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tomandlu

A Citizen's Wage

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As both a supporter of the principals of both a welfare state and that working should always be more financially rewarding that not working, I find myself coming round more and more to the idea of an untaxed citizen's wage. This would be set at a low but viable level to allow the recipient to pay for essentials. No other welfare payments would be provided, except for costs associated with physical disabilities. The state would continue to provide universal healthcare and education.

From my point of view, it has the following benefits:

  • It's simple - everyone gets it, so the associated bureaucracy is minimal
  • It's fair - since everyone gets it, working always beats not working
  • It's self-regulating - if tax revenues fall, the wage can be reduced as a necessary saving, driving people back into work, thus increasing tax revenues

What am I missing IYHO? Also, I can't quite work out the best way to factor children into this - a half-wage until 16 maybe, limited to two claims per family at the most?

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I understand things like this have been suggested before like the negative income tax. I believe one problem was that they were unpopular precisely because it reduced bureaucracy (reduced public sector). I think it's a good transitional policy.

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First question - do the numbers add up? Could it ever be done without imposing far too big a tax burden?

Second question - can you simply cut it and expect people who aren't working to start working? It's not as if everyone who's unemployed is simply scrounging because they can't be bothered to work.

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As both a supporter of the principals of both a welfare state and that working should always be more financially rewarding that not working, I find myself coming round more and more to the idea of an untaxed citizen's wage. This would be set at a low but viable level to allow the recipient to pay for essentials. No other welfare payments would be provided, except for costs associated with physical disabilities. The state would continue to provide universal healthcare and education.

From my point of view, it has the following benefits:

  • It's simple - everyone gets it, so the associated bureaucracy is minimal

  • It's fair - since everyone gets it, working always beats not working

  • It's self-regulating - if tax revenues fall, the wage can be reduced as a necessary saving, driving people back into work, thus increasing tax revenues

What am I missing IYHO? Also, I can't quite work out the best way to factor children into this - a half-wage until 16 maybe, limited to two claims per family at the most?

It was tried in USSR in late 20 century.

Everyone pretended to work and govt pretended to pay :-) was the popular saying at that time.

No incentive to work harder if you can get essentials including housing for free or nearly free.

Also, USSR was importing consumer goods and grain at ever increasing rate starting from circa 1965. Imports were paid for with hard currency received from selling Siberian oil and gold.

Once gold and oil prices plummeted in mid-1980s, USSR was done for.

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Questions:

+ How do you pay for it?

(My suggestion: have a single benefit, which is less than all existing ones, so the tax burden is less than currently)

The gross individual tax-burden might well go up, but the net tax-burden may stay the same or even fall (due to the rebate in the form of the CW)

+ What do you do with "fashionable benefit-takers", like unemployed homeowner, expecting mortgage subsidies

(my suggestion: given then nothing extra, they can sell and move)

If they can't afford the mortgage on the CB, then they can't afford it. Sell and move indeed, or sub-let a few rooms, or rent the whole place out (if the mortgage terms allow that). There are no other benefits available.

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First question - do the numbers add up? Could it ever be done without imposing far too big a tax burden?

Second question - can you simply cut it and expect people who aren't working to start working? It's not as if everyone who's unemployed is simply scrounging because they can't be bothered to work.

See below above re USSR. You have to cut if the tax revenue falls - anything else leads to collapse. I'm not saying everyone is scrounging - simply that the current system doesn't protect against that as an option. The amount gets reduced not to 'punish' people, but because the wage needs to be affordable.

Edited by tomandlu

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What am I missing IYHO?

It might well be workable if the value that funded it were exclusively value the community created in concert - like land value.

The trouble is governments are not remotely willing collect this value and instead they tax people on their work and let community created value be looted as a freebie to win political favour.

If you tried to fund such a thing with the present tax system you would probably make it impossible to work

Edited by Stars

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I've always thought it's a good idea.

Some details are problematic though. Will it include a housing component? Because that will make it a pretty bloody big amount!

(Edit: I just mean, will it be expected to cover housing as well as food etc?)

Edited by Selling up

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It was tried in USSR in late 20 century.

Everyone pretended to work and govt pretended to pay :-) was the popular saying at that time.

No incentive to work harder if you can get essentials including housing for free or nearly free.

That is a completely broken comparison, in the USSR private initiative wasn't allowed so people couldn't do anything else but live off their state wage.

I'm in favour of the citizen's wage, it's not the kind of ideal system I would like to see but it's a good step forward from the current mess. The citizen's wage should be just about enough to live very modestly off it, so that there is still a big incentive to work and improve ones financial status.

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It was tried in USSR in late 20 century.

Everyone pretended to work and govt pretended to pay :-) was the popular saying at that time.

No incentive to work harder if you can get essentials including housing for free or nearly free.

Also, USSR was importing consumer goods and grain at ever increasing rate starting from circa 1965. Imports were paid for with hard currency received from selling Siberian oil and gold.

Once gold and oil prices plummeted in mid-1980s, USSR was done for.

No system is idiot-proof. However, linking it tax-revenue at least supplies a useful feedback mechanism, provided you don't fiddle the numbers too much. The link has the additional benefit of preventing you just hiking income tax in a recession (since you just get more people dropping out of work and just surviving on the CW).

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I've always thought it's a good idea.

Some details are problematic though. Will it include a housing component? Because that will make it a pretty bloody big amount!

(Edit: I just mean, will it be expected to cover housing as well as food etc?)

I'd say yes to housing - but fairly minimal. A reasonable but small room in a shared house ought to be affordable, but no more than that... since everyone gets the wage, this shouldn't have an impact on housing costs.

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That is a completely broken comparison, in the USSR private initiative wasn't allowed so people couldn't do anything else but live off their state wage.

Private intiative otherwise called "black market" in 1980s USSR was huge but invisible to govt statistics.

Everything from private car repairs to "swapping" flats/houses was done privately.

However, profits reaped from such initiatives could not be legally re-invested. E.g. a successful car mechanic could not lawfully hire other people to work only for him. But there were other ways around it.

I'm in favour of the citizen's wage, it's not the kind of ideal system I would like to see but it's a good step forward from the current mess. The citizen's wage should be just about enough to live very modestly off it, so that there is still a big incentive to work and improve ones financial status.

What for? To get bragging rights? If you can modestly live on guaranteed wage in a guaranteed housing and then on guaranteed pension and you are guaranteed a place in a care home should you need it, how many people would strive to improve own financial status? The answer is "about 5-10%" and it is not dependent on political system.

One can't take ones financial status to grave :-)

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What for? To get bragging rights? If you can modestly live on guaranteed wage in a guaranteed housing and then on guaranteed pension and you are guaranteed a place in a care home should you need it, how many people would strive to improve own financial status? The answer is "about 5-10%" and it is not dependent on political system.

One can't take ones financial status to grave :-)

If it's the difference between mere existance and a comfortable living most people would still work.

Personally I still don't see that it can work. The revenue argument doesn't cut it IMO. If it pays for much more than a basic existance then it's probably too high, but if it can't afford to pay for that due to revenue drops there's no point in having it anyway. Also, if you are working you'll presumably contribute towards it then get it paid back, minus some that goes to those who don't work. So how is the net result different from benefits with a bit of shuffling about where the beurocracy occurs?

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many people would strive to improve own financial status? The answer is "about 5-10%" and it is not dependent on political system.

I'd guess the reverse - 5-10% would choose not to improve their financial status. I'm not proposing that one could live a life of luxury on this wage (and remember, it just keeps dropping if tax revenues fall). If you want to ensure that no one takes it too much for granted, then just remove VAT from all essentials, and wack it up for luxuries and non-essentials...

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Private intiative otherwise called "black market" in 1980s USSR was huge but invisible to govt statistics.

Everything from private car repairs to "swapping" flats/houses was done privately.

However, profits reaped from such initiatives could not be legally re-invested. E.g. a successful car mechanic could not lawfully hire other people to work only for him. But there were other ways around it.

Yes, but that's the fundamental difference.

What for? To get bragging rights? If you can modestly live on guaranteed wage in a guaranteed housing and then on guaranteed pension and you are guaranteed a place in a care home should you need it, how many people would strive to improve own financial status? The answer is "about 5-10%" and it is not dependent on political system.

One can't take ones financial status to grave :-)

Most people want more than just live very modestly, they want nice holidays a nice car, eating out, going to theatres, a better house, etc, etc.

If anything it will be 5-10% that won't be working to earn extra money, even right now loads of benefit receivers work (illegaly) to improve their income!

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Also, if you are working you'll presumably contribute towards it then get it paid back, minus some that goes to those who don't work. So how is the net result different from benefits with a bit of shuffling about where the beurocracy occurs?

Because its never taxed, or included in income tax calculations, and everyone gets it. For example, I rent but as I'm not eligible for HB, I am priced out of roomier properties by HB claimants. That, theoretically, would not happen with a CW.

The current system means that working can, theoretically, mean you 'earn' less than if you claimed benefits. That shouldn't be the case, and a CW addresses that issue directly and incontrovertibly without removing or overcomplicating welfare payments.

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Questions:

+ How do you pay for it?

(My suggestion: have a single benefit, which is less than all existing ones, so the tax burden is less than currently)

+ What do you do with "fashionable benefit-takers", like unemployed homeowner, expecting mortgage subsidies

(my suggestion: given then nothing extra, they can sell and move)

1. The same way as the current benefits are paid for. It's just a re-jigging of the way it's redistributed.

2. I was discussing this with a friend who thought it was a daft idea. His argument was that it wouldn't give anyone enough money to live on, particularly because of housing costs. He wanted the benefits system to pay for his mortgage and food (in full) when he was between jobs. I argued that what he thinks he would currently receive is much more than what he would actually receive (i.e. you get less JSA if recently in work, it takes months to get housing benefits etc).

He also argued that it would be handouts for people with jobs who didn't need it. I tried to explain that the problem with giving too much to those without a job gives them little incentive to get a job, especially with a high basic tax rate - the poverty/benefits trap. I also argued that those with jobs, being paid a CI, would be offsetting it against their taxes - i.e. they would be paying more in tax than they received in a CI, like a negative income tax, so the net result is they were paying more in tax than they received in benefits.

TBH, I think he underestimated the number of people on the take, over estimated the support for the average working person should they lose their job and hadn't really considered the benefits trap at length (likely because of the former). I'll have to bring it up again with him, as he is a firm anti-Tory, Labour man (both parents + sister are teachers... ;) ). He did get the Land Value Tax though and thought that made sense... I will see if that germinates into full blown advocacy next time we meet up! :)

EDIT: btw, he thought that it would be bad for employment because of the efficiencies making civil servants unemployed! :lol:

Edited by Traktion

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As both a supporter of the principals of both a welfare state and that working should always be more financially rewarding that not working, I find myself coming round more and more to the idea of an untaxed citizen's wage. This would be set at a low but viable level to allow the recipient to pay for essentials. No other welfare payments would be provided, except for costs associated with physical disabilities. The state would continue to provide universal healthcare and education.

From my point of view, it has the following benefits:

  • It's simple - everyone gets it, so the associated bureaucracy is minimal

  • It's fair - since everyone gets it, working always beats not working

  • It's self-regulating - if tax revenues fall, the wage can be reduced as a necessary saving, driving people back into work, thus increasing tax revenues

What am I missing IYHO? Also, I can't quite work out the best way to factor children into this - a half-wage until 16 maybe, limited to two claims per family at the most?

Central authority collects money.

Central authority keeps money.

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This topic has been discussed quite a bit in previous threads. The numbers can add up rather well and it has been thoroughly researched in particular in Germany and in Switzerland. There are movements in both these countries to implement a basic Citizens Wage, with an idea that a value of around €1,000 a month would be practicable and viable. As I live mostly on the border of both these countries I sometimes go to meetings of this network (Netzwerk GrundEinkommen) - in fact we had a meeting last night.

A film (in German) about this subject was made by a Swiss team and is freely available on the Net (http://www.kultkino.ch/kultkino/besonderes/grundeinkommen).

However, a potential argument against such a system is that people still become dependent on the State to administer such a system and to hand out the funds - a State which is controlled by too many VIs not really willing to implement such an idea and therefore liable to sabotage it in practice.

In my view a better way is to develop social businesses such as those outlined by M Yunus of the Grameen Bank (http://video.ft.com/v/88167920001/Should-profit-be-the-only-driver-of-business-)

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  • 260 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
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      • up 5%



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