"Should a millionaire's child benefit be funded by a minimum wage cleaner working nights to put herself through college, or by someone struggling to pay the bills because he is caring for an ill wife and cannot work as many hours as previously?"
It is nonsense to argue that taxes should increase while the government continues to provide welfare to the well-off. Increasing taxes while providing welfare to high earners is a 'money go round', with the government taking from one hand to give to the other, incurring processing costs along the way.
A prime example of the money go round is universal Child Benefit which provides £20.00 a week for the eldest child in every family and £13.20 a week for all other children. Many countries have already removed or reformed their child benefits - most recently Ireland in the midst of their serious fiscal crisis. This has been motivated by the substantial cost of these benefits, with Child Benefit in the UK now accounting for around £11 billion a year.
I would not question that it is expensive to raise a child, or that as a society we do not want to see children condemned to a life of poverty. But separate benefits already exist that are means tested and targeted on those in need. And for better off parents, £13.20 a week for your second child is nice to have, but a drop in the ocean compared to the cost of housing, feeding, educating and entertaining the child for more than 18 years. And they could gain instead from other taxes not rising to fund the system.
Once the poorest are compensated with an increase in the means-tested child tax credit the saving would be £7.15 billion.
Saving id: Child Benefit
Area: HMRC
Total saving: £7.15 billion
Traffic light status: TBD
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Previous idea for saving: (1) Special Advisors
