The Institute for Social and Economic Research at the University of Essex has published two working papers: Reducing poverty and inequality through tax-benefit reform and the minimum wage: the UK as a case-study, by Anthony B. Atkinson, Chrysa Leventi, Brian Nolan, Holly Sutherland and Iva Valentinova Tasseva, and A variety of indicators evaluated for two implementation methods for a Citizen’s Basic Income, by Malcolm Torry
Reducing poverty and inequality through tax-benefit reform and the minimum wage: the UK as a case-study, by Anthony B. Atkinson, Chrysa Leventi, Brian Nolan, Holly Sutherland and Iva Valentinova Tasseva
Abstract: Atkinson’s book Inequality: What Can Be Done? (Harvard University Press, 2015) sets out a range of concrete proposals aimed at reducing income inequality, which cover a very broad span but include major changes to the income tax and social transfers system and the minimum wage. These are framed with specific reference to the UK but have much broader relevance in demonstrating how substantial the impact on inequality of such measures could be. This paper assesses the first-round effects of these tax, transfer and minimum wage reforms on income inequality and poverty based on a microsimulation approach using EUROMOD. The reforms involve a significantly more progressive income tax structure, a major increase in the minimum wage to the level which is estimated to represent the ‘Living Wage’, and alternative routes to reforming social transfers – either to strengthen the social insurance element or to restructure the entire system as a Participation Income (a variant of Basic/Citizen’s Income). The results show how the first-round effects of either set of tax and transfer proposals would be to substantially reduce the extent of income inequality and relative income poverty and the paper draws out how the two approaches differ in their effects. The additional impact of raising the minimum wage to the Living Wage is modest, reflecting in particular the position of beneficiaries in the household income distribution and the offsetting effects on household income of the withdrawal of means-tested cash transfers.
Abstract: Debate about Citizen’s Basic Income – an unconditional and nonwithdrawable income for every individual – is shifting in character. An earlier phase related to the proposal’s desirability; then followed debate about its feasibility; and now attention is turning to questions of implementation. A significant symptom of this new phase is the recent consultation on implementation of a Citizen’s Basic Income held by the Institute of Chartered Accountants in England and Wales. The consultation considered four implementation methods. This working paper operationalises characteristics of two of the implementation models in terms of changes that might be required in existing UK tax and benefits systems, and evaluates the implementation methods in relation to a wider variety of indicators than previous exercises of this kind: poverty and inequality indices, tax rate rises required for revenue neutrality, household disposable income gains and losses, households’ abilities to escape from means-testing, and marginal deduction rates. The advent of EUROMOD G4.0+ and updated FRS data enables the results to be more up to date as well as more comprehensive.