March Budget 2016

[McPhee]

Off the top of my head, allowance starts at 18 (this ties in with school leaving age after all). Your calculation is wrong though, you don't pay tax on the £7.5k, so the tax is 17,500 and total take home is 40k.

Health care, education remain as they are now. No tax deductions claimable, but as I mentioned, there needs to be a rethink of social care provision as part of the implementation.

The numbers still don't stack up. We'd need a tax rate much higher than 35% to support a £7500/year citizen's income.

Annual salary: £100,000
Take home pay under current system: ~£65,000
Take home pay at 35% flat-rate tax (inc £7500 CI): £72,500

That would suggest the break even point is north of £100k, so I cant see how that system would work. To fund a £7,500 Citizen's Income with a flat-rate income tax, that tax would have to be somewhere approaching 50%. Good luck selling that.

I think it's a great idea, but I can't see it being an election winner. Plus, there are problems. Take that mother of 8 from the thread the other day. There is zero chance of her being able to feed those kids under a CI system. She'd either need additional help, or some of the kids would have to go in to care.

 

[Judgeneo]

The numbers still don't stack up. We'd need a tax rate much higher than 35% to support a £7500/year citizen's income.

Annual salary: £100,000
Take home pay under current system: ~£65,000
Take home pay at 35% flat-rate tax (inc £7500 CI): £72,500

That would suggest the break even point is north of £100k, so I cant see how that system would work. To fund a £7,500 Citizen's Income with a flat-rate income tax, that tax would have to be somewhere approaching 50%. Good luck selling that.

I think it's a great idea, but I can't see it being an election winner. Plus, there are problems. Take that mother of 8 from the thread the other day. There is zero chance of her being able to feed those kids under a CI system. She'd either need additional help, or some of the kids would have to go in to care.

There are edge cases which would need an additional support, and you may need an additional band above 35% for the highest income earners, but the system saves money in others ways. Remember it replaces other means tested benefits, so you don't need to have the take home salaries match the current system exactly, and the administrative cost savings would be rather large too.

 

[Deleted member 66701]

Out of curiosity do you have children?

Yes, three.

Why?

 

[The Mad Rapper]

There are edge cases which would need an additional support, and you may need an additional band above 35% for the highest income earners, but the system saves money in others ways. Remember it replaces other means tested benefits, so you don't need to have the take home salaries match the current system exactly, and the administrative cost savings would be rather large too.

Flat tax isn't flat tax if there are bands. Find another way.

 

[Destination]

There are edge cases which would need an additional support, and you may need an additional band above 35% for the highest income earners, but the system saves money in others ways. Remember it replaces other means tested benefits, so you don't need to have the take home salaries match the current system exactly, and the administrative cost savings would be rather large too.

What constitutes a citizen under this new system?
That would make for an interesting minefield.

 

[Judgeneo]

Flat tax isn't flat tax if there are bands. Find another way.

I don't agree with a flat tax personally, but I do agree with giving people a grant instead of a tax free allowance and means tested benefits.

 

[McPhee]

There are edge cases which would need an additional support, and you may need an additional band above 35% for the highest income earners, but the system saves money in others ways. Remember it replaces other means tested benefits, so you don't need to have the take home salaries match the current system exactly, and the administrative cost savings would be rather large too.

Absolutely. And the day someone puts forward a plan where all of this has been worked out, I'll be 100% behind them. I like the idea, but the finer details would need very careful consideration and a lot of work to provide balance.

 

[Dolph]

The numbers still don't stack up. We'd need a tax rate much higher than 35% to support a £7500/year citizen's income.

Annual salary: £100,000
Take home pay under current system: ~£65,000
Take home pay at 35% flat-rate tax (inc £7500 CI): £72,500

That would suggest the break even point is north of £100k, so I cant see how that system would work. To fund a £7,500 Citizen's Income with a flat-rate income tax, that tax would have to be somewhere approaching 50%. Good luck selling that.

I think it's a great idea, but I can't see it being an election winner. Plus, there are problems. Take that mother of 8 from the thread the other day. There is zero chance of her being able to feed those kids under a CI system. She'd either need additional help, or some of the kids would have to go in to care.

You are probably right about it not being an election winner, fairness is not an election winner if the opposition offers to take from others and give to you. It would be more likely to be driven by a more consistent interpretation of property rights in line with other human rights where people are treated equally and consistently in ,my view.

35% tax isn't that different from now for most people (income tax plus ni), the nice thing about the system is that the tax and benefit apply to all, which makes the level subject to pressure from both net contributors and receivers.

Cases like the mother of 8 who never worked are why we need transitional arrangements. Penalising people for bad choices encouraged by a bad system isn't something that I want to see.

 

[Dolph]

What constitutes a citizen under this new system?
That would make for an interesting minefield.

Rule for me would be quite simple, at least 10 years before 18 in the UK or 3 years of full time work without the payment part.

 

[Dolph]

Absolutely. And the day someone puts forward a plan where all of this has been worked out, I'll be 100% behind them. I like the idea, but the finer details would need very careful consideration and a lot of work to provide balance.

I would love to have the time, resources and data access to properly work it out, becauee i genuinely believe in it. That, combined with the fact that it isn't an election winner means it's probably a pipe dream.

 

[Neil79]

http://eveningharold.com/2015/08/31/ramsay-bolton-tipped-to-replace-iain-duncan-smith-at-the-dwp/

 

[Mr Jack]

My preferred model involves using a generalised payment and offsetting against an income tax to create an effective tax free band.

Example here using a £7.5k payment and 35% flat tax, showing a break even point of approx £25k

A 35% tax would be woefully inadequate to fund government, in reality a citizen's income and a flat tax would require a rate around 60%. Meanwhile £7.5k isn't a sufficient amount to provide for the basic needs of many people.

 

[Dolph]

A 35% tax would be woefully inadequate to fund government, in reality a citizen's income and a flat tax would require a rate around 60%. Meanwhile £7.5k isn't a sufficient amount to provide for the basic needs of many people.

Depends how much you expect government to do and what level of circumstances you plan to cover the basic needs for, however a higher rate paid by everyone is much fairer than the current adversarial system.

 

[Freakbro]

Depends how much you expect government to do and what level of circumstances you plan to cover the basic needs for, however a higher rate paid by everyone is much fairer than the current adversarial system.

I can imagine the quite vocal support Flat Rate tax gets by our more affluent members would dissolve pretty quickly if you told them it was going to be set at 60%+

Peoples opinion rarely seems to be based on whats fair, but what will benefit them personally

 

[McPhee]

I'm not sure many would support 60%. That would mean the net pay for people on George Osborne's National Living Wage would be £2.88 per hour. Enthusiasm would drop off a cliff and productivity would follow. Give up 35 hours a week of your time. Benefit to the tune of £436.80 per month. For a lot of people, that wouldn't be worth it.

 

[Stretch]

I can imagine the quite vocal support Flat Rate tax gets by our more affluent members would dissolve pretty quickly if you told them it was going to be set at 60%+

Peoples opinion rarely seems to be based on whats fair, but what will benefit them personally

Well, not really. Proponents of a flat rate tax want it because it avoids exceptionalism. A 60% flat rate would be as unworkable for lower and middled income households, as it would be unfair to high earners.

The problem with a flat rate is finding a rate which doesn't completely cripple some demographics, whilst still raising sufficient revenue for the treasury.

If you wanted a flat rate to remain tax neutral, it would need to be quite high.

 

[Kemik]

I'm not sure many would support 60%. That would mean the net pay for people on George Osborne's National Living Wage would be £2.88 per hour. Enthusiasm would drop off a cliff and productivity would follow. Give up 35 hours a week of your time. Benefit to the tune of £436.80 per month. For a lot of people, that wouldn't be worth it.

That's really not how a flat rate system works. You set the personal allowance at the rate that is around £12k (standard working hours x minimum wage). Anything over that is then taxed at say 40% without any form of reliefs or benefits. National Insurance would be scrapped.

 

[cheesyboy]

Seems that Osborne has manoeuvred himself into a corner here, and the rather distasteful financing of this giveaway budget resting on the shoulder of the disabled was a result.

Nicely summarised by Sky's Faisal Islam. Wonder if the welfare cap will be abandoned now. Or will they break the Pensions 'triple lock' (strongly doubt it).

 

[John40]

I wonder why he changed his name to Islam from ফয়সাল ইসলাম.

 

[Mr Jack]

Depends how much you expect government to do and what level of circumstances you plan to cover the basic needs for, however a higher rate paid by everyone is much fairer than the current adversarial system.

To pay for the citizens income, basic healthcare, education, defence and justice would require 60% or so. If you actually want to maintain our current insufficient level of spending it'd need to be higher; if you want to improve the state it'd need to be higher still. (Or, of course, you can recoup the money through other forms of taxation).