Monday, 4 October 2010

A fair approach to child benefit

Earners over a certain threshold will soon have their child benefit removed.

The BBC presenters asked whether it's fair that a single-income household bringing in £50,000 should have their benefit withdrawn, while a household with two incomes of £25,000 will keep theirs. Clearly not.

Here's a fair solution: nobody should receive child benefit. I should not be forced to subsidise other people's lifestyle choices. Those who struggle to afford the inevitable expenses of parenthood should not have children.

And who is most likely to be affected by the removal of the natural financial disincentives? Are their children going to be the leaders of tomorrow? Or the next generation of welfare recipients?

If we want to help the poor, we should reduce their tax burden. Child benefit is social engineering of the most dangerous kind.


  1. Suboptimal Planet writes: "Here's a fair solution: nobody should receive child benefit. I should not be forced to subsidise other people's lifestyle choices. Those who struggle to afford the inevitable expenses of parenthood should not have children."

    Well, I've been thinking about that for a while. Finally I've decided to admit to disagreeing.

    On Income Tax, we have personal allowances; these are also transferable (in part or whole at the basic tax rate) between spouses (and presumably between those in civil partnerships, or at least I hope so).

    Now, I assume we have personal tax allowances largely so that we are not taxed on the basic essentials of living (shelter, food and warmth). Surely the old Child Allowance (wrongfully transformed into Child Benefit) is an allowance for the child, to acknowledge that it too has basic essentials; they cost to provide. However, reasonably sensibly, we acknowledge that a child has no earned income (in fact we constrain children not to work, but be educated - or at least go to school). Thus we make the Child Allowance or its equivalents to the parents (or other guardians, carers, etc) of the child. Even though the actual system (both past and present) was and is definitely suboptimal, it has defined purpose.

    Now, SP seems to be of the view that a child is rather like a discretionary purchased chattel - say a TV or wine with dinner - or like a purchased service - say travel and hotel for a nice holiday. He does not seem to view a child as a human being entitled to its fair share of tax relief (for shelter, food and warmth) against its proxy earnings: those being part of that earned by its parents (etc) and spent on its basic needs.

    I disagree.

    Best regards

  2. Hi Nigel,

    Thanks for your comment.

    I certainly wouldn't suggest that children should be regarded as chattel. It is clear that parents have a duty of care.

    A number of steps are required, however, before we get to child benefit:

    1) if parents are so poor that they cannot provide basic necessities for their children, do others in their extended family have a responsibility to intervene?

    2) failing that, does the local community have a moral obligation to assist?

    3) if local voluntary efforts fail, is it reasonable to require national-level intervention using confiscated wealth (taxpayers' money)?

    4) if so, is a cash handout to the parents the best intervention?

  3. Hi SP,

    Apologies for not rushing back after your response.

    I think you have missed my point, though I do agree with you that there must be a decent mechanism for minimal support of those who have insufficient income to benefit from tax allowances (like the poor laws we have had since the first Elizabeth). Quite how you justify forced support for those who have a broader family (presumably not in the direct bloodline) and those who do not, remain unclear - and for another day.

    Back to the current issue, I was arguing that babies, children and teenagers have the right to a personal tax allowance, to the same extent (of right but not necessarily amount) as adults, to cover their basic needs for shelter, food and warmth. However, as most of them do not earn, they should be allowed to pass the tax allowance on to those who have the legal responsibility to support them: parents in the broadest sense.

    There is more on this here, on my comment at the Adam Smith Institute blog:

    As it stands, Child Benefit is just a costly and inefficient alternative to an appropriate tax allowance, for the large proportion of the population of parents that pay enough tax to benefit fully. The purpose of both is good; the mechanism of the former is bad.

    You are, IMHO, quite definitely arguing that the purpose is bad. I disagree - rather strongly.

    Best regards

  4. Hi Nigel,

    People have a duty of care, both morally and legally, for their pets and livestock. Does it follow that the tax system should make allowances for these dependants?

    Both pet-owning and parenthood are lifestyle choices, and they come with responsibilities that are sometimes expensive. It is not right to expect non-pet-owners to subsidise other people's pets, and it is not right to expect childless couples to subsidise other people's children.

    I agree that tax relief is preferable to a handout, but both involve a wealth transfer from those who choose not to have children to those who do.

    I would favour a simple tax system, with no special allowances, but with overall taxation so low that *everyone* pays less than they do today.

    A flat rate income tax would be preferable to the status quo, but ideally we would have no income tax at all.