I am making the following approximations:
Anyone who has more accurate figures please mail me them. All calculations in what follows are approximate.
My proposals are:
Every adult is given a citizen's income (CI) of £3500 per annum. Without making the benefits universal, there will be people not receiving benefits who are entitled to them. If benefits are means tested as at present, the marginal rate of tax is effectively 100% for those in low paid jobs because they lose their benefits. I have estimated that an income of £70 per week is the minimum necessary to pay for food, clothing and shelter.
The cost of this is 40m x £3500 = £140bn.
The average value of child benefit is £2000 per annum. This may vary with age. I have guesstimated that this is the minimum necessary to pay for food, clothing and shelter.
The cost of this is 15m x £2000 = £30bn.
Taxes are flat rate, i.e. the marginal rate does not increase with increasing income. The reasons for this are twofold: it simplifies matters where people have several part time jobs, and there are alternative ways of controlling high salaries, such as linking them with number of employees.
If each person is given a CI of £3500, employers can then afford to reduce salaries by the same amount. This results in an increase in profits of £3500 per employee. This can be recovered by an increase in tax on profits.
This brings in 20m x £3500 = £70bn.
The rest is obtained from a redistribution tax on an average income of £11500 after the salary reduction, i.e. the citizen's income itself is untaxed. If this is set at 30%, it brings in 20m x 30% x £11500 = £70bn. This means that a rate of 50p/£ needs to be levied.
If children are also catered for by a universal tax, an extra £30bn needs to be raised, resulting in a further increase of 13p/£. That's 63p/£, which I feel is excessively high. Anyone still in favour?
That's one of the reasons why I am proposing a tax of 8.5% per parent per child (this is removed when the child becomes an adult). This brings in 15m x 2 x 8.5% x £11500 = £30bn.
Another point is that, if someone has 9 children, their tax rate goes to 100%, which means it's a waste of their time working. My point is that they should be looking after their kids, full time. They and their family will have just enough to live on from citizen's income and child benefits.
Such schemes are usually dismissed because they apparently have excessively high rates of taxation, but as there is no money lost in the system, the average rates of tax minus benefits are the same as they would be for a means-tested system. In fact, there is likely to be money gained from administrative savings, and extra tax revenues earned from those who are now in the poverty trap and cannot take jobs for fear of losing their benefits. This will enable a lower tax rate to be levied.
The effects on people with various salaries is as follows:
A single person on average income at present earns £15000.
Under my proposals, (s)he earns £11500 and pays half of it, £5700, in tax, leaving him with £5800 plus a citizen's income of £3500: a total of £9300. This is an effective tax rate of 38p/£.
A couple with two children, with one parent earning £20000 pounds and the other looking after the children at home.
Under my proposals, the breadwinner earns 16500 pounds and pays 63% of it, £10500, in tax, leaving the family with £6000 + £7000 CI + £4000 Child Benefit, a total of £17000 clear, an effective rate of 15%.
A couple with four children, one earning £40000 and the other earning £10000.
Under my proposals, they earn £36500 and £6500 respectively. The tax rate on each adult is 50p/pound + 4 x 8.5p/£ = 84p/£, leaving them with £7000 clear. The citizen's income is £7000 and child benefit is £8000, leaving a total of £22000, an effective tax rate of 56%.
I am open to suggestions for improvement to these proposals.
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