Friday, 4 May 2018

Killer Arguments Against Citizen's Income, Not (15)

Sobers appears to think that he can win an argument by repeating things which are not just untrue, but he knows to be untrue, from the comments here:

1) There's a difference between working because you want to (and enjoy it) and because you have to pay the bills. I don't have to work, but I do. But equally I know I don't have to so there is never the stress of having to. Its entirely different. Give people who currently have to work the chance not to, even for a slight pay cut, and many will grab it.

Duh.

We are not talking about a "slight pay cut", we are talking about the loss of your entire net earnings, as you would keep the UBI either way.

With the current welfare system, the difference in net income between a low/median paid job and a full-on maximum benefit claim (if you can wangle it) is negligible.

So a UBI would be a lot less of a disincentive to work than the current system. By some twisted logic, he is claiming exactly the opposite.

A sensible UBI would be somewhere between £70 - £120 a week, similar to current benefit levels (depends on what you do with Housing Benefit). I think just about everybody would prefer more than that.

2) They are usually working in the black economy while claiming benefit, so such work is untaxed and unofficial, so not necessarily relevant to a UBI argument. Would such people take official taxed employment if they received a UBI instead of illegally claiming benefits? Maybe, maybe not. Particularly not if the marginal tax rates were higher - the incentive to continue in the black economy would be greater than today.

Kick off with a crass generalisation, which is not true.

How and whether we can collect tax from people currently working cash in hand is a quite separate topic and not relevant to the debate.

Having looked at the numbers in depth, like everybody else interested in the debate, Sobers knows perfectly well that there would be no overall increase to marginal tax rates, so I don't even know why he says that.

And clearly, with a UBI and no means-testing, the total marginal withdrawal rate would fall from 80% - 90% at present to nothing more than the basic rate of tax plus NIC (call it 32%).

Which in itself, is less of an incentive to work cash in hand.

3) While it's possible, it's not very nice, and would involve giving the State a massive control over your life.

Total and utter crap. Most parents receive Child Benefit, nearly all pensioners get a state pension, cash in the bank every month, job done.

If on the other hand you could stay exactly where you were living, and have a UBI drop into your account each month with no strings attached and no hassle of dealing with the benefit system (which is a job in itself at times), then the work/not work calculation is far easier, it comes down purely to £££ vs leisure time etc, than a complete life upheaval (which going onto the current benefits system would entail).

Somebody on welfare, whether that's £71.30 p/w Income Support or £71.30 p/w UBI has plenty of "leisure time" and is pretty much struggling at the margins. Most of them would prefer to have paid work.

4) So? My argument is that if you set a UBI too high many people will choose to live on it and stop paying any taxes, thus meaning those who do must pay higher taxes to compensate, and so on in a downward spiral.

That appears to be his Killer Argument. "If you set it too high", FFS. Nobody has ever suggested anything other than set it at a sensible/affordable amount i.e. in the range £70 - £120 p/w.

5) Again so? If loads of people stop paid work, live on their UBI and do voluntary work, the tax take again drops, and taxes have to go up on those still working, as above.

IF IF IF IF

The current welfare system discourages work (paid or otherwise). A UBI is neutral about it. Ergo, with UBI more people would be in work (paid or otherwise).

My argument has nothing to do with puritan ideals, I'm not arguing that people should work for the good of their souls, I'm arguing that a UBI set too high will necessarily destroy itself. Its an entirely practical, not moral argument.

Again the "too high" mantra. This is the third time he has trotted this out.

This is a futile argument, you might as well argue against having a minimum voting age on the basis that if you set it "too high", only a few old age pensioners will be allowed to vote and if you set it "too low" then parents of young children will effectively get extra votes. Or against speed limits, on the basis that if set "too high" they will have no effect or set "too low" the country will grind to a halt.

14 comments:

James James said...

The question that interests me is how to implement it. If I were a politician, I'd want to start small, say £50 week replacing unemployment benefit, and increase it gradually by folding other benefits into it, ironing out any problems as we go.

You need to identify every person in the country, to ensure people can't claim twice. You need everyone's bank details (people without a bank account should be forced to get one - everyone's entitled to a Basic Account). It should probably be paid monthly.

I think it should be done through HMRC using the existing tax refund system, except paid out monthly. So the existing tax refund system would have to be updated to enable monthly or even weekly payments.

Doing it through HMRC has the advantage of making it easy to reduce the personal allowance at the same time, and makes it clear that it's a net payment - you don't get it if you're paying more tax already.

You could do it through the DWP instead, by extending the pension system to include everyone, but doing it through HMRC would enable it to replace the pensions system and shut down the DWP.

Any more ideas/comments?

Bayard said...

"There's a difference between working because you want to (and enjoy it) and because you have to pay the bills. I don't have to work, but I do. But equally I know I don't have to so there is never the stress of having to. Its entirely different. Give people who currently have to work the chance not to, even for a slight pay cut, and many will grab it."

And you know this how? Have you ever worked for barely more than what you would get in UB plus housing benefit?
What you appear to be saying is that, if CI is introduced, all those currently forced to do shit jobs for shit money might decide not to do them any more. However, that doesn't mean that they will stop working. Instead, they will mostly do better jobs for possibly less money, i.e. be like you, with the CI taking the place of your private income. Poor people are not, despite what Mailexpressgraph readers think, a different species. Ok, people will either have to be paid more to do the shit jobs or they could be done by (shudder) immigrants, who don't get CI.

Bayard said...

"They are usually working in the black economy while claiming benefit, so such work is untaxed and unofficial, so not necessarily relevant to a UBI argument."

Complete non-sequiter. People working and claiming have to work for cash, duh. That doesn't mean that if they suddenly were allowed to work and claim under a CI system they would either stop working or continue to work for cash. The point is, which you are dodging, is that the incentive is there to work, despite such work being illegal and the worker being already in receipt of a subsistence income. How much the illegal worker gets is neither here nor there, and the difference that paying tax makes is solely to the amount taken home.

"My argument is that if you set a UBI too high many people will choose to live on it and stop paying any taxes, thus meaning those who do must pay higher taxes to compensate, and so on in a downward spiral."

Anybody who earns less than the current tax free allowance is already paying no tax. Under CI, they would pay tax on every penny they earn. Besides, you (deliberately?) miss my point that it would be better for employers to get rid of the lazy sods so that they can eat nik-naks and play computer games at home and replace them with more industrious types who will be much happier working for low wages because of their CI.

"If loads of people stop paid work, live on their UBI and do voluntary work, the tax take again drops, and taxes have to go up on those still working, as above."

Again you (deliberately?) miss my point. The fact that people do voluntary unpaid work shows that the incentive is there to work, regardless of the money angle. I wasn't suggesting that suddenly lots of people would give up working to become volunteers, although some might, see my point 4.

Derek said...

On the work angle, I'd like to mention that there are a lot of people who are currently working at raising children and caring for disabled or elderly relatives without any pay at the moment. A UBI isn't going to make those people give up work. It will just ensure that they get some reward for the essential jobs they do.

Mark Wadsworth said...

JJ, I don't do "phasing in". Might as well campaign for what you want and discuss details later.

Agreed, HMRC are the best people to do this, if you are getting the UBI in cash, then you get a PAYE code with no personal allowance. Most people are in work and will get the UBI netted off with PAYE liabilities by their employer i.e. will get a suitably calculated personal allowance.

From there on it doesn't need much "running", it's just loads of direct debit payments every month, with a crack squad of a few fraud investigators.

Mark Wadsworth said...

B, agreed both comments.

D, well yes and no. In the UK there is statutory maternity pay for a while and also Carer's Allowance. These would both go, of course. But apart from that, agreed.

Bayard said...

"You need everyone's bank details (people without a bank account should be forced to get one - everyone's entitled to a Basic Account)."

Why should anyone be forced to do anything? The child benefit system worked for decades being paid out in cash at post offices with a minimal amount of fraud. Indeed, it is much more difficult to commit fraud when dealing with a real person over the counter than it is when dealing with a computer over the internet. The amount of people who don't have a bank account these days is pretty small, so the additional costs of having a cash system for them will be correspondingly tiny.

Ben Jamin' said...

Regarding Housing Benefit, what do people think would happen if it were cut to zero?

I'm genuinely puzzled why it should be paid to anyone other than the unemployed and disabled. Even then it should only be temporary until suitable Council accommodation can be provided.

Bayard said...

BJ, In the short term you'd get a lot of homeless people. The homeless people would end up in temporary housing, paid for by the LA, which would cost more than the housing benefit. The smart landlords would "convert" their flats and houses to temporary accommodation and make more money doing the same thing. No more social housing would be built, for exactly the same reasons as it is not being built now.
The answer is not to abolish housing benefit, but to reduce it to the level where the rents at the bottom end of the private sector are the same as those in social housing.

"I'm genuinely puzzled why it should be paid to anyone other than the unemployed and disabled."

It helps if you stop thinking of unemployment benefit and housing benefit as charity paid by a beneficent state. If you think instead that these benefits are paid to prevent there being a large pool of desperate people who would riot at the drop of a hat, then payment of HB to everyone below a certain income makes sense. The other answer is, of course to build more social housing, but that's not politically expedient at the moment.

Ben Jamin' said...

@ Bayard

Housing Benefit is a subsidy paid that results in a net transfer of incomes. As such, it means that those who would otherwise be able to afford to live in nicer locations can't, while those in receipt of it now can.

So, what we'd see from ending HB is a swap, and therefore a better allocation of housing. IMHO.

Rental values would stay the same. Landlords wouldn't change anything.

For sure, if HB was ended tomorrow, it would be a shock that would certainly cause temporary disruption and angst.

So just wind it down gradually.

Mark Wadsworth said...

B, as to bank accounts, HMRC (or DWP or whoever pays out) could simply set up a new bank called 'Girobank' or 'Trustee Savings Bank' and open an account for everybody who doesn't have one, people can withdraw from that in cash if they wish.

BJ, HB for private landlords is the worst benefit of course. There's no reason not to have some social housing available at low rents (for twenty, thirty percent of households?), but these ought to be in lower rent areas (can still be physically nice buildings), not bloody Kensington & Chelsea, so social rent would not be much above 'market' rent anyway, no misallocation and no sub-letting.

Bayard said...

"As such, it means that those who would otherwise be able to afford to live in nicer locations can't"

This assumes that, if HB was abolished, the Council Tax would go down, whereas all the evidence is that if HB was abolished, the LAs would simply spend the money saved somewhere else, so there is no "otherwise".

Mark Wadsworth said...

B, don't confuse the spending/subsidy side with the tax raising side.

Bayard said...

I try not to, but I couldn't make sense of BJ's comment otherwise.