The Daily Express have got in on the act:
MILLIONS of benefit claimants are better off living on handouts than getting a job, a Government report confirmed yesterday. Some can lose as much as £1.20 in benefits for every £1 they earn.
Why is it mainly right wingers who point this out, again and again and again?
The problem is that the knee-jerk reaction of these right-wingers is to either overtly subsidise married couples or to time-limit benefits.
Why is it that The Citizen's Income Trust are the only ones explaining how this could all be fixed; quickly, simply and cheaply?
Friday, 26 September 2008
Welfare porn (2)
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Why do only right wingers point this out?
Because left wingers don't see it as a problem.
I like the CI proposal. I think it would solve a lot of our problems with welfare dependency and lack of personal responsibility in society today. I just think it's politically dead in the water before you start. Can you imagine any politician standing up and admitting that he/she was going effectively to take money away from single mothers, the long term sick, etc etc and give it to the rich? It's just not going to happen.
Because the value of welfare benefits is not just in the cash handed out but the other stuff you get free as well. Your rent paid via housing benefit, council tax paid or rebated massively, free school meals for the kids, etc etc. If everyone had to pay their own rent and council tax they would be well out of pocket from how they are now. That would be very hard politically to defend, even if the results (people have to get off their butts and get jobs) are good. There will always be that comparison made between poor single mum and multimillionaire both getting the same CI.
Sobers, thanks.
The CI proposals politely ignore Housing/C Tax Benefit.
I have singled out the two 'least worst' ideas on how to fix this and debated them at length at S&M over the past few days. I was roundly shouted down by people who didn't like these ideas but who miserably failed to come up with anything better.
As to giving a CI to 'the rich', the simple way round this is to give them a tax free personal allowance instead.
I have just read the comment thread (or rather skimmed through it!) and suddenly realise I've walked into a bit of a crossfire!
I have often thought about the CI idea in the past and have come to the conclusion that the only way to make it work is if the CI is big enough for a single mum + kid to live on (ie pay her own rent/council tax/living expenses). This will make it politically acceptable, as single mums are the sort of lowest common denominator of welfare claimants.(Single people are generally accept by all as being able to work). Everyone else is somewhere higher on the food chain - all couples with or without kids would get enough CI to cope as living costs would be shared.
So my maths is as follows: The CI should be set at the same level as the tax allowance (approx 100/week), with the proviso that kids CI would be non taxable (or their allowance would be transferable). Kids CI (up to 18) should be half adult rate. CI would be taxable. So all people currently in full time paid employment would immediately lose at least 33% of it, and maybe more. Thus reducing net cost to the Treasury.
The costs: rough back of envelope calculations lead me to total cost of 220bn pounds (assuming 15m kids at 2.6K/year = 39bn, 15m adults not paying any tax at 5.2K/year = 78Bn, 30m adults getting 5.2k/year but paying 33% back in tax = 103Bn).
Thats a lot of money. BUT think of the savings - NO welfare state at all. The only bit left would be the Mental Health bit - if your sectioned someone has to look after you, otherwise you're responsible for yourself. Massive reduction in council spending too, so council tax should be lower. No need for National insurance (more costs savings), simplified tax system, more tax would be paid as people would register with the system to get their CI and therefore get caught by the tx net, CI only to be paid to British citizens thereby reducing illegal immigration (and costs to Home Office). The list is endless. I personally would be prepared to pay the extra tax required to get this scheme up and running, because I believe that within a few years the extra tax revenue from all the people going out to work, or leaving the black economy, would soon allow rates to fall back to around what we have now. And the positive effects on society would be worth the extra costs anyway.
I suspect the only way it could be introduced would be gradually - everyone under 30 say to start with and then just let it evolve naturally with time. The govt spends 5-600bn of our money each year. I reckon an awful lot of it could be reallocated to this system without any real loss of utility.
PS sorry for uber long post!
Remember than an LVT should reduce housing costs.
Also reducing to zero Income taxes should increase employment, as it decreases the cost of employing someone.
AC!, obviously, but Sobers is anti-LVT, not sure why.
I think it's VITAL that any Citizens Income is funded via an LVT, otherwise it will have problems.
AC1, I am doing a two-pronged attack
Step One. All existing welfare and as many tax breaks as poss. get rolled into a CI system (as in the CIT leaflet).
Step Two. All existing property-related taxes (C Tax less C Tax Benefit, Bus Rates, IHT, TV licence, Stamp Duty less subsidies like H Benefit for private tenants, CAP payments) get rolled into LVT to fund 'local' expenditure (as I wrote on ConHome).
So far, so good.
I suppose Step Three is to transfer as much government stuff down to local councils, reduce national taxes (VAT, NI, Income Tax, Corp Tax) and allow LVT to gradually rise. Step Four is to replace State education and NHW with cash vouchers, paid out of local LVT and so on.
Thus inadvertently I have stumbled towards Geonomics.
I'm anti LVT on the basis I don't like being taxed on income I don't have! Which is what LVT taxes, the potential of something rather than what is actually produces/costs. I'm a farmer, and no farmer in the land could afford to pay a LVT of even 2% without going bust. You would close down the entire industry, and a lot of others too I suspect. Because many businesses own property which, if they had to purchase it now, could never be financed by the existing business.
Also LVT would have a massive downward pressure on land prices (not a bad thing in itself), but would leave anyone who had borrowed money to buy in a negative equity situation overnight. Equally I'm not sure the figures add up - I suspect the 5% I think you've quoted before would have to rise once land prices fell because of the introduction of LVT in order to get the revenues back up, thereby creating further land price falls etc etc. LVT is probably a superior taxation system if you were designing a tax sytem from scratch, but we already have a system in place upon which people have made long term decisions. The government is not entitled in my view to suddenly turn the applecart over and change everything so drastically overnight.
The only other tax similar to LVT that taxes value of assets and has to be paid year on year is council tax, and we know how unpopular that is, and how regressive it is too.
As for CI, you have more knowledge and insight into it than I will ever have - As I said, I like the idea, and wish it could be introduced, at whatever level was feasible. I just can't see it ever happening due to the basic flaw of that if it makes anyone at the bottom of the pile worse off, while making wealthier people better off, politically it's a dead duck.
Sobers, good points, my full response is here.
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