Friday, 24 March 2017

Who pays?

Saw this article about maternity pay on the BBC

Statutory maternity pay for UK mothers is among the worst in Europe, according to an analysis by the TUC.

Well the fact that the TUC is behind it is a bad sign to start with.

The trade union body says only Ireland and Slovakia have worse "decently paid" entitlements.
It defines decently paid as two-thirds of a woman's salary or more than £840 a month.
This is a little unclear - the £840 a month figure is apparently 2/3 of the UK average. They don't compare with absolutes anywhere in the source or the TUC's analysis so the mention is a little misleading - not least because no other country is being measured against £840 a month.

Croatia comes top, with six months

Would you rather have 6 months of 2/3 the average Croatian pay, or the current UK system?

Average pay in Croatia is around 750 euros per month, meaning 6 months at 2/3 would be around 3,000 Euros. In the UK you get 90% of your average pay for 6 weeks then around £140 per week for the next 33 weeks. So it would be approx (6 x 25000 / 52) + (33 x 140) = ~ £7,500

Although, the UK system pays out over 9 months - if we pro-rate we get 3,000 Euros vs £5,000 for 6 months. I know which I'd prefer.

Don't get me wrong - I get that this is an issue, but we need to consider the costs of increasing maternity pay. Do we really need more kids being born? If so, encourage it. If not, don't. As far as I know, no-one has done any analysis of whether we want to increase or decrease the birth rate, and without that it's hard to know which way we should incentivise behaviour.

Trump's new healthcare bill

I don't have much of an opinion on Trump either way - I figure we wait and see how he does, it's a bit early to judge so far. That said, I saw this story on the BBC and the graph at the bottom is very misleading:

The scale on the left jumps from 0 to 10 so a quick glance will appear as if the fall under the ACA was significantly greater than it was. Looking at the numbers, it seems to have fallen from a high of 18% to 10% (a drop of 44%) but looking at the positions on the graph it appears more like a drop of 80%.

The prediction under the new republican plan appears to be heading back to where it was before the ACA, but I do note the little uptick they've added at the end (suggesting it will be worse?).

Anyway, let's have a look at what they're doing (and I've cross checked with PolitiFact - no idea if they're any good, but they come across as relatively unbiased)

Key elements of the new bill:
Cuts the Medicaid programme for low earners
This is one of the key things in America, from what I can gather. The Democrats want more support for the poor and the Republicans want less (or at least don't want to have to pay for it). There are a couple of parts of the new act that this could refer to, but probably the biggest one is that the the rollback of the provision under ACA that allowed states to expand their Medicaid provision to those earning up to 138% of the official poverty level (with the federal government paying 90% of the cost), whereas previously it had been limited to 100%. This option has only been taken up by 31 states, so it seems like another one of those odd cases where you get different levels of federal support depending on which state you live in.
Provides tax credits to help people pay medical bills, but reduced compared to Obamacare
Still higher than before the ACA, from the sounds of it, but I can see why some people are unhappy about it being lower.
Ends penalties on those who do not buy health coverage
Definitely a good move - I'm against forcing anyone to buy anything - although there is a risk that young healthy people won't buy healthcare and that will mean the insurance companies can't afford to provide cover for the less healthy.
Allows insurers to raise premiums for older people
This looks fairly big. I do think it's misleading for the BBC not to mention that this is already the case under the ACA, but the limit is going from 3x to 5x the premiums expected from a younger person. In addition, the new act will reduce the subsidies available (for everyone, but this has a bigger impact on the older people).
Blocks federal payments to women's healthcare provider Planned Parenthood for a year
That's a policy thing. The Republicans don't agree with abortion, so they're banning payments to a group that carry them out.

Looks to me like people will still be better off than they were before the ACA. To be entirely honest, the healthcare system in America is a bit worrying - they should look to somewhere like Singapore for a good example of how it can be done.

Thursday, 16 March 2017

Real Tax Rates 2017/18

Six and a half years ago, I posted a summary of how much tax is actually paid at the various earnings levels. I thought it might be time to update it.


Earnings Marginal rate 2017/18 inc Employer's NI
up to £8,060 0% 0%
£8,061-£8,112 12.00% 12.00%
£8,113-£11,000 12.00% 22.67%
£11,001-£43,000 32.00% 40.25%
£43,001-£43,004 52.00% 57.82%
£43,005-£100,000 42.00% 49.03%
£100,001-£122,000 62.00% 66.61%
£122,001-£150,000 42.00% 49.03%
£150,001+ 47% 53.43%

There's a big bump between £100k and £122k as the personal allowance is withdrawn, and the slightly different banding between NI and Income Tax makes for a few oddities. Overall the levels are higher than you might think.

Note: This was calculated using the weekly NI limits, and it is worth noting that if your income is not spread evenly over all of the weeks of the year, you may wind up paying additional NI. Also those with low incomes may face severe benefit withdrawal rates taking their effective tax rate up a lot higher than indicated here.