A Briefing Paper on Basic Income

A personal view by Anne G. Miller (AnnieMillerBI@gmail.com), Trustee, Citizen’s Basic Income Network Scotland

A printable version of this page as a leaflet can be downloaded here.

 

What is a Basic Income?

“A Basic Income (BI), (Citizen’s Income, Citizen’s Basic Income or Universal Grant) is an unconditional, non-withdrawable income for every individual as a right of citizenship.” Similar to a Child Benefit, it is for everyone, and is tax-exempt. Its key features are as follows:

  1. The BI is assessed and delivered on an individual basis. The current basis for means-tested benefits is the couple, which removes the poorer partner from access to benefits on her account & traps many women in financial dependency.
  2. It is universal to everyone who has the legal right to reside in the country, and who fulfils a residency condition prior to receipt of the BI.
  3. The amount would not be means-tested, either on the recipient’s own income or wealth, or on that of another family or household member. This avoids the high marginal deduction rates and punitive disincentive effects facing low-paid workers.
  4. It is non-selective – except that the amount could be age-related, but would not vary by race, creed, gender, sexual orientation, marital status, cohabitation, household living arrangements, past work record or current work status. It would be expected to cover basic needs, such as: food; alcohol and tobacco; clothing; household goods, insurance and other services; fuel and other housing costs; personal goods and services; travel costs; and social and cultural participation.

The wide variety of house prices and rents across the country precludes the possibility of including a housing cost element in a BI scheme for the UK. A separate, individualised Housing Benefit system will have to be retained. Similarly, Childcare provision will also have to be separate from the BI scheme.

People with disabilities would receive tax-exempt payments to cover the extra costs that they incur, such as, for mobility, care, special equipment, special diets, extra fuel and laundry, in addition to their Basic Incomes.

It is unconditional – it does not depend on any preconditions, such as willingness-to-work tests, being involved in voluntary service, or behaving according to traditional gender roles.

The BI would be delivered regularly and automatically to those who qualify, including the responsible parent of a dependent child, as now.

A full BI would be high enough for a dignified, if modest, standard of living, enabling participation in society for a single person: a partial BI would need to be topped up by other income, usually earnings; a child would receive a Child BI. Even a partial BI can contribute to the objectives, but the effects increase with the generosity of the scheme.

A BI scheme is a set of instruments rather than a program of policy objectives, ie, a means to end(s), depending on the other instruments with which it is coupled.

 

Justification for a Basic Income

 

“Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.” Universal Declaration of Human Rights, Article 25 (1), adopted by the General Assembly of the United Nations on 10 December 1945.

Thomas Paine, 1796, argued that the land and natural resources belong to the people. Since land has been appropriated for private use, the owners owe a rent to the whole excluded population.

“A 2005 World Bank study concluded that most of a nation’s wealth derives from intangible capital; that is, from human capital and the quality of institutions, especially the rule of law. The wealthier the nation, the more this is so.”

“No man is an island.” (John Donne, 1624). We all are dependent on many others. Our decisions and actions affect other people. Thus we are interdependent and therefore mutually responsible for each other.

What sort of society do we want to create for ourselves and for future generations?

One based on the values engraved on the Scottish mace, (wisdom, justice, compassion and integrity), together with a BI scheme, would transform our society from one of fear and despair to one of compassion, justice, trust and hope.

A BI is a radical alternative to the current Social Security system, designed for the 21st century. It represents a new relationship between the state, society and its citizens.

A BI could not be claimed as a cure for all of society’s ills but it is a necessary, though not sufficient, condition for a better society.

 

Criticisms and Counter Arguments

 

If the BI is based on the individual, this will lead to Household Economies of Scale (HES) for couples, who would receive more than they need.

Currently, couples are denied HES, but not two siblings sharing accommodation, nor an older adult living with a grown-up offspring. Why should couples be discriminated against? HES could encourage people to share accommodation & reduce the demand for single person housing. Giving a full BI to all primary care-giving parents, but a partial BI to other adults of working-age, could reduce HES.

Why give a BI to rich people who don’t need it?

Administratively, It is more efficient to give a BI to all and concentrate on assessing each person once only each year for income tax. A fairer, more progressive income tax structure would ensure that rich people do not profit overall from the introduction of the BI scheme.

Targeting benefits on poor people is divisive, and makes it easier to stigmatise & humiliate them, leading to low take-up of the benefits to which they are entitled.

It will encourage illegal migrants.

If eligibility is based on the legal right to reside in the country, with a minimum period of residency prior to receipt of the BI and continuing residency in the country for the major part of each year while in receipt of the BI, this could deter illegal immigrants.

Why give something for nothing?

A BI values all individuals and entitles them to necessities. Poverty affects people’s health and shortens lives. Reciprocity is a two way street, and it should not matter who gives first – society or the individual. Most people want to give something back to the communities that support them.

What if some people choose not to work?

Working-age adults receiving only a partial BI will still need to work. Even a full BI will only cover basic needs. Luxuries will have to be earned. Most people want to work, not just for the earnings, but also for the health and social benefits – friendships, a structure to one’s day and job satisfaction. Some may take an occasional sabbatical to travel, study, care for children or elders, do volunteer work, or attain a life-time ambition. Others may adjust their hours to achieve a better work-life balance, reducing the stresses of modern life. We could tolerate a small minority of free riders, as long as they do no harm, and their critics could choose to do likewise.

Can we afford a BI?

Can we afford not to?  What is the price of a good society? There is no one optimum BI scheme. Each scheme will represent a particular set of prioritised objectives, assumptions and constraints. A BI scheme indexed as proportions of mean income per head of the population, (thus reflecting prosperity of society), could meet official poverty benchmarks and be economically viable.

Will rich people (threaten to) emigrate if income tax rates rise?

Protest? Yes. Leave? No. They like it here too much.

 

What objectives can a Basic Income help to fulfill?

 

Each feature of a BI could help to achieve several related short run and long run objectives for welfare reform.

  • Each person is valued for her/his own sake; a BI grants financial privacy and autonomy. Financial independence emancipates and empowers adults, reduces unequal power relationships and gives more choice over life decisions.
  • A BI can help to prevent, or at least reduce, income poverty and provide financial security. In the long run it could increase wellbeing in terms of security, health and educational opportunities, helping people to develop to their full potentials.
  • A BI could help to redistribute income, and heal our divided society. But by itself, it would not reduce very much the inequalities between rich and poor, men and women and geographically. For this to be achieved, it would have to be financed by a restructured income tax system. Eventually it could help to create a united and inclusive society.
  • Non-means-testing of benefits restores the incentive to work-for-pay provided by the wage rate, reducing the current high marginal deductions from potential earnings (income tax, employees’ National Insurance contributions and aggregated benefit withdrawals), facing unemployed and low-paid workers. It would help self-employed people, small companies and workers co-operatives and lead to increased creativity. A BI can reduce the inequality of power relationships in the workplace, and workers and their representatives can negotiate for reasonable pay and better working conditions. The system would work well for either a full employment economy or one affected by loss of jobs via automation. It could lead to more efficient and flexible labour markets.
  • A BI scheme can help to simplify the administration of the social security system, reducing the risk of fraud or error by either recipient or staff. It should also reduce the current time-consuming personal effort and stress required to apply for benefits. Eventually it could lead to a more transparent and accountable system.

The combination of equity, efficiency and choice goals appeals to both left & right.

Further information can also be accessed via the following websites:

Citizen’s Income Trust, for UK-wide perspectives      

Basic Income UK, a grass-roots organisation  

Basic Income Earth Network, for international perspectives