Flaws in Basic Income

Flaws in Basic Income

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5 Responses

  1. I think the case for BI is simply that it’s a much better system than means-tested benefits. In terms of costs, it can cost as much or as little as is desired, or be revenue neutral, or even produce a net gain for the economy; it all depends on how it’s structured and how big the basic income is.

    Given that it’s a massive shift from the current system, and would have many intended and unintended consequences, it should be introduced gradually over many years from a laughably small starting point of perhaps £10 per week, with benefits being reduced at the same rate, more or less, until BI replaces Jobseeker’s Allowance.

    I think it would be a massive missed opportunity if we don’t at least give the thing a try.

    • Mike Rawson Mike Rawson says:

      I appreciate your sentiment, but the maths doesn’t work.

      Balancing BI with benefit reductions only works if we restrict BI to those on benefits, in which case it’s not BI and we can’t make the efficiency savings.

      Giving BI to everyone costs twice as much as current benefits and means that everyone on higher than average income (the “middle classes”) will have to pay a lot more tax.

      • Indeed, there will obviously be more tax paid by those who earn more, if only to offset their basic income! However, I still disagree about the math not working as there are many models which are cheaper/neutral/more expensive, depending on the BI level and the tax rate.

        My preferred scheme is BI-FIT, Basic Income plus Flat Income Tax, as that’s the simplest and reasonably ‘fair’ system. Something like this:

        http://www.parncutt.org/BIFT1.html

        Also, I would love to have a play around with the EUROMOD simulation software:

        https://www.euromod.ac.uk/

        but alas don’t as yet have the spare time.

        If I’m ever on a dating website I’ll be sure to put “would love to play with tax microsimulation software” at the top of my profile…

        • Mike Rawson Mike Rawson says:

          That’s misleading – they don’t pay more tax to offset the BI, they pay more tax because now everyone is getting BI, rather than just a few people getting benefits.

          I agree it can be cheaper than the model I looked at, but then it isn’t BI. It has to be enough for people to live on without working, or it’s just tinkering with the tax and benefits system. I have one eye on the coming robot revolution.

          I will take a look at BI-FIT at some point. Flat tax is another idea I like in principle but find hard to reconcile with reality.

          Thanks also for pointing me at euromod, though I can’t face anything with euro in the name just at the moment.

          There’s someone for everyone John, though tax software sounds like a Marmite interest to me.

          • “It has to be enough for people to live on without working, or it’s just tinkering with the tax and benefits system.”

            Ah, then we are using different definitions, which is my fault.

            Basic income does typically refer to something which would take citizens out of at least absolute poverty and preferably beyond relative poverty (60% below median household income). Personally I think that’s a big ask.

            I’m more a fan of a “citizens income”, which is indeed intended to more or less replace JSA or at least get rid of the means testing. So apologise for the confusion. I like the idea of a social ‘dividend’ for all citizens, but I doubt that it would extend beyond the poverty line, at least not anytime soon.

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Flaws in Basic Income

by Mike Rawson time to read: 6 min
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