Replacing social welfare with a basic income

Loafing Oaf · 08-03-2017 05:50PM

Suryavarman wrote: »

UBI proposals don't tend to be based in reality which would explain why this is the case.

It fails in its purpose.

LOL if you think a UBI can be paid for with higher taxes on higher incomes.

Give a UBI of €10k per year to everyone in employment. That would cost €20bn per year alone.

My understanding is that wealthy people would pay it all back in tax

Water John · 08-03-2017 06:59PM

If you put UBI in place, it has to be a holistic and not piece meal exercise.
For example, any person would have to be domiciled here for a certain length to avail of it.

I have an open mind on UBI. I see great benefits in it socially. Lets look at various options and levels within it. I don't understand just constantly saying, it won't work, it won't work.

Bass Reeves · 08-03-2017 07:35PM

Suryavarman wrote: »

UBI proposals don't tend to be based in reality which would explain why this is the case. .

Some of them don't and some do. It amazing how many conservative economist's believe in UBI. Generally where it falls down is with socialist promoting it where they want UBI with too many safety nets. UBI is supposed to be an enabler.

Suryavarman wrote: »

It fails in its purpose.

LOL if you think a UBI can be paid for with higher taxes on higher incomes..

Generally most economists expect slightly higher taxes. However most are not factoring in extra economic activity which may increase tax revenue with out having exceptionally higher taxes. In a UBI scheme tax would be payable on all income earned above UBI. So even someone only earning 4k in earned income above UBI could be paying 700-1k in tax. The biggest difference would be on tax at lower incomes.

Suryavarman wrote: »

Give a UBI of €10k per year to everyone in employment. That would cost €20bn per year alone. That doesn't include the massive increase in spending that would be needed to absorb all the immigrants from across the EU that will move for a free €10k per year. Show me that we can raise taxes enough to fund that.

Not correct. UBI could be set below present social welfare rates. However if it was set at present welfare rate it would cost 9800/ individual. However subtract personnel and PAYE tax credit and it costs 6500. However all income is now taxable. A person on the minimum wage( approximately 20k) previously paid a tax, PRSI and USC of about 1800 euro. At a tax rate of even 20% he pay 4k leaving a shortfall of 4.3k. TBF most promoters of UBI speak about flat tax rates of 40% which would leave this person as a net contributor to the system. However more than likely there would be an entry level rate lower than 40% on the first part of the income. A person earning 20k in earned income might pay 3k in income tax. People earning less than 16 k in earned income who pay no tax at present would be paying at least 3k in tax

The gap is not as large as people think unless you start put in safety nets as some left wing promoter's present. You have to look at UBI as an enabler not as a social safety net

blanch152 · 08-03-2017 08:05PM

http://www.cso.ie/en/statistics/socialconditions/expenditureonsocialwelfare/

Assume 2009, 20.5 bn expenditure on social welfare is the same.

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

4.7 million people living in Ireland, 1 million under 15, assume that is 1.2 under 18.

That means UBI has to be paid to 3.5m adults and 1.2m children.

Assume half-payment for each child. That gives you 4.1m WTEs.

That allows for a UBI payment of €5,000 for each adult and €2,500 for each child. You would also have to abolish all social welfare payments.

Is €100 a week enough UBI for everyone with no rent supplement, no back to education etc?

Income tax currently brings in around €20bn a year. Therefore to double the payment to €200 a week, we would have to double income tax revenue. Is that really feasible?

Suryavarman · 08-03-2017 08:23PM

Loafing Oaf wrote: »

My understanding is that wealthy people would pay it all back in tax

Pay what back in tax?

Water John wrote: »

I don't understand just constantly saying, it won't work, it won't work.

It has to do with the fact that nobody has proposed a workable UBI that doesn't dramatically reduce incomes for the worst off in society.

Bass Reeves wrote: »

Some of them don't and some do. It amazing how many conservative economist's believe in UBI. Generally where it falls down is with socialist promoting it where they want UBI with too many safety nets. UBI is supposed to be an enabler.

They are few and far between.

Generally most economists expect slightly higher taxes. However most are not factoring in extra economic activity which may increase tax revenue with out having exceptionally higher taxes. In a UBI scheme tax would be payable on all income earned above UBI. So even someone only earning 4k in earned income above UBI could be paying 700-1k in tax. The biggest difference would be on tax at lower incomes.

Slightly higher taxes won't pay for a hugely expensive programme.

What evidence do you have to suggest that a UBI would significantly boost economic growth?

You expect us to pay for a UBI with only a 25% income tax? Wow.

Not correct. UBI could be set below present social welfare rates. However if it was set at present welfare rate it would cost 9800/ individual. However subtract personnel and PAYE tax credit and it costs 6500. However all income is now taxable. A person on the minimum wage( approximately 20k) previously paid a tax, PRSI and USC of about 1800 euro. At a tax rate of even 20% he pay 4k leaving a shortfall of 4.3k. TBF most promoters of UBI speak about flat tax rates of 40% which would leave this person as a net contributor to the system. However more than likely there would be an entry level rate lower than 40% on the first part of the income. A person earning 20k in earned income might pay 3k in income tax. People earning less than 16 k in earned income who pay no tax at present would be paying at least 3k in tax

What the hell are you rattling on about? First you say you'd tax a UBI at over 30%, then you say you'd tax incomes at 15%. This is why UBI proponents aren't taken seriously. You clearly haven't given the idea a whole lot of thought. If you can't be bothered to think about what you're proposing then don't expect people not to dismiss your proposals straight out of hand.

The gap is not as large as people think unless you start put in safety nets as some left wing promoter's present. You have to look at UBI as an enabler not as a social safety net

What does this even mean?

blanch152 wrote: »

Income tax currently brings in around €20bn a year. Therefore to double the payment to €200 a week, we would have to double income tax revenue. Is that really feasible?

No it isn't feasible. Not a bit.

Loafing Oaf · 08-03-2017 08:31PM

Suryavarman wrote: »

Pay what back in tax?

Their UBI

Suryavarman · 08-03-2017 08:41PM

Loafing Oaf wrote: »

Their UBI

And everyone else's as well?

Geuze · 09-03-2017 01:07AM

http://www.socialjustice.ie/sites/default/files/attach/publication/4633/basicincomefullbookdec2016.pdf

2016 book by SJI on UBI.

See page 128 for costs of their proposal.

2015 = 31,298m

It requires an ATR of 40%.

Sam Russell · 09-03-2017 12:00PM

So, as a basic income earner of, say €30k, I get a UBI of €7,600 and a tax bill of €12,000. Ok, that sounds doable.

Now, if Ivan is an EU citizen working beside me, just arrived, he does not get the UBI, but pays tax at €12,000. I do not think that would fly at EU level as all EU citizens must be treated equally.

Now, if I earned €200,000 or €500,000 per year, I would be quite pleased to only pay 40% on my gross income with the small addition of €7,600 for my incidental expenses.

I cannot see it working.

A generous minimum wage, say €12/hr, with a guaranteed job of hours equal to JSA would appear to be easier to fund.

Minimum wage feeds money back into the economy as poor people tend to spend ALL of their income, while highly paid save much of theirs.

Suryavarman · 09-03-2017 01:57PM

Geuze wrote: »

http://www.socialjustice.ie/sites/default/files/attach/publication/4633/basicincomefullbookdec2016.pdf

2016 book by SJI on UBI.

See page 128 for costs of their proposal.

2015 = 31,298m

It requires an ATR of 40%.

So we'd have to massively increase taxes just to boost the incomes of high income households? And leave the worst off in society no better off? A UBI seems to get more farcical the more I hear about it.

Suryavarman · 09-03-2017 02:03PM

Sam Russell wrote: »

So, as a basic income earner of, say €30k, I get a UBI of €7,600 and a tax bill of €12,000. Ok, that sounds doable.

Now, if Ivan is an EU citizen working beside me, just arrived, he does not get the UBI, but pays tax at €12,000. I do not think that would fly at EU level as all EU citizens must be treated equally.

Now, if I earned €200,000 or €500,000 per year, I would be quite pleased to only pay 40% on my gross income with the small addition of €7,600 for my incidental expenses.

I cannot see it working.

A generous minimum wage, say €12/hr, with a guaranteed job of hours equal to JSA would appear to be easier to fund.

Minimum wage feeds money back into the economy as poor people tend to spend ALL of their income, while highly paid save much of theirs.

Such an increase would put a lot people out of work. It would also mostly benefit medium and high income households.

Saving is vital for economic growth. So minimum wage workers spending a higher proportion of their income isn't necessarily a good thing.

Herp_a_Derp · 09-03-2017 02:51PM

I think a UBI could certainly work.

Lots of misconceptions about how it'd work and what it'd cost.

This was posted earlier by another poster.

I have used some of Social Justice Ireland's figures, from
http:// www .socialjustice. ie/content/policy-issues/ costing-basic-income-ireland
Their presentation, size 429Kb, slides 4, 5 and 6.

What's offered?
We could pay a UBI at the same rates as current social welfare rates.
188 to all adults, except people aged 18 to 24 who get 102 per week as currently.
We'd pay 230 per week to those over 66, and 240 per week to those over 80, and we'd pay child benefit.

We'd also pay approx 3,600 million in additional benefits as listed on Slide 5, of SJI presentation.

That's more benefits than Social Justice Ireland propose so it needs extra money.
7,288 million extra in fact.

How is it paid for?
The shortfall of 7,288 million represents 27% of the current income tax system.
We could increase effective rax rates by 27% and we're done. No other tax changes necessary.

People may not complain as much as you think as many of them are receiving approx 10,000 extra per year.

That extra 10,000 per year will offset the additional tax for most workers. Only the rich would pay more under this system I suspect. Very progressive.

30% effective tax rate would be increased to 37%
48% effective tax rate would be increased to 60%

It is fairer to increase other taxes, in my opinion.

For example, corporation tax in 2015 took in 6,873 million.
Excise took in 5,463 million.

If corporation tax was doubled for example the UBI would more or less be paid for.
Could corporation tax be doubled?

There would certainly be a public appetite to see corporation tax increased, and doubling the tax rate from 12.5% to 25% would be acceptable to the public.
It'd be an easy sell to the public and a very difficult sell to the corporations.

Consider the benefits!

A re-invigorated society which would be very fair and one in which people want to work and in which people are rewarded for working.

Sam Russell · 09-03-2017 02:54PM

Suryavarman wrote: »

Such an increase would put a lot people out of work. It would also mostly benefit medium and high income households.

If I run a business, I make profit by employing people, and I pay the going rate and charge enough to make a profit. If every other business I compete with pays a minimum rate of pay, then I can afford to as well. It might cause me to be expect more efficiency from my employees, but it does not put a lot of people out of work.

Saving is vital for economic growth. So minimum wage workers spending a higher proportion of their income isn't necessarily a good thing.

The richer people will still save (because they have more money than they need), and it is people spending that causes growth. People saving allows for investment which is also necessary for long term growth. There is no point in building a new factory with faster machinery to produce more product if you cannot find a market.

Water John · 09-03-2017 02:59PM

Herp, the figures you repost are reasonable and a good basis of discussion. Some here are throwing in extreme cases to queer the whole subject.
I certainly, and most others are not talking of providing UBI to every child, for example.

Herp_a_Derp · 09-03-2017 03:06PM

I agree that many people are proposing extreme versions of UBI and then criticising their own extreme versions, and finally concluding that their own extreme versions are unworkable.

The version I have posted about is reasonable and affordable. It could be implemented immediately although it would be a huge change.

My proposal is to make as few changes as possible. Pay the same rates as current social welfare rates, no-one would be worse off, and the tax system need not change significantly.
People who earn small amounts over their UBI under my proposal do not pay tax, as tax doesn't kick in until 18,000 or so.

What can be criticised about my proposals?

Herp_a_Derp · 09-03-2017 03:12PM

I can't quote as I'm a new user.

This was said by Bob24 in post 309.
but I haven't seen anyone explain why this industrial revolution will be different from the previous ones which destroyed some jobs but also created others in similar quantities.

It has been explained.
This time it is intelligence which has been automated. That has never happened before.

No further explanation should be necessary. In the past brute labour was automated. Intelligence was never automated. Now, human intelligence is about to be rendered obselete by machines.

El Tarangu · 09-03-2017 03:33PM

Herp_a_Derp wrote: »

What can be criticised about my proposals?

Herp_a_Derp wrote: »

The shortfall of 7,288 million represents 27% of the current income tax system.
We could increase effective rax rates by 27% and we're done. No other tax changes necessary.

Proposing to increase the income tax take by one quarter would not be as trivial an exercise as you are making out.

Herp_a_Derp wrote: »

There would certainly be a public appetite to see corporation tax increased, and doubling the tax rate from 12.5% to 25% would be acceptable to the public.
It'd be an easy sell to the public and a very difficult sell to the corporations.

At the moment, Ireland receives so much foreign direct investment precisely because our rates of corporation tax are so; I don't see the same public appetite to raise them as you do.

Herp_a_Derp · 09-03-2017 03:53PM

quote
Proposing to increase the income tax take by one quarter would not be as trivial an exercise as you are making out.

Of course not.
But I'm also proposing to pay approx 9,776 to each worker for free.

This means you'd better off under the new system unless you earn approx 75,000 euro per year. That figure is fairly hard to estimate but I think 75k is about right.
(edit: I think that 75k would be lower now, perhaps as low as 50k per year but I'm not familar with the tax bands. It's a difficult figure to calculate.)

I agree there is a worldwide problem with corporation tax rates. All countries must raise their rates together. If one country holds out it can cause problems.
Countries must work together to deliver higher tax returns from corporations.

Ordinary people, who have votes, pay tax at up to 60%.
Why do voters accept that corporations, who aren't even real people, should pay very low rates, as low as 12.5% in theory, but even as low as 1% in practice?

There needs to be a public backlash against corporations who refuse to pay taxes at reasonable rates.

If it's reasonable for hard working normal people to pay tax at 50% it should also be reasonable for corporations.

Suryavarman · 09-03-2017 05:27PM

Herp_a_Derp wrote: »

What's offered?
We could pay a UBI at the same rates as current social welfare rates.
188 to all adults, except people aged 18 to 24 who get 102 per week as currently.
We'd pay 230 per week to those over 66, and 240 per week to those over 80, and we'd pay child benefit.

We'd also pay approx 3,600 million in additional benefits as listed on Slide 5, of SJI presentation.

That's more benefits than Social Justice Ireland propose so it needs extra money.
7,288 million extra in fact.

How is it paid for?
The shortfall of 7,288 million represents 27% of the current income tax system.
We could increase effective rax rates by 27% and we're done. No other tax changes necessary.

People may not complain as much as you think as many of them are receiving approx 10,000 extra per year.

That extra 10,000 per year will offset the additional tax for most workers. Only the rich would pay more under this system I suspect. Very progressive.

30% effective tax rate would be increased to 37%
48% effective tax rate would be increased to 60%

The paper linked to earlier by Geuze advised a UBI of €7,600 per year and that would cost an extra €15bn per year over current social welfare expenditure.

A UBI is the exact opposite of progressive. How can a welfare programme where almost all the benefits go to middle and high income families be called progressive?

It is fairer to increase other taxes, in my opinion.

For example, corporation tax in 2015 took in 6,873 million.
Excise took in 5,463 million.

If corporation tax was doubled for example the UBI would more or less be paid for.
Could corporation tax be doubled?

There would certainly be a public appetite to see corporation tax increased, and doubling the tax rate from 12.5% to 25% would be acceptable to the public.
It'd be an easy sell to the public and a very difficult sell to the corporations.

We already have the second highest capital taxes in the world. Increasing them further is insane.

You also seem to think that if we double the rate then we double the revenue from that tax which is clearly incorrect. If revenue from CT doubled then it would only cover half the cost of the UBI suggested by Social Justice Ireland.

Consider the benefits!

A re-invigorated society which would be very fair and one in which people want to work and in which people are rewarded for working.

How is it fair? How is giving the rich a large cash payment every year fair? How does taxing the middle class and giving them the money straight back seem like a good idea to anyone?

Sam Russell wrote: »

If I run a business, I make profit by employing people, and I pay the going rate and charge enough to make a profit. If every other business I compete with pays a minimum rate of pay, then I can afford to as well. It might cause me to be expect more efficiency from my employees, but it does not put a lot of people out of work.

This just isn't the case at all. It's a well documented fact that when minimum wages are set too high they reduce employment. It's also well documented that most of the benefits of minimum wage increases go to middle and high income families.

The richer people will still save (because they have more money than they need), and it is people spending that causes growth. People saving allows for investment which is also necessary for long term growth. There is no point in building a new factory with faster machinery to produce more product if you cannot find a market.

Investment increases short term growth. Only productivity growth increases long run growth.

Geuze · 09-03-2017 10:18PM

Suryavarman wrote: »

So we'd have to massively increase taxes just to boost the incomes of high income households? And leave the worst off in society no better off?

I don't get your point.

A 40% ATR would be higher than what most high-earners pay now.

Geuze · 09-03-2017 10:23PM

Herp_a_Derp wrote: »

quote

I agree there is a worldwide problem with corporation tax rates. All countries must raise their rates together. If one country holds out it can cause problems.
Countries must work together to deliver higher tax returns from corporations.

Ordinary people, who have votes, pay tax at up to 60%.
Why do voters accept that corporations, who aren't even real people, should pay very low rates, as low as 12.5% in theory, but even as low as 1% in practice?

There needs to be a public backlash against corporations who refuse to pay taxes at reasonable rates.

If it's reasonable for hard working normal people to pay tax at 50% it should also be reasonable for corporations.

Please note that as only people pay taxes, then people pay CT.

Shareholders / staff / customers all pay the CT paid by a firm.

Geuze · 09-03-2017 10:28PM

Would a UBI make rich people better off?

Take the people in Ireland earning 275k+, 2014 data.

They earned 5,431m gross income.

They paid 2,206m in income tax and USC.

So they paid an average ATR of 40.6%.

The SJI proposal means they pay 40% ATR.

http://www.cso.ie/px/pxeirestat/pssn/rv01/DATABASE/rv01/Income%20Tax%20and%20Corporation%20Tax%20Distribution%20Statistics/Income%20Tax%20and%20Corporation%20Tax%20Distribution%20Statistics.asp

Suryavarman · 09-03-2017 11:51PM

Geuze wrote: »

I don't get your point.

A 40% ATR would be higher than what most high-earners pay now.

As you point out below they get a tax cut and they get €7,600 per year in UBI.

Geuze · 10-03-2017 12:42AM

They would lose tax credits though.

UBI replaces tax credits.

Suryavarman · 10-03-2017 10:48AM

Geuze wrote: »

They would lose tax credits though.

UBI replaces tax credits.

And even though they lose tax credits their ATR is still falling.

Herp_a_Derp · 10-03-2017 12:44PM

Isn't the flat tax rate suggested by Social Justice Ireland 60%, not 40%?
(edit; No, I'm wrong, Social Justice Ireland suggest a 40% tax rate on all income)

I don't agree with flat taxes as they're not progressive. A basic income does not need to be associated with a flat tax.

What does ATR stand for?
Is it effective tax rate?, or actual tax rate?

Corporations are pseudo people are they not?
Corporations do pay tax, and after the tax has been paid by the corporation then the residue is paid out to the shareholders or held as a cash reserve.
Tax is only paid on profits.
If it's ok for ordinary people with votes to pay 50% or 60% tax why is it not ok for corporations?

Water John · 10-03-2017 02:00PM

Flat tax and UBI are two unrelated concepts.

Bass Reeves · 10-03-2017 02:36PM

Herp_a_Derp wrote: »

I
If it's ok for ordinary people with votes to pay 50% or 60% tax why is it not ok for corporations?

Because corporate profits are again taxed when they are transferred out of corporate structure's. Because of MN's in Ireland in general our corporate tax rate is too low. It would be higher however this is a worldwkde issue not just an Irish issue.Coporate tax rate is not just applicable to the Apple's of this world but to lads that own small busines's the local publican , the bigger dairy farmer, the lad that owned more than one shop the small local engineering firm.

A corporate tax rate allows him to retain profit's within the busines to expand that business and to create employment. However if he wants to take profit out of the business in the form of a dividend then he has to pay his marginal tax rate on that. If it is a big MN then when they decided late a dividend they are subject to tax, if the share's increase in value and investor sells he pays capital gains on his profits so all corporate tax rate is a tax on the company's profits to retain the profits for further investment.

This is why I have no sympathy for Apple's tax case they were refusing to pay what is one of the lowest tax rates in the world on the idea that they would pay there due in to the US revenue when they repatriated there profits. It was one of the worst cases of corporate greed and of government collusion I have seen.

Sam Russell · 10-03-2017 03:40PM

Suryavarman wrote: »

This just isn't the case at all. It's a well documented fact that when minimum wages are set too high they reduce employment. It's also well documented that most of the benefits of minimum wage increases go to middle and high income families.

Investment increases short term growth. Only productivity growth increases long run growth.

Do you have a source for any of these points of view?

(Should be easy to find as they are well documented).

Suryavarman · 10-03-2017 04:48PM

Sam Russell wrote: »

Do you have a source for any of these points of view?

(Should be easy to find as they are well documented).

A minimum doesn't necessarily reduce employment, past a certain point it obviously does. This review of the literature finds that in general minimum wages reduce employment. Arindrajit Dube recommends a minimum wage equal to 50% of the median wage.

The second claim is based on the Solow Growth Model.

Replacing social welfare with a basic income

Comments