to think we could solve poverty by simply giving everyone money?

[aufaniae]

This article makes a compelling argument for giving everyone a "mincome".

Why we should give free money to everyone

The basic idea is that poverty costs society money, and that it's cheaper, and of great benefit to society if everyone has a basic income, no questions asked - so no one ever drops below the poverty line. The intro says.

"We tend to think that simply giving people money makes them lazy. Yet a wealth of scientific research proves the contrary: free money helps. It is time for a radical reform of the welfare state."

They actually did a study in Canada where a whole town was on a mincome for some years, and it seems it was a great success.

I must say I find the idea compelling. What do you think?

(Please have a look at the article before responding if you can, there's some surprising and thought provoking stuff there).

If you can prove you are alcoholic, I believe you get extra benefits in the UK. At least you used to ten years ago.

It does not, Lazyjaney.

Lazyjaney, where on this thread and the many links that have been posted, has anyone mentioned 'removing all government spending'?

A mincome would not mean dismantling the NHS or the education system.

teaand I think the point lazyjaney was making was:

At the moment, total government spending is £11k per person - if you decide to make the minicome fiscally neutral, then total spending cannot be above this. If you make minicome £11k a year, there is no money for anything else (such as schools, NHS etc). If you want to keep all this spending, c.50% of the current spend, you could only give £100 a week in minicom, which would be too low

teaandthorazine - the article by Malcolm Torry is very good.

I think the idea of introducing this in steps by demographic groups is very practical.

For example, pensioners get it first to replace state pension and pension credit, then 0 - 15 year olds to replace family allowance, then 16 - 24 year olds to encourage and support further education and training. Then 24 to 65 year olds paid for by scrapping Income Tax Personal Allowance and Capital Gains tax allowance and cost savings from simplifying the system.

Interesting his political analysis showing how all parties could support it ideologically.

This is an idea whose time has come. Our society is so deeply divided and I really think it could galavanise the political debate.

Agree, that blog post is well worth a read for anyone who wants some insight into this issue

"At the moment, total government spending is 11k per person - if you decide to make the minicome fiscally neutral, then total spending cannot be above this. If you make minicome 11k a year, there is no money for anything else (such as schools, NHS etc). If you want to keep all this spending, c.50% of the current spend, you could only give 100 a week in minicom, which would be too low"

Exactly, except it's probably worse as you can't stop spending on basics like keeping the local and central government, the public transport system, the legal system, paying the debt etc etc - so the c 50% of current spend is probably as good as it goes (and it assumes DWP is all gone into Mincome, so there is no more welfare)

If you want to make up the shortfall with extra tax, you are trying to find another 100 a week, or 5200 pa a year, or c 300 bn. To put this into context, that is spending everything we spend on Welfare, Education and Health - again.

That is a huge tax burden, a c 50% hike on every tax we have. Good luck selling that.

Lazy - £150/week for adults and £75/week for 0 - 18 yr olds is fiscally neutral if you also reform personal tax allowances and remove all benefits except free NHS and free education.

but most govt spending is not on benefits - so getting rid of them will not enable such vast sums to be paid out.

and most poor pensioners need more than £100 per week and they are the vast majority of pensioners. not wealthy baby boomers.

so you would still need most govt spending and pensions - which is the most expensive benefit anyway.

so the sums being mentioned are fantasy and the whole idea is a fantasy. a nice fantasy but any economic system at a fantasy level is perfect and lovely.

the perfect communist system - everyone wins
the perfect capitalist system - everyone wins

the realities are very different.

and you would never convince the majority of the electorate to vote for it.

personally I would worry more about the flow of cash out of the UK and us becoming poorer and poorer within the world. we don't have any enduring right to sit at the top table.

Lazy - 150/week for adults and 75/week for 0 - 18 yr olds is fiscally neutral if you also reform personal tax allowances and remove all benefits except free NHS and free education

By "benefits" here you must mean all law and police, all public transport, all military, all social services, all house building and all local government. That'd just about cover it.

This whole discussion has been largely fact free, I suggest you all Google "UK Government Spending 2013" or somesuch and decide what bits of the nation you want to close down and pay for to get the Mincome.

Lazy - look at my post Mon 03-Mar-14 19:48:48

The figures are £216/week for every man woman and child spent on benefits excluding NHS and free education.

That is £720bn divided by 63 million people.

That is £11,428 each per annum.

It does not include other Govt spend like Defence etc. It is just the direct Benefits spending.

The figures are taken from Govt statistics so £150/week for adults and £75/week for children is a very attainable number with some left over to improve community based NHS care (i.e. bringing back district nurses, respite for carers and home help to assist with cleaning and cooking).

^^
Total government spending - Everything - is 720bn, not just that on non health and education benefits, which is c 220bn in total for welfare, all pensions, and all the civil servants who do these jobs.

Imagine to keep it simple that everyone on benefits currently got £100pw and minimum wage was £120.

Then it would be possible to give everyone £100 and drop minimum wage to £20 right? The companies would save all that in wages but would be taxed roughly that amount so it went back to the gov.

Going to work would gain you £20pw just like it did before. That would cost the same as it does now.

Okay, now you say "ah but we save a fortune on admin and loss to the country of the skills of those currently working in the benefits industry" so you can increase the amount everyone gets. Raising the mincome a bit and raising the minimum wage a bit.

What you would like is for the mincome to be equivalent to the living wage and for people in work to get a fair bit over that, but as long as not worse off you could call it a success.

The calculation that to do it at all means closing down the government doesn't make sense.

Just to re-iterate, since people are still hung up on cost: for mincome to be affordable, it would have to be defined in a way that means hardly anyone would actually have more money to spend. (And for each pound one person did gain, someone somewhere else would have lost one.)

It's a restructuring of the tax and benefits system, not an additional hand-out. It's advantage is that is changes incentives with regard to working and household formation, and reduces admin. For example of latter, government no longer has to monitor peoples search for work, and sanction them when they're not doing enough.

this shows the £220m

Grand total of minicome is £67 a week, to pay for all housing, food etc or you increase tax rates. To make this neutral for all, you would need to do so most at the lower end of the income scale, which introduces a disincentive to work - so we are in exactly the same position as today.

caroldecker, Can you explain more how you are arriving at that. Further back you were saying that just working a few hours would not make you any more money so I think we may be talking about a different plan. The mincome paid to everyone would ensure that even working 1 hour would make you more money. It could be one of the advantages.

fraidy - i can see that it reduces admin. but surely it encourages some groups of people to not seek work. i see that if you live in an expensive area you'd have to work, and if you had lots of kids. but if you didn't have many mouths to feed and you lived in a cheap area you would just be able to lounge around all day doing nothing whilst others paid for you. not sure that sounds very fair.

we could make the same argument about the NHS, lots of people dont take care of their health and yet we're happy for them to 'squander' the resources of the NHS.
Or education, lots of people don't take full advantage of thier education that others pay for but no one would argue that the children of unemployed people shouldn't receive an education

backon to keep this revenue neutral and pay a minimum income standard (Rowntree foundation) a couple with two kids need to earn £36,800 between them (before tax).
Assume a £10k tax free allowance and 30% tax and NI rate. this is 26,800 a year net. Between 4 minicome, this is £138 per week each (note single people will need more).
Based on 63 million people, this is £440 bn a year, twice the current benefit spend. We therefore need to raise more tax.
coming from income tax, this is roughly double the current tax take. In order to come from the same group as today, this would need to be taken from base salary at the rate of around 60%.
Therefore 40 hours at £10 an hour would only get you £160 - ie take home of £4 an hour.
This is effectively the same disincentive to work as we have now.

the current disincentive to work hinges on the fact that benefits are means tested, if benefits were given universally then everyone is better off if they work.
A citizens income is not a disincentive in the way that means tested benefits are.

Carol total tax would be going from 600bn to 800bn under your scenario. 30% increase.

This can easily be funded from a 20% tax with no personal allowance instead of 10k (50bn) and a lower threshold for 40% tax.

But, remember this is just redistribution, it's not disappearing into a black hole like defence.
On average most people will be getting just as much back from mincome as they are giving out extra in income tax, there's no net difference.

It just has to be kept sufficiently low and basic so as not to disincentivize work.

"This can easily be funded from a 20% tax with no personal allowance instead of �10k (�50bn) and a lower threshold for 40% tax."

Total UK take for all income tax is 155bn, even this revised down mincome plan needs an extra 200bn, so that's actually more than a doubling in income tax if it alone had to foot the bill. 100% top tax rate anyone?

If you re-tax the whole tax base of c 600 bn that's a 33% rise, so VAT is 27%, top tax rate is 60%... You get the picture.

suzanne benefits are means tested, but, in my understanding, no-one is worse of working, just that the marginal benefit is small, ie losing 60p of benefit for every £1 earned.
This is the same, becaus eyou have a 60% tax rate

achy you are misreading total tax vs income tax i think. Also if people earning, say £50k are not to be better off, you will need to recover the tax on the first part of earnings. Therfore your tax rates would be something along the lines of:
No personal allowance
First £40k at 60%
rest at 40%

Aufanie let's start a political party!

Isn't it funny we consider education and health universal benefits but not something as basic as food.