Child benefit withdrawal will make it better to work less for families with over seven children

And come 2076, that will be the case for every family in the nation.

The child tax credit withdrawal, taking effect on Monday, will lead to marginal tax rates of over 100 per cent on families with more than eight children earning between £50,000 and £60,000.

The IFS explains how the marginal rates are calculated:

Affected taxpayers will pay back one per cent of their family’s Child Benefit for every £100 by which taxable income exceeds £50,000. One per cent of Child Benefit is £10.56 per year for a 1-child family, and an additional £6.97 per child for larger families. Hence the marginal tax rate between £50,000 and £60,000 is increased by about 11 percentage points for the first child and by an additional 7 percentage points for each subsequent one. So, for example, while about 320,000 people will find that their marginal income tax rate increases to more than 50%, about 40,000 of them - those with three or more children - will find that it jumps to at least 65%.

They offer a chart with the rate calculated up to four children:

By seven children, the marginal rate rises to 99.35 per cent, and by eight, it breaks 100 per cent (106.32 per cent, to be exact). This means that any individual with a family of eight kids earning between £50,000 and £60,000 would be better off if they reduced their salary back down to £50,000. In fact, for that individual, they would have to earn £61,105 before their post-tax income was the same as it was at £50,000.

It's unclear whether any families actually exist matching that criterion - rather wonderfully, my back-of-the-envelope maths (which assumes that the exponential decrease in the number of families of each size continues: e.g., there are 1/8th the number of families with three or more kids as there are with two or more, so I'm assuming that there are correspondingly 1/8th the number of families with four or more as there are with three or more, and so on) suggests that there may be exactly one – but even if there are none at the moment, there's no reason why there won't be one in the future. Families with eight children do, after all, exist.

In fact, as time goes on, this problem will get worse. The IFS points out that child benefit is uprated with inflation, while tax bands aren't. Currently, each extra child after the first increases your "marginal tax rate" by around seven per cent, but suppose child benefit is uprated by two per cent a year. In that case, the marginal tax would exceed one hundred per cent for families with seven children next year; for six children in the year 2020; for five children in the year 2028; and, eventually, for families with just one child – i.e., every family – in the year 2076.

Hopefully the law will be changed before then, of course. But as a rule of thumb, laws which become ridiculously damaging unless you actively intervene ought not be signed in the first place. Oops.

Children. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Labour’s best general election bet is Keir Starmer

The shadow secretary for Brexit has the heart of a Remainer - but head of a pragmatic politician in Brexit Britain. 

In a different election, the shadow Brexit secretary Keir Starmer might have been written off as too quiet a man. Instead - as he set out his plans to scrap the Brexit white paper and offer EU citizens reassurance on “Day One” in the grand hall of the Institute of Civil Engineers - the audience burst into spontaneous applause. 

For voters now torn between their loyalty to Labour and Remain, Starmer is a reassuring figure. Although he says he respects the Brexit vote, the former director of public prosecutions is instinctively in favour of collaborating with Europe. He even wedges phrases like “regulatory alignment” into his speeches. When a journalist asked about the practicality of giving EU citizens right to remain before UK citizens abroad have received similar promises, he retorted: “The way you just described it is to use people as bargaining chips… We would not do that.”

He is also clear about the need for Parliament to vote on a Brexit deal in the autumn of 2018, for a transitional agreement to replace the cliff edge, and for membership of the single market and customs union to be back on the table. When pressed on the option of a second referendum, he said: “The whole point of trying to involve Parliament in the process is that when we get to the final vote, Parliament has had its say.” His main argument against a second referendum idea is that it doesn’t compare like with like, if a transitional deal is already in place. For Remainers, that doesn't sound like a blanket veto of #EUref2. 

Could Leave voters in the provinces warm to the London MP for Holborn and St Pancras? The answer seems to be no – The Daily Express, voice of the blue passport brigade, branded his speech “a plot”. But Starmer is at least respectful of the Brexit vote, as it stands. His speech was introduced by Jenny Chapman, MP for Darlington, who berated Westminster for their attitude to Leave voters, and declared: “I would not be standing here if the Labour Party were in anyway attempting to block Brexit.” Yes, Labour supporters who voted Leave may prefer a Brexiteer like Kate Hoey to Starmer,  but he's in the shadow Cabinet and she's on a boat with Nigel Farage. 

Then there’s the fact Starmer has done his homework. His argument is coherent. His speech was peppered with references to “businesses I spoke to”. He has travelled around the country. He accepts that Brexit means changing freedom of movement rules. Unlike Clive Lewis, often talked about as another leadership contender, he did not resign but voted for the Article 50 Bill. He is one of the rare shadow cabinet members before June 2016 who rejoined the front bench. This also matters as far as Labour members are concerned – a March poll found they disapproved of the way Labour has handled Brexit, but remain loyal to Jeremy Corbyn. 

Finally, for those voters who, like Brenda, reacted to news of a general election by complaining "Not ANOTHER one", Starmer has some of the same appeal as Theresa May - he seems competent and grown-up. While EU regulation may be intensely fascinating to Brexiteers and Brussels correspondents, I suspect that by 2019 most of the British public's overwhelming reaction to Brexit will be boredom. Starmer's willingness to step up to the job matters. 

Starmer may not have the grassroots touch of the Labour leader, nor the charisma of backbench dissidents like Chuka Umunna, but the party should make him the de facto face of the campaign.  In the hysterics of a Brexit election, a quiet man may be just what Labour needs.

What did Keir Starmer say? The key points of his speech

  • An immediate guarantee that all EU nationals currently living in the UK will see no change in their legal status as a result of Brexit, while seeking reciprocal measures for UK citizens in the EU. 
  • Replacing the Tories’ Great Repeal Bill with an EU Rights and Protections Bill which fully protects consumer, worker and environmental rights.
  • A replacement White Paper with a strong emphasis on retaining the benefits of the single market and the customs union. 
  • The devolution of any new powers that are transferred back from Brussels should go straight to the relevant devolved body, whether regional government in England or the devolved administrations in Scotland, Wales and Northern Ireland.
  • Parliament should be fully involved in the Brexit deal, and MPs should be able to vote on the deal in autumn 2018.
  • A commitment to seek to negotiate strong transitional arrangements when leaving the EU and to ensure there is no cliff-edge for the UK economy. 
  • An acceptance that freedom of movement will end with leaving the EU, but a commitment to prioritise jobs and economy in the negotiations.

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines. 

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