Talk:Tax credit
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It looks to me like the French system "Prime pour l'emploi" functions much like a tax credit, but without being administered within the tax system. Is this actually the case? Also, Hans-Werner Sinn (leading German economist affiliated with "IFO-CES") has recommended a system of wage subsidies that also work in the same way. It makes me wonder if the categories here are a bit off--one might just as well think of the whole thing as a system of wage subsidies, and ignore the mediating, institutional role of the tax system.
[edit] Tax credits in the UK
The the things that tax credits are definted as in this article - items treated as payments already made - do exist within the UK tax system - but Working Tax Credit and Child Tax Credit aren't tax credits in this sense. So the article is a bit misleading as it stands. Tax credits and income tax are completely separate in the UK, and a credit on one can't be offset against a liability on the other.
The article currently says So it should be questioned why simply raising the personal allowance can not do the same for single workers with reduced administrative burden for both employers and the Inland Revenue. The reason is simple. Unlike most income tax allowances, Working and Child tax credits are means tested. If you have savings much over 50K, you don't get them. In that sense they're more like a state benefit than a form of tax - though the government prefers not to call it a state benefit.
Also, your tax credit entitlement has a cash value. Although tax allowances have a cash value if your income is within a certain band, its cash value will be different if your income rises or drops into a different band - but this does not apply to tax credits. Many people who work for part of the year only, and are unemployed for the rest of the year, will pay no income tax at all for that year, yet may still be entitled to some tax credit payments.
Maybe I'll get round to editing the article some time and create separate articles to explain this properly, unless someone else does it first. Squashy 02:24, 17 November 2005 (UTC)
"If you have savings much over 50K, you don't get them" in the above post is incorrect, any savings you have is not included. Only the interest made on those paymnets is. Peledavid 13:35, 3 October 2006 (UTC)
[edit] Tax Credit Problems
Does anyone think that it would be useful for a paragraph on the difficulties caused by tax credit overpayments/administration in the UK?[1] --ScMeGr 02:02, 16 January 2007 (UTC)
