I initially agreed with George Osborne’s proposal today to remove child benefits from those who earn more than about £44000 per year. Whatever people believe, these are amongst the highest earners in our society. Only something like 15% earn £44000 a year or more, so this isn’t really affecting the middle income group (although the fact that only 15% earn more than £44000 pa is slightly disturbing). At the moment, a family with 2 children will get something like £33 a week, so a total of about £1700 a year. However, having read a little more, I am slightly concerned about how this is going to be implemented.
Firstly it seems like it might not be determined by the household income, but by whether or not one of the parents (or guardians) earns more than £44000 per year. Potentially a single person household with an income of £44000 pa could lose child benefits while a household with two earning £43000 each could retain its child benefit. What is more, it is quite likely that this will be implemented in the form of an on-off switch. If you earn £44000 pa or more you get no child benefit. If you earn £43999 or less you get full child benefit. At the boundary there will therefore be people who earn less but effectively take home more. I still don’t understand why, in this age of computing and IT, we can’t have a system that ensure no one earning less than someone else can end up with more because of some kind of benefit (in fact there seem to be a number of examples of this type of thing in the UK – makes the system simple but not very fair).
Although the above suggests that it might not be implemented in a manner that would be regarded as fair, what has possibly changed my opinion is something a little subtler. Even in the US, you get a tax deduction for every child irrespective of income. Even though we are talking about the higher earners and, for some, losing £1700 a year may not mean much (I suspect that this isn’t true for those earning close to £44000 pa) it just feels slightly wrong that there will be some families with children who will get no benefit compared to other equivalent families who either don’t have children or whose children are now adults. I know it is a small amount of money for the highest earners and they clearly wouldn’t base their decision to have children on whether or not they can get a £1700 benefit per year. It just feels like it says something rather negative about what we value in our society.