BURNT TOAST OR
WARM TEACAKES ?
An essay by Michael Bassey December 2016
PART THREE: CITIZEN'S INCOME AND PROGRESSIVE TAX
An effective way to abolish poverty
is to introduce citizen’s income [i].
Citizen’s income is the name
for the idea of a standard state payment to every person as a right of citizenship
with no means testing. It would replace
most forms of state benefit and eliminate much state bureaucracy. It should be at a level to lift everyone out
It is, of course, a
revolutionary idea. Hitherto people have
worked for their entire income, or, seen by the state as otherwise destitute,
have been awarded benefits. In contrast,
citizen’s income would be paid to everyone irrespective of circumstances. It would be seen as the entitlement of every
single member of the state – man, woman and child, young and old, healthy and
unfit. Up to the age of say 21 it would
be a smaller payment and over 65 a larger one.
Citizen’s income would be
paid by the state from funds raised by taxation: corporation tax and income tax. I consider income tax should be progressive,
perhaps stretching from 2% of income for the lowest paid to 90% for the highest
– if not 100% ! This would embrace the notion that
every earner should contribute to the national exchequer as a citizen’s duty
and evidence of responsibility to the wider society, and the higher the income
the greater should be the contribution to the common weal.
Citizen’s income should be at
a level to enable one parent in a young family to stay at home and enjoy
bringing up their young (who get a small citizen’s income) without fear of
malnutrition or lack of shelter. Likewise
It should be sufficient to support the caring of an elderly relative. It would support those not in work. In other
words, it would eliminate poverty throughout the country.
Clearly, citizen’s income
should not be a bonanza for those earning a wage or salary. In effect citizen’s
income and wages need to be carefully balanced through taxation so that while
the former covers the basics of living, the latter provides for the pleasures
of living and so the incentive to work.
Complicated as it may seem,
in principle citizen’s income with progressive income tax could be a zero-sum
change, i.e. one in which overall the same amount of money is flowing through
society, but such that the poor are less poor and the rich less rich. Looking at the income levels of Figure 4 the
bottom two levels could disappear by virtue of citizen’s income and the top two
levels could be removed by high levels of taxation.
Thus around 13 million people would be better
off, 13 million worse off, and 37 million experience no change.
Thus with appropriate levels
of citizen’s income and carefully chosen increases in a progressive income tax,
not only would poverty be eliminated in our society but the present gross
inequalities between rich and poor would be reduced.
Of course, redistribution of
the nation’s riches in this way would be strongly resisted by the wealthy and the
obvious problem is that it is the wealthy who currently wield power in our
society. But in a democracy it should be possible for the people in the middle
– neither rich nor poor – but who in our society are the majority, to support
such a redistribution. Careful argument
will be needed to enable the electorate to realise the justice of the case.
Yes it is a mind blowing
idea. But in terms of current
maldistribution of wealth and the “inevitable demise of neoliberal industrial
capitalism” it suggests a way forward for our society that would eliminate
poverty and fairly support the unemployed.
[i] See work of Citizen’s Income Trust
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