America - Andrew Stephen juggles a political hot potato

Now that one state has legalised gay civil unions, gay marriage has become a political hot potato. R

I sometimes feel a touch of indignation, I have to confess, when two gay women walk up the nave of my church hand in hand to take Communion. I can't help feeling that if holding hands in church is an ostentation in which heterosexual couples do not indulge, then it is all a bit too in-your-face for a gay couple to do so. But I also see that the women are making an important point. They are saying that they are every bit as full and active members of the church as anyone else, challenging reactionaries in the congregation to say otherwise. And along with five or six other openly gay couples, they receive a genuinely warm welcome from the church.

And this is turning out to be a momentous year for gays here. Across the border in Canada, gay couples like the two women (who were sporting Canadian flags the other day) can now get married. On 2 November, 56-year-old Gene Robinson was due to become the first openly gay and non-celibate clergyman to be ordained a bishop of the Anglican (ie, Episcopal) Church here. (The Archbishop of Canterbury, no matter how hard he tries to prevent a schism among Anglicans around the world, is powerless to intervene in the affairs of an autonomous branch and so cannot stop Robinson's ordination as Bishop of New Hampshire.) This summer, the Supreme Court struck down Texas's anti-sodomy law on the grounds that it invaded privacy; similar laws in 12 other states will have to be repealed because they, too, are deemed unconstitutional.

Now, gay activists are campaigning for the US to follow the examples of Belgium, the Netherlands and Canada, by making gay marriage legal. In Vermont, civil unions among gays are already legal, giving gay couples the same rights as married couples when it comes to taxation and inheritance laws and medical decisions; a ruling is awaited from New Hampshire's supreme court on whether similar measures can be enacted there.

All of which is rapidly making gay marriage a political hot potato. The Republicans plan to make it a major plank in the 2004 elections. Polls show that most voters oppose both gay marriages and legalised gay civil unions. And who, as Vermont's governor, signed that state's civil union into law three years ago? Howard Dean, the front runner among the Democrat candidates vying to take on Boy George next year. He would be highly vulnerable, Republican dirty-tricks strategists believe, on the gay issue.

Not only that, but of the four other serious possibles as Democrat candidate, three - John Kerry, Dick Gephardt and General Wesley Clark - have also indicated their support for legalised civil unions. In another close election, the gay issue - what American political insiders call an "opportunistic issue" - could just tip the balance.

Right-wing pressure groups have jumped speedily into the fray. "The institution of marriage is about to descend into a state of turmoil unlike any in human history," says Focus on Family. Concerned Women for America says gay marriage "is as wrong as giving a man a licence to marry his mother or daughter or sister". The Weekly Standard states, apparently in all seriousness: "Among the likeliest effects of gay marriage is to take us down a slippery slope to legalised polygamy and polyamory." The anti-gay groups point out that it was Bill Clinton who signed the "Defence of Marriage Act" in 1996.

Some Republicans say that gay marriage/civil union is potentially an even better vote-getting issue for them than abortion, which is still heavily opposed in the Bible Belt. Senator Bill Frist, the Republican leader in the Senate (and a member of the party's mainstream) has already voiced vehement opposition even to civil unions for gays. A member of the House of Representatives has tabled an amendment to the constitution, no less, specifying that "marriage in the United States shall consist only of the union of a man and a woman".

One voice, though, has been distinctly reticent. Pressed on the proposed amendment to the constitution, Dubbya said: "I don't know if it's necessary yet. Let's let the lawyers look at the full ramifications of the recent supreme court rulings. What I do support is the notion that marriage is between a man and a woman . . . we ought to codify that one way or the other. And we've got lawyers looking at the best way to do that."

Dubbya's personal political strategists know where the danger lies: more than ever next year, they will need to present Boy George as the soft and cuddly, compassionate conservative. It may be too risky for him to be seen aggressively opposing the growing movement towards normality for gays. Perhaps he may even come to my church (a close relative has) and see for himself how lesbians can walk hand in hand - and how thunderbolts from Heaven do not strike the church or its congregation.

Andrew Stephen was appointed US Editor of the New Statesman in 2001, having been its Washington correspondent and weekly columnist since 1998. He is a regular contributor to BBC news programs and to The Sunday Times Magazine. He has also written for a variety of US newspapers including The New York Times Op-Ed pages. He came to the US in 1989 to be Washington Bureau Chief of The Observer and in 1992 was made Foreign Correspondent of the Year by the American Overseas Press Club for his coverage.

This article first appeared in the 03 November 2003 issue of the New Statesman, Will we survive the winter?

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Q&A: What are tax credits and how do they work?

All you need to know about the government's plan to cut tax credits.

What are tax credits?

Tax credits are payments made regularly by the state into bank accounts to support families with children, or those who are in low-paid jobs. There are two types of tax credit: the working tax credit and the child tax credit.

What are they for?

To redistribute income to those less able to get by, or to provide for their children, on what they earn.

Are they similar to tax relief?

No. They don’t have much to do with tax. They’re more of a welfare thing. You don’t need to be a taxpayer to receive tax credits. It’s just that, unlike other benefits, they are based on the tax year and paid via the tax office.

Who is eligible?

Anyone aged over 16 (for child tax credits) and over 25 (for working tax credits) who normally lives in the UK can apply for them, depending on their income, the hours they work, whether they have a disability, and whether they pay for childcare.

What are their circumstances?

The more you earn, the less you are likely to receive. Single claimants must work at least 16 hours a week. Let’s take a full-time worker: if you work at least 30 hours a week, you are generally eligible for working tax credits if you earn less than £13,253 a year (if you’re single and don’t have children), or less than £18,023 (jointly as part of a couple without children but working at least 30 hours a week).

And for families?

A family with children and an income below about £32,200 can claim child tax credit. It used to be that the more children you have, the more you are eligible to receive – but George Osborne in his most recent Budget has limited child tax credit to two children.

How much money do you receive?

Again, this depends on your circumstances. The basic payment for a single claimant, or a joint claim by a couple, of working tax credits is £1,940 for the tax year. You can then receive extra, depending on your circumstances. For example, single parents can receive up to an additional £2,010, on top of the basic £1,940 payment; people who work more than 30 hours a week can receive up to an extra £810; and disabled workers up to £2,970. The average award of tax credit is £6,340 per year. Child tax credit claimants get £545 per year as a flat payment, plus £2,780 per child.

How many people claim tax credits?

About 4.5m people – the vast majority of these people (around 4m) have children.

How much does it cost the taxpayer?

The estimation is that they will cost the government £30bn in April 2015/16. That’s around 14 per cent of the £220bn welfare budget, which the Tories have pledged to cut by £12bn.

Who introduced this system?

New Labour. Gordon Brown, when he was Chancellor, developed tax credits in his first term. The system as we know it was established in April 2003.

Why did they do this?

To lift working people out of poverty, and to remove the disincentives to work believed to have been inculcated by welfare. The tax credit system made it more attractive for people depending on benefits to work, and gave those in low-paid jobs a helping hand.

Did it work?

Yes. Tax credits’ biggest achievement was lifting a record number of children out of poverty since the war. The proportion of children living below the poverty line fell from 35 per cent in 1998/9 to 19 per cent in 2012/13.

So what’s the problem?

Well, it’s a bit of a weird system in that it lets companies pay wages that are too low to live on without the state supplementing them. Many also criticise tax credits for allowing the minimum wage – also brought in by New Labour – to stagnate (ie. not keep up with the rate of inflation). David Cameron has called the system of taxing low earners and then handing them some money back via tax credits a “ridiculous merry-go-round”.

Then it’s a good thing to scrap them?

It would be fine if all those low earners and families struggling to get by would be given support in place of tax credits – a living wage, for example.

And that’s why the Tories are introducing a living wage...

That’s what they call it. But it’s not. The Chancellor announced in his most recent Budget a new minimum wage of £7.20 an hour for over-25s, rising to £9 by 2020. He called this the “national living wage” – it’s not, because the current living wage (which is calculated by the Living Wage Foundation, and currently non-compulsory) is already £9.15 in London and £7.85 in the rest of the country.

Will people be better off?

No. Quite the reverse. The IFS has said this slightly higher national minimum wage will not compensate working families who will be subjected to tax credit cuts; it is arithmetically impossible. The IFS director, Paul Johnson, commented: “Unequivocally, tax credit recipients in work will be made worse off by the measures in the Budget on average.” It has been calculated that 3.2m low-paid workers will have their pay packets cut by an average of £1,350 a year.

Could the government change its policy to avoid this?

The Prime Minister and his frontbenchers have been pretty stubborn about pushing on with the plan. In spite of criticism from all angles – the IFS, campaigners, Labour, The Sun – Cameron has ruled out a review of the policy in the Autumn Statement, which is on 25 November. But there is an alternative. The chair of parliament’s Work & Pensions Select Committee and Labour MP Frank Field has proposed what he calls a “cost neutral” tweak to the tax credit cuts.

How would this alternative work?

Currently, if your income is less than £6,420, you will receive the maximum amount of tax credits. That threshold is called the gross income threshold. Field wants to introduce a second gross income threshold of £13,100 (what you earn if you work 35 hours a week on minimum wage). Those earning a salary between those two thresholds would have their tax credits reduced at a slower rate on whatever they earn above £6,420 up to £13,100. The percentage of what you earn above the basic threshold that is deducted from your tax credits is called the taper rate, and it is currently at 41 per cent. In contrast to this plan, the Tories want to halve the income threshold to £3,850 a year and increase the taper rate to 48 per cent once you hit that threshold, which basically means you lose more tax credits, faster, the more you earn.

When will the tax credit cuts come in?

They will be imposed from April next year, barring a u-turn.

Anoosh Chakelian is deputy web editor at the New Statesman.