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John51

Citizens Income

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I know that there are many that disagree with CI for emotional reasons. Can we ignore those objections just for this thread and simply talk about the positive, negative and maybe interesting changes having a CI will make to British society?

OK it will probably never come about, just as the NHS was unimaginable to many in the 1930's but hey, it's just a thread on an internet forum.

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I know that there are many that disagree with CI for emotional reasons. Can we ignore those objections just for this thread and simply talk about the positive, negative and maybe interesting changes having a CI will make to British society?

OK it will probably never come about, just as the NHS was unimaginable to many in the 1930's but hey, it's just a thread on an internet forum.

No objection on emotional grounds, the point is that the numbers simply don't add up.

2 questions:

  1. Can anyone give an example of a comparable country that has introduced CI?

  2. In the absence of 1 above can anyone give a properly worked and costed example of how a CI would look?

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Guest eight

[*]Can anyone give an example of a comparable country that has introduced CI?

Yes, Britain - in the form of state pensions, public sector employment, quasi public sector employment and tax credits for those in private sector employment.

Nothing personal Goat, but the tone of your posts almost suggesst you have a VI in NOT seeing the issue debated.

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Lower living costs and jobs for all would be more preferable.......not thought in great depth about it and its implications, but would it not only be pulling inflation up to a certain level? Who is to say that once it is in force prices would not rise to meet it and then CI would need to rise annually with cpi like pensions do at the moment? :unsure:

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Lower living costs and jobs for all would be more preferable.......not thought in great depth about it and its implications, but would it not only be pulling inflation up to a certain level? Who is to say that once it is in force prices would not rise to meet it and then CI would need to rise annually with cpi like pensions do at the moment? :unsure:

As noted by Traktion, it probably requires LVT.

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Yes, Britain - in the form of state pensions, public sector employment, quasi public sector employment and tax credits for those in private sector employment.

Not really a CI is it?

Nothing personal Goat, but the tone of your posts almost suggesst you have a VI in NOT seeing the issue debated.

I'm happy to see debate and desparate to see any kind of sensible proposal as to how it might work.

I have no VI in the issue, if my tone implies otherwise it is because I am bored of posters promoting a CI (and other madcap schemes) as a magic bullet without any kind of detailed thought or understanding of what they are actually asking for.

Edited by Goat

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No objection on emotional grounds, the point is that the numbers simply don't add up.

2 questions:

  1. Can anyone give an example of a comparable country that has introduced CI?

  2. In the absence of 1 above can anyone give a properly worked and costed example of how a CI would look?

First question : Not that I know of.

Second.. Costs.

£500/month for everyone over 18 [simplification - there may be some form of taper here].

=6k/year for 50 million people = £300 Billion.

However, this replaces a lot of pension provision, obviously, so the cost drops to c. £180 billion.

From a similar previous calculation, removing in-work benefits and tax credits drops the cost to c. £100 billion.

So, to make it neutral, you have to increase the income tax and NI take by about 50% - of course, a lot of people in work would see very little difference because of this. Has to be that way, really. Merging Income tax and NI might help as well.

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Guest eight

Not really a CI is it?

I'd disagree. When about 90% of the population are on the state teat in one form or another you might as well go the whole hog and ditch the administration infrastructure.

I'm happy to see debate and desparate to see any kind of sensible proposal as to how it might work.

I have no VI in the issue, if my tone implies otherwise it is because I am bored of posters promoting a CI (and other madcap schemes) as a magic bullet without any kind of detailed thought or understanding of what they are actually asking for.

Yeah, apologies I read my post back and I did word it a bit strongly.

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=6k/year for 50 million people = £300 Billion.

However, this replaces a lot of pension provision, obviously, so the cost drops to c. £180 billion.

State pension ITRO £70bn (2010/11), where does the other £50bn come from?

From a similar previous calculation, removing in-work benefits and tax credits drops the cost to c. £100 billion.

Tax credits £28bn, housing benefit £22 bn; what is the other £30bn?

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First question : Not that I know of.

Second.. Costs.

£500/month for everyone over 18 [simplification - there may be some form of taper here].

=6k/year for 50 million people = £300 Billion.

However, this replaces a lot of pension provision, obviously, so the cost drops to c. £180 billion.

From a similar previous calculation, removing in-work benefits and tax credits drops the cost to c. £100 billion.

So, to make it neutral, you have to increase the income tax and NI take by about 50% - of course, a lot of people in work would see very little difference because of this. Has to be that way, really. Merging Income tax and NI might help as well.

Rents rise with average income. If you fund a CI with increased income taxes, rather than a LVT, the land lords will take the difference as additional unearned income (rent seeking).

While I don't think a LVT/CI is ideal, it is the simplest/best tax/spend solution I know of.

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First question : Not that I know of.

Second.. Costs.

£500/month for everyone over 18 [simplification - there may be some form of taper here].

=6k/year for 50 million people = £300 Billion.

However, this replaces a lot of pension provision, obviously, so the cost drops to c. £180 billion.

From a similar previous calculation, removing in-work benefits and tax credits drops the cost to c. £100 billion.

So, to make it neutral, you have to increase the income tax and NI take by about 50% - of course, a lot of people in work would see very little difference because of this. Has to be that way, really. Merging Income tax and NI might help as well.

Yes, tax rises would be required in in order to create a break even point for a "normal" working person.

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Guest eight

Yes, tax rises would be required in in order to create a break even point for a "normal" working person.

I just assumed personal allowances would bite the dust (in essence the CI would be the personal allowance) and you would then pay tax on all earned income.

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Rents rise with average income. If you fund a CI with increased income taxes, rather than a LVT, the land lords will take the difference as additional unearned income (rent seeking).

While I don't think a LVT/CI is ideal, it is the simplest/best tax/spend solution I know of.

I was trying to do a simple case. Never really looked at a LVT in detail.

I'd probably add.. a serious housebuilding program to get rents/costs down would have to go alongside the introduction of a CI, IMO.

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My initial thoughts are that if everyone is given £500 from 01.01.2014, it wouldn't take long for the purhasing power of that 'extra' £500 in your pocket to be whitled down to practically zero with the cost of essentials rising to snaffle it all up, leaving us all back to square one.

A CI doesn't change the players in the 'game' and therefore it's effects wouldn't be permanent- The country will still be full of; people who want to win (Lets call them class 1), people who can't be arsed (Lets call them class 3) and everyone inbetween (er...middle class?). Money would flow in the same way, it's just that the class 3'ers would enjoy a temporary feeling of wealth. Those middlers would feel like they weren't funding the class 3 layabouts and the class 1'ers, well, they'd put the rent up wouldn't they?

This may or may not make any sense whatsoever & I base this on absolutely no economic theory apart from it just feels right. (which I'm sure is as valid as most economists thinking).

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the main issues of a citizens income would be the scrapping of targeted benefits: should a millionaire get a citizens income? should a single person get the same as a mother with 3 kids?

but on a technical level it makes little sense to have a universal benefit.

you are either a net payer or a net receiver of tax. its pointless paying tax with one hand and taking it back with the other.

a minimum income guarantee i think would be slightly different to a citizens income.

Edited by mfp123

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I just assumed personal allowances would bite the dust (in essence the CI would be the personal allowance) and you would then pay tax on all earned income.

Thats the way I see it too. The advantage of this over the current system is that your always better off by earning something in addition to your CI - there is no negative marginal income trap.

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the main issues of a citizens income would be the scrapping of targeted benefits: should a millionaire get a citizens income? should a single person get the same as a mother with 3 kids?

but on a technical level it makes little sense to have a universal benefit.

you are either a net payer or a net receiver of tax. its pointless paying tax with one hand and taking it back with the other.

a minimum income guarantee i think would be slightly different to a citizens income.

Yes..

I think the issues with kids are tricky, you'd need them to have some associated income, and there's family breakups as well. If you give kids a full CI from birth you'd incentivise s serious baby boom.. Getting housing costs down would help.

As far as universality goes - it gets means testing out of the picture. Means testing is costly and always throws up unfairness; a universal benefit means that people know what they are going to get, and it's basically just a tax rebate for those who pay a lot of tax. Tax credits are/were an attempt to get something like a minimum income guarantee, and are a bureaucratic nightmare.

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State pension ITRO £70bn (2010/11), where does the other £50bn come from?

Tax credits £28bn, housing benefit £22 bn; what is the other £30bn?

I havent tried working it out but will not the wages saved by not paying all the job centre staff, tax credits online staff, fraud prevention staff, housing benefit staff etc etc etc all add up to it and more??

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My initial thoughts are that if everyone is given £500 from 01.01.2014, it wouldn't take long for the purhasing power of that 'extra' £500 in your pocket to be whitled down to practically zero with the cost of essentials rising to snaffle it all up, leaving us all back to square one.

That would be true all other things being equal but CI is not supposed to make everyone better off - its supposed to be alternative mechanism to the current benefits system to provide a safety net for those on low/zero incomes. As such the tax thresholds and rates would need to be adjusted to gradually claw it back as you go up the income scale.

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a minimum income guarantee i think would be slightly different to a citizens income.

A minimum income guarantee would create a zero marginal income trap at some range of earning levels I.e. is we say that for example "anyone who earns less than 10k will have the difference gifted to them" then it becomes pointless to do any work that earns you less than 10k because you would be no better off than doing nothing.

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It seems to me that some form of citizens income is baked into the cake anyway- because we all agree that technology cannot and should not be prevented from impacting on the jobs market and technology is getting smarter all the time.

If ever higher efficiency and productivity is the aim then this implies that less people will be required in the future to create the things we all need- so what are we going to do with the people no longer required- and who will be consuming the output of the hyper efficient production we are trying to achieve?

I suspect that what we will end up with is a beefed up version of the Workfare concept in which the unemployed are paid by the state to do useful things that the private sector can not or will not fund- paid for by taxing that hyper efficient production's profits.

Yes the right will strongly object to this redistribution but in the long run they will agree to it because they will recognize that they need a market to sell in to- and having a super efficient production capacity is useless if all your potential consumers have no money in their pockets.

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So if a CI was say £500 net PM.....you could get four people together and have a total household income of £2000....why would you bother to work?.... ;)

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So if a CI was say £500 net PM.....you could get four people together and have a total household income of £2000....why would you bother to work?.... ;)

indeed; I would be in Spain already ... on a beach ... focus on my garage projects

anyway problem with the CI is that left wingers believe that somehow the super rich capitalists and landowners can pay for the benefit state

the true is that there just is not enough super rich and the benefit state is paid by the middle class

also land value tax would effect mainly the farm land and increase food prices

therefore the CI will not work; plus for CI to work you would have tax all the income at least 30 or 40%; again what would be the point to work?

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indeed; I would be in Spain already ... on a beach ... focus on my garage projects

anyway problem with the CI is that left wingers believe that somehow the super rich capitalists and landowners can pay for the benefit state

the true is that there just is not enough super rich and the benefit state is paid by the middle class

also land value tax would effect mainly the farm land and increase food prices

therefore the CI will not work; plus for CI to work you would have tax all the income at least 30 or 40%; again what would be the point to work?

Also just because someone is living in a property it doesn't mean they own it or pay rent on it. ;)

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