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December 19, 2006

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Rob Knight

As a Lib Dem, I certainly hope so!

Having seen the effects of the 'poverty trap' on others, I find the current benefits system almost obscene in its counter-productiveness. The cost of a basic income would surely be offset by the longer-term improvements in incentives to work.

As for the initial cost, we could start paying for it by cancelling the ID card scheme, scaling back Trident and abolishing the DTI...

dearieme

Who's everyone? Only citizens? Only adults?

dsquared

Are we assuming that "effective tax rate" = "marginal withdrawal rate" here? As you know I have a real bee in my bonnet about average tax rates mattering as much as or more than marginal ones.

Chris

The problem I have with the CBI is that within our current system, there would be little incentive to pursue economic work. I personally have no desire not to work, but if I was given the opportunity I would most likely pursue tasks which have little economic benefit to society - writing, reading, perhaps juggling. I fear many would pursue similar options under a CBI; as it stands, when on the dole you barely have enough to live, there is a great incentive to find a job. Under a CBI this wouldn't exist - it would be more true to subsistence level. How could you reconcile the need for a workforce to pursue economically and societally useful jobs (i.e. sewerworker) within our current economic system with a CBI?

Sam

Chris: That is indeed the weakness in the CBI - if you set it too high, too many people will watch Trisha in their pants. The solution, such as it is, is "don't set it that high, then!".

I wonder if one can create a feedback loop to regulate that slightly by capping the size of the pot of money available to pay the CBI at, say, 20% of income tax take. If too many people watch Trisha, the income tax take falls, so the CBI falls and there is a greater incentive for them to find work.

Incidently, there is no need for a CBI to provide more than "barely enough to live". The marginal tax rate is small, so there is plenty of incentive for people to do even a few hours work for a bit of extra money.

Planeshift

Sam gets it correct. There is indeed the possibility that you can just stay at home with CBI. But if you have a good salary, mortgage, good lifestyle etc all the CBI does it act in the same way as a tax cut would. If you are a low skilled worker the CBI allows you to tell your boss to fuck off, but it also allows you to take part time casual work without the hassle of signing on each time you want a break, or losing all your wages as your benefit is cut.

In other words the CBI acts as a tax cut for the wealthy, a huge tax cut for the middle, and allows the low paid the incentive to work part time and perhaps study for a better job, create music (the best music we've produced was written by people on the dole) or just doss. For employers of the low paid it effectively increases the supply of part time casual workers. We also get rid of the Bureaucrats who administer the inefficent and stupid welfare system.

Everybody wins.

Laurent GUERBY

How do you propose to set the level of the basic income?

If you were to set it right now, what would be its level?

Planeshift

I'd choose £100 a week, as it is a nice figure to use. We then see what effect it has, and alter as necessary.

Russell

What happens with single parents? One 'basic income' potentially to cover several children?

AntiCitizenOne

I'd use geonomics to find the right level for the citizens dividend.

i.e. don't tax income, (taxing money transfers), instead tax the right to exclude others from your property, by paying a tax based on the value of that property.

Ceasing to tax income transfers would be a huge boost to the economy (no state barrier to comparitive advantage) so people could afford to take a yeild hit via the property tax. It would also stop the huge collapse in property affordability.

The citizens dividen could be further altered to pay a different sum based on sex and age that would subsidise insurance costs. i.e. if you don't look after your health it's up to you to make up the difference.

> What happens with single parents? One 'basic income' potentially to cover several children?

Keep knees together.

Russell

Keep knees together? That'll give us child poverty rates of Thatcherite levels...

I'd feel a little odd taking a regular sum of money of the state. I'm sort of proud of being as independent/distant from the state as possible - quite liberal of me, I've always thought.

Surely it's possible to come with a radical simplification of the benefits system without going quite that far?

AntiCitizenOne

Russell,

I think we should punish irresponsible parents. I do not beleive that we should allow parents to use their own children as hostages.

This is how we got into the dysgenic nightmare called the "welfare" state.

sanbikinoriaon

£100pw is ~£300billion per year. Where do you expect to get that kind of money, considering that it's the size of the entire UK budget (iirc)?

Katherine

So, AntiCitizenOne, how do you differentiate between punishing "irresponsible parents" (which I note you seem to think is synonymous with single parents) and punishing their blameless offspring?

Katherine

Oh, and if your great plan is to advise poor people to stop having sex, then perhaps you should extend your advice to the men too - so that it's not just "keep your knees together" but also "keep your dick in your pants".

Russell

Taking ludicrously basic figures, If I understand the the last budget correctly, the UK's total expenditure is £463 Billion. At least £150 Billion of that is the benefit system(!).

£80 per week is a more realistic figure, which if payed to adults gets us to £180 billion. Given numerous other government functions arguably could be removed, I'm frankly surprised we are in the ballpark...

I don't think you could morally justify paying the slacking unemployed the same as pensioners and the disabled, say. Before we get to the children issue...

chris

Some rough figures might help. A CBI of £100 a week for every adult would cost around £250bn.
We'd save £143bn by abolishing all social security benefits and tax credits, and another £40bn from abolishing personal and age-related income tax allowances. CBI replaces these of course.
That leaves us £70bn short. Closing various VAT exemptions could easily raise £10bn, as would cutting the IHT threshold to zero (in theory). Another £10bn could come from abolishing the DTI and EU contributions.
This leaves us with £40bn to find from spending cuts or tax rises.
I say this not as a blueprint, but just to illustrate the sort of numbers involved.It ignores the children issue, among other things.

Mark Wadsworth

Russell, good maths there.

Taking current IS/JSA/short term IB and pensions credit as the "right" level and doubling Child Benefit for good measure means you could scrap the whole lot of benefits, this'd be tantamount to a tax-free personal allowance of £9,000 or so, roughly revenue neutral, one flat tax rate of 33% end of discussion. Housing and social housing is a slightly different topic. As are serious disability payments, which could continue as before.

A flat rate benefit of £80 would mean a higher tax rate of 38% or so.

And, pray tell, at what age does a "slacker" become a pensioner?

AntiCitizenOne

How do I identify irresponsible parents?

Simple. If the parents cannot financially support their own children without the state intervening.

I'd like to see men given the same rights as women in terms of abortion (i.e. no paternity rights/no claim) if the woman decides to have the child. If they do request to be a father they should look after the child.

Katherine

AntiCitizenOne, I did not actually ask you how you identify irresponsible parents, I merely pointed out that you treated "single parents" as synonymous with "irresponsible parents".

What I actually asked was how you punish these irresponsible parents without punishing their blameless off spring.

Katherine

And the other point was about applying parental responsibility to both participants in the sexual act, not just the woman. I was, apparently extremely subtlely, accusing you of sexism.

Laurent GUERBY

AntiCitizenOne, if you tax the land, rich people will just leave on boats or artificial islands :)

chris, french minimal income (RMI) is 433 euros per month and your proposal is at 650 euros per month, roughly 50% higher. Of course on top of RMI in France you have social benefits (cheap housing, healthcare, ...). In the end it's hard but life is still possible with RMI in France. More here in french:

http://fr.wikipedia.org/wiki/Revenu_minimum_d%27insertion

Do you get housing and minimal living for 100 pound per week in the UK with your proposal?

Mark Wadsworth

Laurent Guerby, mooring posts and artifical islands are land, are they not? Hardly a loophole in my book.

Fact, many people are happy to hand over 7% of their property's value to the bank each year, it's called a "purchase mortgage". All land value tax does is split the payment; you hand some to the state and a smaller amount to the bank. So the State can cut taxes (or improve benefits depending which die you bread's buttered) and so net incomes go up, so all things being equal the amount that people pay for housing goes up, so land value tax receipts go up and so on in a virtual circle, until (in theory) land value tax is 100% of rental value and there's no income tax at all.

Any realistic basic income would be less than £100 (and would bracket out social housing/housing benefit - there is an 80% overlap here), and no, £60 or £80 is not enough to live on in most parts of the country. So what? Get a job, move to the Highlands, live in a shared house, get married or something.

Mark Wadsworth

Katherine, it is practically impossible to punish parents without punishing offspring. All you can do is have a system whereby there are LESS irresponsible parents (as ably defined by AC1) having kids, so there's less child poverty in total.

Laurent GUERBY

"Get a job, move to the Highlands, live in a shared house, get married or something."

Get a knife and rob richer people?

Mark Wadsworth

Laurent, that'd be a great method of income redistribution, just hang around outside Tube stations and knife people to death for a mobile 'phone and the contents of their wallet... oh, we already have that in London...

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