Credit where it's due? An assessment of the new tax credits

The impact on incentives of five years of social security reform in the UK

“…Looking forward, Brewer, Clark and Myck (2001) suggested that around 4 million couples with children might be entitled to the child tax credit, but around 1.3 million of these are already jointly assessed through the benefit system or WFTC, and most of the remainder are facing a form of joint income test in the children's tax credit. The working tax credit for people without children will represent an extension of joint assessment for the 175,000 couple families who might be eligible, slightly increasing the existing (small) financial disincentive to cohabit for low-income people without children.…”

“…By contrast with primary earners, parents with working partners typically face a dulled financial incentive to work: growing proportions of people in this position see their partner attract means-tested financial support which is reduced in respect of any earning that they themselves do (Blundell et al 2000., explores this further for the WFTC, and Brewer, Clark and Myck, 2001, do the same for the new tax credits). This is shown for individuals in families where both partners work.…”

Five years of social security reforms in the UK

“…These are: a pension credit, which will increase means-tested support for pensioners and reduce the 100% benefit withdrawal rate in the Minimum Income Guarantee (MIG, which is income support for people aged over 60); a new child tax credit, which will bring together child-related support currently delivered through income support, WFTC and the existing children's tax credit; and a working tax credit for all adults in work on low incomes, regardless of whether or not they have children or a disability (see Brewer et al, 2001, andClark, 2002). These new credits imply further increases in means-tested benefit expenditure.…”

The Saving Gateway and the Child Trust Fund: Is asset-based welfare 'well fair'?

“…Families without children must have at least one adult working for more than 30 hours per week and annual income of not more than about £9,000 for single people or about £13,000 for those in couples, and contain at least one adult aged over 25. For a detailed discussion of how ETC might be designed and what this will mean for the size and characteristics of the eligible population, see Brewer, Clark and Myck (2001). They estimate that approximately 1.7 million adults would be in families eligible for a benefit designed in this way.…”

“…Sources: Estimated eligibility for ETC -Brewer, Clark and Myck (2001). Estimated eligibility for the pension credit -Department of Social Security (2000).…”