How about we scrap all benefits and replace it with Citizens Income?

[anywebsite]

Doesn't it just achieve the same thing as giving everyone £200 in the first place?

 

Similar, but not quite the same, a negative income tax rate would only give money to those who aren't earning, or aren't earning much, rather than £200 for everybody. I'd also keep some benefits, like DLA, Child Benefit & Pensions. I'd phase the new benefit out gently as you start earning, so people aren't penalised for doing small jobs, as long as they declare everything. It'd be a major reform of the tax & benefit system, but admin costs should be reduced overall, it should guarantee a minimum income for everybody, make sure that nobody is caught in a benefit trap where they make less money if they work & make the system more progressive.

 

https://en.wikipedia.org/wiki/Negative_income_tax

[anywebsite]

Then the low paid end up paying an even bigger proportion of their income in tax. It was the Tories in the 80s who shifted the burden of taxation from income to expenditure because it is harder to avoid and it turned all businesses into unpaid tax collectors so it was cheaper to collect.

 

The problem is that it effectively put up taxes for the unemployed, the poor, the old, the young and the disabled. I expected Gordon Brown to change that but he didn't. In fact he made things even worse for the lowest paid by not raising tax thresholds by the rate of inflation so the people at the bottom ended up paying an even bigger proportion of their income in tax. And that's one reason Labour lost the election as their core voters deserted them.

 

You're talking a lot of sense here. Certain taxes hit the poor more & take a higher proportion of the income of those that can least afford it, taxes like VAT & duties, TV licence. Income tax is one of the fairer more progressive taxes, but it should be made more so.

 

Labour did do a few little things to help, like the 10p rate, minimum wage, tax credits & the cut to 15% VAT, but not enough. The tax credits system seems complicated too, they'd probably have been better just raising allowances & introducing a new top rate. Even car tax was made a bit more progressive, by taxing bigger & more polluting cars more, taking some small cars out of paying car tax at all.

[epiphany]

It's interesting that a negative income tax (of which citizens income is a form) is advocated by notable economists right across the left-right spectrum. Why is this? Because if applied correctly (and it would take some experimentation) it would be a far more efficient way of dealing with the following problems:

 

1) Disincentive to work - no longer would people be worse off by going into a minimum wage or part time job due to losing their benefits. Despite what people say, I think most people would jump at the chance of working AS LONG AS that work nets them more income. That still means jobs need to be available, and that leads to the next point...

 

2) Employers being forced to discriminate against low skilled workers - with the right application of a citizens income, minimum wage could be phased out, removing the burden on small businesses to employ workers at wages above what their skills warrant. It would also allow forward thinking, low skilled workers to gain on the job experience, rather than being turned away because their skill level does not warrant the minimum wage employers are forced to pay them.

 

The anticipated knock on effect from this would be less cost to employers = less cost to consumers = more economic activity. Perhaps that is simplifying it, but it's open to debate.

 

3) Diminishing purchasing power among low income workers - if the economy is to work, we need consumers equipped with adequate purchasing power to legitimise production. In purely objective terms, what does it matter if that purchasing power has been earned through work or given as a benefit?

 

4) Expensive bureaucracies required to administer a complex web of means tested benefits - a citizens income would be cheaper to administer.

 

Given how little many of us trust politicians to run the economy, assuming the reason they have not implemented or even seriously debated the possibility of a CI must be because it won't work is short sighted.

[epiphany]

With monetary reform you also need land reform.

 

In the form of LVT.

 

If owned all the land, and you owned all the money, how much would I charge you for the first night's rent?

 

^ This.

 

Looking at CI in isolation, or as crow barred into the existing system, may rightly show it to be unworkable. Combine it with other measures such as LVT, scrapping minimum wage and a more robust public option in the banking system and it starts to make more sense.

 

There is no point debating CI if we are not willing to look at the knock on effects from other economic programs.

 

Otherwise we end up with a "sticking plaster" approach to fixing individual problems, rather than looking at it more holistically.

[Cyclone]

Similar, but not quite the same, a negative income tax rate would only give money to those who aren't earning, or aren't earning much, rather than £200 for everybody.

£200 for those who are earning is soon paid back as tax, so in that respect, apart from a bit of tooing and froing, the effect is the same.

I'd also keep some benefits, like DLA, Child Benefit & Pensions.

Pensions aren't a benefit IMO, and I agree about DLA, CB I'm not so sure.

I'd phase the new benefit out gently as you start earning, so people aren't penalised for doing small jobs, as long as they declare everything.

That means you still need a system to administer it, why bother to phase it out at all? Just increase the higher rate of tax by 1% to compensate instead.

[Cyclone]

You may be right because people always want more than they have.

But from a lazy man's perspective if I can survive on 200£ a week then why get out of bed?

It's the same situation with benefits right now, except that in some cases working will actually make people worse off. So this change improves on that situation immediately.

You're looking at it like doing a grotty low paid job that I hate would be a means of topping up something that's perfectly adequate for survival.

 

 

If the 200£ was paid in vouchers for essentials, as I believe all benefits should be, then yes that would be awesome.

No more "unfit to work people" saving up ridiculous amounts of dla and ESA to jet off to benidorm for golf holidays.

It wouldn't be a benefit though, it would be CI.

[Cyclone]

What about people who, according to government Doctors, are unfit to work? I had to be signed off as "sick" before I could get a solitary penny, but I've been doing voluntary work for years, and have been told I can work a few hours a week in a paid job and keep my benefits if I only earn a small amount of wage.

 

You can work can't you, so work.

[MrSmith]

One of the big problems of our tax system is that people lower down the scale pay a bigger proportion of their meagre income in tax. It's stupidly unfair but successive governments have done nothing to help. The current government do at least understand the problem and are raising the tax thresholds that Brown had let fall. By handing back £200 a week to everyone it helps those at the bottom the most by effectively refunding some of the unfair taxes on the poor like VAT and Council Tax. So rather than look on it as a universal benefit perhaps it should be looked on as a tax refund.

 

I would think the lowest paid members of society spend most of their money on food which for the most part is VAT free, public transport is VAT free, children’s cloths VAT free, insurance exempt from VAT, domestic fuel and power lower rate VAT. They will pay little if any personal tax and for the most part will get tax credits that exceed what they pay. They are likely to be on housing benefits so don’t pay council tax.

 

On the whole the low paid don’t pay tax and any they do pay they get back in the form of tax credits.

[tinfoilhat]

I would think the lowest paid members of society spend most of their money on food which for the most part is VAT free, public transport is VAT free, children’s cloths VAT free, insurance exempt from VAT, domestic fuel and power lower rate VAT. They will pay little if any personal tax and for the most part will get tax credits that exceed what they pay. They are likely to be on housing benefits so don’t pay council tax.

 

On the whole the low paid don’t pay tax and any they do pay they get back in the form of tax credits.

 

That right in theory, in practice its way off. Beer, fags, takeaways, toys etc for the kids, electrical goods and petrol if they have a car, without even trying to think of much. Again, in theory they aren't essentials but in reality that's where the money goes. If you took the average family receipts, on benefits and low earners expect a big chunk of it to be vatable.

[Anna B]

Citizens Income is where every citizen born in the UK 18+ gets a non means tested basic amount of money from the government to live on to cover basic rent and groceries regardless of any other income.

 

Citizen’s Income Trust - "A Citizen’s Income (CI) is ‘an unconditional, non-withdrawable income payable to each individual as a right of citizenship"

 

It is financially possible to do if you divide the total expenditure on benefits inc admin, the buildings, maintanence then divide it by total number of UK citizens 18+

 

This would equate to around £200 per week, and those with kids get an extra £30 quid a week.

 

CI elimainates all the bureaucracy, stigma attached to benefit claiming and provides a fair straight forward system and safety net for everyone.

 

More info here

 

http://www.citizensincome.org/

 

Yes, I can see where you're coming from. I doubt it will ever happen though. Too simple. And I bet employers would start reducing wages.

 

Incidently, it costs £6 in bureaurocracy and administration for every £1 saved on benefits.