Why pay money to the rich when they don’t need it?
It is efficient to pay the same level of income to everybody of the same age and then tax it back from those who don’t need it. The alternative is to means-test incomes so that only those who are poor receive them: but that results in complexity, stigma, errors, fraud, and intrusive bureaucratic interference in people’s lives.
Would Citizen’s Basic Income be financially feasible?
We shall take this question to mean: Could a Citizen’s Basic Income of a useful size be implemented on the realistic assumption that no additional public funds would be available?
Tests for a Citizen’s Basic Income scheme’s feasibility might be listed as follows:
- revenue neutrality ( – that is, it would be funded by making changes to the current tax and benefits system)
- poverty and inequality need to fall
- Low income households should suffer no significant losses at the point of implementation, and no household should suffer unmanageable losses
- Income Tax rates should not rise by more than 3%
- A significant number of households should be released from means-tested benefits.
Such a scheme exists (see the reference below).
Would people still work?
If by ‘work’ we mean ‘paid employment’, then the answer is yes. In the short to medium term, we are unlikely to see a Citizen’s Basic Income that would be sufficient to live on, so everyone would need additional sources of income. And because Citizen’s Basic Incomes would not be withdrawn as earnings rose, any family taken off means-tested benefits by their Citizen’s Basic Incomes would experience a reduction in withdrawal rates, and would experience more incentive to seek employment, or to start their own business, than they do now.
If by ‘work’ we mean purposeful activity of any kind, then the answer is again yes. By providing a secure layer of income, a Citizen’s Basic Income would enable people to readjust their employment hours in order to undertake additional caring and community work.
Why pay money to people who do nothing?
We are already paying means-tested benefits to people who do nothing, and the complexity and sanctions associated with those payments demotivate people and can tip their families into poverty.
Would immigration go up?
As with other benefits, a government would be likely to require a period of legal residence before someone could receive a Citizen’s Basic Income. Because any feasible Citizen’s Basic Income would not be providing additional money, but would rather provide everyone with a secure layer of income, and therefore a greater employment incentive than means-tested benefits, anyone coming into the country would be even more likely to contribute to the economy than they are now.
Would wages fall?
Means-tested benefits function as dynamic subsidies – that is, they rise if wages fall, which can encourage wage-cutting. A Citizen’s Basic Income would not rise if wages fell, so employers would experience more resistance if they attempted to cut wages.
Some wages might rise. Because everyone would have a secure financial platform on which to build an income strategy, some workers would be more able to leave undesirable jobs in order to start their own businesses, or to learn new skills and seek new jobs; and workers would be able to spend longer looking for a job that they might want rather than any job. Either currently undesirable jobs would have to improve, or wages would have to rise in order to attract workers.
Some wages might fall. Because everyone would have a secure income layer, some people might decide to take a desirable job even if it didn’t pay very much. Wage levels for desirable jobs might therefore fall.
Would a Citizen’s Basic Income threaten the welfare state?
If a revenue neutral Citizen’s Basic Income scheme were to be implemented, then no cuts to public services would be required. The amounts of means-tested benefits received by households would fall, but only because they were already receiving Citizen’s Basic Incomes. Benefits specifically designed to cover the additional costs of disability, and benefits to cover the differing housing costs in different areas, would continue.
Would public expenditure go up?
If Income Tax Personal Allowances were to be reduced in order to fund Citizen’s Basic Incomes of the same value, then no additional government funds would need to be spent: but because the Citizen’s Basic Incomes would count as public expenditure, and the revenue foregone through Income Tax Personal Allowances does not, it would look as if public expenditure had risen when it hadn’t.
Has a Citizen’s Basic Income ever been tried?
Short pilot projects have taken place in Namibia and India, and something like a Citizen’s Basic Income has been implemented by accident in Iran. Experiments in the similar but different Minimum Income Guarantee and Negative Income Tax in the United States and Canada during the 1970s showed useful social outcomes and very little withdrawal from employment. The similarities between the economic effects of a Minimum Income Guarantee and Citizen’s Basic Income would suggest that the results of the Minimum Income Guarantee experiments would be replicated if a Citizen’s Basic Income were to be implemented; and the differences between them mean that the effects are likely to larger for Citizen’s Basic Income than for the 1970s experiments. Basic Income pilot projects and similar experiments continue in the United States, Uganda, Kenya, Spain, Finland, and the Netherlands, and experiments are planned for Scotland.
More detailed responses to questions can be found in chapter 10 of Malcolm Torry, Why we need a Citizen’s Basic Income: The desirability, feasibility and implementation of an unconditional income, Policy Press, 2018.
Recent research on a financially feasible Citizen’s Basic Income scheme can be found here.
Three recently published introductions to the subject are as follows:
Annie Miller, A Basic Income Handbook, Luath Press, 2017
Guy Standing, Basic Income: And how we can make it happen, Penguin, 2017
Malcolm Torry, Why we need a Citizen’s Basic Income: The desirability, feasibility and implementation of an unconditional income, Policy Press, 2018
For a detailed treatment of feasibility, see Malcolm Torry, The Feasibility of Citizen’s Income, Palgrave Macmillan, 2016