Poor (high) taxpayers! Any Questions (10th April)

The Basic Income was relevant to all 5 topics discussed on Any questions on BBC4 on 10th April. But first, the shock news that some taxpayers will pay 60%! According to the Financial Times, more than 1 million UK taxpayers will be caught in an income tax ‘trap’ over the next 4 years, because the tax free personal allowance will taper off for incomes above £100,000. The details need not concern us, but this ‘quirk’ only affects earnings between £100,000 and £120,000 per annum. It will reduce earnings above that figure, but will be of little consequence to those on higher incomes.

This is of course intolerable, but as I have pointed incessantly in this blog, ‘Dynamic Benefits: towards Welfare that works’ (click ‘Publications’) explained in 2009 that the withdrawal of means tested benefits has the effect of a much higher tax rate on over 2 million claimants. ‘Dynamic Benefits’ proposed a remedy: the Universal Credit, which if it had ever got off the ground, would have had a claw-back rate of ‘only’ 65%. But it never did get off the ground, so benefit claimants still suffer much higher tax equivalent rates. My heart bleeds for the almost rich, but did the Green Party use this as yet another prime opportunity to point out how the Basic, or Citizens’ Income would work?

Last Friday ‘Any Questions’ debated five issues: Cameron’s scheme to allow workers from large organizations to volunteer on three days per year; should we keep the newly discovered oil under Sussex in the ground; Trident; non-doms; and EU membership. Of  course, Caroline Lucas could not easily introduce an idea on which the general public are still hazy, and the few who have heard of it still think it is unaffordable. The Basic Income should have been launched two years ago, using the numerous topics where it wold help to explain it.

Without a Basic Income, as panellists pointed out, the volunteering would not be truly voluntary. Like Zero hours contracts, this is another area where a Basic income would introduce flexibility so that anyone could volunteer, and the obvious problems this ill thought out proposal would create for many organizations, not least the NHS, would be avoided.

Fuel costs. There will be a component in the Basic Income to cover reasonable heating costs for an individual. This would give individuals the incentive to wear more clothing instead of turning the heating up, but it would also incentivise entrepreneurial and infrastructure changes to reduce consumption.

There is already a Europe-wide basic income movement, and Philippe van Parijs has produced a scheme for Europe.

On Trident and non-dom status the relevance is indirect. It depends of the culture shift which the Basic, or Citizens’ Income could help to bring about. Society can still allow for differential wealth and incomes, but the Basic Income will put everyone on the same footing, from those on benefits to those on £100,000 per annum and above. Once this is perceived as fair, anyone who threatens to leave on taxation grounds will be seen as nasty and selfish. That is not so at present. Michael Caine is quite proud of having done so.

Whilst Caroline Lucas did make cogent points on Trident, I shall put the question she did not fully answer in a fairly stark form: suppose everyone has abandoned nuclear weapons except Russia and North Korea. What is to stop one of them holding the rest of the world to ransom?

There are all kinds of answers to this unlikely scenario, but it need never arise once the new cultural consensus has emerged. Specifically, if the Basic income is applied between all nations as well as between individuals, the need for any nation to be ready to defend itself with an extreme deterrent will look preposterous. Trident is only ‘necessary’ in a competitive world where competition inevitably spills over into aggression.

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