Would A Citizen’s Income Be Inflationary?

[StringerBell]

OK, here are some simple figures. I remember them vividly from my first job after graduating. This was a middling salary at the time (£6660); some professional graduate salaries were quite a lot lower.

Person 1: working. Gross salary, £130 per week. Of that, tax £50, Rent £55, leaving £25 to live on.

Person 2: not working: Housing benefit £130/week[1], Income support £25/week.

So already, we have no financial incentive to work.

Your figures are way out of date though.

Today someone earning £130 a week pays less than a fiver in tax.

From: http://listentotaxman.com/

[CrashConnoisseur]

You must be joking!

The UK is already spending itself into bankruptcy (with 'ell to pay), and you now want them to do

something that will get them there more quickly, while raising taxes on those that do work !

This (and your comments in previous threads) indicate that you don't understand the concept of a Citizens Income:

http://www.citizensincome.org/

You should be thinking the exact opposite: cutting transfer payments, cutting taxes, and shrinking

the size of government.

But that isn't the exact opposite! Cutting transfer payments, cutting effective tax rates (tax levied / loss of benefits / tax credits), and shrinking the size of government are what a Citizens Income does.

Look at it this way: Currently a 40% UK taxpayer gets a weekly 'Citizens Income' of £50 a week (£6,450 tax allowance * 40% / 52 weeks). The idea of a universal Citizens Income is to give the same £50 a week to every citizen instead of a tax allowance / tax credit or benefit such as JobSeekers Allowance / Income Support, etc. and get rid of all the bureaucracy. The large savings in administration costs and the fact that £50 a week is less than most current benefit rates would allow the Citizens Income to be set a bit higher (say somewhere in the £60 to £80 range). Since a Citizens Income would be a fixed amount no matter how much you earn, you will always be better off by working (unlike the present system) with tax being paid on income from the first pound earned.

Edited August 3, 2009 by CrashConnoisseur

[porca misèria]

Your figures are way out of date though.

Today someone earning £130 a week pays less than a fiver in tax.

From: http://listentotaxman.com/

Of course! They're 1983.

Today an equivalent salary would be up to three times more. And the underlying point remains: someone earning a low income may lose more in benefits than what they earn. That can even happen on £30k if your benefits entitlement is more than the basics: for example, if you're disabled and get extra living / mobility allowances.

[edit] - delete rant that went too far off the topic. Oh, and note that my figures were for London, and that by contrast the BBC nearby were offering £5100 to new science/engineering graduates, as a big-name point of reference to show my £6660 wasn't too bad relatively speaking!

Edited August 3, 2009 by porca misèria

[Authoritarian]

To have a proper citizens income the government needs to taking more in taxation than its spending and then you can equally redistribute the profits. If you did it this way it wouldn't be inflationary.

Edited August 3, 2009 by chefdave

[Saberu]

Yes 10k for everyone, its not about redistribution of wealth (although l would advocate no tax for anyone under 20k and offset higher tax on high earners), its about removing the government from the levers of power and interference i.e. removing all their spending money and giving back to individuals to buy their own services/social insurances.

Exactly, that would be true democracy. Everyone over 16 gets 10k then they pay for all public services via point of service and for other things like wars, everyone can vote whether they want to donate x % of their 10k to fund the war and obviously if not enough people vote they wouldn't be able to go to war.

The way I see it is the tax revenue is something like 540 billion pounds, so divide that by the 50 million people over 16 years of age in this country and that's 10,000 pounds each plus 40 billion leftover for things which would be hard to manage via POS.

Then I won't have to pay for all those wasters who spend their lives drinking and smoking then give the NHS a bill of 100,000s of pounds.

Another great benefit, is the removal of the very much overly generous benefits people get for having children which must make up the vast majority of benefits. Why should I pay a waster without a job 1k/ month + free house just because they have a couple of sprogs? Especially if I don't want any for myself yet am still subsidising other peoples.

As our society is terminally obsessed with spending money there would be enough money coming back into the economy through the purchase of products and services that this social kind of redistribution of wealth shouldn't have a bad effect, indeed as many people have said since the government spending is probably only 50% efficient due to corruption, this way we could double the amount of money we get from our taxes!

I know as a business owner I'd be happy for all my potential customers to be 10k richer per year.

[Nationalist]

Sure 'on average'. It may come as a surprise to you that a 10k per annum CI could be provided right now with no additional taxation required. Indeed I did the math and there would actually be a significant saving due to massive amounts of inefficient pen pushing we could do away with.

I don't think so.

Assume 40 million adults in the UK, a state-provided income of £10K costs £400 billion. No way can you get that from efficiency savings.

Total govt expenditure is £670bn per year, including NHS: £119bn, Education: £88bn and Defence: £38bn.

All those items still have to be paid for because someone on £10K pa can't afford private education or private health.

You could aportion part of the £189bn social security budget to the CI, but bear in mind most of that goes to pay pensions for old folks which would still have to be paid.

I think you need to do your sums again BBC, the CI is unaffordable except for certain countries which are blessed with extreme oil wealth.

[Saberu]

Assume 40 million adults in the UK, a state-provided income of £10K costs £400 billion. No way can you get that from efficiency savings.

Total govt expenditure is £670bn per year, including NHS: £119bn, Education: £88bn and Defence: £38bn.

I think you need to do your sums again BBC, the CI is unaffordable except for certain countries which are blessed with extreme oil wealth.

You are missing the point. Using your example of adults (guessing over 21?) makes it even easier. And it seems I've underestimated government expenditure.

Using the stats above it seems we could afford a CI on top of keeping the NHS, free education and defence budget- hurrah.

As for pensions and all existing benefits, they would definitely be unnecessary in the new system but all existing ones can keep being paid.

The CI system could gradually be introduced to people who are not currently claiming benefits of any form, or people who wish to switch from their existing benefits to CI, or people who wish to switch from their pension to CI with the obvious clause of not being allowed to go back.

Considering the example of 10k/ year CI is already better than most pensions and can offer a reasonably good quality of life I don't see any problem. The only people who will be hard done by are the benefit scroungers who had 2-3 children just to claim 2000/ month between free housing/ tax breaks and cash, but they 833/ month for each parent giving a combined income of 20k/ year is more than enough money to support a family IMO.

Also I think the free tax allowance could be abolished as it wouldn't be necessary, people will already be reasonably wealthy from their CI and any job. This would push up tax revenues.

They could phase in CI over time to make it easier and cheaper, start off with just 5,000 pounds/ year then increase it above inflation each year until it reaches the necessary amount.

Edited August 3, 2009 by Saberu

[Minos]

To have a proper citizens income the government needs to taking more in taxation than its spending and then you can equally redistribute the profits. If you did it this way it wouldn't be inflationary.

What has money got to do with it? It's all about resources and labour. Print or redistribute enough money and you'll get rising prices. What's needed is to keep the poor poor so those with money can keep the resources for themselves.

[Traktion]

I wouldn't worry too much about the big ideas of 10k pa each and such - they would be so radical that, short of state failure, they would not happen in a single leap. Why not see if a basic CI works well first?

A basic CI which is enough to cover current benefits requirements is all that is needed. This would stop the benefits trap, divide the benefits money equally and encourage people to supplement their income with work.

We ran through the figures in the last thread about this and it worked out at something like £70 per week for every adult in the UK by simply redistributing the £189bn equally. IIRC, the state pension is about £95 per week. This probably could result in a £50-60 per week left for non-pensioners (EDIT: and perhaps £100 for disabled people too). This is tax neutral - it is just redistributing benefits payments.

The amount wasted in distributing the current benefits, not to mention those taking more than their fair share, is the problem. Distributed equally, via a massive computerised payroll system is easy - you just need to put each citizen's NI number + account number in and fire off the money (which is why it is easier to take other tax + give back in this way).

How do you stop everyone from just not working? Balance the payments against GDP. The less work done by the population, the less money they get as a CI, which encourages people to work. If everyone wants to sit in the sun, the CI would be zero. If most people want to work to better their income, the CI will rise. Importantly, as there is no CI cut off, it is always beneficial to work for extra income.

With unemployment rising, more automation happening and the benefits trap ever present, the current system is too complicated and unsuitable, imo. Something has to give and if unemployment starts to head very high, this may be the only feasible option.

Edited August 3, 2009 by Traktion

[Saberu]

I wouldn't worry too much about the big ideas of 10k pa each and such - they would be so radical that, short of state failure, they would not happen in a single leap. Why not see if a basic CI works well first?

A basic CI which is enough to cover current benefits requirements is all that is needed. This would stop the benefits trap, divide the benefits money equally and encourage people to supplement their income with work.

I agree that in practical terms a CI that matched current JSA would be good as an initial step. But obviously this is a philosophical thread about the optiumum system of CI, which is why I agreed on £10k because it allows us to vote in the most purely democratic way possible, with our money.

Capitalism can be corrupted by marketing and branding but it will always be open to competition, whereas voting for the same three parties gives you no option. At least by having the money we retain the power. Point Of Service payment is the way forward, but first we need a baby step like the one you suggested. Stop these stupid over generous benefits for parents with children and just have the CI

[Stars]

If you fund a CI by collecting the value of government services in the value of the territory it administrates and remove other taxes, it will work (far better than what we have). If you attempt to fund it by taxing people's work, you will end up with a real estate boom followed by an economic collapse.

Edited August 7, 2009 by Stars

[huw]

yeh but whats the difference.

if a high earner is contributing a higher degree of tax towards the citizens income why would he need some of it back.

why not just say low earners pay less tax, high earners pay more.

why would high earners want to pay tax and get their same money back again.

if youre right in the middle, you pay citizens tax and get the same amount back again.

pointless.

The difference is that under the earnings-related system, you have to track everybody's circumstances in detail.

Reducing complexity/bureaucracy/sterile employment is not pointless. The high earner probably doesn't need some of his contributions back ... so what? If he ends up in the same place, but without the need to fill in a tax form and support massive government and accountancy overheads to check that form, isn't that to his overall benefit?

[Alan B'Stard MP]

How about a citizens voucher? Each citizen is issued with a number of vouchers each year which in themselves are worth nothing but when presented in payment for services with cash - multiply the value of the payment tendered. Vouchers by some mechanism can only be reedemed by the person to whom it was issued.