APPENDIX

S7

(3) In 1940 the saving in respect of the children of the unem-ployed is likely to be less than in 1937. On the other hand,there will be additional war-time savings in respect of pay-ments for evacuated children and separation allowances.

Thus, taking everything into account, a net cost of£100,000,000 should be a safe figure.

If the allowances were to be given only in respect of thesecond and subsequent children, the cost would be morethan halved and could be safely estimated at not above£50,000,000. An allowance of 3s. (in place of 5s.) to the secondand subsequent children would, therefore, cost less than£30,000,000, or more exactly £27,000,000. If the allowanceswere to be restricted to the third and subsequent childrenthe cost would be more than halved again, amounting (at5s.) to some £20,000,000; and a restriction to the fourth andsubsequent children again halves it, bringing it down toabout £9,000,000.

APPENDIX IV

THE FORMULA FOB THE AGGREGATE OF DEFERRED PAY ANDDIRECT TAXES

The results given in Chapter 6 above result from the followingformula. For incomes up to £750 a year, 35 per cent of theexcess of the income over the basic minimum of 35s. a weekfor an unmarried man and 45s. for a married man. This is,of course, very far from a flat rate, since the proportionateeffect of the fixed allowance is much greater at the lowerincome ranges, as appears in the table in Chap. VI, where theproportion of income withheld is shown to rise under thisformula from 3| per cent at 50s. a week to 29 per cent at£700 a year. For the higher income groups the percentageof the excess of income over the basic minimum rises as follows:

Per cent of excess

over basic incomes

£750—£2,000

40

£2,001—£3,000

45

£3,001—£5,000

55

£5,001—£10,000

65

£10,001—£15,000

70

£15,001—£20,000

75

£20,001—£50,000

80

Above £50,000

85