by Karl Widerquist | Sep 5, 2020 | Opinion, The Indepentarian
Originally published by Open Democracy. 14 August 2020, under the title, “Basic income could virtually eliminate poverty in the United Kingdom at a cost of £67 billion per year”
Universal Basic Income (UBI) – a policy that would provide a regular, cash income to every citizen without means test or work requirement – is surprisingly inexpensive. The United Kingdom could introduce a full UBI (one large enough to live on) for just £67 billion per year or 3.4% of Gross Domestic Product (GDP), according to a study Georg Arendt and I recently completed.
Attention to UBI in the United Kingdom has increased substantially as the Scottish Parliament discusses experimenting with it and as policymakers discuss it as a temporary measure to boost the economy during the Covid-19 outbreak. While a pilot project can examine some of the effects of UBI, this kind of study is necessary to determine how much it is likely to cost.
The cost of UBI is often exaggerated because many authors focus on its ‘gross cost’: the size of the UBI times the population. The gross cost of UBI is not a cost in any meaningful sense, because it ignores the great extent to which the new taxes people pay to support UBI are cancelled out by new money they receive in UBI. The real cost of UBI is the ‘net cost’ – the amount people receive or pay after subtracting the amount they pay themselves. The net cost of a full UBI for the UK is only about one-third its gross cost.
Our study is based on data from the 2014/15 UK Family Resource Survey. It uses microsimulation analysis from the European Union’s EUROMOD Tax-Benefit Model to subtract out the amount people pay themselves and determine the cost of a roughly poverty-level UBI of £7,706 per adult and £3,853 per child.
Key findings of the study include:
- The cost of a full UBI for the United Kingdom is £67 billion per year or about 3.4% of GDP.
- This figure is the net cost – the real cost – of a UBI scheme of £7,706 for adults and £3,853 for children. This assumes a 50% income tax rate for net beneficiaries integrated into the UK tax-and-benefit system in a way that ensures the majority of UK citizens benefit from the transition and no one in the bottom 20% of the distribution of income is financially harmed by the loss of programmes replaced by the UBI. Although net beneficiaries’ tax rate increases, they receive more in UBI than they pay in additional taxes.
- This UBI scheme adds only 39% to the cost of the UK’s existing benefits system (not including the spending on the National Health Service), and an 8.7% increase in the UK’s total government spending (£67/£771 billion).
- This UBI scheme is a net financial benefit to most households in the lower 70% of the UK income distribution, making it an effective wage subsidy (or tax cut) for millions of workers and their families.
- The average benefit over the existing system for each net-beneficiary family is £4,056.
- Under this scheme, the percent of UK families with incomes below the current official poverty line would drop from 16% to 4% and poverty among children and the elderly would all but disappear.
- The net cost of this UBI scheme – the gross cost minus the amount people pay to themselves (£155 billion), and ignoring the costs and benefits of integrating the UBI into the existing tax and benefit system – is about one-third (35.4%) of its often-mentioned but not very meaningful gross cost (£438 billion).
- Also subtracting the cost of existing programmes that can be replaced by UBI without financially harming anyone in the bottom 20% of the income distribution makes the net cost only about 15% of the programme’s gross cost.
- This UBI system eliminates absolute poverty (e.g. as it is measured in the United States) from the UK.
- According to a 2015 piece in the Guardian, the UK currently spends over £93 billion per year on corporate subsidies and tax breaks. If so, the UK could entirely fund a UBI by eliminating corporate subsidies and tax loopholes. No increase in individual taxes would be necessary, and the government would still have £26 billion available for corporate subsidies.
- Countries with similar per capita income and similar tax-and-benefit systems should expect the cost of UBI to be a similar percentage of their GDP.
Those remaining in poverty under the scheme would be much closer to the poverty line than they are now and would have enough to get by in combination with other government payments and services. Therefore, we conclude that a UBI of this size would eliminate absolute poverty in the United Kingdom, a powerful result for less money than Parliament currently spends on corporate subsidies and tax breaks.
Download the full report
by Gery Petrova | Aug 3, 2020 | News, Opinion
The EU Commission has said from the 25th September 2020 signatures can be collected from EU residents in connection with a new European Citizens Initiative. If the European UBI family succeeds in gathering 1 000 000 signatures, divided among a minimum of seven countries, then ECI delegates will be able to present a proposal to the European Commission which, if approved, would hopefully convince EU governments to start paying Basic Incomes to all of their citizens.
Bulgaria suffers from a number of problems, and in particular population loss and economically active citizens leave the country for better opportunities elsewhere. Angel Petrov writes:
The population decline carries long-term economic costs. Over time, a shrinking workforce becomes unattractive to investors and unable to subsidise the pension and healthcare needs of an ageing population.
Poverty and inequality are significant problems in Bulgaria. Bulgarian people currently receive the lowest income in the European Union while the cost of living is increasing. This is paradoxically occurring during 25 years of steady rise in productivity and mostly rising GDP. The Gini coefficient (2019) is 40.8 and rising.
The Corona crisis measures
All government ‘aid’ described below is highly bureaucratised and full of conditions, and in addition the funds are often paid late due to the complicated and sluggish administrative processes citizens are subjected to. The aid consists of:
- Cash payments of €192 only for families with 14 year old children for the duration of the state of emergency (2 or 3 months)
- over 2 months the unemployment fund will pay 60% of the income of the employees from sectors most heavily influenced by the COVID-19 crisis for up to three months. In addition to employers in sectors where operations have been suspended as a result of the social distancing measures (tourism, sports, culture, etc.), any other employer that can prove a 20% y/y drop in revenue in March is also eligible for the 60% salary subsidy.
- The measure has been extended until 30th of September 2020.
This is the main stimulus. However, the working population has doubts that the administrative process will be efficient enough (it is expected that most companies will receive the aid in October and November 2020). Furthermore, many small and medium businesses don’t have the means to pay 40% of the salaries. Some critics see this policy as supporting big companies which will absorb the unemployment caused by the lack of help for small and medium companies.
- To date (1st August 2020) 129 million leva (64,5 million EUR) have been distributed to 8400 employers, that is 13% of the 1 billion leva (511 million EUR) allocated by the government. Close to 35% from these people have taken aid only for one month.
- On the 10th of April the Bulgarian Central Bank enacted a moratorium on debt repayments. Overall the number of people who have debts in Bulgaria is almost 3 million. By the 10th of May, 102 000 have applied for temporary cancellation on payments (usually 6 months) towards their loans, and 80 300 have been approved. Changes in these numbers are expected.
- The processes are not transparent, efficient and timely
- The measures are conditional and selective and not universal
- Most of the governments support is expressed in loans rather than direct payments
In conclusion the measures so far have the potential to create another wave of workforce immigration towards Western countries, weakening further the economic future of Bulgaria because:
The case for a UBI emergency pilot in Bulgaria
The unnecessary agony of the Bulgarian nature and people can be prevented, and UBI is a key step that can be collectively taken to compensate over three generations who have given their talents, energy and time towards creating shared wealth spreading beyond the country borders. It’s time for common dividends to be distributed to their rightful owners.
Bulgarian UBI advocates are working hard to unite the people around the idea that once social and economic stability is achieved through unconditional payments of around 1000lv (500 EUR) Bulgarians will have the time and capacity to build a new system that meets their needs and corresponds to a consensus based on democratic values. Due to the inflexibility of the national currency (it is tied to the euro), the dominant proposal on how to implement Basic Income in Bulgaria at the moment is by restructuring the tax system and national budget in a way that will pay the UBI bill with the collection of Value Added Taxes and Excise Taxes paid by the sellers. The idea is for every Bulgarian citizen with an active address registration to own a bank card issued by the Bulgarian Central Bank which will serve people as a payment method to be used to receive a Basic Income that would meet basic needs like rent, utility bills, food, clothes etc.
A UBI emergency pilot hosted in Bulgaria would not a utopia, and the EU could rescue its reputation by supporting it. It is an opportunity to trial universal basic income on a national level using the Bulgarian state financial infrastructure to distribute funds to the people.
The EU Commission would also have a vested interest in embracing the project, as the positive results would increase cohesion and trust, and would give hope to other states that the European experiment is not another way to practice concentration of power.
It’s time for evolution not only for Bulgaria but also for the EU. UBI is a win-win solution and will literally bring Bulgaria back to life. People outside long to return to their roots and work for the wellbeing of their parents and the next generations. The EU owes this to the people of Bulgaria and Bulgarians owe it to themselves, their ancestors, the children, and the European natural environment that happens to be surrounded by Bulgarian borders. We have too much to gain and nothing to lose.
———————————————————————————————————————
RESOURCES:
More details on COVID related government aid.
Interview (Georgi Nedelchev, in Bulgarian)
UBI Project Paper (in Bulgarian)
Videos:
Discussion on Universal Basic Income (in Bulgarian)
Is UBI possible? Discussion (in Bulgarian)
UBI and Poverty (in Bulgarian)
by Marc de Basquiat | Aug 2, 2020 | French
Par Marc de Basquiat, 1er Mai 2020
Traduction par Christine Cayré
On peut lire l’article par Marc de Basquiat ici.
Le 30 Avril 2020, les six groupes politiques se sont réunis en vidéo conférence pour délibérer sur un rapport très attendu. Depuis 2017, un comité ad hoc a étudié les avantages potentiels d’un Revenu de Base en Corse. Ce rapport a été présenté par Jean-Guy Talamoni, président de l’Assemblée de Corse, qui s’est pleinement impliqué dans le travail de préparation.
Le mécanisme proposé par ce rapport est inspiré de la proposition de Tony Atkinson « Impôt forfaitaire et revenu de base » *. Depuis 2019 l’administration fiscale française est en mesure de connaître le revenu mensuel de pratiquement tous les individus. A partir de ces données, un impôt mensuel est calculé sur la base d’une formule personnalisée. Pour la majorité des 20 % des revenus les plus élevés, le calcul de l’impôt suit une règle stricte : 30% du revenu moins 498.52 euros par personne (par conséquent 498.52 pour une personne seule et 997.04 pour un couple).
En fait, le montant octroyé aux personnes les plus désavantagées par la société – le Revenu de Solidarité Active – est quasiment équivalent : 497.01 pour une personne seule, souvent complété par l’allocation logement et l’allocation familiale. La proposition portée par l’assemblée de Corse consiste en un impôt négatif mensuel sur le revenu qui vise à rapprocher le calcul de l’impôt sur le revenu avec les allocations versées aux pauvres.
Chaque mois, l’administration fiscale calculerait la différence entre un revenu de base théorique de 500 euros pour chaque adulte et 30% du revenu perçu lors du mois précédent. Ainsi toutes les personnes dont le salaire est inférieur à 1 667 euros recevraient 500 euros, moins le montant de l’impôt, via un virement sur leur compte bancaire. Ceux percevant des revenus supérieurs verseraient leur impôt défalqué du montant de 500 euros.
L’étape suivante consiste à obtenir le soutien du Ministère des Finances français pour déployer l’expérimentation du calcul mensuel des impôts en Corse.
Depuis de nombreuses années, des millions de touristes se rendent en Corse pour ses paysages singuliers, ses plages et ses montagnes, sa culture et son histoire. L’île de Napoléon Bonaparte continuera c’est certain d’accueillir des visiteurs et pourra peut-être aussi s’enorgueillir prochainement d’être une pionnière en Europe pour l’expérimentation du premier authentique impôt négatif entièrement financé associé à un revenu de base théorique.
Lire dans son intégralité la présentation des conclusions des travaux de la commission ad hoc relative à l’étude de la faisabilité d’un revenu de base et à la possibilité d’en expérimenter la mise en œuvre en Corse.
* A.B. Atkinson, Public Economics in Action: The Basic Income/Flat Tax Proposal, Oxford: Clarendon Press, 1995
Marc de Basquiat préside l’Association Française pour l’Instauration d’un Revenu d’Existence (AIRE) et il est membre à vie du BIEN.
On peut lire cet article en anglais ici
by Malcolm Torry | Jul 31, 2020 | News
The Basic Income Lab at the University of Stanford has published a useful overview report, What we know about Universal Basic Income: A cross-synthesis of reviews
This report is structured as follows. First, it provides an overview of the reviews. Then it synthesizes the basis of evidence (e.g., experiments, policies, and programs) that has been used to arrive at conclusions about UBI as well as the types of outcomes that have been of interest to researchers and the evidence that exists for these outcomes. The final section highlights gaps in the current state of the evidence and where future research is required.
Readers might wish to be aware of how definitions are used in this report. ‘UBI’ means ‘a cash transfer given to all members of a community on a recurrent basis regardless of income level and with no strings attached’; and ‘UBI-type’ means a cash benefit with some of the characteristics of a Basic Income, but not others. Particular care needs to be taken over the word ‘unconditional’. In this report, ‘unconditional’ can mean that receipt of the income is conditional on having a low income, but is not conditional in any other way.
by Malcolm Torry | Jul 29, 2020 | Opinion
The Canadian Sayout newsletter has printed an article about Basic Income:
… At present government is paying out vast sums of money. In effect, we have a new and large-scale experiment by government in directly providing people with incomes. This gives us some indication
of how a guaranteed income plan could work. Such a plan would be universal. And, as is now being demonstrated, it actually can be done.
A guaranteed, universal, and livable income programme would be transformative for our society. It would directly address income inequality. It would diminish and possibly eliminate poverty once and for all. …
The author, Robyn Peterson, has clarified his use of terms in the article:
a proper BI should be unconditional with the same amount being paid to every citizen or legal resident. This would avoid the somewhat cumbersome issue of establishing who should benefit and by how much, with a progressive income tax system evening things out.
