Howard Reed – If We Tax More And Borrow More We Can Have A Universal Basic Income

This would seem to be one of those obvious statements – if we tax everyone more and then borrow more as well then we can afford to give everyone some money – a universal basic income. Rather a well, D’Oh, sorta statement really. Government takes in lots more money then it is able to dole out more.

That it’s also an appalling idea is also true but then it does come from Howard Reed so that’s another obvious statement. Our task is only to check why, not whether, it’s appalling. And the reason why is that it puts us all on that government dole, ties us ever firmly into dependence upon the State.

[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””] The cost of a weekly universal basic income (UBI) for everyone in Britain could be covered by reversing cuts to benefits over the past decade, according to a report. The government could make tax-free payments of £60 to every adult, £175 for those over 65 and £40 for each child under 18, regardless of other income, in a proposal designed to cut rising levels of poverty and inequality across the country. The report by the economists Stewart Lansley and Howard Reed, and published by the leftwing thinktank Compass, said that the net cost of reworking the tax and benefits system would be £28bn, a figure less than the aggregate cuts to welfare since the Conservatives came to power in 2010. The changes would return social security spending back to the level of a decade ago to help cover the costs of the UBI, alongside what the economists said would be some modest increases in income tax for higher-paid workers. [/perfectpullquote]

It’s not just the higher paid who’d have to suffer “modestly” higher taxes either. Everyone would end up paying income tax at 15 pence in the pound from £ one of earnings. That’s not a modest increase in anything.

The report is here.

They’re going to increase spending on social security by that £28 billion. Quite why 2010 was the right amount to be spending on such isn’t explained, it’s just an assumption. But of course we’ve managed to bring tax and spending into some sort of balance right now. So, to increase this spending we’ve got to go borrow it. OK, so, if we borrow more we can spend more.

That’s not enough though. In order to really fund this they want to abolish the personal allowance. Everyone pays income tax – at 15% – on the first penny or pound they earn. Welcome to freedom folks, all your money are belong to us. Oh, and higher income earners have to pay more tax as well.

OK, sure, if the State swallows more into its maw then more can be spent. Seems simple enough.

But note what this really does. We all become subservient to said state. The logical claim of taxing earnings £1 is that all earnings do righteously belong to the State. Further, we get just a little bit of pocket money back as a dole – we’re again subservient. Sure, there are people who do think like this but allowing them into polite society is a perversity our culture shouldn’t tolerate.

It is true that a universal basic income would be less damaging than the incentive stultifying welfare system we’ve got today. But it needs to also mesh in with our first ten or 20 thousand of earnings being ours, not that property of the state. That is, a UBI plus a personal allowance of somewhere near median wages. We’ve also got that Laffer Curve problem that we cannot raise taxation of the richer much if anything from current levels. We’re definitely budget constrained therefore. The answer to which is to just keep cutting everything else government does until we can indeed afford it.