Bonzer plan from Ritchie

The principle is simple. Every qualifying person, without exception, in the UK would be paid a basic income by the state. This would be designed to prevent poverty. So, it would be greater than the current inadequate old age pension, and replace it. And the payment would, when joined with the payment due for each child (who would have their own entitlement) ensure that no family would live in poverty (defined as being income of less than 60% of the median wage).

This would be financed by giving a much reduced tax personal allowance (maybe just £2,000) and more progressive tax rates than now ending at a top rate of maybe 70%. Do however remember that everyone, including those on these top rates of tax, would get this universal basic income, tax free.

60% of median income is £12,600 a year. There’s 65 million people in the country. This would cost £800 billion or so.

That’s larger than the current size of the entire government. It’s also about 50% of GDP just on its ownsome for this universal “basic” income.

Sorry, Britain just isn’t rich enough to pitch a universal benefit at this level.

Just as a very broad brush the govt currently spends around 40% of GDP. About half of this (very broad brush) is on government and its services etc, half on income redistribution. That half on income redistribution gets subsumed into the basic income, but that other half on government itself does not.

So, government now handles 70% of GDP. I can’t actually think of anywhere at all that has managed to tax that much of GDP.

Which brings us back to what sensible people like Chris Dillow have been pointing out. We can have a universal *basic* income out of roughly the tax take we’ve got, perhaps a small rise in it. But that basic income has to be *basic*, around the current pension guarantee.

How odd that an accountant cannot do maths. Or sums even.

49 thoughts on “Bonzer plan from Ritchie”

  1. Never mind dismissing it on a practical “how-much-it-costs” level.

    What it amounts to is the state takes all our money and we kiss their arse to get it back again minus what it will cost or how much they will put in their own pockets.

    No. Civil fucking war first.

  2. Could it ever be affordable given it’s based on a proportion of median wage rather than an absolute amount? Wouldn’t it be an incredible % of GPD however ‘rich’ the country became?

  3. The CIT has outlined a revenue neutral scheme and 24-65 year olds would get just over £70 a week, the same as Jobseeker’s allowance or Income Support (which would be abolished along with 10 or so other things). They’ve said it would have to be phased in too, to mitigate the consequences to the poorest households that would otherwise lose out.

  4. This isn’t a new idea from him in fairness – I think he mentions in the article that he and one of the ‘four horsemen of the apocalypse’ commentators who are his most loyal lickspittles, Howard Reed posited this two years ago.

    Anyone not banned by him care to ask him to posit who in his mind, qualfiies for the following category:

    ‘ Every qualifying person, without exception, in the UK’

    Would the Incoming refugees from Syria (for example) qualify in his eyes – what about those from Libya, Eritrea and Afghanistan?

    When I raised this back in the day – his response was that the eligibility would be based on a reciprocal arrangement with the immigrants’ countries of origin. When I pointed out this was unlikely to work with Poland, Lithuania and Slovakia let alone the countries mentioned above (I think I used Pakistan and Bangladesh in the original comments section) his response was (unsurprisingly) to call me a troll, invoke his comments policy and declare the discussion over. (In the eyes of TW’s resident troll Arny old shite this is ‘winning the debate’)

    Might be worth reminding him of this gaping hole in the theory if anyone has a few minutes to kill……

  5. “What it amounts to is the state takes all our money and we kiss their arse to get it back again minus what it will cost or how much they will put in their own pockets.”

    Not in Murphy’s view – he contends that all money is the governments, bar that portion that they deign to let us keep.

    Now, you may disagree with this…

  6. He is mental. What is the point of a basic income, a reduced tax allowance, and then lots of tax?

    Why not simply set the basic income at the level of the tax free allowance and only pay it out to people who don’t earn enough to pay tax?

  7. VP: I’m not sure that the status of immigrants is such a “gaping hole” in the principle of Basic Income as you suggest. The Citizens Income Trust, for example, has suggested that entitlement would be conditional on a minimum period of legal residency.

  8. Tim,

    60% of median income is £12,600 a year. There’s 65 million people in the country. This would cost £800 billion or so.

    To be fair to Murphy, the way I read this —

    And the payment would, when joined with the payment due for each child (who would have their own entitlement) ensure that no family would live in poverty (defined as being income of less than 60% of the median wage).

    — is as saying that no family will live in (that definition of) poverty precisely because they will, as families, be able to combine multiple payments. Which implies that he’s OK with individuals living in (that definition of) poverty under his scheme.

    Needs clarification.

  9. There is a great deal to be said for something like this. Remove all welfare (all forms of redistribution) and give everyone a basic income of around £3,000 per person per year. No more housing benefit, no jobseekers allowance, no child benefit. Tax rate of 30% (including NI) kicking in from the first pound earned but not levied on the basic income.

    People would then be far more incentivised to work. Politically difficult of course.

    This is a BiG, so Milton Friedman’s negative income tax updated.

  10. Given that “poverty” is defined by the left as excluding benefits, such “poverty” can never be eliminated.

    If you do include this new benefit, similarly “poverty can again never be eliminated.

    Sigh, always a job to do, eh?

  11. Diogenes,

    > What is the point of a basic income, a reduced tax allowance, and then lots of tax? … Why not simply set the basic income at the level of the tax free allowance and only pay it out to people who don’t earn enough to pay tax?

    The point of a basic income is that it removes all the disincentives to work. If everyone gets it regardless of income, then it’s always worth doing some job to get extra money. Your idea destroys that aspect of it.

  12. Ecks,

    > What it amounts to is the state takes all our money and we kiss their arse to get it back again minus what it will cost or how much they will put in their own pockets.

    Hardly. The state already take lots of our money (not all of it) and give some of it back to some of us. So no change there. One of the advantages of a basic income is precisely that it’s such a piece of piss to run (as long as you don’t let some fuckwit like Duncan Smith within a mile of it) that it massively decreases the amount deducted by the state to pay for the administration of the scheme.

    I do usually oppose the idea of taking money off people then giving it back to them — as with tax credits — because it’s obviously the absurdly expensive way of reaching the desired end. A basic income, however, should be cheap.

    I do wonder, though, whether Murphy has twigged that this scheme, done properly, would mean we could drastically cut the size of HMRC. I thought he wanted them to take on more staff?

  13. Sq2,

    “The point of a basic income is that it removes all the disincentives to work. If everyone gets it regardless of income, then it’s always worth doing some job to get extra money.”

    There are a lot of people who would gladly do f**k all if they could sit at home all day playing video games and breeding more workshy while raking in £140 a week. For those people, the basic income removes any incentive to work.

  14. Another hole in his plan and the same one that blights every socialist pie in the sky idea.

    This is to be funded by those higher taxes. But those higher taxes won’t bring in the money expected because people don’t like paying higher taxes. Bearing in mind how dependant we are on relatively few for such a huge chunk of income tax, how are they going to fill the hole when people stop bothering to earn or bugger off? And it won’t take many to go to make that hole.

  15. > There are a lot of people who would gladly do f**k all if they could sit at home all day playing video games and breeding more workshy while raking in £140 a week. For those people, the basic income removes any incentive to work.

    I wasn’t talking about incentives; I was talking about disincentives.

    The existence of a generous welfare state removes incentives to work, obviously. Some people will judge that the amount they can get on benefits is all they need. However, some people who are on benefits would like more money. And, for those people, the current system provides a disincentive: they work their arses off, they get a wage, and their benefits therefore get reduced so that the actual increase in their income is not worth the work they’ve put in. Basic income addresses that.

    The lack of (some) incentives exists either way. The disincentives are optional.

  16. Sq2, I thought the point was that the basic income is also paid to children, pensioners etc and all other benefits are cancelled. The incentive to work is that the tax threshold will probably be lower than it is today.

  17. I’m very much in favour of a Citizen’s income (or Negative income tax, which is broadly the same thing). The problem (as has been pointed out) is with the level provided. It has to be affordable, and it has to be enough to live on. Tying it to median wage sounds very unaffordable.

    @Andrew M: There are a lot of people who would gladly do f**k all if they could sit at home all day playing video games and breeding more workshy while raking in £140 a week. For those people, the basic income removes any incentive to work.

    I don’t have a problem with this – the end goal of production is consumption. I look forward to a world where we can all sit on our arses all day and do f*** all. Currently I want more than I can afford by staying on benefits (plus have issues with wanting to be self supporting etc) so I work. If I was handed enough to live the quality of life that I desire without having to work, I’d do so. I guess the problem with these people who do just live on benefits is that they don’t have enough ambition!

  18. Churm Rincewind

    ‘VP: I’m not sure that the status of immigrants is such a “gaping hole” in the principle of Basic Income as you suggest. The Citizens Income Trust, for example, has suggested that entitlement would be conditional on a minimum period of legal residency.’

    Fair point technically, however, given the furore that erupted with the sight of one drowned child on the Turkish coast, you don’t need to be Bastiat to imagine the second order consequences of this. Can you imagine the SJWs looking at children ‘unable to afford to eat’ – a scenario easily set up by gullible dupes in the Guardian, Huffington Post and elsewhere – and pressuring for these periods to be made shorter and shorter until they are abolished altogether.

    The concomitant accompaniment consequence would be people traffickers moving people en masse from the third world to claim the minimum income allowance and siphoning it off for their own gain – no doubt to be banked in a ‘secrecy jurisdiction’

    In addition, this would open up the prospect of enormous levels of fraud, especially from certain parts of the world (I am thinking the subcontinent in particular) – Given the furore around ‘institutional racism’ you’d have to be very optimistic to imagine the average DWP person querying seven members of the same family, 6 of whom were actually resident in Dhaka while only 1 was in London claiming the allowance….

  19. I think there is much in favour of a plan something like this, though the affordable amount is likely to be rather less than Ritchie proposes. A knock on consequence of this, though, is that it won’t be able to replace a system of social housing/housing benefit – so you can’t dismantle the whole benefits system and there will still be disincentives to work. (Also it seems reasonable that disabled people are deemed to have extra needs and potentially less social expectation that they should work… Which again creates incentives to be declared disabled).

    Tax credits as a form of negative income tax may be a more (politically) pragmatic approach than a Basic Income – interesting that the ASI, as I understand it, is quite accepting of them.

  20. No family would get less than 60% of the median wage. So a single mother with one child gets 60% of the median wage (£518 in 2014 so c£530 now). But the allowance is X per adult and Y per child, so a family with two adults and two children gets 120% of the median wage i.e. £33k – and that is just the transfer. Supposing, to make it simple, X=2Y then the total transfer is £1232bn or roughly 70% of GDP, so the tax rate that Murphy thinks will be his top rate has to be applied to everything and there is no money left over to pay for health, education, defence unless you are also taxing this transfer at 70% (which should just about cover government expenditure plus the immense cost of transferring 70% of GDP from one pocket to another via a weekly paym,ent to every single person in the country). At which point the value of the guaranteed income comes down to 18% of median wage for a family or less than “the current inadequate state pension” for a pensioner.

  21. VP

    I think your many comments about the fat fvcker are spot on: he preens himself in his imagined genius while being in utter blissful ignorance about second and greater order consequences of his ludicrous proposals.

    I am reminded of an amusing youtube video I saw of a car thief throwing a rock at a car windscreen which rebounded off his head, then did the same again only harder with a similar consequence only this time it pole-axed him onto the floor spark out.

    I wonder how Murphy has managed to survive to the age he has. He’s defying the laws of nature.

  22. Diogenes,

    > Sq2, I thought the point was that the basic income is also paid to children, pensioners etc and all other benefits are cancelled.

    Yes, exactly.

    VP,

    > Can you imagine the SJWs looking at children ‘unable to afford to eat’ – a scenario easily set up by gullible dupes in the Guardian, Huffington Post and elsewhere – and pressuring for these periods to be made shorter and shorter until they are abolished altogether.

    How is this more of a problem with the basic income than with the current benefits system?

    77,

    > No family would get less than 60% of the median wage. So a single mother with one child gets 60% of the median wage (£518 in 2014 so c£530 now). But the allowance is X per adult and Y per child, so a family with two adults and two children gets 120% of the median wage

    Much as I don’t want to defend Murphy, sorry, no, this is not what he said at all.

    And the payment would, when joined with the payment due for each child (who would have their own entitlement) ensure that no family would live in poverty (defined as being income of less than 60% of the median wage).

    He quite explicitly said that no family would get less than 60% of the median wage because parents’ and children’s allowances would be added together, not that each family member would get median wage.

    As I said earlier, that does seem to imply that he’s OK with individuals being below the median wage, which would be surprising.

  23. Families are nice things and all that, but why all the sycophantic fawning over them? Families make up less than half of the population. When is somebody going to stand up and demand that non-familes stop being screwed by the system? Why should I have to sprog before the system gives me enough money to stay alive?

  24. The problem is that by definition 50% of whatever entity we are talking about – either individuals or families – must be below the median. Obviously Murph is easily confused but it looks as if his aim is that families should all get 60% of the median individual income. However, this in turn changes the median and…. Doesn’t it all just disappear up its own backside?

  25. @ S2
    Please re-read what I wrote.
    I quoted Murphy, then pointed that his formula meant that a small family would get 60% of the median wage and one double that size would get 120%. I nowhere say that each individual gets median wage.
    A single-parent family is, by definition, a family. Murphy seems not to have heard of “equivalised family incomes” http://www.ons.gov.uk/ons/dcp171766_285295.pdf.
    I don’t think a single-parent family with one child needs £16k but I am certain that the standard two-parent, two-chioldren unit does not *need* £33k if it is managing quite adequately on £25k at the moment.

  26. 77,

    Oops, yes, sorry, I see now. I misinterpreted your “a single mother with one child gets 60% of the median wage” as meaning that the single mother (who has one child) gets 60%, not that the two of them added together do. Anyway, I take it back, then.

    Anyway, it’s worse than you think.

    > Supposing, to make it simple, X=2Y

    I’m pretty sure, from what he says, that X=Y.

  27. Diogenes – median income needn’t change if it’s only people below median income who are affected.

    If 50% of people are on £25k or more, then that stays the median whether the other 50% are getting nothing or getting £15k apiece.

    If we were talking about the mean then yes, life might get complicated. Unless you look at post-tax income, of course, in which case you just need to tax rich people more to bring the mean down again.

  28. As the Adam Smith Institute said yesterday, a Basic Income is a good idea. It should be implemented gradually. A good place to start would be replacing jobseekers allowance (£2500/year) with Citizen’s Income. This would be cheaper than you think, given that pensioners get more than that so they wouldn’t get any extra, and people on jobseekers allowance already get it so they wouldn’t get any extra, and they wouldn’t have to go to Jobcentres to get it.

  29. Other than immigrants, what about those that emigrate or work abroad?
    If you pay into the system for 20 odd years or more and move abroad them currently if you still top up your NI contributions you can receive the state pension, so entitlement may have to be linked to more than just residency, especially given EU movement rights. What if you spend most of 20 years working in Europe then retire back in the UK?

  30. “I wasn’t talking about incentives; I was talking about disincentives.”

    CBI provides an incentive not to work, or a disincentive to work. Meanwhile, the current benefit system provides a disincentive to work, or an incentive not to work.

    Surely, the difference is not incentives vs disincentives, but the type of (dis)incentives involved.

  31. BNIC

    Very good point – I must confess I had not thought of that angle – and I very much doubt Murphy, arguably one of the most ignorant people in the public eye when it comes to the concept of second order consequences, has either…..

  32. Charles Murray wrote a decent little book about this ages ago – IN OUR HANDS. A bit more cogent than this stupid fucker, but then what does one expect.

  33. Oh, its stupider than you think Tim

    . . . ensure that no family would live in poverty (defined as being income of less than 60% of the median wage).

    Median is the point where half the set is above it, and half below.

    Raise the bottom of this set and you raise the median, raising the ‘60% of median’ point, requiring a rise in benefits, raising the median again, requiring a yet another rise in benefits.

    Essentially until everyone in the country has exactly the same income.

    https://www.youtube.com/watch?v=rv5t6rC6yvg

  34. One of the worst things about Murph is that he thinks that every idea that flits through his alarmingly stupid head is original and has never occurred to anybody else. He must have a knowledge base of precisely zero – or else he is a total liar. Just about ev erything has been thought of before…and in many cases it has even been implemented and somethimes abandoned. But he doesn’t know any of this. He fails to acknowledge anyone unless they are on his speed-dial.

  35. it’s a lousy idea.

    Following on from Theo, sure this might solve a problem with those who currently want to work more but risk losing benefit (high marginal rates).

    But on the other side of the coin are far larger numbers of people who would never want to claim benefit, and (culturally) would always work and try to support themselves.

    Some of those people (on lower salaries) would now be offered the chance to work less for the same pay.

    Basic psychology should dictate that the total net effect in the economy would be less work being done. Why do that? It would be pointless / counter productive.

  36. And everyone who distributes the money gets a dacha on the Black Sea.

    “The principle is simple. Every qualifying person, without exception, in the UK would be paid a basic income by the state.This would be designed to prevent poverty.”

    The principle is simple. People will quit working, and the State will have no money to pay out. For most people the incremental value of actually working will be far too small to incent them to actually work.

  37. It doesn’t matter if the feckless want to lie idle for £X a week, it matters what X is. If I have a moderate tax bill, that others want to do nowt for almost nowt is not a problem.

    I suspect that to make anything like this work, there would have to be a wholesale transport of the urban poor out of London. Not necessarily a bad thing…

  38. Maybe Murphy is just lazy and while he knows (or should know) that there’s plenty of research and writings on a subject including numbers he can’t be bothered to research the subject.
    Or maybe it just would slow down his rate of churning out blog postings if he actually had to try and gather some information.

  39. I imagine this would have an impact on minimum wages, if everyone has a garunteed income would the minimum wage employers pay just be the differential between that and the current minimum wage, so costs reduced for business so profits increase and tax take (or employ more people to provide a better service).
    Alternatively what would be the minimum “markup” be that people would want to go to work.
    Sounds like something of a balancing act to get this right.

  40. This idea of a basic income will be back. Setting it at say 4k a year would eliminate Income Support, JSA most of ESA except support component. It would get rid of student maintenance grants I think, and a layer of DWP staff checking claimants are ‘actively seeking work’ and who could then do other stuff like answering the ‘phones for HMRC in the next office block. Starting rate of tax could be 25%. No tax free allowance.
    Only adult UK nationals resident in the UK get it. For everyone else they get a tax free allowance of 16k of UK income to compensate, and anyone anywhere in the world can have free movement rights to the UK and a visa stamped NRTPF.

    That’s one outline model.

    What we don’t want is the Murphy modelling this. His schema with Reid abolishes all disability related benefits and encourages the break-up of families ( 190/week single, 290/week couples ) Phuck that.

  41. Diogenes

    I think it’s a combination of a lack of knowledge, total unwillingness to educate himself and extreme belief in his on omniscience which make him appear such a complete halfwit. Truly when you think he has descended beyond self-parody he’ll come through once again…..

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