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Magneto
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05 Oct 2013, 9:36 am

Reuters article on the Swiss proposal.

They could probably make it work, if they replace all non-core functions (protection and defence) with it.

Citizens incomes are a step in the right direction though. Sort of like methadone for statists. It gets people back into the mode of being responsible for themselves.

It wouldn't even be particularly hard to implement. To use a hypothetical UK example, and merging national insurance with income tax for simplicity into one 25% tax on income above £10k/year, we could manage a citizens income of £8k/person whilst abolishing the deficit (this is assuming it replaces all non-core functions; perhaps let the counties set a sales tax to continue to run their services?). Up until £42k/year gross income (ex. citizens income), they would be paying out less in tax than they would be taking in, so you simply deduct the two - they don't pay actually pay any tax until £42k/year, it's just taken out of their citizens income. So if they're earning £20k/year, they would be receiving a citizens income of £5.5k/year, 8-0.25(20-10). The general formula, citizens income = 8-0.25(income-10). Or, to put that in terms of tax, tax = 0.25(income-10)-8, so below £42k/year they'll have a negative income tax.

I would suggest that, for children, it be divided in half - half to the caregivers, and half into a savings account accessible upon the age of majority. If it compounds in real terms at 2% a year for 18 years, then it would be a total of £87k to spend on something such as a house, university etc.

For a family of 4, then, two out of work parents and two children, they would be receiving £24k/year. Setting healthcare @ 2k/year/person, and education at £3k/year/person, they would have £10k left over. Of course, under a free market, they wouldn't be paying that much for healthcare and education, but we'll go with the government figures for the time being. Probably 60% of that would go on housing, leaving them with £4k/year for utilities, food, clothing and other expenses. Utilities should come to under $2k/year, but that only leaves $2k/year for food and other expenses.,,

Fortunately, that's assuming none of them have any work, a very unlikely assumption. Even if they can only pick up a few grand a year worth of work, it's going to tip them back into the black. One parent, working minimum wage full time, would be earning around £12k/year (I think it was the Rowntree foundation that gave that figure). £14k/year for a family of four, with one parent working, housing and utilities already paid for, is quite a lot really.

Of course, this requires that people actually be responsible. But if they're not, it's their own fault. It's no-one else's job to be responsible on their behalf.


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zacb
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05 Oct 2013, 10:34 am

Why not just exempt X or Y amount of income from the income tax?



Magneto
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05 Oct 2013, 10:40 am

Because it's politically unten- ahem. Because it doesn't give a flat baseline income - if you're earning £5k/year, that's all you would get, as opposed to £13k/year. All your suggestion does is raise the income tax threshold significantly, which wouldn't help people anywhere near as much...


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zacb
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05 Oct 2013, 10:53 am

Think about this for a moment. They will probably be taxed on their income, and some of it will be given backed to them. Why not exempt it up to 36,000? That way, you need no worry about moral hazard, and people would be more likely to put it into things you need. It would have the same net effect.



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05 Oct 2013, 11:26 am

Did you even read my post...?


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zacb
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05 Oct 2013, 11:30 am

I understand. If you were to replace the welfare system or implement this instead of a living wage, it would be a step in the right direction. Milton Friedman proposed a system of giving out hard spendable cash instead of "government vouchers". But yes I did hear you. I was just giving you a tad constructive criticism, even if I do disagree. Are you in Switzerland btw?



Master_Pedant
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05 Oct 2013, 11:40 am

zacb wrote:
Think about this for a moment. They will probably be taxed on their income, and some of it will be given backed to them. Why not exempt it up to 36,000? That way, you need no worry about moral hazard, and people would be more likely to put it into things you need. It would have the same net effect.


Are you proposing tax-exemptions for the first $36,000 (or whatever units) of income in addition to the basic (or citizen's) income?


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zacb
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05 Oct 2013, 12:01 pm

Master_Pedant wrote:
zacb wrote:
Think about this for a moment. They will probably be taxed on their income, and some of it will be given backed to them. Why not exempt it up to 36,000? That way, you need no worry about moral hazard, and people would be more likely to put it into things you need. It would have the same net effect.


Are you proposing tax-exemptions for the first $36,000 (or whatever units) of income in addition to the basic (or citizen's) income?


If my understanding of costs are right, then in Switzerland that would be equivalent to 10,000 here in the US. And since he suggested a 2,800 security income, I figured I would round it to 36k. Since an immigrant must have 76,000, then I figured that would not be such a large sum if 76k is the minimum for immigrants. In addition, it would please fiscal conservatives, and social democrats. It would also cost about the same, and would in real terms be less inflationary, and since they would "own" that money from their labor, they would likely focus on basics , before they went on to other things like a new car or what not. If you look at the example of the stimulus of a tax credit when pres. Bush was still in, most people spent that money on basics. Contrast that with food stamps, where they buy alcohol, and I think giving back their own money would make more sense. In addition, the need for a new division within welfare would not be needed.