Killer Arguments Against Citizen's Income, Not (13)

Chris Goulden at the Joseph Rowntree Foundation betrays his deliberate lack of understanding.

He lists the main pro's and then plucks some con's out of thin air:

A citizen’s income would require two big principles to be accepted and supported by the public, namely that:

1. Everyone should get a baseline level of state financial support, even if they choose not to do anything to try to earn money for themselves.

2. The basic marginal tax rate should be much higher than it is now, otherwise almost everybody’s net income from the state would rise, and there is no obvious way to finance this. (Some do not assume UBI must be paid for through income tax and suggest a wealth / carbon tax instead, or bigger cuts to state spending elsewhere, for example. None of these are easy options either).

Most politicians in the UK (or in England at least) are likely to regard both of the above as unacceptable to voters - a view supported by long-standing evidence on public attitudes to welfare.

3. A third objection relates to support for housing (and other) costs. For UBI to achieve its goal of removing the complexity and disincentives involved in means-testing, it would also need to replace support for housing costs. But with largely market-based rents, it would not be easy to include a simple rent element in a UBI payment without creating shortfalls for some or large surpluses for others. The same applies to means-tested childcare support. This counter-argument is strong – arguably public attitudes towards benefits and taxation could change but differing needs will not.

4. So, a central problem is that advocates of UBI either unconsciously or wilfully fail to acknowledge that the current system is designed to provide specific payments for people in specific circumstances (e.g. caring, disability, high housing costs, high childcare costs). If you sweep all of that away, you either have to level up, giving a massive boost to people without those specific needs (at huge cost), or you create a fall in income for those with them. Neither is remotely acceptable in any real world.

1. Agreed.

2. Is complete crap. The actual effective tax rate for claimants (i.e. about half the population, if you include Tax Credits) i.e. the total of PAYE deducted AND means tested benefit withdrawal is stupendously high and would fall considerably. There is no need to increase tax rates at all, and certainly not the basic rate of tax, that's basic maths.

As to "unacceptable" to voters, this is not an argument AGAINST simplifying and harmonising welfare and tax systems, it is an argument FOR educating voters. He is simply providing the brain dead with ammunition.

3. Housing related welfare can be kept running in parallel for the time being. Welfare for landowners is bad; means testing is bad, but needs must. Saying that "we have to means testing housing relating welfare, therefore we must also means-test non-housing related welfare" is just crap logic, you might as well go on to say we should means test non-cash benefits (state schools, NHS, the right to vote or use a public library etc).

He clearly knows bugger all about "means-tested childcare support". There's the superficially generous but savagely means tested Childcare element of Tax Credits (progressive) and the equal and opposite, weird and wonderful tax breaks for employer payments (regressive); as well as Free Early Education vouchers and kids who get a 'free' Kindergarten place at a state school (flat rate and non-means tested).

The actual cash amount/value that most parents get - regardless of which scheme(s) they benefit from - is pretty close to £90 per week per child, plus or minus £10. Ergo, we can get rid of all the overlapping crap and just give every parent of a pre-school age child £90 a week (a kind of age-related Citizen's Income) or a state school nursery place (and a small cash balance?) and there would be few winners or losers at either end of the income scale.

4. He then lists things which Citizen's Income proponents have always said should be left completely outside the system and continue to run in parallel. Disability payments should be transferred to the NHS budget anyway. . We dealt with housing and childcare costs above; he mentions them twice just to make his list appear longer. He clearly doesn't know about "caring" either. I assume he means "Carer's Allowance" which is just another reason for paying people a lower rate of Income Support by another name, so recipients thereof would be better off with a Citizen's Income (which would be pitched at the same £ amount as Income Support to start off with)

JRF; "Struggling to pay Council Tax: New perspectives on the local taxation debate"

I've only just stumbled across this fine research by the Joseph Rowntree Foundation, it's from 2006 but none of it will have changed much.

To sum up:

It is estimated that over two million households struggle to pay council tax each year in England.

Those struggling to pay are predominantly low-income households in low-value properties, not people in high-value properties (see Table 1 and Figure 1). These conclusions are based on the following findings...

* It is estimated that 5,740,833 households in Britain have a low income and live in bands A-C (including 2,898,888 pensioner households).

* It is estimated that 181,450 households in Britain have a low income and live in bands F-H (including 101,008 pensioner households).

They then provide more detailed figures, which can be presented as follows:

As you can clearly see, there is a very strong correlation between household income and the value of the house they live in, taking Council Tax Bands as a proxy for home values, for example:

* over half of low or median income households are in Band A or Band B homes,
* two-thirds of average income households are in Band A, B or C homes,
* nearly half of high earners are in Band E to H/I homes,

and similarly
* half of households in Band A homes are low income households
* half of households in Band B and C homes are low or median income households
* half of households in Band E to G homes are high income households
* four-fifths of people in Band H/I homes are high income households.

and finally, only two per cent of all households are on low incomes but live in Band E to H/I homes, and slightly over half of these are pensioners, in other words, the famed "asset rich, cash poor, Poor Widows In Mansions" used as a human shield by the opponents of tax reform represent one per cent of the population.

I've explained the significance of the bold lines over at the KAALVTN blog.

"Hard working pensioners 2"

Following on from Monday’s discussion the Beeb are reporting on an IFS research study in which it is claimed that UK pensioners' incomes have risen faster than all other age groups in the last 30 years, and also claims that the over-60s are the only age group to have become better off since 2007/08.

 

The Beeb suggests that “the findings may fuel the debate over how much protection pensioners should be given from the government's current austerity measures”.

As yet the actual report Living standards, poverty and inequality in the UK: 2013 does not appear to be publicly available, the IFS website explains that "The Department for Work and Pensions (DWP) has today [13th June] published its annual statistics on the distribution of income in the UK. The latest data cover years up to and including 2011–12.  Tomorrow, IFS researchers will publish a detailed report, funded by the Joseph Rowntree Foundation (JRF), on what these data tell us about living standards, poverty and inequality in the UK."  The link given actually takes you to details  of the Conference organised around the release of the report:-

Living standards, poverty and inequality in the UK: 2013

Date: 10:00 14 June 2013 - 11:30 14 June 2013 Type: Conference Venue: CILIP  [see map] Price: members: Free; nonmembers: Free

On Thursday 13 June, the Government will publish the latest figures on the distribution of income and the extent of poverty in the UK. The figures will cover 2011-12, the current coalition government's second year in office.    The IFS will then release a fuller report, funded by the Joseph Rowntree Foundation on the latest figures and recent trends on Friday 14 June.  Going beyond simply describing the data, it will look at the factors driving the changes in incomes and poverty observed, and will look forward to prospects for income growth and poverty over the coming years.

"Now listen up Ed, me old Not Red pal, the boy on your side that is clearly leading the way back into government

is that well clever geezer and Iain Duncan Smith tribute act Liam Byrne.   He knows that the only way you can convince the electorate to put you into Number 10 is to promise to be even more of a means testing fixated bunch,  to promise to tax the incomes of the lower paid even more severely - you can bring in a "living wage" so the party can be seen to be looking after 'the ordinary working man' but if you do you must make sure that anyone getting it is subjected to having so much of it taken away that they'll be even worse off than they were before it came in - and you really must make it absolutely clear all the time that unemployment is all the fault, and only the fault, of the unemployed themselves, ***the lazy, shirking buggers.   Oh and Ed, when you are in Number 10, just remember, "it was the Sun wot done it" ok?"

Update : there's now some documented proof that Liam, with a little help from Iain (or vice versa) has already done some sterling groundwork, and the message is definitely getting across ...

Jospeh Rowntree Foundation takes tentative first steps...

From their report summary:

Volatility has plagued the UK housing market for four decades. The JRF Housing Market Taskforce identified ways to create a more sustainable housing market. This paper presents a progress report, and highlights key priorities for the Government.

Key points

The Government should*:

• Conduct a revaluation of property for Council Tax purposes with a view to gradually transforming it into a national land and property value tax, following full modelling to identify difficulties and to inform its design.

• Ensure the Financial Policy Committee has the power to introduce mortgage credit controls, and that the housing market as a whole is monitored as a threat to wider economic stability.

• Monitor the FSA’s new mortgage rules to ensure they do not unnecessarily exclude low risk borrowers from the housing market, collecting the necessary data to do this and formally reviewing the rules after three years.

• Introduce a more effective safety net for home-owners that shares responsibility fairly between home-owners, lenders and government.

• Switch the emphasis of housing subsidies away from a reliance on Housing Benefit towards housing supply, as part of a new model for financing new affordable housing.

Three out of five ain't bad.

* Yes I know we can ignore arguments based on "should", but firstly I'm quoting and secondly this is their recommendations based on facts, evidence and so on.

They own land! Give them money!

From the summary of The Joseph Rowntree Foundation's report "Housing options and solutions for young people in 2020"

Key points

• Around 1.5 million more young people aged 18–30 will be pushed towards living in the private rented sector in 2020, reflecting growing problems of accessing both home ownership and social renting.
• Without a sustained and long-term increase in new housing supply, demand-side initiatives to help aspiring home-owners risk maintaining the inflated house prices they are meant to overcome...
• More stable private rented tenancies might be achieved through smarter incentives for landlords. International evidence suggests that these could include tax breaks in return for more stable, longer term tenancies for vulnerable or lower income tenants and/or other benefits such as lower rent levels.

OK:

1. Mr Joseph Rowntree set up his foundation to look into the causes of poverty, and in his original instructions of 1904, he wrote: "The Soup Kitchen in York never has difficulty in obtaining adequate financial aid, but an enquiry into the extent and causes of poverty would enlist little support. Every Social writer knows the supreme importance of questions connected with the holding and taxation of land, but for one person who attempts to master this question there are probably thousands who devote their time and strength to relieving poverty and its accompanying evils." Bit of a cluebat there, eh?

2. In the second bullet point, the report acknowledges that "demand-side intitiatives" (i.e. subsidies) will just push up rents.

3. So why do they then suggest tax-breaks for landlords? Assuming a rational landlord, the value of the tax break would have to be roughly equal to the rental income foregone. Ergo, this would end up much the same as Housing Benefit, a "demand-side initiative" which merely pushes up rents. Every £1 which a claimant ends up in the landlord's pocket and results in all non-claimants having to pay £1 more for what's left (or paying £1 more in tax, or possibly both). It's a vicious circle.

4. Now, there's an easy way to break the vicious circle: imagine that we had Housing Benefit but made it universal (so that it doesn't just result in transfers from non-claimants to claimants/landlords) so that everybody always has enough money to be able to rent at least somwhere basic, and instead of funding that universal HB out of income tax, we fund it out of a tax on land values..? It's hardly a new idea, something along these lines was enacted under Queen Elizabeth... The First.