Posted: Dec 08, 2015 2:50 am
Beatsong wrote:Personally I wouldn't have a problem with the idea of paying a basic income to the poorest 10% or 20% of the population, that IS enough to eat and pay rent (or combined with building enough social housing to house them), with some kind of tapering mechanism to make sure it's still advantageous to work.
This is very hard to achieve, as the tapering rate acts as an additional tax in practice. When my kids were young, I was not working (I'm still not) and my wife was working part time (now full time). If I'd taken up a day a week of work, as I had an opportunity, I would have earned enough that I'd be paying tax at 15%, while also having one tax benefit based on the lower income of a family reduced by a taper of 30c per dollar, and another based on joint income also reduced at 30c per dollar, in effect a 75% marginal tax rate, which is not much of an incentive to work.
I'd like to see a scheme like this tried somewhere, because I think that if done well, it could solve a lot of problems of our current systems. With a system of paying parents at half the rate on behalf of each of their children, the effect would be very similar to current tax arrangements in Australia for tax-free income and family tax benefits.
Call me a cynic, but means-testing the universal income would just lead to the very wealthy structuring ther affairs so that their reportable income fell just below the rate at which the benefit was lost, and achieve very little. Far better to tax them extra, even through regressive consumption taxes, and then give back universally at a flat rate to balance that.