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Robin Jessen, Davud Rostam-Afschar, and Viktor Steiner, “Welche Effekte hätte ein bedingungsloses Grundeinkommen für Deutschland?” [What effects would a Basic Income have for Germany?]

 

Robin Jessen, Davud Rostam-Afschar und Viktor Steiner, 15. Sept. 2015

Robin Jessen, Davud Rostam-Afschar und Viktor Steiner, 15. Sept. 2015

 

 

 

 

 

 

 

 

 

 

 

 

This article presents a proposal for how basic income could work in Germany. An Unconditional Basic Income of 800 € per month and adult person (corresponding to the actual, conditional social transfer payments, above all the Hartz IV payments) could be financed by a flat tax of 68.9%. This flat tax would replace the actual progressive tax system and the contributions to the current social security system that makes up about 20% of gross income. A micro-simulation shows that people with low incomes would have increased work incentives compared to the current Hartz-IV-system.

 

Another simulation was established to evaluate the effects of UBI on the average working time of different types and incomes of households. The simulation resulted in a reduction of the hours worked by 5% on average, whereas the poorest households would increase their hours worked by 1.4%. Women would reduce their working time on average markedly stronger than men.

 

A third simulation calculates the redistributive effects of an UBI. The top five deciles of all households would loose from 0.2% of their equivalent household disposable income in the 6th decile up to 21% in the 10th decile, whereas the lower deciles would profit from 34.1% in the first up to 4.9% in the fifth decile. The main beneficiaries of this proposal would be single parents with several children, whereas single persons without children would lose some 2000 € per year on average. All in all, the redistributive effects of this scheme would be material.

 

Thus, two important arguments against the UBI are disproved: a) it can be financed without massive distortions of the public finances, and b) the incentives to assume a salaried work would be strengthened for people with small incomes who are considered to be the most prone of perils like passivity and idleness.

 

The article and the underlying study of the same authors was written as a reaction to two recent critical papers against the UBI (Habermacher und Kirchgässner, 2013, and Flassbeck et al., 2013). The authors present their proposal as revenue-neutral, which leaves some questions, above all concerning the actual progressive income tax rates of 14% up to 45% in Germany. Replacing this progressive tax (and the actual 20% of social security contributions) by a flat tax of 68.9% would, at first sight, mean a significant increase of the tax burden not for the lowest, but for the lower and middle incomes. Still, the results of the simulations have to be taken into account in future discussions about the effects of the introduction of an Unconditional Basic Income.

 

Language: German

Robin Jessen, Davud Rostam-Afschar, Viktor Steiner, “Welche Effekte hätte ein bedingungsloses Grundeinkommen für Deutschland?”  [What effects would a Basic Income have for Germany?]. Ökonomenstimme, September 15th, 2015.

 

Jessen, R., D. Rostam-Afschar und V. Steiner. “Getting the Poor to Work: Three Welfare Increasing Reforms for a Busy Germany,”. Freie Universität Berlin, School of Business & Economics,Discussion Papers 2015/22, No date, 2015.

 

Straubhaar, T., Werner, G., Eichhorn, W., Friedrich, L., Habermacher, F., Kirchgässner, G., Flassbeck, H., Quaas, G. and Thieme, S.: “Das Bedingungslose Grundeinkommen: ein tragfähiges Konzept?”, Wirtschaftsdienst, Springer, Band 93(9),September 19,2013.

About Albert Joerimann

Albert Joerimann has written 9 articles.

Born in 1955, latest professional activities: translations, B.I. activist since 2003

The views expressed in this Op-Ed piece are solely those of the author and do not necessarily represent the view of Basic Income News or BIEN. BIEN and Basic Income News do not endorse any particular policy, but Basic Income News welcomes discussion from all points of view in its Op-Ed section.

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