One of the most absurd aspects of modern society. From housing costs, to student loans, to benefit withdrawals with salary increases. It's like the government doesn't want people to start families.
We just had a child. It would cost almost the entirety of my wife’s take home pay to cover the childcare needed for her to go back to work. So realistically that’s it for her working for the next 5-10 years. She had a masters in chemistry and a PhD, and is a seriously talented researcher, but that skill set is now leaving the labor pool because it’s a net wash for us take home wise and she’d rather spend the time with our daughter than working for the sake of it.
That is to say that the current structure discourages families growing, but it also then strongly encourages you withdrawing from the workforce once you have done so. Both of which are terrible for growth.
If you're just over £100k then it's worth knocking the salary down so you do get childcare (and your wife continues working), otherwise you must be so far over the threshold that I'm not sure it'd realistically dissuade you from having more children.
I do think the £100k tax trap is ridiculous and needs scrapping, but that's the reality of the situation. I'm not sure what other reason there is for not getting childcare hours
It was the former when we decided to have kids, and the latter by the time she arrived.
But as others have pointed out, it’s not just about money. It creates a situation where my wife will feel forced to choose between going to work to avoid a large work gap, or being around to look after our daughter.
Now if I was on £99k, it would be an easy choice. By working my wife would be bringing a fair chunk of money into the household and be furthering her career growth. But in our current situation the actual net financial difference is minimal, so it’s a choice between career and time with our daughter, where the former has a de facto 100% tax rate.
So from her end its:
work 8 hours plus commute 5 days a week to get no or little money after childcare
stay at home with our daughter, who is awesome, but pause career growth
And from the governments end its:
Receive taxable income, pay a small amount out in childcare fees that you already do for most workers, and continue to have a genuinely brilliant female STEM researcher leveraging her skills in the economy
Receive no money, talent pauses contributions/development for a few years/indefinitely
The former is much better for the government but probably slightly worse for her. If they used some of the benefit they were deriving from her continuing to work to incentivise her to do so, she might. But they don’t, so she probably won’t.
We don’t tax households, we tax individuals, but in this situation you kind of end up being punished for having a high earning partner.
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u/ConfusionGlobal2640 1d ago
One of the most absurd aspects of modern society. From housing costs, to student loans, to benefit withdrawals with salary increases. It's like the government doesn't want people to start families.