FUTURE-BRITAIN-3
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 of poverty.   
 
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.

REFERENCE
[i] See work of Citizen’s Income Trust at http://citizensincome.org

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