Those on the left (and authoritarians generally) say that a flat rate UBI of £4,000 a year, payable to each UK resident (or whatever the rules are) working age adult on a no-questions asked basis would a) leave existing claimants worse off (it wouldn't actually, if you leave Housing Benefit as a separate payment) and b) it's not right to pay it to wealthy people/high earners.
Fair enough. That does not change the basic principle, which is to get marginal withdrawal rates down as far as possible.
I set up a spreadsheet with HMRC's figures for taxpayers' income percentiles and my estimate of incomes of non-taxpayers. For a given total payout, there is of course a mathematical trade-off between how high the basic amount is and what percentage would have to be clawed back via PAYE codes. This reflects the political trade-off (low earners should/should not get more than £4,000) and the economic trade-off (the lower the marginal withdrawal/tax rate, the better for everybody, unless you are loony left wing).
The answers are:
£4,000 - zero %
£5,000 - 5%
£6,000 - 10%
£7,000 - 16%
£8,000 - 23%
£9,000 - 30%
Even paying £8,000 a year with a 23% withdrawal rate would be a vast improvement over the Universal Credit headline withdrawal rate of 63%, which is on top of any PAYE/NIC you have already had deducted.
Also, at £8,000 a year basic entitlement, there is clearly no need for Housing Benefit/council tax rebates any more, and is much the same as the current full state pension, getting rid of yet more layers of crap. Win-win.
What have we wrought in the UK?
54 minutes ago
15 comments:
So it's been determined that those on £100k+ do not need the personal allowance. So extending this down to everyone to partly pay for CI is not a huge leap. Also has the advantage of getting rid of the 60% tax bracket between £100k and 123k.
M, haha, good point. Although the 60% rate is an abomination anyway.
it wouldn't actually, if you leave Housing Benefit as a separate payment
Yes but the whole point for gummint would be to drop this.
JH, the point of housing benefit is to prop up rents and house prices. The Tories inadvertently put a cap on it, so we must be thankful for small mercies.
Would the CI replace all disability benefits?
S, no sensible UBI supporter has ever suggested any such thing. We repeat over and over that severe disability benefits are separate.
S, I wonder how many people currently on disability payments would find it possible to work given a UBI? For example, someone with depression or other mental illness being hounded by the DWP, constantly nagging them to see if they really can't work could well be pushed into a deeper state of depression and unable to work at all. Attempting to get into work carries the risk of starting again with the Spanish Inquisition if their health deteriorates again and they have to reapply. All the intrusions of the DWP (including sanctions) don't appear to have yielded any meaningful results, making things worse at great cost often anyway.
With a UBI, their stress levels would be much less and a part time job feasible. And with a UBI, the extra that you could get from a disability payment would be much less, making it less enticing for the (albeit few) folk who are not severely disabled who get it fraudulently.
MW, re the personal allowance, it's such an arbitrary judgement. Does a single high earner household of 5 in effect get no personal allowance whereas a household of two slightly lower earners gets two? Does a rent free trust fund kid or semi-retired household deserve a personal allowance?
If a CI doesn't replace disablity benefits then its useless, as there will be the same incentive as now to 'get on the sick' and get more money from the State. The whole point of a CI is its universality and uniqueness - everyone gets the same, deal with it. As soon as you start allowing special cases then it creates incentives to get yourself into those categories to claim extra money.
For example a friend of mine is a teacher - just about every single mother parent he deals with is trying to get their child(ren) statemented as disabled in some way (normally Aspergers/autism/ADHD/even Tourettes) so they can claim more benefits. If this continues post CI, then there will be no great change in welfare culture. The same goes for people with bad backs and depression there's hundreds of thousands of them.
S, that is simply not an argument against UBI. It is an argument for policing these dubious sickness claims properly, ideally by taking it out of DWP remit and passing it to NHS.
It doesn't matter whose hands you put the decision making process in, its always gamed by those seeking to gain an advantage. The last thing one needs is to make the NHS even more political, its bad enough as it is. Doctors are hardly very rigorous in enforcing the existing sick note system, they'll hand them out to anyone basically. Give them the power to decide who gets disability benefits and the bill would go through the roof.
This is why CIs and UBIs are never going to fly in States with well established needs and means tested welfare systems. There's too many people who would face income cuts if they were introduced at any sort of affordable level and they are all the sort of hard cases who would be paraded across our screens nightly in order to discredit any new system.
S, wrong again. If the choice us get nothing or lie and get quite a lot, people will lie. If the choice us get quite aalot or lie and get a bit more, far fewer will lie.
M, good points, as you say, all very arbitrary.
MW - great summary. A UBI reduces the incremental payment for disabilities while leaving the total the same. If you get £x for disability, you're much less likely to lie or change your behaviour to get it than if you get £x/2 unconditionally and £x/2 for disability.
Sobers, the argument that people will game the system is not an argument against the system. Every system is going to be gamed by someone. The universality of a CI means that it is very hard to game it, as demonstrated by the lack of gaming of child benefit in pre-means tested days.
Saying that UBI isn't going to stop people gaming disability benefit is a disadvantage of UBI is like saying that one of the disadvantages of screwdrivers is that they can't be used to drive in a nail. UBI isn't going to cure world hunger or reconcile the Israelis with the Palestinians, either.
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