Replacing social welfare with a basic income

OleRodrigo

The Finns are piloting it, the Swiss are considering and it has been proposed by the Green Party in the UK. Some economists are arguing it will save the taxpayer in the long run. Would there be any merit to replacing social welfare payments with a basic income in Ireland? The Finns are looking at a figure of €800 per month for everyone.

http://yle.fi/uutiset/kela_to_prepare_basic_income_proposal/8422295

BoJack Horseman

It would prove to be very expensive.

As an example:
The 2016 social welfare bill is budgeted at €19.6bn.

Excluding the approx 600,000 pensioners & the 1.1 million u18's in Ireland, there are about 2.9 million adults of working age.

A payment of €800 per month for this number of people equates to €27.8 billion.
€8 billion more than is currently expended.

For the model to match current expenditure, the "basic income" paid to everyone would be €570pm.
Now this frankly would very strongly encourage job take-up at any level, however, it would be all but politically impossible as it equates to a 30% reduction in income for those currently on the top rate of JSA/JSB.

Iwasfrozen

BoJack Horseman wrote: »

It would prove to be very expensive.

As an example:
The 2016 social welfare bill is budgeted at €19.6bn.

Excluding the approx 600,000 pensioners & the 1.1 million u18's in Ireland, there are about 2.9 million adults of working age.

A payment of €800 per month for this number of people equates to €27.8 billion.
€8 billion more than is currently expended.

For the model to match current expenditure, the "basic income" paid to everyone would be €570pm.
Now this frankly would very strongly encourage job take-up at any level, however, it would be all but politically impossible as it equates to a 30% reduction in income for those currently on the top rate of JSA/JSB.

Yep, the whole idea is a no go.

mickdw

They would cut back on tax credits for workers as the payment would more than make up for the credits.
1 million paye workers would equate to 3.3 billion saved by deleting credits.

Nichard Dixon

BoJack Horseman wrote: »

It would prove to be very expensive.

As an example:
The 2016 social welfare bill is budgeted at €19.6bn.

Excluding the approx 600,000 pensioners & the 1.1 million u18's in Ireland, there are about 2.9 million adults of working age.

A payment of €800 per month for this number of people equates to €27.8 billion.
€8 billion more than is currently expended.

For the model to match current expenditure, the "basic income" paid to everyone would be €570pm.
Now this frankly would very strongly encourage job take-up at any level, however, it would be all but politically impossible as it equates to a 30% reduction in income for those currently on the top rate of JSA/JSB.

It would be unwise to dismiss this on the basis of such a simplistic calculation. For a large part of the working population the basic income would be a replacement for a tax credit, likewise it would replace things like student grants that are not in welfare spending as such. I imagine a rate close to the lowest rates of welfare could be achieved and then pensioners, recently unemployed etc would have an additional payment from the PRSI system. I think it worth exploring, it would simplify things a lot and prevent a lot of the poverty traps and perverse rewards in the present system.

BoJack Horseman

Nichard Dixon wrote: »

It would be unwise to dismiss this on the basis of such a simplistic calculation

I'm not dismissing it.... I'm doubtful the people are willing to cough up the billions needed.

what was inaccurate about my calculation?
(simplicity being very secondary to accuracy & no grounds for dismissal).

Student grant expenditure is below €400m per annum..... tax credits are €3.3bn.
So, where are you going find the rest?

FreudianSlippers

I had a whole thread on this. It doesn't work on the numbers.

Negative income tax with a flat tax could certainly work, but one or two posters were obsessed with the idea that a small percentage of the people in this country who suck up the highest amount of welfare would be slightly worse off.



It'd be a joke really if it wasn't so depressing.

steddyeddy

BoJack Horseman wrote: »

I'm not dismissing it.... I'm doubtful the people are willing to cough up the billions needed.

what was inaccurate about my calculation?
(simplicity being very secondary to accuracy & no grounds for dismissal).

Student grant expenditure is below €400m per annum..... tax credits are €3.3bn.
So, where are you going find the rest?

Simplicity is inaccuracy when you leave out several variables.

BoJack Horseman

steddyeddy wrote: »

Simplicity is inaccuracy when you leave out several variables.

so what was the inaccuracy with the cost calculation?

and how will you make it cost neutral?

steddyeddy

With a flat 800 you could take away the medical card for all bar those who are long term sick. That would save a lot. You could also make all schools fee paying which could improve education and the economy in the long term.

steddyeddy

BoJack Horseman wrote: »

so what was the inaccuracy with the cost calculation?

and how will you make it cost neutral?

A scientific calculation and a conclusion based on that variable (I.e we couldn't afford it) is inaccurate when limited variables are used in the calculation.

E.g calculating how long it would take to get to work using wind factor as the sole variable.

BoJack Horseman

steddyeddy wrote: »

With a flat 800 you could take away the medical card for all bar those who are long term sick. That would save a lot.

How do the numbers stack up?

13% of the population have a disability.
35% of the population have a chronic illness.

You could also make all schools fee paying which could improve education and the economy in the long term.

How much would you make schools charge?
This would surely be a juicy slice of the €9,600 income you will be giving an unemployed single parent, considering he/she is now paying €50 a pop to bring their child the GP.

Bob24

I think it could work in theory and would be a good thing, but it would be such a large big bang changing the whole social model that its introduction would be extremely difficult to say the least.

To balance the numbers you would probably expect wage reductions and/or increased taxation on labour (either paid by employers or employees), as well as a complete overhaul of every other social benefits. All at the same time!

Here's how I see it if it was going to be 800 per month for someone someone who currently is making 1500 per month:
- The person's employer would be allowed to reduce the salary to 800 per month (new total income would be 800+800 = 1600, an increase of 100 to get their buy in).
- There would be a new tax of 700 euros attached to the job and payable by the employer, not changing the total cost of labor for them.
- Any means tested social benefits would disappear in exchange for the slight increase in total income for working persons and that guaranteed minimum income for unemployed people, simplifying (i.e. suppressing) administrative tasks to manage them. Of course any benefits which are not related to people's financial situation but rather other personal circompstances (for example disabilities) would not be touched.

melissak

BoJack Horseman wrote: »

How do the numbers stack up?

13% of the population have a disability.
35% of the population have a chronic illness.



Is this true. Almost half the country is long term sick? Something very wrong there..
I think this basic income idea could work in theory. If there were provisions made for emergency and hardships etc and maybe food stamps or community garden schemes so people wouldn't go hungry it would be ok to reduce payments to some people. There would be a lot of money and resentment saved by not having to catch cheats. Also child benefit should be means tested and doctors should be taken to task for willy nilly prescription happiness but I imagine the introduction of generic drugs has disincentiveised this somewhat.

steddyeddy

BoJack Horseman wrote: »

How do the numbers stack up?

13% of the population have a disability.
35% of the population have a chronic illness.



How much would you make schools charge?
This would surely be a juicy slice of the €9,600 income you will be giving an unemployed single parent, considering he/she is now paying €50 a pop to bring their child the GP.

I'll get back to you when I'm finished work but they're just two more variables to consider. There's plenty more.

melissak

Also maybe the government can find another few billion down the back of the couch....

ancapailldorcha

melissak wrote: »

13% of the population have a disability.
35% of the population have a chronic illness.

Hmm.... Those numbers seem awfully high. I wonder how they defined those terms.

steddyeddy

1 in ten people in Ireland are disabled and more than a third have a chronic illness?

melissak

And I imagine more people would take up part time or lower paid jobs and declare nitems r etc if they wouldn't lose out. This extra tax would help

Bob24

melissak wrote: »

Also child benefit should be means tested

To me if you are to bring a guaranteed income you should do away with means tested benefits. That's one of them points of having a minimum income in my opinion: you guarantee everyone has the means to lead a "simple" yet decent life on that income and make citizens more independent and accountable by letting them manage that income. Of course unforeseen circumstances such as severe illness should be treated separately, but I wouldn't classify having children as unforeseen circumstances (at least in most cases) so everyone should be incentived equally to raise children.

BoJack Horseman

ancapailldorcha wrote: »

Hmm.... Those numbers seem awfully high. I wonder how they defined those terms.

The disability number is from the CSO, 2011 census.
The 'chronic illness' number is from the HSE

Now, 'chronic' does not necessarily mean 'long-term'... but you get the idea.

One can imagine how politically difficult it would be to eliminate the medical card (which covers more than half the population).

melissak

ancapailldorcha wrote: »

Hmm.... Those numbers seem awfully high. I wonder how they defined those terms.

I wouldn't be altogether surprised. I heard on the radio that more than 1\3 of the population is on Medication for chronic pain. Probably same amount on valium ext must cost a fortune not to mention the health implications

Godge

BoJack Horseman wrote: »

How do the numbers stack up?

13% of the population have a disability.
35% of the population have a chronic illness.


.

https://www.esri.ie/pubs/BKMNEXT259.pdf

From a comment in a column of page 22

" Recent prevalence data suggest that up to 25% of young people may have special educational needs as defined by the EPSEN Act (2004) – Banks & McCoy (2011)."

BoJack Horseman

Bob24 wrote: »

To me if you are to bring a guaranteed income you should do away with means tested benefits. That's one of them points of having a minimum income in my opinion

Indeed that's the point.

With a basic universal income, there will be no such thing as child welfare.
The idea is to eliminate all ancillary benefits in order to incentivise the takeup of work.

It will be very tough for some people, but the idea is that it benefits the nation at large.

melissak

Yes but like this min income there would have to be a line somewhere. The extremely wealthy don't need it. If they stopped paying it automatically to bank accounts and made people queue up and fill forms to get it every month those who didn't need it probably would not even bother.

Bob24 wrote: »

To me if you are to bring a guaranteed income you should do away with means tested benefits. That's one of them points of having a minimum income in my opinion: you guarantee everyone has the means to lead a "simple" yet decent life on that income and make citizens more independent and accountable by letting them manage that income. Of course unforeseen circumstances such as severe illness should be treated separately, but I wouldn't classify having children as unforeseen circumstances (at least in most cases) so everyone should be incentived equally to raise children.

BoJack Horseman

melissak wrote: »

Yes but like this min income there would have to be a line somewhere. The extremely wealthy don't need it.

That's not the point though.
Finland is aiming for a universal basic income.

It isn't universal if there are caveats.... and if other benefits continue as normal then you are just describing what the status quo is.

melissak

BoJack Horseman wrote: »

That's not the point though.
Finland is aiming for a universal basic income.

It isn't universal if there are caveats.... and if other benefits continue as normal then you are just describing what the status quo is.

Oh. I misunderstood it so. Then it only benefits companies and the well off at the expense of the worse off. Again status quo I suppose.. This may work in theory but the so called poor will only take so much.

Bob24

melissak wrote: »

Yes but like this min income there would have to be a line somewhere. The extremely wealthy don't need it. If they stopped paying it automatically to bank accounts and made people queue up and fill forms to get it every month those who didn't need it probably would not even bother.

But if you keep means tested benefits and that universal income is not paid to everyone (i.e. is not universal anymore), how different is it from the current welfare model in most European countries including Ireland?

melissak

Bob24 wrote: »

But if you keep means tested benefits and that universal income is not paid to everyone (i.e. is not universal anymore), how different is it from the current welfare model in most European countries including Ireland?

If they made it slightly inconvenient to opt in for certain benefits those who really didn't need it wouldn't bother. I can't see bono waiting in line in the file office for 200e per week

BoJack Horseman

melissak wrote: »

Oh. I misunderstood it so. Then it only benefits companies and the well off at the expense of the worse off. Again status quo I suppose.. This may work in theory but the so called poor will only take so much.

Finland seems to think it will benefit overall for them..
Its trickier in Ireland.... it would impact a lot of people disproportionately & would therefore be political nuclear waste, no one will touch it.

€400m on student grants would be gone.
School footware & uniform allowances would be gone (saving €44m)
No more rent supplement scheme (saving €300m).
Eliminating the medical card will save well over €2 billion, but will cause a lot of strife.

t'would be a brave politician to touch any of this.

BoJack Horseman

melissak wrote: »

If they made it slightly inconvenient to opt in for certain benefits those who really didn't need it wouldn't bother. I can't see bono waiting in line in the file office for 200e per week

making the 2 million workers queue every wednesday in their PO to receive their universal income would not be practical from anyone's perspective.
It would harm businesses considerably.

Bob24

melissak wrote: »

If they made it slightly inconvenient to opt in for certain benefits those who really didn't need it wouldn't bother.

What percentage of the population do you estimate wouldn't bother for an extra 800 euros tax free each month? I'd say less than 1% and the "saving" would probably not be enough to finance the red tape which was put in place to disincentive them.

Also the idea of that universal income is that it is an integral part of your income (meaning companies will pay you less than they used to before the new model), so preventing some citizens from accessing it would probably pose legal and moral challenges.

You can not only think of it as a new minimum income, it has an impact every aspect of the social model and the way wealth is redistributed within society.

melissak

Would it apply to people who are Irish and have companies here but don't pay tax as their money lives elsewhere. Do such people get child benefit? It would gall me particularlyif someone who is plenty rich whose money lives in Malta or another such haven got free money?

Bob24

melissak wrote: »

Oh. I misunderstood it so. Then it only benefits companies and the well off at the expense of the worse off. Again status quo I suppose.. This may work in theory but the so called poor will only take so much.

Not necessarily benefiting companies and the rich. The change would imply a complete review of the social model and while companies would benefit because they could give lower wages (topped up by that universal income), they would obviously have to give something on another front (for example taxation).

It is probably missing many parameters but see my post here - in my example there is zero benefit for the company: http://www.boards.ie/vbulletin/showpost.php?p=98041935&postcount=13

melissak

BoJack Horseman wrote: »

making the 2 million workers queue every wednesday in their PO to receive their universal income would not be practical from anyone's perspective.
It would harm businesses considerably.

Surely they could queue every couple of months without much difficulty. If they are that important they don't need Government money. You could also say they are too busy to file tax returns but it wouldn't fly

BoJack Horseman

melissak wrote: »

Would it apply to people who are Irish and have companies here but don't pay tax as their money lives elsewhere

To receive social benefits you have to satisfy habitual residency tests.... so it would not apply to Irish people living abroad.

Do such people get child benefit?

Children's allowance is paid to children who love abroad.... so long as their parent is habitually resident in Ireland.

draiochtanois

This post has been deleted.

melissak

BoJack Horseman wrote: »

To receive social benefits you have to satisfy habitual residency tests.... so it would not apply to Irish people living abroad.


Children's allowance is paid to children who love abroad.... so long as their parent is habitually resident in Ireland.

So people who live here but not enough to pay tax don't get it?

BoJack Horseman

melissak wrote: »

So people who live here but not enough to pay tax don't get it?

Once both parents are habitually abroad.... I don't think so.

melissak

I suppose this is true and it would be complicated, it is just a bugbear of mine to see rich people benefiting twice from things like children. They get much bigger tax breaks due to their bigger incomes and then they get child benefit and all the other bonuses too.
.What are they going to do with all the civil servants now employed in social welfare

[quoob24;98042442"]What percentage of the population do you estimate wouldn't bother for an extra 800 euros tax free each month? I'd say less than 1% and the "saving" would probably not be enough to finance the red tape which was put in place to disincentive them.

Also the idea of that universal income is that it is an integral part of your income (meaning companies will pay you less than they used to before the new model), so preventing some citizens from accessing it would probably pose legal and moral challenges.

You can not only think of it as a new minimum income, it has an impact every aspect of the social model and the way wealth is redistributed within society.[/quote]

Bob24

draiochtanois wrote: »

This post has been deleted.

The article linked on the original post only mentions it would apply to Finnish citizens so these people might be in for a disappointment ;-)

I think you are raising a very good point though:
- If it is available to all residents (or even just all EU citizen residents), wouldn't there be a huge inflow of people trying to move to Finland to benefit from it?
- And can they really restrict it to Finnish citizens only as I thought European Treaties are preventing member states from treating other EU citizens in a less favorable manner than their own citizens when it comes to social benefits?

I've always thought a basic income was inevitable with the way things are going. Soon enough, none of us will have jobs :pac:

https://www.youtube.com/watch?v=7Pq-S557XQU

K-9

FreudianSlippers wrote: »

I had a whole thread on this. It doesn't work on the numbers.

Negative income tax with a flat tax could certainly work, but one or two posters were obsessed with the idea that a small percentage of the people in this country who suck up the highest amount of welfare would be slightly worse off.



It'd be a joke really if it wasn't so depressing.

Well you'll always get one or two.

Maybe put up a link and we can consider your thread as well.

melissak

Bob24 wrote: »

The article linked on the original post only mentions it would apply to Finnish citizens so these people might be in for a disappointment ;-)

I think you are raising a very good point though:
- If it is available to all residents (or even just all EU citizen residents), wouldn't there be a huge inflow of people trying to move to Finland to benefit from it?
- And can they really restrict it to Finnish citizens only as I thought European Treaties are preventing member states from treating other EU citizens in a less favorable manner than their own citizens when it comes to social benefits?

Can people who just move here get dol e. I thought you had to be here for a few years to get residency first. Is this just non eu people

melissak

K-9 wrote: »

Well you'll always get one or two.

Maybe put up a link and we can consider your thread as well.

Do you think people care about this because of the crime and social order implications of having a group or class of people without enough to live on. If we spend less on the carrot we would have to spend more on the stick

Bob24

melissak wrote: »

Can people who just move here get dol e. I thought you had to be here for a few years to get residency first. Is this just non ex prople

Not a specialist on the topic but I'd say the reason people who just moved here can't get the dole is that they don't have enough PRSI contributions?
As long as the same rule on minimum required PRSI contributions applies to Irish nationals, everyone is treated equally.

In the case of a universal income I am not sure it could be tight to having made previous contribution to the national social insurance fund.

OleRodrigo

McWilliams on disability claims:

http://www.davidmcwilliams.ie/2013/04/04/the-mystery-of-disability

OleRodrigo

Deleted User wrote: »

I've always thought a basic income was inevitable with the way things are going. Soon enough, none of us will have jobs :pac:

Humans need not apply

I think this will be the main driver, but it won't be feasible until there is an EU-wide policy, when there is greater economic and political integration.

DarkyHughes

It would just be an extra 12euro per week. So yeah I'm all for it.

Iwasfrozen

DarkyHughes wrote: »

It would just be an extra 12euro per week. So yeah I'm all for it.

Stats?

Show me the numbers, I don't believe you.

MRnotlob606

I can't see this working unless we're taxed more.Tax is something us Irish are not so fond of.