Universal basic income

[2020yearfromhell]

Does anyone know more about Ubi, would we ever head this way?

Lethargic, your post illustrates very articulately what is wrong with the current system. It's not weird though - it's common - so much so that there's a graphic illustrating it on an Economics book I have on my desk right now (I teach Economics). A more universal system would help solve that problem but I just can't see giving free money to those who already have a lot of it ever being politically possible.

I asked my students what they would spend £4000 a year tax free on (inviting them to choose something that others would disapprove of) and they suggested cosmetics and clothes.

My initial thoughts are I like the idea ( not read any books etc or original reports on it so know I am naive) . Would worry about it not meeting needs of disabled or those with lots of children. Cost could be high ( saw earlier post looking at possible deficit that could be created). However this would also potentially end NI credit administration as all would get UBI and not pension as well as end eg winter fuel allowance etc. Could they remove the personal allowance from earners ( they would all be getting the £11-12000 anyway) to help pay for it?upside is it may make businesses eg in London pay for their lower earning workers to stop them from leaving ( at the moment they have their wages subsidised by the government in the form of universal credits and housing components). If people wish to move out ( of London) then this may help control ( lower the above wage inflation house price growth that increasingly raises costs for younger people) house prices.

Meant to say combine NI with income tax as well.

Could sort out discrepancy between CGT and income tax/NI.

I like the idea, but I am very skeptical about it say 2-3 generations down the line.

People who grow up with a certain "given " will most likely be less inclined to work FT or at all. That in return will affect the economy and the ability to pay for it.

I think those that would like extras/luxuries etc will work for them. I think this would make sorting finances simpler for lots of people , if they work they get to keep a well known % of what they earn.
I think it should be eligible for CSA as well.

@vanillandhoney

So how on earth would we encourage people to do all the essential jobs that need doing if people didn't need to do them? If you could do nothing for £12k a year why would you work 40 hours a week as a toilet cleaner for the current wage of c.£14k? Or even a nurse on £27k? The only way you could get people to do the essential jobs would be to raise their wages drastically, so you'd have to pay all supermarket staff, toilet cleaners, etc £70k a year. This would either then cause huge inflation and the price of everything would go up, so the basic income would have to go up, and then the wages for essential jobs would have to go drastically again...repeat ad infinitum until you get paid a million pounds to work at McDonalds!

Well, 12k isn't a huge amount of money for a single person. Most people with mortgages, bills and childcare costs wouldn't be able to survive on that for very long. So someone could go to work and earn 14k on the checkouts at Tesco and have a total income of 26k, which is pretty good for a single adult.

The income you get from your salary would be on top of the income you get for "doing nothing", so of course there would be an incentive to work. 1k a month sounds generous but if you have all the regular bills (mortgage or rent, council tax, utilities, food, a car to run, childcare costs to name a few) to come out of that, you don't end up with very much at all left over for luxuries.

What about saving for things like a new boiler, a new car, new appliances? Christmas presents, maternity leave, holidays, new clothes, children's activities, school uniform...you couldn't afford all of that plus necessities on 1k a month.

I would happily go to work to "earn" 14k a year if it meant my total take home was 26k a year! That sounds like a pretty sweet deal to me.

£12k was just an example amount If it truly was a UBI it would have to be enough for all those things you mentioned, so if £12k isn't enough, say £20k, you'll still have the same issue.

You might think it sounds like a sweet deal - but what about people who are already earning £26k (or more) a year?
Now = they get paid £26k a year for doing full time (say 40 hours)
With UBI = they will get £12k for doing 0 hours, and then £14k "extra" for doing the same amount of hours as they did before for £10k less?
Why would anyone choose to do that?
Either wages would have to go up significantly, so that people would still choose to do the essential jobs at full time hours
Or, if everyone's basic needs are met (whatever the threshold for that is evaluated as), you would have to accept that most people wouldn't work 37 hours more than they need to just to pay for luxuries...

The closest thing we have to a UBI at the moment is something like the winter fuel allowance, and that has its own issues:
a) a number of pensioners still die or become unwell due to being able to afford heating. According to this we have the second worst rate of excess winter deaths in Europe www.independent.co.uk/news/business/news/cold-weather-uk-winter-deaths-europe-polar-vortex-a8224276.html (suggesting the amount given is too low for some)
b) many of the people who receive it don't need it (suggesting the amount is too high for some)
c) many of the people who receive it are in a far better financial position (mortgages paid off, triple locked and final salary pensions) than younger people who don't need it (suggesting it is unfair)
d) it still requires a fair amount of administrative work which negates the whole rationale behind UBI which seems to be that it would be paid for by abolishing the administrative aspects of the benefit system

say for example a family of 4 got £700 then people would be much more happy to live in smaller/cheaper properties/ even stay with family to save up
You're having a laugh, there's plenty of places where £700 pm wouldn't pay for accommodation for 4, be pushing it for one-bed. And how many people have enough spare room to house another 4 whilst they 'save up' - and what are they saving up for, a tent?

@thevassal - the model you propose isn't the one generally trialled abroad. The basic income is from the government as a way of circulating money within the economy. No individual benefits to monitor and maintain and removal of that admin layer.
I'll give a childish, crude example - instead of 80% of a country's money being held in the accounts of the richer members of society, it is spent and circulated by everybody.
Someone who couldn't normally pay for childcare pays it. Someone who wouldn't normally lease a car leases one to get to their £22k job.
Someone who wouldn't have bought a new bed while on benefits buys one with U income+wages.
Remember too that people work for more than just their base salary: employer pension contributions, perks, travel, company car, childcare vouchers, bonuses, private health insurance.
If the world is moving towards automating more jobs, how will people feed and house themselves? Existing wealth needs to be shared and circulated.

The Tories get it - they are sharing the country's wealth at the moment by awarding their mates lucrative contracts. £7,000 a day here, golden handshakes there, gardening leave to people who did f**k all for a few months, 800+ freeloaders claiming up to £5,000 per month for 'attending' the House of Lords. This sharing of wealth is already happening, but not among the working and middle classes yet.

I would love to live in a world where the means of survival was separated from the marker of luxury. Money currently does both jobs and the reality of that is huge cognitive dissonance.

It's so so stressful to live in the zone where your means of survival is at stake and yet the whole world acts as though more/less money is merely a matter of more/less luxuries.

OTOH there is a sense of shame attached to being (un)able to support a family where this isn't always an issue of being unwilling/lazy.

Yes it probably would fuck the economy, but maybe "the economy" isn't working in the first place.

Now = they get paid £26k a year for doing full time (say 40 hours)
With UBI = they will get £12k for doing 0 hours, and then £14k "extra" for doing the same amount of hours as they did before for £10k less

Why would it work like that?

They'd get 12k UBI, plus their 26k full-time salary, which means their total income would be 38k.

Now = they get paid £26k a year for doing full time (say 40 hours)
With UBI = they will get £12k for doing 0 hours, and then £14k "extra" for doing the same amount of hours as they did before for £10k less

Why would it work like that?

They'd get 12k UBI, plus their 26k full-time salary, which means their total income would be 38k.

I'm sure I read this had been discussed in the UK and it was something like £48 a week...

@yoyo1234

I think those that would like extras/luxuries etc will work for them. I think this would make sorting finances simpler for lots of people , if they work they get to keep a well known % of what they earn. I think it should be eligible for CSA as well.

That depends on the tax/nic rates. It would almost certainly need to be around 50% tax/nic deducted from the wages, the deduct travel costs, etc. Would people really work for maybe just a quarter of their wages after taxes/costs???

@vanillandhoney

Now = they get paid £26k a year for doing full time (say 40 hours) With UBI = they will get £12k for doing 0 hours, and then £14k "extra" for doing the same amount of hours as they did before for £10k less

Why would it work like that?

They'd get 12k UBI, plus their 26k full-time salary, which means their total income would be 38k.

What about tax/nic??

What about tax/nic??

Well, yes, they'd be taxed on their income, but they'd still be better off than they were on the original 26k salary, or on their 12k UBI

@vanillanandhoney...so if I was happy with my £26k salary currently and considered that enough to live on and provide all the luxuries I wanted (which in many areas it is) why would I continue to work full time and earn £38k, £12k of which I didn't need?

Yes, some people would but lots wouldn't....they'd think if £12k covers my basic needs and another £14K covers all my luxuries why would I bother working full time for all that added stress to buy another £12k of additional stuff I don't need and did fine without. I'll just go part time, still receive the same total income and be able to spend three days a week with my family or doing things I enjoy. We already have a huge lack of teachers, nurses, etc in this country....what would we do when the ones we do have all decide to go part time or less because the government's effectively going to make up the other half of their salary?

For ubi to work you will need everyone to basically work when they don't need to, solely to keep buying more and more luxuries....a)why would we assume people would do that and b) isn't that encouraging a culture that is even more materialistic and consumer centric than the one we have now which seems to contradict the whole community centric, share the wealth ethos of ubi?

As I pointed out above, to pay every adult £12k per year would require a further £400 billion in tax, equivalent to about 65% on the base rate, so that would be around 85% basic tax rate. How many people would be prepared to earn 26k, but pay £22k in tax on it?

kazzyhoward Why would it need to be 50% NI /income tax? I also suggested CGT more aligned with income tax and no personal allowance.

Ifailed - in your calculations, have you eliminated the cost of all benefits currently issued, all DWP and HMRC costs to administer them? I appreciate there will be admin costs in administering the UBI, but it will be substantially less. Have you factored in government grants to local authorities to help charities and the most vulnerable - such as now, during Covid? The number of people who are signed off for stress would go down and that would have an effect of productivity. Many people stay in jobs where they feel bullied or overworked and get signed off for stress because they don't see any other choice but to stay in that job. The lighter burden on our health & MH services. Free school dinners, free public transport passes. There are a lot of knock on effects on society which would take a couple of years to calculate. For example, during 2020, if there had been UBI in place before March, Rishi wouldn't have had to pay furlough. How much would that have saved?

@vanillanandhoney...so if I was happy with my £26k salary currently and considered that enough to live on and provide all the luxuries I wanted (which in many areas it is) why would I continue to work full time and earn £38k, £12k of which I didn't need?

You're just one person, though. Lots of people would think differently to you. I mean, I know I would happily work the same hours I do now for an extra 12k in the bank.

If you were happy with your previous salary, you could always work part-time or find a different job.

so if I was happy with my £26k salary currently and considered that enough to live on and provide all the luxuries I wanted (which in many areas it is) why would I continue to work full time and earn £38k, £12k of which I didn't need?

You're just one person, though. Lots of people would think differently to you. I mean, I know I would happily work the same hours I do now for an extra 1k in the bank each month!

If you were happy with your previous salary, you could always work part-time or find a different job.

Sorry for the double posts, formatting issues

2020 I think exploitative employers are the ones worried about UBI. Staff won't put up with dreadful working conditions so much.

Richard Nixon came very close to introducing it in the USA. It is an idea that has followers from the left and right of politics. Try Reading Utopia for Realists by Rutger Bregman en.wikipedia.org/wiki/Utopia_for_Realists