Proposed tax and benefit changes: winners and losers in the next term

This Election Briefing Note shows how the tax and benefit reforms proposed by the three main UK parties would affect government revenues and the incomes of different groups in the population. It also shows how the changes to taxes and benefits already announced by the government and due to come into effect between May 2005 and April 2009 will affect household incomes

Take-up of family credit and working families' tax credit: final report

The current government has substantially increased the use of means-tested tax and benefit programmes to try to help people on low incomes. An important early example of this was the replacement in October 1999 of Family Credit (FC), a benefit providing support for low-income working parents, by Working Families' Tax Credit (WFTC). WFTC was delivered differently from FC, it was described as a tax credit rather than a benefit, and it was also much more generous than its predecessor. However, the efficacy of using means-testing to help people on low incomes is limited by the fact that many of the people eligible for means-tested programmes do not take them up. Because of this, one of the government's stated aims when introducing WFTC was to encourage take-up, arguing that as a tax credit rather than a welfare benefit, it will reduce the stigma associated with claiming in-work support, and encourage higher take-up. In this paper we try to answer the question of whether the replacement of FC by WFTC did indeed encourage take-up. We also try and identify more generally what factors are important in explaining non-take-up of FC and WFTC, in particular quantifying the effect of entitlement level and examining the effects of people's knowledge of, and attitudes towards, in-work support. Our approach is an econometric one, investigating the relationship between take-up of FC/WFTC and a variety of explanatory variables in two micro-data-sets, the Family Resources Survey (FRS) and the Families and Children Survey (FACS)

The distributional effects of tax and benefit reforms since 1997

Tax and benefit changes under Labour to date will have a net cost to the exchequer of around £1.1 billion in 2005–06. This is the difference between a large set of changes raising around £57.2 billion and a slightly larger set of changes costing £58.3 billion. Tax and benefit reforms implemented in Labour’s first term cost a net £4.8 billion, while those since 2001 have raised a net £3.7 billion. The average impact of the £1.1 billion tax and benefit giveaway since 1997 is to raise household disposable incomes by £0.84 a week or 0.2%. The biggest proportionate gains are in the second-poorest tenth of the population, whose disposable incomes are increased by 10.8%, while the richest tenth fare worst, with a cut in income of 5.1%. Tax and benefit reforms since 1997 have clearly been progressive, benefiting the less-well-off relative to the better-off. Reforms in the second term – while less generous on average – were more progressive than those in the first, with the poorest faring better. Increases in council tax above inflation since 1997 will raise a net £5.8 billion for local government in 2005–06, net of council tax benefit. This outweighs the £0.84 a week net giveaway per household by central government and leaves households overall £3.62 a week worse off on average. The increase in council tax is regressive, except for the poorest fifth of the population (thanks to council tax benefit). But the impact of council tax on the relative distribution of income is modest, leaving the overall progressive pattern of tax and benefit changes since 1997 intact

Tax and benefit changes: who wins and who loses?

* Tax and benefit changes implemented by Labour since 1997 will have a net cost to the exchequer of around £2.2 billion in 2005-06. The average (mean) impact of this small net giveaway is to raise household disposable incomes by £1.69 a week or 0.4%. The biggest proportionate gains are in the 2nd poorest tenth of the population, whose disposable incomes are increased by 11.4%, while the richest tenth fare worst, with a cut in income of 3.7%. * Tax and benefit reforms since 1997 have clearly been progressive, benefiting the less well-off relative to the better-off. Reforms in the second term - while less generous on average - were more progressive than those in the first, with the poorest faring better. * Increases in council tax above inflation since 1997 will raise £5.8 billion in 2005-06, net of council tax benefit. This outweighs the giveaway by central government, and leaves households overall £2.85 a week worse off on average, equivalent to 0.6% of their disposable incomes. The increase in council tax is regressive, except for the poorest fifth of the population, who are partially protected from the rises by council tax benefit

The 10% tax rate: where next?

In Budget 2007, the Government announced the abolition of the 10% starting rate of income tax alongside a wider set of reforms to personal taxes and tax credits to take effect during the period April 2008 to April 2010. Further changes to tax credits and state benefits were announced in PBR 2007 and Budget 2008, some to take effect in 2008-09, some in 2009-10 and others in 2010-11. During April 2008, the Government said that it was looking at ways of compensating the net losers from these changes (in practice, those for whom the losses from the abolition of the 10% band exceeded the gains from the other measures). On 13 May it announced a £600 rise in the income tax personal allowance for 2008-09, with a corresponding cut in the higher-rate threshold. In the light of these changes, this note looks at: * To what extent the rise in the personal allowance, and other measures in Budget 2007, PBR 2007 and Budget 2008, compensate those who lost out from the abolition of the 10% rate of income tax; * To what extent the Government's pre-announced changes to personal taxes, tax credits and benefits for 2010-11 provide compensation for these losers over the medium term; * What options the Government has for 2009-10 and beyond

The benefits of parenting: Government financial support for families with children since 1975

This commentary describes the changes to the structure of child-contingent support through the tax and benefit system since 1975. It also presents new results, which were produced to quantify explicitly the amount of government support for families with children, using representative samples of families from over the past three decades. With these data, it is possible to examine whether child-contingent support has become more or less progressive, or more or less slanted towards large families, lone-parents families or families with young children

Financial work incentives in Britain: comparisons over time and between family types

This paper reviews various techniques for quantifying financial incentives to work, shows how financial work incentives have changed across the population since 1979, and estimates how much of these changes are due to changes in the tax and benefit system

Normal mere exposure effect with impaired recognition in Alzheimer’s disease.

We investigated the mere exposure effect and the explicit memory in Alzheimer’s disease (AD) patients and elderly control subjects, using unfamiliar faces. During the exposure phase, the subjects estimated the age of briefly flashed faces. The mere exposure effect was examined by presenting pairs of faces (old and new) and asking participants to select the face they liked. The participants were then presented with a forced-choice explicit recognition task. Controls subjects exhibited above-chance preference and recognition scores for old faces. The AD patients also showed the mere exposure effect but no explicit recognition. These results suggest that the processes involved in the mere exposure effect are preserved in AD patients despite their impaired explicit recognition. The results are discussed in terms of Seamon et al.’s proposal (1995) that processes involved in the mere exposure effect are equivalent to those subserving perceptual priming. These processes would depend on extrastriate areas which are relatively preserved in AD patients

How to Recover a Qubit That Has Fallen Into a Black Hole

We demonstrate an algorithm for the retrieval of a qubit, encoded in spin angular momentum, that has been dropped into a no-firewall black hole. Retrieval is achieved analogously to quantum teleportation by collecting Hawking radiation and performing measurements on the black hole. Importantly, these methods only require the ability to perform measurements from outside the event horizon.Comment: 6 pages v2: modified protocol to discuss total angular momentum, corrected typos, added references v3: updated with referee feedbac