Posts Tagged 'citizen’s income'

Would a Citizen’s Income make some people poorer than they are today?

The notion of a Citizen’s Income, an unconditional income for every individual as a right of citizenship, has been around for thirty years, thanks in no small part to the efforts of author and director of the Citizen’s Income Trust Dr Malcolm Torry. In today’s guest post, Dr Torry gives clarity and background to the recent debate over whether a Citizen’s Income would really leave some low-income families worse off.

Malcolm Torry, photo for websites, 2015An unconditional income for every individual as a right of citizenship would help to solve the problem of poverty and would create a more just society. This is no doubt why the Green Party voted to include a Citizen’s Income in its manifesto for the forthcoming General Election.

The details have not been published, but what is known is that the party intends a Citizen’s Income of £72 per week for every adult (less for children and young people, and more for elderly people), and that it would pay for it by abolishing personal tax allowances and means-tested benefits.

Current controversy around the Citizen’s Income was caused however by Andrew Neil’s interview with Natalie Bennett, the Leader of the Green Party. He suggested that because people would lose their personal tax allowance of something like £10,000, and would only receive £3,500 in Citizen’s Income, they would be worse off.

In making this suggestion it is clear that Neil had not understood that the cash value of a tax allowance is the value of the allowance multiplied by the tax rate; and Natalie Bennett didn’t pick him up on the mistake.

But even though the logic was erroneous, the idea was out there that a Citizen’s Income would lose people money.

Problem

The Green Party scheme might be similar to the Citizen Income Trust’s illustrative scheme that the Work and Pensions Select Committee published as evidence in 2006 and updated in 2013. There is no problem with affording this scheme, as the abolition of personal tax allowances, the abolition of means-tested benefits, and the restriction of pension contribution tax relief to the basic rate, would save enough money to pay for the whole of the UK population’s Citizen’s Incomes: but there is a problem with it.

For some low income households their Citizen’s Incomes would more than replace the value of their lost personal tax allowances, but they would not also replace the whole of their abolished Working Tax Credits.

Because the Citizen’s Income would never be withdrawn, additional earnings would produce more additional disposable income than additional earnings can produce in the context of means-tested benefits, so households suffering small losses at the point of implementation of a Citizen’s Income would be able to make them up quite easily by earning a little more. But this was clearly not a total solution, so more work was required.

In 2012 I used the Euromod modelling software maintained by the Institute for Social and Economic Research at the University of Essex to quantify the losses that low income households would experience; and during the summer of 2014 the Citizen’s Income Trust studied a number of schemes similar to our illustrative scheme. We found that we could reduce the losses but not eliminate them. So the search began for alternative methods of implementation.

Alternative

Work I subsequently carried out using Euromod showed that a revenue neutral Citizen’s Income scheme need not impose losses on low income households at the point of implementation if means-tested benefits are left in place and households’ Citizen’s Incomes are taken into account as income when their means-tested benefits are calculated. The 2012 and 2014 results were published together in an Institute for Social and Economic Research working paper and have been republished in a recent edition of the Citizen’s Income Newsletter.

The Guardian’s Political Editor, Patrick Wintour, then read our website, telephoned me for a discussion, and wrote an article stating that the Citizen’s Income Trust had said that the Green Party’s Citizen’s Income scheme would impose losses on low income families.

We had not said that – in fact, we had never commented on the Green Party’s scheme, except to note that they intended to develop one for their manifesto: but by noticing the similarities between our illustrative scheme and what the Green Party had so far said about theirs, Patrick Wintour had drawn his own conclusion and published it as if it was ours.

“…it is perfectly possible to implement a genuine Citizen’s Income of £72 a week without imposing losses on low income households…”

What he did not emphasise, which he might have done, is that we had proved that it is perfectly possible to implement a genuine Citizen’s Income of £72 a week without imposing losses on low income households if means-tested benefits are retained and households’ Citizen’s Incomes are taken into account when their benefits are calculated.

What other journalists have correctly noted is that if additional tax revenue is raised, either through higher Income Tax rates, through the implementation of a financial transaction tax, or through some other new tax, then a larger Citizen’s Income would become affordable. This would eliminate losses on low income households, and possibly on all households, without means-tested benefits having to be retained.

On the plus side, Patrick Wintour’s article, and the many articles that have followed it, in the Guardian, the Times, the Financial Times, and elsewhere, have stimulated a substantial increase in the level of the debate, which is exciting for the Citizen’s Income Trust. We have never before had so many people asking to join our mailing list, our website has never experienced so many daily visits, and we have never had so many new Twitter followers.

Later this year  Policy Press will be publishing my new book, 101 Reasons for a Citizen’s Income. This will be a short introduction to the subject, and cheap enough to enable readers to give copies to their friends, colleagues and relatives.

The need for the book is clearly urgent, and I’m working as hard as I can to finish it.

You can keep up to date with Citizen’s Income by following them on twitter @Citizensincome


Torry-MoneyForEveryoneDr Malcolm Torry’s book Money for Everyone: Why we need a Citizen’s Income (Policy Press, 2013) is available at a 20% discount from the Policy Press website – here.

His new book 101 Reasons for a Citizen’s Income publishes later this year. Sign up to our newsletter to get the latest information on forthcoming publications, be part of the Policy Press community and access members special offers.

The Citizen’s Income Trust was formed from a group of people who had gathered together thirty years ago to discuss how they might promote debate on a Citizen’s Income (then and sometimes still called a Basic Income), they became the Basic Income Research Group, and then the Citizen’s Income Trust. They promote debate on the desirability and feasibility of a Citizen’s Income. They publish the Citizen’s Income Newsletter, maintain a library and a website, hold meetings and conferences, and respond to requests for information. They run on voluntary labour and a shoestring budget. More information is available via their website – here.

The views and opinions expressed on this blog site are solely those of the original blogpost authors and other contributors. These views and opinions do not necessarily represent those of the Policy Press and/or any/all contributors to this site.

Why it’s the right time for a Citizen’s Income

Malcolm Torry

Malcolm Torry

By Malcolm Torry, author of Money for everyone, new this month

A Citizen’s Income is an unconditional, nonwithdrawable income for every individual as a right of citizenship. It’s unconditional: that is, any two working age adults would receive exactly the same amount, no matter how different the amounts they earn, the assets they own, or the households in which they live. Every person over retirement age would receive the same larger amount. And every child would receive the same as any other child. A Citizen’s Income is nonwithdrawable: that is, if you earn additional income, your Citizen’s Income remains the same. And it’s for every individual: so it’s not reduced if you’re living with someone else, or the person you’re living with earns some additional income.

In all of these respects a Citizen’s Income is the opposite of our current means-tested benefits. Means-tested benefits are conditional: on looking for work, or on being ill, on how much you earn, on who you’re living with, and on how much they earn. Means-tested benefits are withdrawable: so if you earn some additional income then your benefits are reduced – and you will often receive only 15p of any extra £1 you earn, or sometimes only 5p. And means-tested benefits are not always paid to the individual, because for a couple living together only one of them receives the means-tested benefit, whether that’s Income Support, Jobseeker’s Allowance, so-called Tax Credits, or, in the future, so-called Universal Credit.

Is Citizen’s Income affordable? Details of costs can be found at http://www.citizensincome.org. For example, the FAQs on the website include a report on a feasible revenue-neutral Citizen’s Income scheme that grants a Citizen’s Income of £51.85 weekly to every child and every adult up to the age of 24, £65.45 to adults older than 24 and younger than 65, and £132.60 to everyone over 65 years old (a Citizen’s Pension).

Several recent books have suggested that a Citizen’s Income would be an important part of the answer to the growing inequality and other problems that our society faces today: but the last book to offer anything like an exploration of the subject as a whole, and of the arguments for and against a Citizen’s Income for the UK, was published over ten years ago. Money for everyone fills a significant gap. It argues for a Citizen’s Income on the basis that this is the kind of benefits system that we would invent if we were starting from scratch, and on the basis that a Citizen’s Income would solve many of the problems facing our society and our economy. It would provide a greater incentive to seek additional earned income (because it wouldn’t be withdrawn as earned income rises); it would be efficient and cheap to administer, it could attract almost no fraud, and there would be almost no errors in its payment (unlike our current benefits system); no stigma would attach to receiving it (because everybody would receive it); it would increase social cohesion (unlike our present tax and benefits structure, which divides us into benefits recipients and tax-payers); it would set us free from bureaucratic intrusion (whereas the present benefits system imposes cohabitation rules on us, meaning that civil servants need to know who is living with whom); and the radical simplicity of a Citizen’s Income would future-proof it (unlike our present benefits system, which belongs in the 1930s).

Money for everyone surveys the history of our benefits system, and of attempts at reforming it, and it suggests different ways of implementing a Citizen’s Income. It describes the Alaska Permanent Fund dividend, Iran’s new Citizen’s Income paid to households, and pilot projects in Namibia and India. It constructs a list of criteria for an ideal benefits system, and finds that a Citizen’s Income would satisfy them but that our current largely means-tested system does not. The book asks the important question: Would people still work if they received a Citizen’s Income? – and finds that they would. Further chapters describe a Citizen’s Income as an answer to poverty, inequality, and injustice; ask who should receive a Citizen’s Income; study financial feasibility; discuss political feasibility; and ask which problems a Citizen’s Income would not solve.

Changing society and changing economy need a Citizen’s Income; Money for everyone shows that a Citizen’s Income is both desirable and feasible.

Money for everyone is available to buy with 20% discount at www.policypress.co.uk

 


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