Here is a pile of figures and graphs observing the take home income for people in different circumstances with different incomes: http://research.dwp.gov.uk/asd/asd1/TBMT_2008.pdf
Yup, it is the government's own document - they know; yet still they do it.
I'm guessing Call Me Dave was shown page 43, there's Tracey in here council flat with two young children. If she gets a job making £150/week, she'll be allowed to keep 4p in the pound of what she earns. That is like a tax rate of96%! How hard would you work for 4% of your salary?
But it's worse than that: if she lived in rented accommodation, rent paid by housing benefit, until she earns more money, she would need to exceed £450/week to reach a point where working pays more than 4% of gross earned income. They should have shown Dave pg. 58
Hang on! What about the people down the street, nice hard-working married couple, surely they can't get caught in the benefit trap? They're on page 109.
Steve and Wendy, three kids: Aiden 6, Molly 7 and Kylie 13. They live in a rented house.
They have to earn £640/week (£33,600/year) before their marginal withdrwal rate drops from 90% to 70%!!
So, Dave has found this out, he has said he thinks it must stop - I wonder what his policy will be?
Here's the graphs:
Tracey, in a council flat or house:
Tracey, in a private rented house or flat
Steve & Wendy: