need to take back from that same tax pot (which is best kept for the very needy), it is simply wrong to use taxpayers money as a carrot for particular lifestyles – especially when often those lifestyles are not a matter of choice. After all, how many single parents planned to be single parents?

Verdict: If executed (the policy, not Osborne) alongside fair tax breaks for the ‘squeezed middle’ – in particular, those in the lower end who also have children – they could make their claim of ‘fairness’ and it would be a sensible argument. But done as a way of rewarding certain types of people, often people who’ve just been lucky, at the expense of people who’ve been unlucky, the verdict, Mr Osborne, is a resounding guilty.

Advertisements

10 Comments

  1. I argue from the Left in favour of means tested benefits – one day in the future, I’d like to see that £1B put back into Child Benefit, but not to support the school fees of the wealthiest 7%. I also argue for simplicity and avoiding the mushrooming bureaucracy attendant on complex attempts at fairness (which never succeed anyway). And don’t be too worried about parents with kids paying a lot of tax – public services (when you have kids) are the best bargain in town. (Have a look at how much the French and Americans spend of their GDP on health as a fer’instance).

    Sure there’s detail to iron out, but I never thought I’d support something Gideon suggested. Glad the Daily Mail hated it though – so I can’t be entirely wrong!

  2. Hi TootingTrumpet,

    Yes, cutting benefits for middle earners is not the end of the world (although raising a family by yourself on £44k probably isn’t exactly a picnic – but as I say, hardly abject poverty).

    BUT, and it’s a big but, having a system where married people are rewarded through the tax system – the people who are least in need – offends me.

    Each according to his ability makes sense; each according to his need makes sense. Each according to government preference even if it totally disregards both ability and need is a bit daft.

    Thanks again for reading Left Eye Right Eye, and for sharing your thoughts.

    Lou

  3. Each according to his ability makes sense; each according to his need makes sense.

    A sentiment with which I have much sympathy, but it’s not very libertarian is it? At some point, the state will have to use its monopoly of the legal use of force to implement that? Agreeing (largely) with statements like that is one reason why I’m as pale a libertarian as I am a lefty.

  4. Well neither are libertarian if you take them to extremes, that why I don’t believe in either to an absolute extent. Both of them fundamentally mean somebody encroaching on somebody else’s basic liberties and causing them harm. But both are ideas that I think make sense, as valid philosophical ideas. The government just choosing whose behaviour they like and don’t like, with no regard for ability, need, or harmfulness, is not a valid philosophical approach, it’s just judgemental social engineering from the government.

  5. If you haven’t read at least some of Atlas Shrugged (particularly the sections on Reardon Steel), I think you would find it very interesting. It explores some of those issues, albeit in somewhat lumpen prose.

    Don’t all governments do social engineering, even if they explicitly foreswore it?

  6. Hi there,

    Well, it doesn’t matter how many people do something; if it’s wrong, as a philosophical principle, it’s wrong.

    I suppose in a way it depends what you can social engineering though. Tax breaks to get low earners into jobs I like; that’s social engineering. What I don’t like is social engineering for it’s own sake. Working family tax credit helped out people who were in need, by encouraging them to do something (work) which is in almost everyone’s interests. Social engineering around subjective opinions about what sort of lifestyles are valid, with no regard for need OR ability, and with no benefit to anyone, makes me incredibly nervous.

  7. I agree on social engineering for subjective viewpoints and I wasn’t as clear as I should have been above. The mere act of governing is social engineering, so it’s not the numbers of governments, it’s the acceptance of government itself as a way of living.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s