Sunday, 28 June 2020

Killer Arguments Against Citizen's Income, Not (29)

From The Scotsman:

Helpfully, the former Edinburgh SNP MSP and local government minister Marco Biagi has done some sums, calculating that rolling in all benefits currently paid out in Scotland would cover £19bn and on the basis that the Scottish Government won’t stop spending £19bn on schools, hospitals, police and all the other services for which it is directly responsible, the rest of it would have to come from higher tax, almost all on income.

It doesn’t sound too bad when you say it quickly enough; a bit more income tax and everyone gets £9,000 a year with no strings attached. The rich can easily afford it, so what’s not to like?

What’s not to like is the scale of the tax rise. Most appraisals of CBI presume the £12,500 tax-free personal allowance would go and National Insurance would be paid by everyone, and Mr Biagi’s calculations produce a basic income tax rate of between 42 and 44 per cent.

The Office for National Statistics estimates average gross earnings in Scotland to be £470 a week, £25,000 a year give or take a quid or two, and income tax at 40 per cent would mean the average worker paying £10,000 a year in tax and getting £9,000 in return.


He appears to be suggesting that UBI is bad for two reasons:

1. It would increase basic rate of income tax to 40%, and

2. The net cost of income tax minus UBI to an average taxpayer would be £1,000 a year.

The problem is, he is a fucking moron who doesn't know what he is talking about and isn't comparing like with like.

1. At present, the total marginal withdrawal rate (PAYE deducted plus means-tested benefits foregone) for an average earner is at least 75%. They might not know it, but it is. £9,000 a year is a very generous* UBI, so I hope it would replace all means tested benefits, in which case the effective withdrawal rate is reduced to the new higher PAYE rate of about 55%**, which is a big improvement. You end up 45p better off for every £1 you earn, not 25p.

2. The current net cost of income tax minus UBI to an average [Scottish] taxpayer is £2,480. They pay £2,480 income tax and receive £zero UBI. So reducing that net cost to £1,000 is a big improvement.

* I would say overly generous, but hey, I'm using other people's figures.

** Basic rate tax and NIC are bad taxes, but not the worst. That's VAT, and in this context, means-testing.

2 comments:

Bayard said...

"The problem is, he is a fucking moron who doesn't know what he is talking about and isn't comparing like with like."

I think that's a bit harsh. More likely his editor asked him to write something dissing UBI, "doesn't matter if it doesn't add up, so long as it's superficially convincing, no-one's going to read much beyond the headline, anyway, we just want to leave an impression".

Mark Wadsworth said...

B, then he is deliberately lying which is worse. Why write something you don't believe in? I don't.