UK Labour's promote their success with tax credits for low-wage workers in early 2000s?

The Rise of the Outsiders: How Mainstream Politics Lost its Way, Steve Richards, London: Atlantic Books, 2017, page 108:

' . . . former Foreign Secretary, Robin Cook, who died in 2005 was an MP for the Scottish constituency of Livingston, a relatively poor area. Speaking at a fringe meeting of the Labour Party conference in 2001, early in Labour's second term in power, Cook noted that his constituents in Scotland had been beneficiaries of the government's tax credits—credits that boosted the income of the poorest, especially those on low wages in work. . . '
This section goes on to say that many persons who received these tax credits thought they were merely technical adjustments made by Inland Revenue. Blair and Brown didn't talk about them because they thought middle-income voters, "Middle England and the newspapers it read," would disapprove of this income redistribution.

And actually, I think my own United States gets some of the credit for pioneering the Earned Income Credit (EIC), although this is mainly for low-wage workers with children.
 
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in the U.S. (and I am a Yank!) . . .





This is the U.S. Earned Income Credit for 2014.

Notice that for each situation of 0, 1, 2, or 3 children there's a phase-in, a plateau, and a phase-out.
 
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Chancellor to extend tax credits
Up to £35 a week top-up for childless couples

The Guardian, Larry Elliott, 26 Nov 2001

https://www.google.com/amp/s/amp.theguardian.com/uk/2001/nov/26/budget2002.tax

‘ . . . Mr Brown is keen to extend the system to childless households, many of whom are living on the minimum wage of £4.10 an hour. . . ’

‘ . . . The British Social Attitudes survey will show that 71% favour topping up the incomes of the low paid through tax credits. . . ’
The U.S. version has also been more popular than might be expected, being expanded during the Reagan, Bush Sr., Clinton, and Obama years. During the Bush Jr. years the Child Tax Credit was increased.

============================

Again, the U.S. Earned Income Credit primarily helps parents, grandparents, aunts, uncles, and older siblings as long as they have the primary responsibility for a child 18 years of age and younger, or

up to and including age 23 if classified as full-time student, or

any age if doctor has classified as disabled and only minimal or no gainful employment.

* Your qualifying “child” has to file either no tax return or a return only to get a full refund of tax withheld.

* You (or one of either you or your spouse if filing jointly) has to be older than your child except in the case of disability.

* You have to live with your child for at least six months, and yes, time away at school counts as time your child lived at home. If a child was born or dies during the year, it’s half the time they were alive.

* If parent(s) can claim a child, only parent or relative with higher income able to claim child.

* Step children, foster children officially placed, and children placed for adoption all fully count.

=========================

And yes, I welcome a discussion of how the UK might be different :)
 
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I'm from the UK and a benefits adviser. The big issue with working tax credits here is that it encourages employers to pay low wages as workers income is topped up by the state using money generated from general taxation. This is particularly hard on young single workers who struggle to support themselves.

This is part of the reason that the system here is being rolled into Universal Credit that is designed to lump most benefits together. It also the reason the national minimum wage is set to increase substantially over the next 3 years to move most full time employees beyond the income allowed to claim UC/Tax Credits.

Had Labour done this in the late eighties/early nineties when they introduced the minimum wage and never bothered with tax credits then many social issues arising from over and under payment and encouraging people to only work part time would have been avoided. It also encouraged people to claim health benefits to top up,their incomes whether they where sick or not. This has caused the current problem of people who have genuine need for additional income due to disability having to go through tough and unfair assessments for benefits like ESA and PIP.

I feel I should point out I am a life long Labour voter!
 
Something I think might make the biggest single change is something we almost got here in the U.S. in Dec. 2016 — that if a person makes less than $47,000 for the year, they get time-and-a-half for overtime even if they’re classified as salary.

This would encourage companies to spread out available jobs.
 

Wimble Toot

Banned
I'm from the UK and a benefits adviser. The big issue with working tax credits here is that it encourages employers to pay low wages as workers income is topped up by the state using money generated from general taxation. This is particularly hard on young single workers who struggle to support themselves.

This is part of the reason that the system here is being rolled into Universal Credit that is designed to lump most benefits together. It also the reason the national minimum wage is set to increase substantially over the next 3 years to move most full time employees beyond the income allowed to claim UC/Tax Credits.

More state subsidy of private profit in order to prevent rent-seeking bureaucratic Capitalism falling to pieces?
 
New Deal: job creation at £5,000-£8,000 a time

The Telegraph, Philip Johnston, 9 Sept. 2005.

https://www.telegraph.co.uk/news/uknews/1497983/New-Deal-job-creation-at-5000-8000-a-time.html

‘ . . . The Government says its New Deal for Young People has helped 500,000 under-25s off benefit, . . . But in 2002 the NAO reported that only around 14 per cent found jobs directly because of the New Deal. Most of the rest "would have found work anyway because of growth in the economy". Each job cost the taxpayer between £5,000 and £8,000. . . ’
So, I think we’re talking about training rather than actually creating new jobs. To me, it works best when the two go hand-in-hand.
 
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Wimble Toot

Banned
I am willing to listen to ideas of what’s rent seeking or not

Well, if you are using your wealth to create tangible benefits for others (including jobs) it's not rent-seeking.

If you are exploiting existing wealth for a share of the economic rent, and not creating anything new, it is.
 
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