Quick guide to Citizens’ Income (including graph explanation)

There are two extremely worried, separate groups. One questions the impact of economic expansion on the global environment, and the other opposes the austerity cuts being imposed by the (UK) government. These groups should be working together. The Citizens Income is an unconditional payment to everyone, replacing means tested benefits and tax allowances, paid for out of income and resource taxes. For further information on the general principle, see

http://www.citizensincome.org/

My book, ‘Citizens’ Income and Green Economics’, which explains in detail the link between the Citizens’ Income, the poverty trap caused by means testing, and saving the planet for future generations is available from The Green Economics Institute.

http://www.greeneconomics.org.uk/papers/citizen.pdf,

or from

Radish Bookshop 128 Harrogate Road Chapel Allerton, Leeds LS7 4NZ 0113 269 4241

http://www.radishweb.co.uk/

The fate of Easter Island (left pic) demonstrates what happens when a culture which takes expansion for granted meets the limits of the environment to cope (see the first few paragraphs of the book résumé if you haven’t heard). I am terrified by the significance of melting arctic ice. The graph on the right is a clue to the first step in a possible answer. Its immediate effect is to expose the fallacy in the ‘anti-scrounger’ attitudes prevalent in some sections of the media, and the fundamental weakness in the government’s workfare reform plans. At the time of this first update (July 2014), the Labour opposition strategy was that they would be better than the government at hounding scroungers, totally failing to see the ‘persuasion is better than force’ logic which is the basis of the Citizens’ Basic Income.

The graph at the top of  this page  illustrates the withdrawal of means tested benefits as though they were taxes. which they are for the person losing the benefit. It can be used  to bring the BI mainstream. It reveals the Universal Credit as a scrounger oriented answer. It is taken from a surprising source: page 88 of  ‘Dynamic Benefits’, (Sept 2009 : click ‘Library’, p.9), Iain Duncan Smith’s own literature. The graph is for a single person, but there are similar graphs for various family situations.  A simpler graph, for a family just showing the outline can be found on page 162. A similar, up to date graph appears in the RSA report on the Basic Income, dated 16th December 2015.

Ignore the colours. They are just the details of how the poverty trap/scroungers charter is made up (same thing, depends on your mind set). Concentrate on the black line at the top. The ‘Marginal tax rate’ is the amount you lose in tax or withdrawal of means tested benefits (exactly the same effect) for each extra £ earned. Draw a vertical line at, say £12,000 pa. You lose 70p from every £ through  withdrawn benefits. Draw another line at £30k – you only lose 30p in tax and National Insurance.

The ‘Participation tax rate’ is the total you lose out of the total earned. To show this you look at the total coloured from the entire rectangle. You only keep the white bit at the top. Now compare £12k with £30k pa.

Now graft on the Universal Credit (UC) and the Basic Income.  The UC graciously allows former scroungers, sorry benefit claimants, to retain 35% of their benefits. So on the graph, you draw a horizontal line at 65% to represent the tax equivalent, up to the point where all means tested benefits are withdrawn. This is better than now, but not much. It would still be necessary to use the whole apparatus of benefit sanctions. But this assumes the UC is actually functioning. The news item on the latest damning Public Accounts committee Report on the UC (3rd Feb 2016) states that 4 years after launch, 200,000 out of 4,500,000 who should qualify for the UC are actually receiving it, and the projected full rollout – not until May 2021 looks decidedly mythical.

The Basic income would draw a straight horizontal line across all income levels. Even at a flat tax rate all the citizens’ Basic income does is shift the tax or tax equivalent so that all incomes share the burden equally. Martin Wolf, Chief Economics Commentator on the Financial times has said it would have to be at least 60% if housing costs were included, but former ‘scroungers’ are paying more than that now as they lose benefits, and would continue to do so with UC. All the clap trap about why the Basic Income is unaffordable, would make people lazy, or would not work for whatever reason,  is demolished by this graph. All the Basic, Citizens’ Income does is put everybody on the same playing field. Oh, and by the way, it makes work pay. The real reason Iain Duncan Smith resigned in March 2016 is because he has failed to do this, and he realized the UC was never going to work. The anti-cuts movement should be using this thorough critique of means testing as powerful support for their opposition to the inhuman combination of workfare with benefit sanctions.

The Citizens’ Income will facilitate a fusion of ideas from the now outdated ‘right’ and ‘left’, and the currently unthinkable  possibility (which I consider necessary) that large numbers of ex-socialists and ex-conservatives who accept ecological limits will recognise that they have more in common with each other than with their former allies who still don’t realize how dangerous indiscriminate economic growth is from now on.

Ideas always evolve, but also, instead of, as hitherto, my railing at the TV or radio in impotent rage at an item where the CI is relevant but not mentioned,  you will find it here. The whole idea is a huge thought experiment. The main purpose of the Citizens’ Income is to give everyone a sense of security without economic growth. There may be better ways of achieving this, but no one has yet thought of them. A CI, or something serving the same purpose, must become a reality. But that can only happen when there is a world wide consensus. This is an idea which needs to go viral, but the immediate need is to expose the lunacy of workfare at a time of serious unemplyoment .

[Second update March 2016, shortly after Iain Duncan Smith’s resignation as Work and Pensions Secretary]

7 responses to “Quick guide to Citizens’ Income (including graph explanation)

    • Thank you. I guess most will think my claims about the possible demise of workfare are unrealistic. My next Friday’s blog will discuss the similarities and differences between what happened over the Poll Tax, and what we can do now over workfare. Please retweet, or whatever people who understand cyber networks better than me do.

  1. Pingback: Can “Evidence-based Policy” Replace Ideology in Politics? | Politics, Perception, Philosophy. And Physics.·

    • I cannot reply to this comment because it starts “. . .see it as solving or mitigating”, and ends “libertarian) ideologies and the . . .”
      All before and after is missing, and I don’t understand blogs well enough to fathom out how to find the rest.

    • Ok, I have now read your attached paper. Thank you, excellent material. To those who see difficulties in juggling a UBI with migration, I advise publicising the principle. The UBI can then be seen as helping to solve the migration crisis. But apart from your link to this blog (thank you), your paper does not touch on the relevance of the UBI to sustainability – Green issues

  2. Pingback: Could our #RegionalDemocracy trial a Citizens’ Income? | We Share The Same Skies·

    • I have only just spotted this on my blog. I remain as passionate as ever about the need for the Basic income, but there is a dange of something very similar being used irresponsibly

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s