Scrap Benefits and pay every adult, working, non working or retired, an unconditional basic income of £15,000 a year? Discuss

If I gave you £15k basic income, index linked to inflation every year for life. What would you do with your time

Same as I do now.

Any chance you could answer my questions in my first post?

It's inflationary and a ponzi scheme that makes barclays look honest. You may as well promote women empowering women as your financial model.

The table seller doesn't pay any VAT, he passes it on to the end consumer. VAT registered businesses collect VAT but don't suffer it themselves. The table seller gets £48, keeps £40 for himself and passes on £8 to HMRC.

Each part of the chain passes VAT onto the next person. The amount of VAT only increases as they each add value to the product. Finally, the end consumer pays £8. However , if everybody was just passing the goods on at cost, the end consumer would only be charged £2, and this would be the only VAT received by HMRC.

If it is the 15K is free money than surely it would become worthless, this causes inflation. Every shop, every bank, knows we all have a free 15k so they price up their goods and services accordingly.

I understand merry mouse perfectly. It's your nonsense about passing a fiver round I don't get.

To explain the inflation thing...

All the money in the world is £10 and there are 10 pineapples which are worth all the money in the world, so each pineapple costs £1.

You, lend me £10 to buy all the pineapples and charge me £2 interest.

The £2 doesn't exist!

But great, you have just created 2 £1 coins and you lend them to me - fabulous!

Problem.

The pineapples are still worth all the money in the world, so they are now worth £1.20 each. I now need the £12 just to the buy the pineapples, and don't have any money to pay you back your interest.

Now, I could say to the pineapple seller "I can't afford to pay you £12, but I am the only person who wants your pineapples, so if you want the money now, I'm going to have to pay £10".

However, this deal hasn't 'created more money', it has reduced the value of the pineapples, so that the middle man (the banker) can be paid his £2 and take his cut in return for speeding up the flow of money through the economy.

And...

Money isn't created by banks, except in the sense that the royal mint makes money. Money represents a communal way of measuring the value of goods and services.

Banks are businesses that make money by providing a service that people require - the market decides the value of the things that people spend money on, not the banks.

Obviously banks can make decisions that effect exchange rates and interest rates. However, they can't create a value that isn't there. (They might attempt to do this and succeed for a little while, but generally this all ends in tears).

corrupt bastard, VAT is a tax on 'added value' borne by the final, non VAT registered, consumer.

1. VAT registered wood cutter grows tree and sells wood at £10 and charges 20% VAT so £12
2. VAT registered table maker buys wood at £12, claims back VAT £2, makes table and sells to shop for £20 + VAT of £4.
3. VAT registered shop buys table for £24 and claims back VAT of £4.
4. Customer buys table for £40 + VAT of £8.

HMRC only receive any money if somebody adds value, not if they simply pass money around. If they all just charged each other £10, HMRC wouldn't make any more than the original £2.

It is so obvious why it doesn't work I'm amazed it needs spelling out.

Your fiver is passed to me. I pay 20% on it. So I have four quid. I pass on four quid. The recipient pays 80p. They have three pound twenty. They pass it on. The recipient pays 64p. Need I go on?

It's called Citizens' Basic Income isn't it?

I think it has much to be said for it but I can't see how it could be anything like £15000 pa. £6000 perhaps, £7500 max.

Then abolish the old age pension (they get the CBI same as everyone else so it's the same or higher income under a different name.) Also abolish the minimum wage. Massively restrict other benefits.

On top of the CBI people can earn what they want at a standard flat rate of, say 25%.

It has the virtue of massive simplicity. Also it abolishes the poverty trap since it is never not in someone's financial interest to work, as it is now, where some people face effective marginal tax rates of over 90% if they get a job as they lose in benefits almost as fast as they earn extra.

The genuinely sick or inform would of course get additional support.

I would be broadly supportive of such a system but think that £15k is far too much. Moving away from 'magic money tree' economics, where no taxes need to rise in order to pay for things, what do the numbers show?

Well 15000 multiplied by the number of over 18's in the UK (approx. 50 million) gives us...

750 BILLION pounds.

To put that into perspective, we currently spend around £225 billion on welfare and housing benefits.

So, to pay a 'national allowance' of £15k per year, the chancellor will have to up taxes by half a trillion quid or so! That just isn't going to happen any time soon.

HOWEVER

How about a National Allowance of around £5k payable to everyone (more for the disabled, obviously), total scrapping of all other benefits / housing allowances etc., and a free market solution whereby the allowance can be borrowed against (up to a certain threshold - say 300%) to get people through difficult times such as short term unemployment, or to help start up a business or pay for university fees etc. When not needed, the money could be put towards purchasing further pension provision or just taken as cash and spent.

This would be cost neutral, solve the pension?s crisis, give everyone a handy line of credit, boost the economy, give an incentive for the unemployed get back into work and even help out the banks.

What's not to like???

Passing a fiver around just makes it a bit crumpled and grubby.

Nope, I agree, vat does not work like that. Money is generated by supplying a service or making something out of raw materials that is of greater value than the raw materials and then trading.

You know that whole creating money from nothing nonsense you're banging on about? That's inflation. Right there.

"vat works in the same way"

No it doesn't.

I actually don't understand a word you are saying. And believe me that's not because I am stupid.

The Qatari government don't just give their employees enough to cover basic living costs, they give them enough to live very well indeed. Of course they ship in cheap labour from India and Asia to do all the dirty work and manual labour in the country.

What about people who are carers for a disabled child and so can't due to caring responsibilities do the 'extra' work to increase their income?

I'm assuming your scrapping of benefits includes those paid to help with the higher costs of living with a disability?

So you will have groups of people who never have the opportunity to earn more/live more comfortably.

As a single parent of 3 with one disabled child who's care needs prevent me from working I'd be worse off under your proposal.

I can see why it could work for some.