Be Excellent To Each Other

I've just been wondering, instead of reducing people's benefits by the exact amount earned from work, would it not be better to reduce it by 50p for every pound earned? After all this is actually an encouragement to do some work and get toward getting off benefits altogether and potentially save some money on paying people benefits.

Or am I missing something?

I thought that's how it works, or did work. Problem is that for the £1 wage you lose 50p benefit, 20% tax and 12%nic potentially, so that's 18p real income which is no huge incentive.

Edit: The tax changes mean that it's unlikely that the full tax impact will bite on the first bit of income to that degree, but you also have to factor in new costs (Getting to work, Nursery costs etc) which can further increase that cost. But, taper it over too high an income level (10p in the pound say) then you can reach a position where benefit doesnt get wholly clawed back. It's a minefield of balancing cost savings/incentivisation and need for the individual.

Sort of related: If you apply for OSAP (Ontario student loan), it's almost in your interest to NOT get a part time job to help support yourself. The reason being that earning money means they give you a smaller loan. People who work their butt off in a summer job between terms sometimes find themselves ineligible for any sort of loan, and are forced to take out one with their bank instead.

Granted, the loan itself isn't very much (there were a series of articles in the media decrying the 'OSAP Diet' of trying to survive on $7.50 a day, when your own college's caf might be selling you a cup of tea for $4.50) but it's interest free.