by Guest Contributor | Jan 13, 2017 | Opinion
Imagine entering a website for your country which after answering a few questions would inform you how much money you would receive from a basic income. This is net of any increased taxes from each of the financing models proposed to finance the UBI. This site will also tell you how the country would be affected overall. Each of the variables are listed and are changeable, which gives those interested the ability to measure results from all possible outcomes.
We have this now in a Google Docs spreadsheet form, and it has been forwarded to all the members of the international BIEN outreach group of which I am a member. The original Excel version can be found here.
The outreach group has several objectives. My primary focus in this group is the collaboration, communication, connection, and mutual support of the international groups who are working on modelling, financing and forwarding a universal basic income.
At the congress earlier this year, I presented a paper on a European wide basic income financed by a collective goods and services or value added tax. This was a costed model which indicated that an increase of the European VAT rate of 16 percent to 22 percent would be sufficient to finance a basic income of 150 to 200 Euros for everyone in the European union over the age 18. The expected results for Europe was people had more money to spend, there was increasing employment, no need for austerity measures, big savings in bureaucracy and healthy economies in Europe with the measures they need to cope in a changing world.
While 96 percent of people in Europe would be better off with this UBI, a higher percentage could have been achieved by having a tax-free income allowance as well with a slightly higher GST rate. I was not able to model this, as it impacts individual member budgets while I was seeking a collective UBI agreement keeping with the existing aligned VAT rates across Europe. However, this is the suggestion that I made to the New Zealand government last year.
The Labour party here, along with all the left-leaning parties, have indicated an interest in or directly support UBI. I find that reading other people’s spreadsheets brings on a headache so I have designed an interactive model that hides away the calculations and simply delivers the results of each financial model in a dollar value for your individual circumstance.
I have made this template available to the BIEN international community. They would need to enter their own existing welfare budget, the country tax and VAT incomes. It also asks for the population income and taxation per income band. Doable from web sources in some countries, but needing real work and government assistance in others. It does offer a way to map financial results given different financing models.
While we could disperse this information through our own networks, I have an additional objective in that there are six questions that the website would require you to answer, most of which relate directly to the calculation of your personal UBI net advantage. While the other asks whether you would leave your job if you received a UBI. I will consult with the parties here as to whether they need anything further answered as there were hints of a UBI financed by a capital gains tax which would be interesting to compare.
The four models currently considered are:
- Tax free earnings to $100,000 and UBI of a higher amount financed by a raise in GST.
- A moderate UBI financed by a raise in GST.
- A lower UBI financed by the top tax rate.
- A lower UBI financed by increasing the income tax by the same percentage.
My conclusions are as follows:
- The bottom earners of less than $16,000 are best off with the model (1) as are the people earning more than $70,000.
- The middle earners from $16,000 to $70,000 (the majority) are better off with model (3) however the top tax rate would need to be more than 100 percent and therefore it is not possible.
- Model (2) has the second best overall result of $10,187 average extra money per person yearly. Model (1) has the best of $13,376.
- Model (4) has a similar overall result to model three of an $8,604 average additional income per person annually.
The spreadsheet also adds the total cash benefit for the entire population, and I hope that if this was put to a vote that this would be given due attention, as the extra cash received by many from the top tax being increased is not much more than from the tax-free GST model. The country total is $47 billion for the GST model compared to $26 billion for the top tax. This gap widens as the variables are changed.
My conclusion is that the tax-free GST model is the best method of financing UBI for New Zealand.
My hope is that someone will first audit these findings and bring about this information being shared on a website. This way, people get a chance to view what a UBI means to them and their country. The questions answered will help developers with the data they need to see what the likely outcomes for their country would be.
A final note – A tax on spending enables people to save with the extra UBI they receive, seek employment without a punishing higher tax rate, get a entry-level job without paying any tax on it and still receive the full UBI.
UPDATE: Added new spreadsheet version.
About the Author:
Peter Brake is a self-employed accountant in a busy public practice and a part time organically certified olive farmer. A member of the BIEN outreach task-force, one of four members charged with creating a space in the next congress for Bien affiliates and international developers of UBIs to share their progress, discuss common problems and brainstorm common solutions. He is actively involved with the British, European, Indian and New Zealand UBIs.
by Kate McFarland | Jan 12, 2017 | News
Finland’s basic income experiment is now underway, with the first payments having been mailed this week. With the experiment generating much media attention, here is a review of some of the basics.
On January 1, 2017, Finland launched an experiment in which 2,000 individuals–randomly selected from a pool of unemployment benefit recipients–will receive unconditional cash payments of €560 (about 590 USD) per month for two years.
The first payments were sent out on Monday, January 9.
The main goal of the experiment, as it presently stands, is to determine whether unconditional cash transfers are more effective than means-tested unemployment benefits with respect to promoting job-seeking and employment. Olli Kangas, leader of the research team at Kela that designed the experiment, has recommended expanding the experiment to other target populations (including “other persons with small incomes” and individuals under age 25).
The Sample
The test subjects comprise 2,000 individuals between the ages of 25 and 58 who were receiving unemployment benefits from Kela (the Social Insurance Institution of Finland) as of November 2016. These subjects were randomly selected from a pool of about 175,000 individuals nationwide.
To avoid selection bias, participation in the experiment was mandatory for those selected.
Kela reports that, of those selected, 87% had been receiving the Labour Market Subsidy, while 13% had been receiving the Basic Unemployment Allowance. These programs provide taxable payments of €32.80 per day, five days per week, to those (and only to those) who are officially registered as unemployed job seekers. The benefits are subject to withdrawal if a recipient turns down an offer of work or training. Furthermore, if a recipient takes temporary or part-time employment, the amount of the benefits is decreased (as a general rule) by 50 cents per euro in earned income over €300 per month.
The Basic Income
Those included in the study population will be paid a monthly basic income of €560 for a period of two years. Unlike the Labour Market Subsidy and Basic Unemployment Allowance, the amount of the benefit does not decrease if the recipient earns additional income (regardless of the amount of earned income).
The basic income is not subject to tax. However, it is counted as income for the purpose of determining eligibility for additional social assistance.
Kela notes that there are some circumstances under which payment of the benefit might be terminated, such as moving abroad or entering military service.
Research Objectives
The Finnish government is interested in testing basic income as a way to remove work disincentives in the current welfare system as well as to reduce bureaucracy.
Kela plans a study of the trial in which the group of the 2,000 individuals receiving the basic income is compared with a control group consisting of all individuals in the original target population who were not selected to receive the benefit. The study will examine, for one, differences in employment rates between these groups.
Information about individuals’ employment status will be gathered through register data. Kela will be conducting no interviews or questionnaires of the test subjects, since such interventions have the potential to influence behavior. (Kela has also expressed concern about interviews with test subjects conducted by the media.)
It is possible that the experiment will be expanded in subsequent years–as research team leader Olli Kangas has recommended–to test different levels of basic income or different taxation models, or to include additional population groups. However, no firm plans have been made, and moving forward with any expansion is contingent on the amount of funding allocated to the experiment by the Finnish government.
More Information
The latest information about the study can be found on Kela’s “Basic Income Experiment 2017-2018” webpage: https://www.kela.fi/web/en/basic-income-experiment-2017-2018.
Thanks to Danny Pearlberg for reviewing this article.
Photo: Saariselkä, Finland CC BY 2.0 Ninara.
by BIEN | Jan 12, 2017 | News, Testimonies
Interview by Scott Jacobsen
*Conducted via email with minor edits.*
The economy has shifted into high gear for knowledge and ability, the currently labeled Knowledge Economy concomitant with the Fourth Industrial Revolution. How has this affected inequality based on standard metrics of knowledge and ability, such as credentials from post-secondary institutions in relevant disciplines?
It has pretty much always been the case that an education will help you get a better job, with better pay and conditions. This is still basically true, though we are seeing even amongst the highly educated longer periods of unemployment, a failure to get “good” jobs, and increasing insecurity in the work that they do get. Why? Because we just don’t need the same number of people employed in order to make the economy work. By all means, get a great education, but look at it as much as an investment in developing yourself so that you will have a meaningful life as in getting a good job. Because maybe there is no job to be got.
You have argued for some form of Universal Basic Income (UBI) as fundamental to the “progressive civic” and “economic reinvention.” What are other terms or phrases for ideas associated with, but not the same as, UBI? What characterizes them?
There are a number of forms of basic income, not all of them universal. A common one is the idea of a negative income tax. So instead of paying tax, you are paid an allowance, but as you move back into work, get a job, the amount you are paid tapers until finally, you are back to paying tax and must make sure you do your year end tax planning. The real difference between this and a UBI is that it tries to integrate the allowance with the labor market whereas UBI tries to establish an income independent of it.
What makes the UBI plan of action unique?
I guess at heart it is the way it has the potential to break the nexus between remuneration and a job. It recognizes that many of the things we do as citizens and individuals fall outside the normal parameters of paid work but that nonetheless those things we do — from caring for children to volunteering with community organizations or political parties or sports groups — are valuable to society and so it makes sense to recognize that contribution. It also empowers workers to be able to say no to crap jobs offered on a take-it-or-leave-it basis.
What are the most common success stories of UBI or similar programs? Any failures?
Every trial of UBI I know of has been successful in that it has dispelled one of the biggest myths about giving people a no-strings-attached income, namely, that people become lazy and do nothing. Every trial shows almost the exact opposite. One of the most comprehensive trials is the one I talk about in my book, run by UNICEF in India. But similar positive results have been shown in other trials, including the one in New Jersey run by the Nixon Administration.
What city seems the most progressive and forward-thinking in its implementation of UBI?
Hard to say. A number of cities, including Utrecht in the Netherlands, are running trials, as are a couple of cities in Canada and Finland. I think this is great. It builds momentum and adds to the data supporting implementation on a larger scale.
What country seems the most progressive and forward-thinking in its implementation of UBI?
I guess Finland, but I think there are some issues with the route they have decided to take. They have chosen to test a partial rather than a full version. Still, it is good to see a national government move in this direction, however tentatively.
Any advice for would-be policymakers or activists about strategies for the implementation of UBI?
Gather data through trials. With trials, implement them with populations that will receive conservative support. In Australia, that might include rural communities, including farmers. Don’t pitch it as “free money” because it isn’t. Don’t let that description stand. Educate people about the notion of universality and why, in a democracy, it is important that everyone is entitled to certain benefits. Reach out across ideological divides, right and left. Involve business in discussions. Lobby for corporations to set aside a percentage of stock to be held by the government as part of the common wealth. It’s going to be a hard sell, so the sooner you start, the better!
And this raises the major piece of advice I would give: don’t oversell the idea of Universal Basic Income. As important a tool as it is likely to be for dealing with technological unemployment, it will not by itself solve the various social and economic problems that beset us and we should be careful not to suggest that it will.
This is the Korean version of the text.
by Kate McFarland | Jan 12, 2017 | News
Economist Klaus Schwab, founder and executive chairman of the World Economic Forum, expressed optimism about unconditional basic income (bedingungsloses Grundeinkommen) in an interview with Hamburger Abendblatt, a daily newspaper in Hamburg, Germany. Schwab called the idea “basically plausibly” and predicted that discussion about it would develop over the next decade.
The Hamburger Abendblatt interview covered a range of topics related to globalization and digitalization. At one point, the reporters asked Schwab about his assessment of US President Donald Trump’s contention that he will bring back jobs from Asia and Mexico. In reply, Schwab pointed out that some industry might return to the US in the form of “digitized factories”.
Schwab then broached the idea of unconditional basic income in response to a follow-up question about the future of work: if industry is becoming digitized, what should be done for “those for whom there is no longer any work”?
In Switzerland, there was recently a referendum about the unconditional basic income. At least 23% of the citizens voted for it. Even I assent the idea for a basic income is basically plausible. Furthermore, I believe in 10 years the discussion about it will be far more ahead than now.
In response to a question about the effect of a basic income on attitudes toward work, Schwab asserts that a basic income could be seen as recognition for certain types of work, such as care work, that are important to society but currently paid relatively low wages:
I deny that people would then put their hands in their lap and sit lazily at home. A nurse in Germany with 2000 euros gross pay might today feel worn out. If, however, she were to receive a basic income, she might see it as recognition, and she would have a different basic attitude towards her work. In the future, if jobs are swept away due to digitalization, we need on the other hand a humanization of society. Industrial jobs will be gone, but there will be more social work to be done, like medical and health care.
The World Economic Forum is best known for its annual meeting in Davos, Switzerland. Held each year in January, the Davos meeting brings together approximately 2,500 invited guests, comprising top business executives, political leaders, and distinguished academics, for a series of panels and discussions of pressing global economic, political, and social issues.
The Davos meeting itself has already proven receptive to discussions of basic income. This year, the event will include a panel on basic income, featuring BIEN cofounder Guy Standing. Last year, the event held a forum on a “world without work”, in which Nobel laureate Sir Christopher Pissarides expressed support for a basic income guarantee, and was the site of the dancing “robots for basic income”.
Full interview with Schwab (in German):
Hannes Koch and Jörg Quoos “Schwab: ‘Gewinner müssen mit Verlierern solidarisch sein’,” Hamburger Abendblatt, January 9, 2017.
Translation assistance by Ronald Heinrich. Reviewed by Danny Pearlberg.
Photo CC BY-NC-SA 2.0 World Economic Forum
by Kate McFarland | Jan 11, 2017 | News
A panel discussion and Q&A on a universal basic income for the UK was held in Sheffield in November 2016. Watch the video below.
The Festival of Debate, hosted by the British nonprofit organization Opus Independents, is a series of panel discussions, debates, lectures, and artistic performances related to social, political, and economic issues in the UK. The series was launched prior to the general election in May 2015 and has been continued through 2016.
On November 23, 2016, the Festival of Debate held a two-hour Q&A and debate on universal basic income in Sheffield, England, held at the DIY arts space DINA. After opening statements, the floor was opened to questions, concerns, and criticisms from the audience.
Topics addressed include: “How could Britain fund a UBI?” “Why spend that money on UBI? Why not improving NHS, public services, job creation, etc?” “With automation, will there even be enough jobs in the future?” “How should we define ‘work’?” “How could we deal with freeloaders under the UBI?” And many others.
PANELISTS (viewers’ left to right):
• Simon Duffy, Director of the Centre for Welfare Reform and member of Basic Income UK.
• Andrew Gamble, Emeritus Professor of Politics at University of Cambridge.
• Kitty Stewart, Associate Professor of Social Policy at the London School of Economics and Research Associate at Centre for Analysis of Social Exclusion. (Stewart is the main critic of basic income on the panel.)
• Jonathan Bartley, Co-Leader of the UK Green Party, which endorses universal basic income as part of its platform. Replacing Bartley after about 1 hr 20 min (when Bartley leaves to catch a train) is another Green Party member, Laura Bannister, who recently founded World Basic Income.
Photo (Sheffield) CC BY-NC-ND 2.0 Paolo Margari
