Yesterday I blogged about a reader’s experience with Working for Families. I asked Lindsay Mitchell, being an expert on welfare, to write a guest post about it.
“My husband earns a low salary, it’s a family choice we make because he works for a charity that supports people in poverty to lift themselves out. He loves his job, it’s very rewarding.
I was recently offered some work, a small part time job. I am a SAHM of two little ones. I knew that some of our working IRD tax credits and WINZ benefits would drop but when I did the calculations I was staggered. For every dollar I would earn I will lose (in tax or via drop in funding) 70 cents in the dollar.
It was a disheartening discovery.”
Labour’s 2005 Working For Families vote-buyer began the process of transferring annually $2 billion plus of taxpayer money to families with children. Their incomes were boosted and greater lifestyle choices were also enabled.
Whale Oil’s correspondent illustrates this. WFF allowed her husband to choose spiritually rewarding work over economically rewarding work. That choice came with a sting though. Financial assistance – or tax credits – has to cut off at some point. If the total family income rises through either her taking a job, or him getting a rise or working more hours, a high ‘effective marginal tax rate’ will be incurred. A substantial portion of any extra earnings will be lost
What would a WFF system that let them keep 70 percent of extra earnings look like? One that cost a lot more than $2 billion! One that would impose higher taxes on, amongst others, the childless. Read more »