Financing a full Basic Income: Advice for J Bartley

Jonathan Bartley is an excellent ambassador for the Green Party – and the Basic Income. But I, a midget, must climb on his giant shoulders to say that vital bit extra.

Jonathan was a speaker at a day event on the Basic Income organized in Leeds by CERIC (Centre for Employment Relations, innovation and Change) on 26th January. One serious worry I have about the Basic Income movement is its focus on poverty and redistribution to the almost total exclusion of threats to the ecosphere. Jonathan was the only speaker I heard (I missed the first), to make that connection.

But Jonathan thinks, and I grudgingly agree with him, that in the short term the public would reject a Basic income generous enough to allow them to contemplate restricting economic activity to what the ecosphere can cope with. But if James Hansen is right, short term may be all we have. Like Spitfires in 1940, only when the need is perceived will the politically impossible get done.

As it happens, the CERIC conference did hear a realistic here and now Basic Income proposal, and I shall return to that in a moment.

The CERIC conference was a meeting of 60 or more, some of whom had come considerable distances, most of whom were already well versed in the Basic Income principle. This is what I wanted them to hear:

“If the sums necessary to guarantee basic needs to every man, woman and child are already impossibly large then this country is not merely morally bankrupt, it has already gone bust.

As it happens, the donkey work was done for us by the Centre for Social Justice, a Think Tank set up by Iain Duncan Smith. One of its early publications set out the case for the Universal Credit (UC): “Dynamic Benefits: towards Welfare that works”

“Somewhat surprisingly for a Think Tank with a right-wing agenda, this report contained a series of graphs showing the withdrawal of means tested benefits on the same graphs as ‘real’ tax [There is one at the head of this blog, which Jonathan could use]. Taxes are sums taken from individuals by public bodies; benefits are given to individuals by public bodies. Therefore, the withdrawal of a benefit has exactly the same effect as a tax.

“Less surprisingly Dynamic Benefits does not show the intended effect of the Universal Credit. Even without the problems discussed by Parliament in October 2017, all it would have done is to reduce the tax-equivalent withdrawal rates shown by the graphs from 80% or higher to 72%.

“The basic Income movement could have used those graphs to ask “how can we put everyone on the same footing? If everyone is given an unconditional Basic income sufficient to meet basic needs, what tax rate will be necessary to fund it? In other words, how to produce a straight line on those graphs instead of the tax-equivalent mountains shown at the low income end, or the high plateau left by the UC?

There are of course better ways than income tax for funding a basic income. Land Value Tax, and a relatively small, not punitive Wealth Tax are obvious candidates. But if straight redistribution of income revealed a shortfall, we all have a right to know that dreadful fact.  But of course that is not the case. The government should be faced with a simple  challenge: use the computer power at your disposal to  produce a straight line on those graphs. Anything else is injustice.

Although that is logically unassailable, the vast majority who don’t do graphs would just be puzzled. The Murdoch press would have a field day lampooning it, so some support is required.

“In their paper ‘Financing the social State’, Richard Murphy and Howard Reed do have a stab at an adequate Basic income, though their aims are different from mine. Sufficient for the purposes of this discussion, according to Martin Wolf, Chief Economist at the Financial Times, [Private correspondence, no link] even as a flat tax the necessary rate would have to be at least 60%. That will be considerably lower than the income tax rates accepted matter-of-factly in the 1940s.

The foregoing is in italics as a possible template which Jonathan can use that as a basis whenever it is appropriate for him to explain the long term feasibility in future. I accept that a Basic Income capable of fulfilling all the far-reaching claims some of us make for it will have to wait. But those trying to advance the cause need to be briefed on the goal, not just immediate practicalities.

In passing my proposed figure for a ‘full’ basic income would be £175 per week, £750 per month. This would be dismissed as inadequate by the Rowntree Trust, but rubbished as a scroungers’ paradise by the press. If circa 30% of GDP seems huge, most of those getting it pay more back in tax.  I look forward to cleverer ways of putting everyone on the same footing.

But far from putting me off, Martin Wolf’s advice makes the case for a full Basic income all the more urgent. Those losing means tested benefits are paying tax-equivalent rates higher than 60% now

However, a Basic income capable of immediate implementation was presented to the CERIC conference by Malcolm Torry, of the Citizens’ Income Trust, figures updated slightly from this link. This illustrative scheme (p8 in the linked booklet) would take many low earners off benefits entirely, and reduce means tested benefits considerably for many others, a vital stepping stone to understanding the basic income.

This CIT scheme would cost £2.79 Bn. The total 2016-17 benefits bill was £264Bn, and the cost of the Universal Credit (UC) was stated to be £15.8Bn in 2015. The CIT scheme will achieve more than the troubled UC at lower cost.

What should happen now, is for Mhairi Black MP, who is on the Work & Pensions Parliamentary Select Committee, to read the CIT scheme. It would hardly add to Caroline Lucas’s workload to draw Ms Black’s attention, say during a division, when they will invariably be in the same lobby.

And I assume Caroline and Jonathan are still on speaking terms.

This plan seems so obvious to me that there must be some reason why it has not happened. But Jonathan, could you not at least discuss it with Malcolm Torry?

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