Rishi Sunak no more bailouts

[Elpresidente29]

He said government cannot go on like this...

How will furlough work for those whose employers can't afford full time workers for the first few months? Will the government pay 50 percent of wages and the employer the other 50 percent of wages? It is nice and well to say we should go back to work. But most likely staff will be rotated or work part time for a few months before going back to their full time routine

@Aryaneedle I agree with that point that lots of people are poor because of circumstances. Yes I worked hard but I have a good income & own a home because of who I was born too & how I was raised.

How does UBI work with rent or home ownership though?

DB spoke to his work recently about returning & they said no way they can have thousands back in their big city office travelling in by public transport. This is going to be a long, slow process.

The firm my dh works for a re planning on making the shift to a large proportion of staff wfh permanent.

I believe there will come a time, perhaps July? When gov will request companies to either pay for employees themselves or let them go.

I'm furloughed myself, my dh did this for our own company.
I will have to find work elsewhere as my normal work will be the last to be operating again.
I can't expect the gov to pay me a salary to stay at home. I'll claim UC maybe, I don't know as don't want to lose TC as better for us.

So what happens to the self employed people who can't even access funds until June? Do they just get a few weeks of help and then it stops?

I'd imagine it would be back paid, but probably yes.
Nobodies job is safe, not even those wfh atm.
They could be made redundant the same as the furlough, it obviously depends on the company and business.
If they can't afford to continue trading then redundancies will happen.
The self employed the same. If you don't have work, you'll have to sign on.

Well I must say I think that's incredibly unfair. Furloughed employees will have had 3 months of 80% wages whilst those self employed have had to hang around waiting for the same help, not sure whether they'll be able to last until then, to have it stopped a couple of weeks later!

UBI cannot be a replacement for the current benefits system, but it could be an underpinning.

It can't be a replacement because if it was high enough not to create any unacceptable hardship for even the most obscure case, it would be too expensive. If it was priced at an affordable level, there would be some people left in unacceptable hardship by a one-size-fits-all benefit.

If I were dictator:-

1. I would start by determining the individual poverty level, 60% of median earnings before tax and benefits. Let's say that's £16,000 at the moment.
2. I would set the minimum wage at that divided by 50 weeks x 40 hours = 2000, £16,000 / 50 / 40 = £8.
3. I would set UBI at 50% of full-time minimum wage income. So £16000/2 = £8000 a year, £667 a month. This leaves everyone with some incentive to work, as they need to earn 8K just to get up to the poverty line.
4. The existing benefits system would continue as is, but every pound obtained obtained from UBI would be deducted from benefits entitlement, so benefits recipients would only be better off from UBI if it was more than their normal benefits. In most cases they would get no extra money, I'd guess.
5. However they would be better off in that UBI is totally reliable income they don't have to apply for, or wait for, and that cannot be removed by sanctioning.
6. Where an increasing number of adults live together, it's possible that their individual UBIs could add up to more than a combined benefits claim (if they were all the same household) so in that sense UBI would incentivise people to live together to share costs, whereas the current benefits system gives people more money if they live apart.
7. Turning to the tax system, the personal allowance would be abolished. (UBI would replace it.)
8. There would be a single rate of income tax paid on all income. This would combine income tax and NI. Employers NI would become an employer part-payment of the employee tax bill, and as such would be a taxable benefit. The single tax rate would likely be between 40% and 50%. This is not as bad as it sounds, the government gets nearly 40% in tax and NI from what the employer pays out even for a basic-rate taxpayer, at the moment.
9. UBI would not benefit people with a state pension worth more than UBI, they would lose a pound of pension for each pound of UBI they gained.

A colleague of mine her dh is a six figure a year type. She just shrugs all this off and says ' they can claim from the government' !
Not everyone can mate, but they don't see the bigger picture!

Employers NI would become an employer part-payment of the employee tax bill, and as such would be a taxable benefit.

That doesn't make any sense.

Random, that all sounds good to me but I don't think there is much chnace of it happening. All Sunak has said is that as the self employed have had help in this crisis (not that those of us honest to disclose over £50k before tax profits get a penny if we did not have a limited company) then we face higher NI next year.

Employers NI would become an employer part-payment of the employee tax bill, and as such would be a taxable benefit. The single tax rate would likely be between 40% and 50%.

So your basic UBI is basically an ‘unearnt’ threshold tax allowance? Is that what you mean? Any earnings on top would be taxed at 40-50% with your employer paying into that set amount do you mean? Instead of NI?

So fuck pensioners, they can starve, Random. Unless I’ve misunderstood.

Boris has made me laugh today talking about how people need to get back to earning their pay packet, like they want to.

I’m fairly sure he knows full well a huge amount can’t think of anything worse.

So many folks aren’t asking when can I get back to work, instead they are asking, how long can I claim for

Says it all

Random is right btw. If you look at your net pay, the deductions for income tax, NI and pensions often come in at about 35-40% of your gross. Add any salary sacrifice/student loans and it’s an even higher %.

I am changing jobs and getting a 6 grand ‘gross’ pay rise but net it’s £371 per month which is 4.5k per annum increase, the extra 1.5k is going to the government. But the government is paying me so actually I’m a void in terms of paying the treasury. They don’t gain anything from me individually, finance wise but my job saves them £ in crisis funding down the line.

@Alsohuman no they would get the same state pension, but as the full state pensions is £8750. UBI is lower than that so it makes no sense to claim UBI. But if someone was not entitled to full state pension as they took off too many years for childcare, then it would make more sense to claim UBI of £8000 unless they also qualify for other benefits that add up to more than UBI

That doesn't make any sense.

Let me explain with simple figures not based on current rates. Say someone earns 30K, employer pays 2K in employer NI, employee pays 2K employee NI, and 4K in income tax. Summarising, the employer pays out 32K, the government gets 8K, and the employee takes home 24K.

In the new system, the employee gets 8K UBI, and the employer still pays out 32K. Their salary is 30K, but because the 2K employer-NI is now treated as a payment of their personal tax bill, it is a taxable benefit, in the same way that anything else that employer pays for on behalf of the individual is a taxable benefit. The salary is 30K, but their taxable income is 32K. In order to leave them with the same total income they had under the old system, they would have to have a total tax bill of 16K, 50% of their 32K taxable income. Since 2K has already been paid by the employer, they would actually have 14K deducted from their salary, giving them 30-14 = 16K. Add the 8K UBI and they are back to 24K.

The point of all this is just an administrative mechanism to have a flat rate payroll tax without the government losing the money it currently gets in employers NI, giving the employers a windfall reduction in wage costs. The alternative would be just to pass a law giving everyone a pay increase equal to the employers NI at the time it was abolished, but I'm assuming (perhaps wrongly) that that would be more complicated, from a legal point of view.

So fuck pensioners, they can starve, Random. Unless I’ve misunderstood

I think you must have misunderstood. They wouldn't be any worse off than they are now. Like the vast majority of the population, they also wouldn't be any better off. The point of this UBI is to catch people who fall through the cracks, a simple backup/supplement to the system we already have. It can't give extra money to a huge proportion of the population, because then it would be unaffordable.

(There would have to be a lower rate of tax for pensioners, at least for the first few decades, they can't be expected to pay the part of the new single tax rate that replaces National Insurance. That would double their tax bills overnight.)

He did say they would do what it takes for as long as it takes. The initial scheme would be extended If need be. I know they can't bank roll us all forever but surely they need to continue with this until it is safe to go back to work.

My husband is self employed and won't receive any money until June and he is already talking about cutting it

Essentially people would get their state pension entitlement, or UBI, whichever was higher. For people with a full pension, pension would be higher.

The relative advantage of having a full state pension would be reduced. One advantage that would persist is that your state pension would continue if you live abroad, whereas UBI is only for UK residents. Perhaps in the long-term it would be logical for UBI to simply replace the state pension though.

So your basic UBI is basically an ‘unearnt’ threshold tax allowance? Is that what you mean? Any earnings on top would be taxed at 40-50% with your employer paying into that set amount do you mean? Instead of NI?

I'm not sure what "threshold tax allowance means", but overall what you wrote sounds right. You get 8K even if you don't work, but any work you do, every single pound gets taxed at 40%-50%, with the net result that someone on median earnings is no better or worse off than they were under the old system.

So what happens to pensioners with occupational pensions, are they allowed to keep them?

Also unless I am mis reading. Whichbis possible, your UBI replaces the state pension. If you have a private pension you take x amount off that for the UBI.

So if UBI is 12.5k per annum and you have a 30k per annum private pension you deduct 12.5k from that in ‘tax’ so your annual income woukd be UBI-12.5k
Pension-17.5k
Total= 30k

Is 12.5k enough for those with no private pension? Depends how you see it and how you’ve organised your shelter (mortgage, rent etc. But the point of UBI would be that its guatanteed income for everyone but not everyone wants others to have that guarantee at their expense. I think.