Radical tax reform

[Nchangeo]

Lots of talk on here about taxes, HE, wealth taxes etc.

Countries a mess. Something needs to change. But with current levers to pull everyone feels it’s unfair.

I ran the numbers on a radical idea last night.

Universal Income (non-means tested and non taxed): £500 per week per adult.
Replaces all benefits.

Flat rate of tax for all earnings replaces all other income taxes; National Insurance, Student Loan repayments etc.

To balance the books as currently stands this would mean a flat rate of 61% on income.

If we put it to 70% then we could pay off the deficit in 11 years and start a national wealth fund.

Would you be better off or worse off under this system.

Would you mind being worse off if it means it’s fair to everyone and hopefully the country improves?

What do we think? I was quite surprised the numbers worked.

What do you class as "earnings"? Wages? Interest from savings? Dividends from stocks? Capital value of inherited land? The car you use being bought and run through a blind trust?

Radical idea, why don't we say your income is what you earn and everyone pay a citizen fee for services based on their risk to society.

Scrap benefits almost entirely - and we basically say, if you want something you or your family need to earn it. Happy to insure major risks at the state. level -you need to pay a premium based on your risk. Benefits completely linked to previous contribution - short term only.

What motivates them to work FT for that wage, when they could cut out the faff of employment (and travel expenses) and get £26,000 in UC? I’d rather tighten my belt and not work!

If you are taxing only earnings and not capital (houses, investments, dividends, shares etc) then you are letting the rich who have big investments get much richer while the people doing the work have to work for less money.

there need to be more taxes on the very rich - property over 5million and capital gains and big inheritance tax over 5million are all good targets that will leave the vast majority of ordinary people untouched.

pickettys book Capital explains how the super rich don’t earn more they just have more property

The universal income needs to be less. We have a joint income of £120k, under this system we would be very slightly better off each month if we kept our same jobs, but if we were getting £4k a month tax free from universal income then probably either one or both of us would give up work.

Land/property is the easiest thing to tax that the wealthy have.

You can't take it and hide it overseas. If you own land/property and the government decides to tax it then you don't have much choice but to pay.

The wealthy stay wealthy by hiding their asssets away from the taxperson. In cash that is overseas accounts. In assets that is land and property and art. In inheritance it is things like trusts.

The government can very easily tax the wealthy if it chooses to. It chooses not to.

Completely detached from the realities of human nature.

The 40-50 stressful weeks create the need for holidays to recover from them!

Ok how much do you think?

This has to replace ALL other benefits. We can still have social housing and build those with reduced rent. But there’s no cash benefits for paying rent anymore.

Schmucks like me have “wealth” in some ISAs for all to see and tax if deemed necessary.

What if people have bought jewellery or paintings etc etc or have sent money abroad?

What about my house? If I’m “land taxed” heavily on that I will have to sell, but no one will be able to afford to buy because they in turn can’t keep up the land taxed. (I’m talking about a box - no mansion here!) Si I suppose in a few years all property will be owned by the state which may be some people’s ideal.

In a sense we need the property bubble to burst, but if it did burst it would cause chaos and financial difficulty for too many people.

The reason I have not changed wealth taxes on this model is because I am trying to incentivise personal wealth creation. For everyone equally.

So no child benefit?

But is it worth working 40 hours a week for less than £10k a year if you can afford to live without it? Once you factor in child care, you’re actually paying to work - so you could stop working, be home with your child and live of the £48k you’re getting (presumably tax free) from the government instead?

So then it would need to pay significantly more to make it worth working in Morrisons. And presumably Morrisons needs people working so it has to pay higher wages, so that maybe you get £20k a year net from working full time, as maybe then it’s worth it - but then your grocery costs would go up. So if UI amount is based on cost of living, then it would need to increase.

I don’t think UC is giving the majority of household £4k a month though and if it is then it’s too high. I’ve just done a total of our bills and how much we spend and UBI would need to be around £3k max per month for a household (around £370 per week each), for us not to stop working. It just wouldn’t be worth working if we had £4k income for free and then getting taxed 70% on earnings, it wouldn’t be worth the stress.

Exactly! I quite fancy a life of unemployment/volunteering/ad hoc working while knowing the state is covering a reasonable cost of living for me. If I could cut my mortgage in half (ignoring that other bills would also drop) I’d have quite a nice life pottering around for £4k a month and have enough spending money for the odd day out here and there.

£44k per year take home is a decent amount to live on, many manage on a great deal less ( AND pay housing costs).

OP this is a crazy idea. Without people working, running businesses and so on, what do you think happens to the GDP?

Where is the incentive to work if it's unnecessary?

What would be the effect on prices of things if the baseline was every adult has 2K?

Jesus wept.

£44k per year take home is a decent amount to live on, many manage on a great deal less ( AND pay housing costs).

Doesn't matter. If you currently earn much more than that, and have outgoings relative to your income, such as a higher mortgage, you couldn't manage if your income was suddenly reduced.

They obviously have never heard of/don't understand the concept 🙄

Ok that would lower the flat rate % dramatically.

Let’s be even more bold and go to £350?

So 18200 per adult per year?

Thats a rate of 45.6% to balance the books or 49.4% to pay off our deficit in 10 years.

Thats not far off the HE tax rate! Whats everyone thinking about this? Happier

What do you mean?

Would things work for HE with the new model? 45% or 50% flat rate plus you get given your 18.2k

This doesn’t work at all for single adult households. The costs of living as a single person are more than half of those living as part of a couple. And that’s before you add children into the mix.