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.

Morrisons man is now taking home £30114.5 at the 50% flat rate model

the challenge is a lot of low paid workers would just stop working under this proposal. A third of people in the uk earn less than £26k at the moment so would struggle to see the benefit to working for more than that.

@AngelaSnerkelhow much do you earn to see take home halved? That’s not possible? Even with an income of £120k is only see a 17% decrease in take home on this proposal.

I would be worst off on your numbers.
What about adults who have never worked? Do you get £500 per week on your 18th birthday or after you have started working?
I am not sure how young families will be affected. If both work, then there is not much at all left for childcare, is it?

I think it could be easier to get a grasp on the prices of houses and mortgages than applying a universal oncome.
Have you shared all your number crunching?

How much do you suggest we should each pay for our share of the nuclear deterent? Management of fishing areas? Protection of areas of outstanding natural beauty? Maintenance of embassies in foreign countries?

I've not read every post here but I know I'm not the first person to say this but what about: stamp duty, capital gains tax, inheritance tax, vat, corporation tax? Because if you're only taxing income, what's to stop self employed people setting up ltd companies and paying themselves (a lot do this anyway).

Also, my employer (which is actually the govt) would have to almost double my wages to leave me on the same take home pay at 70% tax. At my current salary, it would leave me at a take-home of £25.5k per year. So that's £2k per month which wouldn't pay rent, bills and food on a 2 bed flat in my area - before any other costs. So if you want to collapse the housing market and the economy at the same time, your plan is great.

Eer no. This model doesn’t touch any of that. This is literally playing with only national gross income from PAYE/ self assessment tax receipts.

I want to enable and incentivise personal responsibility and wealth/ asset growth.

Under the 70% model that’s literally impossible. The government give you 26k. Just cash. In your bank account before doing a days work.

I am going to play around with the rest but I want to get this part of the model tied down first. The reason I am doing this is the country is losing the plot because half country is being subsidised and the other half are getting more pissed off. It traps one half and angers/ disincentives the other. This is a fairer transparent solution.

What you'll actually achieve is people finding ways around your earnings tax and gaining income through other means. Which is what happens already, of course, and plugging those loopholes is a big reason why our existing tax code is so extensive.

Out of interest, if we're going to give £26K to everyone, what do you think that will do to inflation?

It’s a good question. If you stopped all over benefits it would be evened out somewhat. The social bill is so huge currently this proposal is not actually that wild; hence why the numbers work and we can get it down to 45/ 50% if we give 18,200 UI

Starting with council tax, hugely regressive. Can't see it happening though, since it would impact people in London and the south the most..oh and the fact this government has absolutely zero political courage, sadly.

If you're essentially saying nobody has to pay back their student loan (as you pay same amount of tax whether you have one or not) then what's to stop every single 18 year old applying for uni, living out for 3 years getting all food, housing and socialising costs paid for, while not going to a single lecture, and then either failing to graduate or scraping a 3rd class degree (or higher, 2 of my housemates literally never went to lectures and still got 2.1s from a Russell group uni) that they have no intention of ever using?

If I got a fully funded jolly for 3 years that I'd never have to pay back I'd absolutely do it. Beats being an apprentice or working in Tesco and living with mum and dad.

Does the £26K also replace the state pension, OP? That seems humane. We have one of the lowest state pensions in the First World.

Am I correct that you do not plan to tax unearned wealth? Look around. Lower rates on dividends and capital gains didn’t do much good under the Tories, did it? Merely encouraged short term thinking.

I agree we need growth and to get growth you must incentivise risk. With notable exceptions, we have mainly been incentivising greed. If you don’t tax unearned income this will just continue.

Yes I’d be very happy with that.

Return all utilities, train lines and water to public ownership.
Increase personal tax allowance to GBP 24k per person, transferable between spouses.
Flat rate income tax at 20% (like the Swiss) for all income above the personal allowance.
National register of dwellings available to rent. Landlords to ensure their accommodation meets criteria for habitable dwellings and to be forbidden from letting unless licensed to do so.
Rents to be set locally according to type and standard of accommodation and capped with a controlled increase per annum only if warranted by inflation.
This is controversial, but make motorway toll roads, as in France, and use that money for maintenance and upkeep.
Basic NHS to continue free at point of use, but only provide basic medical care.
Anything else to be covered by an insurance-based funding scheme.
Reverse inheritance tax decision on family-owned farms and encourage more people back to the land to remove dependencies on imports. Limit supermarkets to sourcing local produce only. Encourage more self-sufficiency via allotments/land sharing.
Provide basic food and nutrition education, where in school or as part of adult education/evening classes.
I am still trying to work out what would be best on the education front, but I think smaller schools/classes, focus on reading, writing and useful arithmetic (for example cookery uses both mathematical skills and chemistry in an applied way, which could be more relevant to pupils as they see the results of their efforts) plus vocational training for those of a less academic bent.
I would make tertiary education free for a first degree, but limit the number of places available, with the exception of courses where there is currently a shortage of qualified professionals/will be an imbalance in the next decade.
I wouldn't scrap benefits completely, but would definitely encourage voluntary activities on one or two days per week, preferably outdoors, for those able to undertake them. Alternatively look at retraining to retain "old-fashioned" skills that are dying out.
I have no idea whether any of this is feasible and what the overall costs would be to rejig.
I am not averse to bringing back national service either, as this teaches skills and discipline.
I would consider bringing in an internet usage licence, a bit like a driver's licence, with different categories, in the hope that this reduces dark web activities and porn.
I would also introduce official photo ID for everyone and a requirement to register and deregister with your local administrative authority whenever you moved. This could also be used to allocate people to GP and Dentist practices automatically.
I never knew I had so much benevolent despot in me!

Husband is a high earner and, because of the level of tax he’s paying on salary and pension contributions, I think he’d take home a bit less. He’s the main earner.

I’m a mid-earner working part-time and would be better off.

For both of us, life would be better in theory because we’re public sector workers and so our working environments may improve with better funded services. On balance, the possible hit to his salary may be a price worth paying.

You still have the 2kish the government gave you. So you have just over 4k a month, like 4200. Which is less than you currently have as I think you earn 85k if 25.5 is 30% of it. So £6 or £700 worse off than now maybe.

I think the idea is mad, but im coming round to thinking its not the lower earning who would down tools but the higher earners as they would be worse off than now. The lower earners could still boost thier total income by 34% and going from no take out ever, to one take out a month is a bigger incentive than going from one take out a month to two.

Apologies, I thought your UBI was £500 a month. I should read better. I guess I felt £2.2k UBI pp a month was a lot? I think you could lower that. The current benefits cap is a lot less.

So under the 70% model I'd be in the same place I am now, give or take. But at the moment my take home is after pension deductions. So you'd need to work out if those were pre or post tax because if they are after tax, I'm substantially worse off.

The bigger issue is that the tax is flat rate so that you need to be earning a lot to see substantial returns. If you're in a couple earning £4k a month UBI, would you be a full time health care assistant for £22k a year?

double posted

Oooo we are getting somewhere!! Yes for lower middle earnings it was coming out that universal income is not much different from our current earnings. But equalises the playing field so there’s everyone’s in the same boat.

Yes I do need to work out what happens with pensions. The UI replaces state pension. It’s literally all adults full stop.

Private pension. That was saved under a different social contract. I do want to incentivise wealth accumulation and delayed gratification/ personal responsibility. So I need to think about that one.

Well I never 😂

Whos needs Rishi or Rachel eh? 😅

Who is coming off worse in this system. If HE are same or better. Middle earners same or better, and lower earners same of better. How is this possible?!?

The math is doing magic mathing.

It still doesn’t really work for a single adult household. If UBI was done per household rather than per person it might do, but single people would be really disadvantaged as two people don’t cost 2x the amount of 1.

And also doesn’t work for people (single or couple) who are currently higher earners, high expenses (mortgage etc), children…

I brought up benefits for the severely disabled but got no information. So if all other benefits stopped how about someone like a man I know who is paralysed from the neck down. I don't know how much he gets but he lives in a house he rents and he has live in carers who rotate. How would he pay them with no benefits and rent, bills, food plus his carers will come to more than £500 a week.

So people who contracted out get the benefit in their work/private pension but those who didn't lose out? Don't think that will be fair or popular

He’s working for £3.60 an hour, what is your hourly rate?