Saturday 24 October 2020

Killer Arguments Against Citizen's Income, Not (32)

With my Citizen's Basic Income Trust hat on, I had a Zoom call with somebody doing an MA on the topic yesterday.

He asked me about "political feasibility", given all the other (spurious) objections.

The answer is, do it softly-softly behind the scenes. For example (ignoring the fact that they are trying to lump a lot of this into Universal Credits), to get down to the tedious details:

1. There is a significant couples penalty in the welfare system. A single adult gets £74/week Income Support (in its various guises) and a couple gets £117/week. So just hold the single person rate fixed and gradually bump up the couple's rate to £148 and allow them to put in two separate claims. Then get rid of the tick box that asks whether you have a 'partner' or not.

2. Gradually align Working Tax Credits (basic amount £3,040 a year for a single adult working more than 16 hours/week or £3,865 for a single adult working more than 30 hours/week) with Income Support Rates and reduce the 16 hours/week threshold down to 1 hour.

3. So Working Tax Credits would end up at £74 x 52 weeks a year = £3,848, even if you are only working 1 hour a week.

4. Gradually reduce the earning threshold for Working Tax Credits withdrawal down to £nil, while at the same time gradually reducing the total withdrawal rates for Working Tax Credits, Income Support and Universal Credit down to 32% for every £1 of income (from their current overall rates of about 60% to 100%).

5. 32% is of course the current real basic tax rate (income tax + Employee's NIC). At this stage, you no longer need a parallel means-testing system - claimants are just given a PAYE code with no personal allowance (a BR code) with a tick in the box for "Income Support/WTC claimant - no NIC threshold". They do this with the extra 9% tax for people with student loans, it's perfectly realistic . So they get full amount of benefits and these are "means tested" or "clawed back" via normal PAYE.

6. Gradually reduce Statutory Maternity/Paternity Pay (£151/week for 39 weeks) to the same as Income Support or Working Tax Credits, while extending the eligibility period from 39 weeks to "until you decide to stop claiming or are old enough to get the old age pension". Claimants get the same adjusted PAYE code as above.

7. Married people who earn less than the Personal Allowance can transfer part of the notional tax saving to their working spouse, it's a tax saving of a laughable £250 a year. This one will keep the Daily Mail readers happy. Allow the lower earner to transfer the entire unused part of their personal allowance, and/or allow the lower earner the claim the lost tax saving on the unused part as a cash payment (to the extent they are not getting Statutory Maternity/Paternity Pay, see above) and gradually bump up the cash payment to the same as Income Support - WTC - SM/PP rates.

8. Gradually phase out all the "looking for work" conditions, do interviews every three months instead of every week, reduce the number of hours people have to pretend to be looking for work down to 1 hour a week.

9. Gradually increase the normal NIC thresholds to £12,500, so that the value of the NIC and income tax allowances for somebody in full-time work - not receiving IS, WTC, SM/PP etc - is £4,000 (£12,500 x 32%) and then get rid of the allowances and deduct tax and NIC from the full amount of earnings with a monthly "tax credit" of one-twelfth of £4,000 (mathematically exactly the same thing - they used to do this in Ireland), then increase the IS, WTC and SM/PP rates to £4,000 a year as well so that people are heartily indifferent which system they're on.

And so on - in five or ten years, we'd have a UBI system (or Negative Income Tax system) and nobody would have noticed. Most people wouldn't have a clue what all these things mean, so won't have a strong opinion if some obscure sections in some obscure social security acts are amended a bit every year.

12 comments:

Francis said...

Why omit employer NI contributions from your calculation?

Mark Wadsworth said...

F, that will also have to be factored in, along with hundreds of other steps. I was just giving examples.

Lola said...

Excellent. Now, where do I sign up?

Mark Wadsworth said...

L, you have done.

Lola said...

MW 'thumbs up'.

L fairfax said...

The problem is that the couple's penalty is there by design, some people want that (I don't).
So getting rid of it will not be a popular.
Don't get me wrong I would welcome Citizen's income - just not sure it will happen.

Mark Wadsworth said...

LF, the bureaucrats and authoritarians like it, I don't think anybody else cares. Every adult gets one vote at elections, couples get two votes. Seems fair to me.

L fairfax said...

@Mark

Are you serious? Loads of people talk about poor single mums and how they need help more than couples.
Even in https://en.wikipedia.org/wiki/Ice_Age:_Dawn_of_the_Dinosaurs when one of Sid's children eats another child he says "I am a single mum and should be treated with compassion".
I don't think like that but loads do. I hope you are right but fear I am.

Mark Wadsworth said...

LF, but there are as many people who dislike this state of affairs.

It's a question of numbers, a single mum gets single-person Income Support, Child Benefit and Child Tax Credits. Under a UBI system, she gets adult UBI (same as single-person income support) plus child-rate UBI. It's not too difficult to choose a child-rate UBI that that doesn't make them materially worse off.

The rest can be fudged somehow, i.e. by all means pay them a fraction of each child's father's UBI?

biochems.store said...
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Bayard said...

Mark, That's a good argument for a UBI: it allows the state to make absconding fathers pay for their offspring in an unavoidable way.

Mark Wadsworth said...

B, yes, that's assuming the mother is prepared to name the father.

Some will claim they don't know or that they do know but are intimidated into not saying [truthfully or not], some will accuse the wrong bloke, what if ten different mothers of ten different children name the same bloke [do they get one-tenth each, or is it first come first served?], etc, no system is perfect.