To think a basic income/citizens wage is a blinding idea?

[Littlefluffyclouds81]

For anyone unfamiliar with the concept, the idea is that each adult citizen, regardless of their working status, money in the bank etc, gets a basic amount of money for free, each month, for example £1000.

Sounds a bit nuts, but bear with me.

The benefits would be that everyone, whether they are homeless, or whatever, knows they have the security of this money coming in each month. There are no costly administrative procedures in determining whether someone is eligible for benefits, or sanctions for those who break the rules.

But, surely everyone will just sit on their arses and not work? Well no, because actually most people have an innate desire to be successful and do well, and let's face it no one is going to be living the high life on a grand a month. It would actually get people out of the benefits trap, because as it stands people are hesitant to come of benefits because if the job doesn't work out, they have to start their claim all over again, or they might have worked out that they would be hardly anything better off by working, so it's not really worth it. With a basic income, they could work as much as they liked knowing that they will still have this money behind them.

So how will it be paid for? Once you have removed the humongous costs of means-testing benefits, and assessing fitness for work with disability benefits, and all that, well that's the government a good few quid up, right there. Also bear in mind that the fund currently used to pay benefits would just be transferred to pay basic income. Raise corporation tax which the coalition sneaked down, and maybe a little bit more tax for the very highest earners, and that's job done.

The theory is, that as it stands, a lot of people have nothing. They are scraping by on the bare minimum of benefits, living in fear of sanctions and being forced into work fare. This way, people would have options, they would all of a sudden have opportunities in front of them to do courses, move to better accommodation, or whatever they needed. It would give people hope. The stigma of being 'on benefits' would be gone, as it would be universalistic. Equality would be massively improved, and with it so would would wellbeing, and health, which would also save the government millions.

I realise with the latest turn of political events there is approximately no chance of this happening, but I think it makes a bucket load of sense.

I can see that the disincentive to work is a problem, but is it not also a problem that, in a modern technologically advanced society there is not enough useful and productive work to go around
This is likely to increasingly become the case as more and more jobs are done by robots and computers
We will need to find new ways of allocating resources

I think this is a very valid PoV too.

Also Juneau, there are many countries where we would get better benefits than than the UK. For example France: 35 hour working weeks, extra holiday accrued on overtime, between 6-10 weeks off paid a year, an extra week off paid if you get married, government funded nannies for 8 hours a week for every woman who gives birth, very generous family benefits.

We're all still here though, not in France.

Yes, and France's economy is up shit creek without a paddle! Its a complete basket case.

I think that's a bit harsh, doesn't seem far behind the UK from what I can tell.

www.telegraph.co.uk/finance/economics/11313327/Britain-edges-past-France-on-world-stage.html

Cinnebar you're absolutely right to want to start with a living wage, I think it's shameful that taxpayers have to subsidise low wages through tax credits etc. However I wonder how many businesses can really afford it?

There's an idea knocking around, that I think originated from a right wing think tank but don't quote me, that businesses could afford to pay a living wage if their tax bill was reduced.

I'm still working it through in my head but, completely to my surprise, I think it might work. (Although I vote Labour, I'm not going to throw out a good idea just because it came from the other side.)

The basic issue is whether every £1 lost through business tax would be more than made up for by a combination of increased income tax from workers (likely to be very little, because most people on a living wage will not earn much more than their annual personal allowance), increased VAT from increased spending by workers, and reduced tax credits and other benefits (on the basis that individuals are likely to be more efficient in spending their money on where it's most needed).

I think it might break even in pure fiscal terms, but just as important is the psychological boost it might give to people.

I'm unclear at this point to what extent increasing wages to would create the inflationary spiral discussed up thread. I need a proper economist to help me.

There was plenty of willingness to work in the mines and shipyards. I'm sure generations of farm labourers would still be happy to bring their families up in tied cottages on estates. I'm not really sure about the attractions of worklessness. But, I do think the traditions of mass working have disappeared.

The hi ho, it's off to work we go, mantra is out of date. It comes from an age when men working was the default for all but the aristocrats.

In short, it's bollocks.

All business think their tax bill should be reduced. In fact, lots of ordinary taxpayers think it too. Unfortunately, from time to time, corporations (those who do pay tax) do have their bills reduced. But, poverty doesn't seem to be going anywhere. I wonder why that is.

Might have missed it up thread but how would this work for sahp? You could recoup the cost of the payment via tax of the wohp in the family but unless you link the sahp payment to their spouses income (like cb now does), sahp would basically be costing the state a lot of money.

Now, I am a sahp and would quite like a free 1000 pounds but being sensible about it, I dont see how it is feasible.

I am also deeply uncomfortable about not having separate tax status, and my right to cb being linked to my husband's earnings. This would only get worse with a citizen payment.

Dh is well paid but he works really hard, long hours and is away a lot. if he could bring home the same money and work less, of course he would do it and so would all the other people working in hard jobs that they maybe don't love.

www.telegraph.co.uk/news/worldnews/europe/france/11155877/How-did-France-get-it-so-wrong.html

YANBU. But I'm a closet Marxist.

Yes, I can see that politically it would be very difficult at present to reduce the tax bill for corporates.

But remember that corporates don't really exist. They're not tangible. They don't - they can't - bear any costs themselves. They're just a convenient legal fiction

There's a lot of academic research that looks at who does bear a company's tax burden. The overall conclusion is that business taxes are actually borne by a corporate's shareholders (via reduced return on their investment), customers (through increased prices) and employees (through reduced wage bills). I also hold the personal view that additionally suppliers bear some of the cost (via reduced prices paid by corporates for raw materials).

About 70% of business taxes are ultimately borne by employees.

Well, in theory a corporation, registered to pay tax in the UK, should pay a proportion of its annual profits to the government in corporation tax. They may well also be liable for business rates. So, it's not true to say that the corporation can't owe money in and of itself. I'm not sure how you dodge the rates. But, declaring a healthy loss every year, is a smart way to avoid the corporation tax.

Something else too, which I don't think has been mentioned. Do you really think all the higher rate tax payers will continue to stay in this country and pay for rest of the population to live for free off the back of their taxes? They'd just leave, because money gives you choices.

Cinnabar I think corporation tax would have to be reduced to fund it.

My parents run their own business and, although good employers, they panic about this sort of stuff. My worry would be that they'd have to make a number of employees redundant in order to afford the wages of the rest of their workforce, and work them into the ground. If the government makes the living wage affordable to ordinary businesses, not just massive corporations, then yes it should be done regardless of which side of the political spectrum it originated from.

Well, in theory a corporation, registered to pay tax in the UK, should pay a proportion of its annual profits to the government in corporation tax. They may well also be liable for business rates. So, it's not true to say that the corporation can't owe money in and of itself. I'm not sure how you dodge the rates. But, declaring a healthy loss every year, is a smart way to avoid the corporation tax.

With all due respect, you've missed the point.

Of course a corporate can be legally liable for corporation tax, and business rates, and irrecoverable VAT, and employers' NIC and a host of other minor taxes.

But a corporation only exists on paper. It's not a natural person. If a government chose to make all companies illegal tomorrow then nothing would prevent the same people getting up to so the same commute to the same office buildings and doing the same work.

Ultimately, only natural persons can bear tax costs.

And you can't declare a loss unless you have in fact (whether a sole trader or a partnership) incurred more legal liabilities than you have created legal assets. Your tax position might be different - for example if you claim enhanced tax relief for R&D, or utilise brought forward tax losses against current year income.

I'm unclear at this point to what extent increasing wages to would create the inflationary spiral discussed up thread. I need a proper economist to help me.

Also, we don't live in a vacuum. What's the economics of paying ourselves a handsome minimum wage if the BRICs underbid us and therefore we lose a lot of the jobs to them?

I'm interested to see the Spanish proposal of 750 Euro per month translates to 545 pounds, not to far from the 625 I estimated.

As for everyone giving up work to live on that, I repeat my proposal from up-thread: if the amount of basic income is linked to the definition of poverty as 60% of median household income, assuming income in this case only counts non-benefits income, before tax, then if "everyone" gave up work, median income would be zero, 60% of median income would be zero, and the basic income would fall to zero, causing "everyone" to go out to work again.

I really like this idea. If it is just enough to live on, it stops anyone being homeless and hungry, but encourages people to work to improve their living standard. We would also save money chasing benefit "cheats" and means testing.
Some might give up work when their children are very small and live on a tiny income, but few would want to survive on a tiny income all their life. And those that do, will be those who already try and work the system to stay on benefits.

But it's not a tiny income if each adult is paid £1000 a month (as per the OP's suggestion). We live quite happily on £1800, with money to spare, so even though I love my job, I would quite happily quit work to stay at home with DD and DH for £2000 a month (assuming no inflationary rises, which which I believe would happen).

Clarification, I mean inflationary rises would happen.

I think £1000 a month would be too high. It needs to be enough so that you can survive on it, but no more.

For instance, I live in a 3 bed semi with large garden and garage in the E. Mids. A family of four could live here comfortably, so by your maths Theoretician we'd be getting 26K per year. Our mortgage is only 6K, so compared to families living anywhere in the south we'd essentially be getting a location-based bonus. I'm not knocking your point at all, just saying it's something else to consider if this is about striving for equality.

I checked rents in that area, and you're right, four people sharing even a three bedroom property would be very comfortable, without working, on my suggested income.

One possible way to address this would be for the income to be location-specific, but I think going down that road would recreate some of the problems we are trying to avoid, by giving people an incentive to lie about where they live, and having to check.

I think a better approach would simply be to reduce the income so that it was a poverty-level income in the cheaper parts of the country, rather than for the country as a whole.

So anyone with no support from working family who was determined to live only on the basic income alone would have to move to the cheapest part of the country, for it to even be possible.

I love the idea. I would retire immediately, as that's what I earn now. I would never sit and watch TV though, I have so many things I want to do that would benefit others. I think lots of jobs we currently do are pretty pointless anyway. Most of us would be happier, nicer, more creative people if we had more free time.

Maybe £100 a week? In terms of locations, if you have a basic income, you can move somewhere cheap to live. If you want to live somewhere with more opportunities for better paid jobs, then you can move to somewhere more expensive and get a job.

Isn't the benefit cap £500pw? So £1000pppm would amount to the same for high rate benefit claimants?

I thoroughly support the idea, did it come into practise in switzerland(?) as hoped. I think it's an excellent idea to aid equality and percieved benefit fraud. Children shouldn't get their own amount as then it doesn't stop the kids for money perception. £2000 a month is loads. We get £1400 a month with work and benefits atm for 3 of us and it just and so runs a 3 bed house and pays for my taxis (disabled) etc and we don't scrimp too much. £2000 plus wages would be a dream! it's too much really. £10k a year would be ample, you don't want it so high that you discourage work

I don't see why you only have to rack up liabilities in order to make a loss. My company requires all employees to dine at the Dorchester four times a week, with clients and their entire families. We have absolutely nothing to show for this behaviour, (all bills are paid at the time) except an enormous hole in our accounts. But, it looks very like a loss to me.

We put it down under expenses.