would the Citizen's Income be paid for?
are a number of ways;
by expenditure savings on existing social security benefits
* by savings on administration
* by raising extra revenue by abolishing income tax allowances
* by extra revenue resulting from integrating National Insurance
contributions into income tax
* from the results of increased wealth creation through economic
savings would arise because the payments would be deducted £
for £ from existing benefits, and would be a far less costly
system to administer than the existing tax and benefits system.
The Exchequer would get more revenue because the income tax base
would be wider, because employees' and self-employed National
Insurance contributions could be integrated into the new style
income tax (chargeable on both unearned as well as earned income)
and because fewer people would be caught in the poverty and unemployment
traps and would be able to contribute through their earnings.
What amount of Citizen's Income could be afforded in present circumstances?
depends on what sort of CI we should opt for. There are three
CI - defined as "enough to live on" - would require
such high levels of income tax
( probably around 70 per cent) that it is unlikely to gain political
or public support.
CI - defined as "needing to be supplemented for those without
other income" - is usually taken to mean half the rate of
Income Support for a married couple with less for children but
considerably more for old-age and disability pensioners. Partial
CI would need to be supplemented by other provision, especially
for housing costs and for families with children, but far fewer
people would need it than need means-tested benefits at the moment.
For the majority of people income tax minus CI would be a smaller
proportion of their income than direct tax is now. The level would
depend on the size of the pensioner supplements, the speed with
which existing benefits and non-personal income tax reliefs (such
as for mortgage interest) could be phased out and the state of
CI - is defined as the small payments which would be the first
step towards a partial CI system. For an example, see the illustrative
scheme on this website: click
Would many people on a Transitional CI not have enough to live
are problems to be faced. Like social security at present the
amounts available for CI depend on taxation policy. The integrated
income tax rate would have to be a few percentage points higher
than the present standard rate of income tax plus National Insurance
contributions and this would result in a more progressive tax
structure in which a majority of the population had slightly higher
net incomes after adding CI to and deducting integrated income
tax from their gross incomes and a minority of higher paid people
had lower net incomes than now.
. Is income tax the only means by which Citizen's Income could
may be other ways as well. In Alaska every citizen receives an
annual income from the profits of oil produced at Prudhoe Bay.
In the UK we might look at the idea of a "social dividend"
financed out of the profits of industry as it adopts new technologies..
of the most distinguished social welfare experts in this country,
Professor A. B Atkinson , in a lecture delivered at the London
School of Economics to mark the 50th anniversary of the Beveridge
Report, said: "In my view, it is ...a mistake to see basic
income as an alternative to social insurance. The historical opposition
to Beveridge should be forgotten. It is more productive to see
basic income as complementary. For this reason , I am much more
persuaded by the approach to basic income adopted by Hermione
Parker (1989) as the first phase of a move to a basic income.
In her BIG Phase 1, she outlines a scheme which would replace
tax allowances, although retaining an earned income disregard,
but would keep the existing structure of social insurance benefits.
However I would see this partnership between social insurance
and basic income not just as a transitional compromise, but as
an alternative conception of the basic income. The basic income
would complement an improved social insurance scheme by reducing
dependence on means tested social assistance and helping low wage