How much poorer would the rich need to be to provide a basic minimum income for everyone? Robin Devany
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I doubt whether they have to be poorer at all. Putting more money into the hands of the poor will increase their ability to spend. It is highly unlikely that any increase in income will increase the level of savings, and the money will find its way into the hands of the rich as it circulates around the economy. The government could fund the initial expenditure through myriad of ways including selling bonds. Any initial taxation of the rich will soon be offset by the growth in the economy. Duncan Edwards
The answer is not a lot at all. It could be part funded from a diverse range of taxes (consumption, pollution, corporation, capital gains, financial transactions, income) and from savings from reducing some inefficient means tested benefits. The main source could be from currency issuance or equivalent, and I recommend reading The Deficit Myth by Stephanie Kelton on how this is possible without spiralling inflation. Also, the amount of economic activity this would stimulate would enrich everyone and reduce many social costs. Dean Pearson, @dean_econ
This question misses the point. Money is a measure of power. Do we want to live in a democratic state? If so we need equality. Alessandro Carabaich
Proposals for universal basic income (UBI) can be expensive, but not all require a large tax burden. The Green party’s 2015 manifesto had plans for a £80 a week UBI policy, completely funded by reform of the benefits system – requiring no more tax. Other proposals suggest minor tax increases. BasicIncome.org says UBI would account for 3.4% of GDP. Currently, the UK’s tax intake is 35% of GDP, compared with an EU average of 40%. Putting up tax by 5% points of GDP could raise a significant amount to fund a UBI, and would be done on the top 30% of earners. Ruby Herbert
The Liberal Democrats are considering a UBI policy and have produced a relevant policy paper for consultation. The answer indicated that for a modest £75 a week UBI not only the rich but almost everyone over the median income would be poorer (if sometimes only by a few pounds). Paul Chandler
Depends on who one defines as rich. In cities such as Vancouver, Canada, seniors who bought a house 50-60 years ago for peanuts, find themselves wealthy on paper, however inadequate their pension may be. Anthony Walter, British Columbia, Canada
Nothing at all, to be exact. It could be covered simply by ensuring corporations paid about 1% more of the taxes they are currently avoiding. They wouldn’t even notice, and no individual would need to be taxed at all. lisamarie3
Taking away the logistics, which is obviously more complicated, and just focusing on the money: when you consider it’s believed it would cost about $30bn a year to end world hunger, and last year in the US alone the combined net worth of the top 1% (assuming by rich you mean the top 1%) was $34tn, then you’d imagine it wouldn’t cost much at all to give everyone a basic income. Cropolite
It is impossible under a capitalist system to provide for everyone, whether through a basic income or otherwise. The system is designed to make that impossible. Even if you did find a way to get the super-rich to give up 1% of the income from their wealth to provide a basic income for everybody, inflation would make it worthless. If you want to end abject poverty, you must first end capitalism. There is no other way. ReidMalenfant
Having a basic income is not really the problem. The problem is being able to give satisfaction and meaning to people’s lives that would be more enjoyable and therefore preferable than the prospect of the Willy Wonka ticket. This is not to defend inequality. Simply that many political philosophies begin and end with the redistribution of resources and wealth. They imagine that if such a thing were to occur, all human problems would then evaporate. thegreatfatsby
The rich wouldn’t have to become poorer, just stop becoming even richer. Grabbing some numbers from a CNBC article, we learn that in the US the top 1% gained about $6tn more than they had last year. Share that equally among the 99% and it’s an average of $17,000 a person. If you wanted, you could weight the distribution so the poorer half could get $25,000 and the richer half only $12,000. That’s plenty of money to make a massive difference in everyone’s lives (and that’s everyone including children) and the 1% aren’t made any poorer, they’re just giving up the 4% growth in wealth they experienced. A similar result could be had with a few percent tax on wealth (if they could actually be made to pay it). mlehane
Provision of a “basic minimum income” would rely on creating a sustainable basis for redistribution of wealth/income from the rich. OP asks “how much poorer they’d need to be”, which implies looking at a reduction in their overall wealth, not simply addressing how their incomes are taxed.
The problem is that a redistribution of existing wealth/assets might just about be achievable as a one-off (eg announced without notice in order to prevent reactive asset-shifting), but otherwise it could encourage the wealthy to relocate to low-tax territories. Look at Sir Jim Ratcliffe, “Britain’s richest person relocates to Monaco”. Per the Guardian, prior to moving he was paying £110m a year in taxes to HMRC. That’s now zero.
It’s an ugly practicality, but any UK government has to consider how to retain the golden gooses who make high net contributions to the treasury, because if the tax regime becomes “punitive” then they’ll just depart. Their capital and assets tend to be relatively easy to relocate, and there are plenty of countries ready to welcome them.
If the rich take off en masse, then using them to fund a “basic minimum income” on an ongoing basis is no longer viable. They’re not in the UK to tax.
The UK’s 10 richest people have a combined fortune of about £130bn – but almost all of them are dual-nationality and you’d have to seriously wonder how many of them would rather hold on to their UK passport than their fortunes. But even if you took their entire wealth from them … it would amount to a one-off £1,850 for each person in the UK. Then where do you turn for the next month’s payment?
Less likely to move in order to shelter assets – and indeed easier to tax – are those who are relatively rich because they are high-income. Taxing income and employment (via NICs) provides a steady stream of revenue for the government. But how many people becoming “rich” through earning regular income are there? Really not many – only 1% of Britons earn more than £100,000 a year and, due to the high cost of housing in London and south-east England, where most of them are based, a lot of them are heavily indebted by mortgages. There are practical limits to what can be achieved by squeezing them.
The brutal truth is that the UK economy isn’t in great shape and exit from the EU has hurt it more than benefited it. Look at our place in the world chart for GDP per capital on a PPP basis. We’re down at No 37. Nowhere near the Top 10, where – surprise, surprise – territories that offer low/no tax residency for billionaires dominate. But crucially, we are also a long way behind countries such as Norway that are able to afford a much more comprehensive and generous financial offer to their citizens.
If the UK wants to work towards the kind of universal financial security implied by a “basic minimum income”, taxing the rich isn’t going to cut it on its own. Certainly not as a one-off measure. Taxes would need to rise for almost everyone.
There are things that can and should be done – aligning capital gains with income taxes, tackling profit-shifting, rewriting tax laws so that you can’t just relocate to Monaco before realising all your gains (eg sale of business) built up in the UK over decades, taxing inheritances and estates and “gifts” so that wealth can’t be protected within families for centuries (!) at a time. But just as important is work done to make the UK economy productive. And to do that it needs to incentivise innovation and long-term investment here – which then also has to be factored into the tax system.
For now, I’m afraid that it is a fiction that Britain can afford to pay everyone a minimum income when, at present, virtually all regions are already net beneficiaries of transfers from London/south-east and couldn’t afford to sustain NHS or schools in their areas if funded by local incomes/wealth. We are very much a second-tier nation in terms of our prosperity and we have to sort that out through improvements in education and overall economic revival. justonetom
I’m not sure that simply transfering income from the rich to the poor is the way to alleviate poverty. A better way, I think, is to reduce the overheads of the poor, by for instance tackling the housing crisis and with it the energy crisis. We need to build more carbon-neutral homes for rent that people on low incomes can afford, and upgrade our existing housing stock so that it is better insulated and therefore cheaper to heat. I don’t know what it would cost to insulate every home in the country to grade C or above or build enough to wipe out housing waiting lists, but I think a tax on wealth could make a big contribution to funding that. One other major source of cost to the poor is ill health. We need to put the NHS back on its feet so that people do not lose years of income because they are stuck on waiting lists. Again, here, I think wealth taxes are the way to go to give the NHS the boost it needs. mrsdoom
First of all, on idea behind the UBI is that it would replace all other benefits, including state pensions, unless you elected to pay into one. The theory is there would be a huge saving in admin. You would get your UBI when you were 18 till you died, and that would be it. For many people, then, the UBI would be less than the state benefit they get now. Of course, if there was a UBI and people got benefits on top of it, the outcry from the right would be unimaginable.
Secondly, as has been said before, who’s rich? Only about 10% of the population earn more than £40,000 a year, and after taxes and pension payment etc, that £40,000 equals a take home of less than £600 a week. Hardly Rockefeller.
Thirdly, if we assume a UBI is what you need to stay alive and healthy – rent on a bedsit, food and power, say, that’s going to vary between perhaps £500 in some areas of the north to more than £1,000 in London. Who is going to sort that out?
And finally, in our culture, what’s realistically going to happen if a lot of working couples are a £1,000 better off every month? House prices will skyrocket, that’s what.
I do believe a UBI is inevitable and necessary, but there are a lot of bugs to be ironed out. MysticMutt
The question seems to assume that there is a finite amount of wealth available for everyone, whereas it is more likely that liberating the full human potential of the poor via a basic income, and limiting the anti-democratic effects of allowing society to harbour an excessively wealthy class, would make everyone, on average, far better off. David Le Page, Cape Town