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127

The Affordability Issue

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Standing, G. (2017). The Affordability Issue. In Standing, G. Basic Income: And How We Can Make It Happen. Pelican, pp. 127-154

131

First, they do not allow for clawing the basic income back in tax from higher-income earners, which could be done with no net cost to the affluent or to the Exchequer, simply by tweaking tax rates and allowances so that the extra tax take equals the basic income paid.

Second, they do not take account of administrative savings from removal of means testing and behaviour conditions. Administration accounted for £8 billion of the £172 billion 2013-14 budget of the UK's department of Work and Pensions, much of which will have gone to pay staff in local job centres to monitor and sanction benefit recipients. This does not include hundreds of millions of pounds paid to private contractors to carry out so-called 'work assessment' tests on people with disabilities, which have led to denial of benefits to some of society's most vulnerable people.

Third, they compare the cost of a basic income with the existing welfare budget and assume that all other areas of public spending remain intact. Yet governments can always choose to realign spending priorities. The UK government could save billions by scrapping the plan to replace the Trident nuclear missile system, now estimated to cost more than £200 billion over its lifetime. It could save further billions by ending subsidies that go predominantly to corporations and the affluent.

[...]

Fourth, back-of-the-envelope exercises ignore the wide array of tax exemptions and allowances that have come to characterize the modern fiscal system. The UK personal income tax allowance, which in 2016 exempted the first £11,000 of income from tax, costs the Exchequer almost £100 billion a year in foregone revenue. Non-imposition of national insurance on some earners costs another £50 billion. These two exemptions alone amount to nearly 10 per cent of GDP and are strongly regressive.

e.g., The Economist's

the fourth point confused me at first (why are personal exemptions regressive?) but then, think about it: if you make less than £11,000 a year, you're not getting the full "value" out of it, whereas if you're making more than that, you're getting a sweet tax break

—p.131 by Guy Standing 3 years, 1 month ago

First, they do not allow for clawing the basic income back in tax from higher-income earners, which could be done with no net cost to the affluent or to the Exchequer, simply by tweaking tax rates and allowances so that the extra tax take equals the basic income paid.

Second, they do not take account of administrative savings from removal of means testing and behaviour conditions. Administration accounted for £8 billion of the £172 billion 2013-14 budget of the UK's department of Work and Pensions, much of which will have gone to pay staff in local job centres to monitor and sanction benefit recipients. This does not include hundreds of millions of pounds paid to private contractors to carry out so-called 'work assessment' tests on people with disabilities, which have led to denial of benefits to some of society's most vulnerable people.

Third, they compare the cost of a basic income with the existing welfare budget and assume that all other areas of public spending remain intact. Yet governments can always choose to realign spending priorities. The UK government could save billions by scrapping the plan to replace the Trident nuclear missile system, now estimated to cost more than £200 billion over its lifetime. It could save further billions by ending subsidies that go predominantly to corporations and the affluent.

[...]

Fourth, back-of-the-envelope exercises ignore the wide array of tax exemptions and allowances that have come to characterize the modern fiscal system. The UK personal income tax allowance, which in 2016 exempted the first £11,000 of income from tax, costs the Exchequer almost £100 billion a year in foregone revenue. Non-imposition of national insurance on some earners costs another £50 billion. These two exemptions alone amount to nearly 10 per cent of GDP and are strongly regressive.

e.g., The Economist's

the fourth point confused me at first (why are personal exemptions regressive?) but then, think about it: if you make less than £11,000 a year, you're not getting the full "value" out of it, whereas if you're making more than that, you're getting a sweet tax break

—p.131 by Guy Standing 3 years, 1 month ago
146

The affordability issue essentially comes down to two sets of choices--how high should the basic income or social dividend be, and what are society's fiscal priorities? There is nothing sacrosanct about existing tax systems, most of which are excessively complex and highly regressive. And this is without counting the enormous sums that are lost to government coffers through tax avoidance and evasion.

think about existing tax systems as an example of drift

—p.146 by Guy Standing 3 years, 1 month ago

The affordability issue essentially comes down to two sets of choices--how high should the basic income or social dividend be, and what are society's fiscal priorities? There is nothing sacrosanct about existing tax systems, most of which are excessively complex and highly regressive. And this is without counting the enormous sums that are lost to government coffers through tax avoidance and evasion.

think about existing tax systems as an example of drift

—p.146 by Guy Standing 3 years, 1 month ago
150

Wealth taxes, inheritance taxes, a tax on financial transactions and a tax on robots have all been mentioned as possible sources of finance for a basic income. Another suggestion is for Google, Facebook and other corporations to pay for the data users now provide for free, from which they make the bulk of their profits, which could then be shared out as a basic income.

[...]

In the UK, Stewart Lansley has suggested paying a basic income from a 'social wealth fund' financed by a charge on share ownership. He calculates that a 0.5 per cent annual levy on ownership of shares in the top 100 companies quoted on the UK stock market would raise over £8 billion [...] More than half these sums would be a charge on overseas owners. This writer has proposed a levy on rental income from private ownership and exploitation of all types of property--physical, financial and intellectual--that would be used to build the fund.

not bad

—p.150 by Guy Standing 3 years, 1 month ago

Wealth taxes, inheritance taxes, a tax on financial transactions and a tax on robots have all been mentioned as possible sources of finance for a basic income. Another suggestion is for Google, Facebook and other corporations to pay for the data users now provide for free, from which they make the bulk of their profits, which could then be shared out as a basic income.

[...]

In the UK, Stewart Lansley has suggested paying a basic income from a 'social wealth fund' financed by a charge on share ownership. He calculates that a 0.5 per cent annual levy on ownership of shares in the top 100 companies quoted on the UK stock market would raise over £8 billion [...] More than half these sums would be a charge on overseas owners. This writer has proposed a levy on rental income from private ownership and exploitation of all types of property--physical, financial and intellectual--that would be used to build the fund.

not bad

—p.150 by Guy Standing 3 years, 1 month ago