Citizen's Income Financing..

[Damik]

Oh and damik you're being a tool here. The numbers NEED to change, someone somewhere will be worse off and its not going to be the government.

So don't think of it in terms of 89 billions, think of it as "the CI will be calculated by what we can afford". This country has lived and is living outside of its means and either you are in favour of curbing that behaviour or you want us to go bankrupt.

Which is it?

the original poster suggests to tax working people extra 61% on the top of what they are paying already in the income tax to afford CI. so the CI is not financeable. simple as that. nobody will pay for it. we can not afford it

[snowflux]

can you understand English???

the current system costs £244 billions. the CI would cost about £333 billions. the difference would be £89 billions

and you are suggesting to tax working people for these extra £89 billions. so to pay extra 61% on the top what they are paying now

[Damik]

try this:

Edited October 24, 2013 by Damik

[snowflux]

Guys

It’s not all so black and white. There would have to be a taper rather than a sudden change and you are only considering the financials rather than the changes in attitude required in this country.

You’re also thinking of it the wrong way around, we shouldn’t ask “how much does somebody need to live on?”, it should be “we can afford to spend this much on welfare, how can we reach that figure in a fair manner”. If the country can’t afford it then the country can’t afford it and people that are not contributing should be told just that.

As nice as it would be for myself and I’m sure a lot of members on here to see it happen, you wouldn’t immediately jump from relatively high means tested benefits to a much lower CI. You would have to say, for example, OK the average full time worker currently gets £x after tax and this will now be £y, the typical single parent with one child currently gets £x and this will now be £y while the administration is phased out. “yes, it’s going to be a bit of struggle but there you go, it’s either that or bankruptcy, but working will no longer negatively affect your incomes”. On 1 st October 2014 the formula will change to x,y,z. and by 1 st April 2015 this will then change again until we are at a sustainable level. This would enable rents and costs of living slowly reduce, as well as CI payments, and as long as it’s transparent and clearly explained then in theory the majority would be accepting of it.

As for who gets it, well again we would have to decide exactly what we can afford.

My major concern about CI are those skilled migrants that we DO want –doctors, engineers, teachers, plumbers, electricians etc. Do they instantly get CI? If not are they on the poverty line for three years? Why would they come here for that? Do they still get the CI if they return home for 6 months?For a weeks’ holiday?

How is it paid? Does everybody require a UK bank account? Does everyone have to ‘sign on’ to make sure they aren’t dead or out of the country? Does the employer have to pay the equivalent CI in order to justify hiring a foreigner? Does this apply to the NHS to hire skilled surgeons?

Things such as DLA would be offset by additional NHS help. But as long as it’s not given as cash, and therefore spent on what we actually want it to be spent on, then it’s fine with me.

One thing that we are trying to eliminate is the incentive to not work, which may be a concern with the removal of NMW. So I would make it clear that the CI can and will change year on year depending on how much is raised via tax. If everyone decides to stop working? Well, they get less money, but then there is nobody to blame except the population themselves and that *should* be a useful tool for the government to fall back on.

Yes, those are all good points. A lot of careful thought would have to be given regarding how to get there from here (to avoid another Universal Credit type débâcle) and, as you say, a gradual phase in rather than a big bang would almost certainly be the best way to go about it. There would also be winners and losers, as there are under the current system, and you can be sure that the press would give great precedence to the plight, no matter how small, of the losers.

Edit: To be honest, though, I don't think it's possible to introduce a CI without a revolution. There are just far too many vested interests in maintaining the current status quo for it to get off the ground, and even if it did, said VIs would soon sabotage it with unnecessary complication.

Edited October 24, 2013 by snowflux

[fluffy666]

the original poster suggests to tax working people extra 61% on the top of what they are paying already in the income tax to afford CI. so the CI is not financeable. simple as that. nobody will pay for it. we can not afford it

Let's see.

Suppose you have 10 beans. Now, I take away 6 beans. How many beans do you have?

[SHERWICK]

try this:

What fluffy is saying is that it doesn't matter that income tax goes up by 61% because you have another £6000 to pay it.

However, I don't think that £6k is going to cover most people.

Can anyone calculate whetheromeone who earns 30k, 40k, 50k etc would be better or worse off, and by how much?

[fluffy666]

Guys

It’s not all so black and white. There would have to be a taper rather than a sudden change and you are only considering the financials rather than the changes in attitude required in this country.

You’re also thinking of it the wrong way around, we shouldn’t ask “how much does somebody need to live on?”, it should be “we can afford to spend this much on welfare, how can we reach that figure in a fair manner”. If the country can’t afford it then the country can’t afford it and people that are not contributing should be told just that.

As nice as it would be for myself and I’m sure a lot of members on here to see it happen, you wouldn’t immediately jump from relatively high means tested benefits to a much lower CI. You would have to say, for example, OK the average full time worker currently gets £x after tax and this will now be £y, the typical single parent with one child currently gets £x and this will now be £y while the administration is phased out. “yes, it’s going to be a bit of struggle but there you go, it’s either that or bankruptcy, but working will no longer negatively affect your incomes”. On 1 st October 2014 the formula will change to x,y,z. and by 1 st April 2015 this will then change again until we are at a sustainable level. This would enable rents and costs of living slowly reduce, as well as CI payments, and as long as it’s transparent and clearly explained then in theory the majority would be accepting of it.

As for who gets it, well again we would have to decide exactly what we can afford.

My major concern about CI are those skilled migrants that we DO want –doctors, engineers, teachers, plumbers, electricians etc. Do they instantly get CI? If not are they on the poverty line for three years? Why would they come here for that? Do they still get the CI if they return home for 6 months?For a weeks’ holiday?

How is it paid? Does everybody require a UK bank account? Does everyone have to ‘sign on’ to make sure they aren’t dead or out of the country? Does the employer have to pay the equivalent CI in order to justify hiring a foreigner? Does this apply to the NHS to hire skilled surgeons?

Things such as DLA would be offset by additional NHS help. But as long as it’s not given as cash, and therefore spent on what we actually want it to be spent on, then it’s fine with me.

One thing that we are trying to eliminate is the incentive to not work, which may be a concern with the removal of NMW. So I would make it clear that the CI can and will change year on year depending on how much is raised via tax. If everyone decides to stop working? Well, they get less money, but then there is nobody to blame except the population themselves and that *should* be a useful tool for the government to fall back on.

Yes, I was just looking at the money aspect. And I think that housing is a problem - the 'basic survival' bit is so dominated by housing costs right now that you cannot have a remotely fair system. Bear in mind that child benefit is very simple and cheap to administer, and of all the benefits it's closest to CI. There are edge issues, yes.

Part of me wonders why a country with over 2 million official unemployed, and where half the population goes to university, really needs to import workers of any kind.. to some extent CI advantages natives over immigrants.

As far as varying CI with tax take.. that looks attractive but it's economically dangerous. If a recession automatically takes money out of people's pockets via lower tax revenues, there is a multiplier effect built in (Recession -> lower CI -> Deeper recession..), and people get used to more money in boom times.

[fluffy666]

What fluffy is saying is that it doesn't matter that income tax goes up by 61% because you have another £6000 to pay it.

However, I don't think that £6k is going to cover most people.

Can anyone calculate whetheromeone who earns 30k, 40k, 50k etc would be better or worse off, and by how much?

Depends how the tax bands and rates are shifted around.

You could almost certainly arrange things so that there would be no change.

[dkujsbap]

What fluffy is saying is that it doesn't matter that income tax goes up by 61% because you have another £6000 to pay it.

However, I don't think that £6k is going to cover most people.

Can anyone calculate whetheromeone who earns 30k, 40k, 50k etc would be better or worse off, and by how much?

Again its not a case of how much worse off certain people will be. It's how much money we are able and willing to spend on welfare and then divide that in a simple and fair manner.

Chances are that most people will get fewer pounds sterling. The reason is that we spend too much both collectively and as individuals.

Welfare needs a reform and is currently unfair and unsustainable. If you can think of a better way to reform that isn't a bureaucratic nightmare then please let's hear it.

Whichever way you look at it, the quality of life WILL go down, taxes WILL go up and welfare WILL be reduced. It's just whether or not were all treated equally in that respect, or not.

[Damik]

What fluffy is saying is that it doesn't matter that income tax goes up by 61% because you have another £6000 to pay it.

fluffy is wrong

1/ the total income tax receipts in 2012 were around £145 billions

2/ if your income tax just go up to offset the CI £6k pa the total income tax receipts (tax - CI) would be the same £145 billions and in this case there would be no difference for the tax payer

3/ however the CI requires extra £89 billions of the total tax receipts (tax - CI). so the working people would not pay in their income tax only these £145 billions, but also extra £89 billions on the top

and this is the extra 61% of the total income taxation (tax - CI) to finance the CI

[Goat]

My thoughts from another thread: Citizens Income Let's talk about the difference it will make

CI of £6,000 for all adults of working age and £4,000 for all children under 18 to replace all working age benefits including housing benefit, this is probably just about enough to live on. Eliminate all personal allowances and raise the basic rate of income tax to 40%.

Cost of the proposal (based on Citizens Income Trust) £200,400 million (adults) and £77,600 million (children), total cost £278 billion.

Savings from working age benefits £71 bn per appendix#1 of earlier link (excluding tax savings addressed later), housing benefit £29bn per appendix#2, total benefit savings £100bn.

Additional tax revenue from elimination of personal allowances (including NI) per appendix#1 £91bn, increasing this from their 32% to 40% implies £114bn.

Additional tax revenue from increase in basic rate of tax per HMRC impact analysis £81 billion (probably less in reality due to disincentive effects of the tax).

Error: The above assumes an increase in BRIT of 20p but ignores the removal of national insurance, the actual tax gain would be ITRO 8p or £32bn so there's a £49bn hole in my workings (probably a bit less since NIC isn't on all income but IT is).

Total savings and revenue therefore £100bn + £114bn + £81bn = £295 bn.

Net saving from the proposal £295 - £278 = £17bn plus possibly some uncertain administrative savings.

The major losers are:

• Pensioners (all non state pension income now taxed at 40%), that £17bn surplus will probably have to be redistributed to them as compensation.
  
• Low income (particularly single parent) families due to the dramatic reduction in benefits.
  

The major winners are:

• Childless people in work on moderate incomes.
  
• Families on higher incomes.
  

Largely unaffected:

• Single people on higher incomes.
  
• Families on moderate incomes.
  

The big unknown:

• What is the effect on overall economic activity as a result of the removal of the benefit trap and other disincentives to work.
  

Note that this excludes pensioners who are assumed to continue to receive their state pension. The reason for this is that CI is meant to be a replacement for working age benefits; I think we'll also need to let them have a personal tax allowance since they cannot benefit from CI but I have'nt included the cost of this.

I think the big issue is that people will not accept the consequences of the policy, which is a big cut in benefits for single parent families that is redistributed to high income families and childless people on moderate incomes.

Edited October 24, 2013 by Goat

[wonderpup]

They will only do it if it is worthwhile. Offering to pay someone £2ph is unlikely to get someone out of their armchair, unless they see a better future beyond it.

The market should be allowed to discover the rate at which people are prepared to work for anyway. Who is to say what is a worthwhile wage to work for? Only the person being offered the work can tell you that.

You seem to have asked then answered your own question- the rate will be determined by what will motivate people to do the job- what a CI would do however is give people a stronger bargaining position which would lead to better rates of pay- so a CI would not collapse pay rates as suggested, it would support them to some degree by giving people the option to say no without starving to death as a result- to some extent the existing benefits system already puts a floor under wages that would exist even if the MW were not there.

[fluffy666]

fluffy is wrong

1/ the total income tax receipts in 2012 were around £145 billions

Correct, although it's best to combine Tax and NI, since they are all deductions from your payslip.

2/ if your income tax just go up to offset the CI £6k pa the total income tax receipts (tax - CI) would be the same £145 billions and in this case there would be no difference for the tax payer

No, income tax receipts would go up if income tax was raised.

If you 'net it out' then the total amount required drops by this £89 billion. But you wouldn't, because that would make it more complicated. Bear in mind that out total £333 billion includes payments to workers.

[Damik]

My thoughts from another thread: Citizens Income Let's talk about the difference it will make

CI of £6,000 for all adults of working age and £4,000 for all children under 18 to replace all working age benefits including housing benefit, this is probably just about enough to live on. Eliminate all personal allowances and raise the basic rate of income tax to 40%.

Cost of the proposal (based on Citizens Income Trust) £200,400 million (adults) and £77,600 million (children), total cost £278 billion.

Savings from working age benefits £71 bn per appendix#1 of earlier link (excluding tax savings addressed later), housing benefit £29bn per appendix#2, total benefit savings £100bn.

Additional tax revenue from elimination of personal allowances (including NI) per appendix#1 £91bn, increasing this from their 32% to 40% implies £114bn.

Additional tax revenue from increase in basic rate of tax per HMRC impact analysis £81 billion (probably less in reality due to disincentive effects of the tax).

Total savings and revenue therefore £100bn + £114bn + £81bn = £295 bn.

Net saving from the proposal £295 - £278 = £17bn plus possibly some uncertain administrative savings.

The major losers are:

• Pensioners (all non state pension income now taxed at 40%), that £17bn surplus will probably have to be redistributed to them as compensation.
• Low income (particularly single parent) families due to the dramatic reduction in benefits.

The major winners are:

• Childless people in work on moderate incomes.
• Families on higher incomes.

Largely unaffected:

• Single people on higher incomes.
• Families on moderate incomes.

The big unknown:

• What is the effect on overall economic activity as a result of the removal of the benefit trap and other disincentives to work.

Note that this excludes pensioners who are assumed to continue to receive their state pension. The reason for this is that CI is meant to be a replacement for working age benefits (and is not included in the CI Trust's workings); I think we'll also need to let them have a personal tax allowance since they cannot benefit from CI but I have'nt included the cost of this.

I think the big issue is that people will not accept the consequences of the policy, which is a big cut in benefits for single parent families that is redistributed to high income families and childless people on moderate incomes.

this would require about extra £34 billions than the current system. without any chances to decrease the government deficit. why would we do that???

[Bora Horza]

so again we will subsidise private businesses to pay less than the minimal wage ??? great, we can even get back some Chinese jobs, which pay £100 pm ...

You're being inconsistent.

On the other thread you support workfare which effectively involve the Government paying for companies staff, and yet you're complaining lowing the minimum wage will subsidise private businesses!

A CI system would mean that there would be no bureaucratic hurdles, or perverse disincentives - low paid/short term employment would be much more viable (in fact - completely necessary given that CI would need to be set at such a low level), in theory this could increase economic growth.

[Damik]

Correct, although it's best to combine Tax and NI, since they are all deductions from your payslip.

No, income tax receipts would go up if income tax was raised.

If you 'net it out' then the total amount required drops by this £89 billion. But you wouldn't, because that would make it more complicated. Bear in mind that out total £333 billion includes payments to workers.

do you understand thar your current costs of the social and pensions are £244 billions and it would be replaced by CI costs of £333 billions ???

so your tax receipts would not go up just to recover the £6k pa of CI to keep the total income tax revenues the same as now; they would have to go even higher to recover the extra £89 billions in total

------------------------------------------------------------------------

you can only implement the CI if you keep the costs to the current £244 billions

[Damik]

You're being inconsistent.

On the other thread you support workfare which effectively involve the Government paying for companies staff, and yet you're complaining lowing the minimum wage will subsidise private businesses!

A CI system would mean that there would be no bureaucratic hurdles, or perverse disincentives - low paid/short term employment would be much more viable (in fact - completely necessary given that CI would need to be set at such a low level), in theory this could increase economic growth.

Tories propose a social workfare for local councils

[fluffy666]

do you understand thar your current costs of the social and pensions are £244 billions and it would be replaced by CI costs of £333 billions

I understand, You don't.

First, tell me:

- Who does that £244billion currently go to?

- Who would that £333 billion go to?

Straight answer, please.

[wonderpup]

fluffy is wrong

1/ the total income tax receipts in 2012 were around £145 billions

2/ if your income tax just go up to offset the CI £6k pa the total income tax receipts (tax - CI) would be the same £145 billions and in this case there would be no difference for the tax payer

3/ however the CI requires extra £89 billions of the total tax receipts (tax - CI). so the working people would not pay in their income tax only these £145 billions, but also extra £89 billions on the top

and this is the extra 61% of the total income taxation (tax - CI) to finance the CI

I think the problem with this kind of calculation is that it's taking a snapshot of the system as it is now and trying to map it onto a very different scenario- to introduce a CI would require so much to change that it makes this kind of simplistic calculation a bit pointless.

For example how do we calculate the impact on the tax take of freeing up a lot of people to take on extra work that is at present not practicable for them to do- either because they would screw up their benefits claims or it is just not worth while because it would taken off them by the tax credits system?

I am not going to say that a decent level of CI is absolutely affordable because I honestly don't know- any more than you can say it's absolutely unaffordable because I don't think you know either.

But the reality is that we are drifting into a form of CI anyway via Tax Credits, Workfare and the ever expanding list of subsidies that are now being funded by the state- even "Help to Buy' is a form of welfare using taxes to support otherwise unsustainable life styles.

I think that the term 'Citizens Income' is in reality a shorthand for a much more radical rethink of how we deal with a world in which full time secure employment is fast becoming a minority privilage, while reality for more and more people is a world of short term or zero hour contracts and jobs that are either temporary by design or temporary due to the volatile nature of the new globalised economy.

I think the core issue here is that we now have a society that was built on the expectations that arose from the industrial revolution- a society in which large numbers of people had long term secure employment, lived shorter lives and for the most part had the same career or job skills for the entire time they worked.

But the reality is that that world no longer exists- or rather it continues to exist only in the institutional memories of our institutions- as a result those institutions are no longer fit for purpose- a welfare system based on the binary idea that you are either fully employed or not employed at all is wildly out of synch with a world of zero hours contracts and short term temporary employment.

As a result the system grows ever more byzantine in it's attempts to capture this complexity and force it back into that 19th century binary model.

But I must sadly agree with those who say that there are so many vested interests in the current outdated system that the chances of any real intelligent reform are slim- so it's an interesting discussion but I have no expectations of ever seeing a CI- even if it were affordable.

Edited October 24, 2013 by wonderpup

[Damik]

I understand, You don't.

First, tell me:

- Who does that £244billion currently go to?

- Who would that £333 billion go to?

Straight answer, please.

- pensions and social care

- CI

[Goat]

this would require about extra £34 billions than the current system. without any chances to decrease the government deficit. why would we do that???

Not sure where your £34bn comes from but I have spotted a substantial error in my above workings that would imply a £32bn deficit (more if we include some element of compensation for pensioners).

I think there's a valid argument to be made that the removal of the perverse incentives of our current tax and benefit system would lead to substantial economic growth that would close the funding gap and which would be desirable in its own right.

Edit:

Note also that my workings were originally done to refute the idea of a CI but in doing so I've persuaded myself that it is at least possibly affordable and worth further investigation.

As I said earlier I think the real problem is that no-one will accept the implications of the policy, which is swingeing cuts in benefits to single mothers and a huge increase in benefits for wealthy families.

Edit2:

Presumably your £34bn figure is £278 - £244, i.e. you've taken the total cost of the proposal and deducted the "current £244bn" and not included the other changes to income tax etc (and also failed to notice that pensioners are excluded, which would be a massive cost on top of the £278bn).

Edited October 24, 2013 by Goat

[dkujsbap]

do you understand thar your current costs of the social and pensions are £244 billions and it would be replaced by CI costs of £333 billions ???

so your tax receipts would not go up just to recover the £6k pa of CI to keep the total income tax revenues the same as now; they would have to go even higher to recover the extra £89 billions in total

------------------------------------------------------------------------

you can only implement the CI if you keep the costs to the current £244 billions

The £9600 personal allowance would be removed and taxed at x%. This would also increase tax receipts.

The figures don't necessarily have to add up on day 1.

But you're arguing my point without realising it. We currently provide 61% too many services (or waste it) than we can afford.

[Damik]

I think the problem with this kind of calculation is that it's taking a snapshot of the system as it is now and trying to map it onto a very different scenario- to introduce a CI would require so much to change that it makes this kind of simplistic calculation a bit pointless.

For example how do we calculate the impact on the tax take of freeing up a lot of people to take on extra work that is at present not practicable for them to do- either because they would screw up their benefits claims or it is just not worth while because it would taken off them by the tax credits system?

I am not going to say that a decent level of CI is absolutely affordable because I honestly don't know- any more than you can say it's absolutely unaffordable because I don't think you know either.

But the reality is that we are drifting into a form of CI anyway via Tax Credits, Workfare and the ever expanding list of subsidies that are now being funded by the state- even "Help to Buy' is a form of welfare using taxes to support otherwise unsustainable life styles.

I think that the term 'Citizens Income' is in reality a shorthand for a much more radical rethink of how we deal with a world in which full time secure employment is fast becoming a minority privilage, while reality for more and more people is a world of short term or zero hour contracts and jobs that are either temporary by design or temporary due to the volatile nature of the new globalised economy.

I think the core issue here is that we now have a society that was built on the expectations that arose from the industrial revolution- a society in which large numbers of people had long term secure employment, lived shorter lives and for the most part had the same career or job skills for the entire time they worked.

But the reality is that that world no longer exists- or rather it continues to exist only in the institutional memories of our institutions- as a result those institutions are no longer fit for purpose- a welfare system based on the binary idea that you are either fully employed or not employed at all is wildly out of synch with a world of zero hours contracts and short term temporary employment.

As a result the system grows ever more byzantine in it's attempts to capture this complexity and force it back into that 19th century binary model.

But I must sadly agree with those who say that there are so many vested interests in the current outdated system that the chances of any real intelligent reform are slim- so it's an interesting discussion but I have no expectations of ever seeing a CI- even if it were affordable.

I am OK to discuss the benefits and problems of the citizen income if the total costs are same as current £244 billions (pension and social) and go down to about £170 billions to reduce the current deficit of £120 billions

Edited October 24, 2013 by Damik

[fluffy666]

- pensions and social care

- CI

I said 'who'.

Pensions and social care go to a subset of the population.

CI goes to all the population.

OK? You with me?

[Damik]

As I said earlier I think the real problem is that no-one will accept the implications of the policy, which is swingeing cuts in benefits to single mothers and a huge increase in benefits for wealthy families.

I quite like the idea that with wife and 2 kids I would receive about £1000 to £1300 pm for nothing.

I can move from London to some cheap place paying like £200 pm for mortgage.

And if I work cash in hand I would not be paying 45% income tax.

It just does not sound it can work.