Monday, 6 February 2017

Killer Arguments Against Citizen's Income, Not (7)

The morons seemed to have reached peak idiocy, they are going round in ever decreasing circles without bothering to look at facts, maths or logic, let alone reading and thinking about what they just wrote.

David Smith's gibberish also published in yesterday's Sunday Times:

The flaw in a UBI also comes down to simple maths. If you pay everybody a fixed amount, including the very many who currently receive nothing from the government (1), the cost of the policy (2), could be enormous (3)...

There is no easy way around these problems (4). A UBI means giving money to people who do not currently get it (5), and who do not really need it (6), with the only way of making it affordable being to reduce the benefits going to those who are in genuine need (7). If that was politically unacceptable, as it would be (8), then the consequence would be higher overall spending, and significantly higher taxes to pay for it, neither of which we need.(9)


1) There are actually very few such people. People in full time jobs get a personal allowance for income tax/NIC, which could be replaced with a CI of equal value. Pensioners get a state pension. Parents/minor children get Child Benefit/Child Tax Credits. Unemployed and carers get ESA, IS, Carer's Allowance etc. Students get modest grants and soft loans.

Out of fifty million adults, there are only about two million who get nothing, which appears to be stay-at-home married mums married people with no income and no children at home, whose spouse earns a reasonable amount.

2) It is not a net "cost", it is redistribution. The cost is the admin costs (much lower than current system) and the deadweight cost of taxes on earnings/earnings-based means-testing of benefits.

3) How much the gross cost is depends entirely on how high you set it. The net cost will always be £nil.

4) They aren't "problems", except in his fevered imagination.

5) See 1). He has not done his homework.

6) Sure, people with full time jobs don't "need" it, but they would break even. For those thirty million adults, the extra PAYE from losing the personal allowance nets off with the CI they now get (i.e. about £70 - £80 a week). Marginal tax rates are unchanged. In practical terms, we can just ignore this vast group and assume they get no CI and just retain the tax free personal allowance.

The only significant group who would now get something are the aforementioned non-working spouses, the effect of this is much the same as a transferable personal allowance, which is what 99% of civilised countries have.

7) The Tories decided to have an absolute cap of £500 a week for benefits paid to a household. As only a few thousand households get that much in actual cash benefits, in reality, this is a cap on Housing Benefit paid to private landlords, so inadvertently, they have done The Right Thing.

We can retain the £500/week cap. With a sensible CI, an unemployed couple would have to have about ten children to get £500/week, in which case their Housing Benefit would be reduced to nil, sorted.

8) Nonsense. The £500/week cap was widely supported, including by me.

9) Nonsense. See above. Most of the CI payments would be financed by the very person receiving it, it is a wash, it nets off to nothing.

9 comments:

Lola said...

And what they are also not willing to do is look at financing CI through LVT and hence by implication scrapping 'all other taxes'.

It never ceases to amaze me how truly illogical a lot of the great and the good are. I was brainwashed as a yoof into thinking all these people 'knew what they were doing'. I am now absolutely sure that they don't. Or, in a large number of instances, are deliberately lying to preserve the status quo and their own fat entitlements, aka their self interest.

Shiney said...

@L

"Or, in a large number of instances, are deliberately lying to preserve the status quo and their own fat entitlements, aka their self interest"

I'd say in 99% of instances they know very well that they are being 'economical' with the truth.

ThomasBHall said...

@ Lola & Shiney- I'm not sure- I suspect that certain topics get given a cursory amount of thought when very young- and then form a core of a belief system that never self-scrutinizes. Articles of faith like- "Private property is the basis of civilisation", "free markets benefit the rich", "high incomes should have high taxation", "Benefits cost the country xyz" etc. become so fundamental to a person's identity- the ability to critically evaluate them is lost...
Some are self serving bastards for sure- but I feel the ignorance goes deeper than the self service...

Ben Jamin' said...

Again, the problem arises from the conflation of prices and costs. Seems even economists don't know the difference, so what chance has anyone else.

As the CI is a transfer payment, the only costs are a) admin, b) deadweight costs from financing it by taxes on output.

"a" is a necessity, "b" is a choice. All be it a stupid one.

Bayard said...

"there are only about two million who get nothing, which appears to be stay-at-home married mums"

Surely they get paid child benefit?

"this is much the same as a transferable personal allowance, which is what 99% of civilised countries have"

What is a transferable personal allowance and are we in the 1%?

Mark Wadsworth said...

L, agreed.

TBH, good explanation

BJ and B, I have amended.

Lola said...

BJ. very neat. I shall remember.

Mark Wadsworth said...

B joint taxation = transferable personal allowance

Lola said...

TBH - Yep. We are assemblies of our prejudices. Except me and you, of course.