Tuesday, 28 April 2020

Killer Arguments Against Citizen's Income, Not (27)

From The Independent:

51 per cent of the public also support a universal basic income, "where the government makes sure everyone has an income, without a means test or requirement to work". Just 24 per cent are unsupportive of the idea, with 9 per cent saying they do not know how they feel.

The idea a basic income has been backed by dozens of MPs from across the political spectrum as a solution to workers falling through the cracks of the current government support scheme - including the self-employed. Former work and pensions secretary Iain Duncan Smith has however criticised the idea, suggesting it would be a disincentive to work during the crisis (1) and would be badly targeted (2).

Christ on a crutch.

1) The whole point of the lock down is to disincentivise people from working! If you are furloughed, you are forbidden to do work for your employer. (Note: I got talking to a builder recently who is on furlough from a large construction project; he's now working part time for his dad instead. Good for him). The majority of adults are still in paid work; receiving a state pension; or are already on some state benefit or other. They clearly wouldn't get anything extra.

2) Compare the UBI with the Furlough Scheme, which his own government introduced. The cost to the taxpayer of a furloughed worker on an average wage is £1,260 per month - the more that person was earning beforehand, the more they get now - a kind of negative means-testing. Means-testing is bad enough, but negative means-testing is worse. That's really badly targeted. A sensible UBI would be in the region of £300 - £400 per month, just enough to live off, assuming there is a rent/mortgage freeze, i.e. very well targeted. It does the job at minimum cost.


mombers said...

Very good point about the reverse means testing of the furlough scheme. But the higher your income, more often than not the bigger your rent or mortgage burden. So it's yet another 'they own land, give their serfs money to pay rent or mortgage'. A rent + mortgage freeze and a much smaller, flat UBI would solve the problem.

Mark Wadsworth said...

M, good point and exactly. Three of us more or less independently came up with this.

mombers said...

Another interesting point is dividends. Hundreds of thousands of people have avoided a chunk of tax by paying themselves in dividends but are now wailing because dividends are not covered under furlough. Leaving aside whether the practice is good or bad, a basic income would remove that question as well. Personally, I am all for reducing or eliminating tax on private property (capital and labour) but never had the balls to go contracting.

Bayard said...

" Iain Duncan Smith has however criticised the idea, suggesting it would be a disincentive to work.."

Yep, the Tories hate CI because it means they can't starve the workers back to work.

Funny how the same disincentive is not a problem for them with landlords or anyone who has a private income.

Piotr Wasik said...

"they own land, give them money" - sometimes I don't get why this policy is so successful, what percentage of the adult (i.e. voting) population are landlords? here reddit says even Tory MPs percentage that are landlords is only 28% https://www.reddit.com/r/ukpolitics/comments/9k8i2s/percentage_of_each_partys_mps_that_are_landlords/ so this is as far as opposing rent freeze goes. As of owner-occupiers, the other "they own land" part, wouldn't they welcome mortgage unconditional freeze, and no tricks like accumulating interest or extra fees?

Piotr Wasik said...

okay, I answered to it myself: 2.5mln landlords in the UK and 5.45mln rented accomodations https://www.mydeposits.co.uk/blogcat/how-many-buy-to-let-landlords-are-there-in-the-uk/ vs 38mln voters. I am not giving percentages because I realised that it is not only landlords themselves that benefit from rents but their whole families (the same goes for tenants).

Mark Wadsworth said...

M, part of my job is doing these dividend v salary v pension contributions calculations. What a waste of human effort. Another argument for a flat tax system (which does not preclude basic and higher rate tax, of course).

B, true, but the Tories hate welfare, full stop. Unless you are living off land subsidies, which is welfare for the rich.

PW, the gimmick is that the Tories sell Housing Benefit, Furlough Scheme or Help To Buy as being there to help the poor access housing or pay their mortgages. They pretend that rents and land prices are independent variables (which can only go up, of course). They are not, they are a balancing figure.

But every £1 of such payments just goes into £1 higher rents and prices.