How to determine the amount of unconditional basic income (UBI) ?

The definition states:
UBI should guarantee existence and allow participation in society.

The amount

  • will be different in each country according to the cost of living
  • will be adjusted periodically to take into account the evolution of prices and possibly other parameters
  • children probably will get less than adults

Rules should be simple to avoid administrative overhead. Reduction of bureaucracy is one of the aims of UBI.
It's acceptable that certain persons get "too much" and can save some money or ...

The democratic process to determine the amount will be useful because important questions will be discussed

  • Distinguish 'luxury' and needs. What is needed to live with dignity?
  • Determine needs not limited to simple survival. For example participation in cultural, political life, ...
  • Are we ready for generosity? In case of doubt will we fix UBI at a relatively high level?

The aim is to arrive at a sum which guarantees existence and allows participation the life of society.
It'is possible to pay an allocation which covers needs partly during a transitional phase.

Even a small amount already brings advantages

  • Possibility of accepting a part time job or a badly remunerated but rewarding job which you really love.
  • Possibility to start studies. It will be necessary to fill the gap with savings, student allocations, holiday jobs, ...
  • +- the same advantages as a complete UBI but with some limitations

UBI will replace numerous payments entirely or partly. Payments linked to unpredictable specific needs (e.g. health insurance) should not be abolished.

Definition of Unconditional Basic Income

UBI is an income granted unconditionnally to each member of a political community.

Characteristics

  • garantee existence and allow participation in society
  • individual right
  • paid without control if the beneficiary really needs it
  • no obligation for the beneficiary to work

 

We don't need it

- We already have Guaranteed minimum income for the poor (RMG), Unemployment compensation, Minimum income, Benefits for children, ...

+ Unconditional Basic Income (UBI) has important advantages (See page Arguments/advantages).

We support only those who need it (social selectivity)

- Those who have enough income don't need financial help from the state.

- This would be much easier to afford.

+ Unconditional Basic Income (UBI) has important advantages (See page Arguments/advantages).

+ With UBI you could considerably reduce other expenses. E.g. Guaranteed minimum income for the poor would be replaced by UBI, Retirement pensions and Salaries of civil servants would be reduced by the amount of the UBI, Employers could reduce salaries by the amount of UBI (and pay more taxes), ...

+ If you get Guaranteed minimum income for the poor (RMG) or Unemployment compensation it's not financially interesting to accept poorly paid work because amounts paid by the state would be reduced or canceled. In some cases you would have to reimburse RMG. With UBI you would benefit  from every Euro earned (perhaps reduced by (low) tax rates).

UBI would not be affordable

- With simplistic calculations you can show that UBI would ruin even rich countries.

+ Miscellaneous models to compensate the expenses have been described during the last decades. If you find a bad one continue to search! Several models might get good results.

+ Unconditional Basic Income (UBI) allows to reduce or eliminate several considerable expenses. E.g. Guaranteed minimum income for the poor would be replaced by UBI, Retirement pensions and Salaries of civil servants would be reduced by the amount of the UBI, Employers could reduce salaries by the amount of UBI (and pay more taxes), ...

+ UBI has a positive impact on the economy (See page Arguments/advantages). This increases total income of the state.

+ Few people would get (much) more money than today (if you reduce other expenses). So it shouldn't cost much more than the current system.

+ UBI has important advantages (See page Arguments/advantages). It's ok if this has a considerable cost.

+ UBI should be introduced progressively. E.g. begin with a small amount and increase it in several steps, include more and more categories of persons (children, students, poor, retired, unemployed, ...). Then people would understand that the impact on the state's budget is low or even positive. It would allow to adjust the accompanying measures to compensate the expenses.

People would stop working

- There is a risk that more people than today wouldn't work or at least work less. (Already today most children and old people don't work, many people are searching unsuccessfully for jobs, some even don't want to find a job).

+ Globally people do more unpaid than paid work (for family, associations, ...). Salary is not the only reason (and certainly not the best) to contribute to society.

+ Most people want more than the minimum. With UBI most would continue working to afford more.

+ Polls reveal that most people would continue working if they got UBI (the same job, perhaps less hours or change the job).

+ Most people who would stop paid work would continue to contribute for family, associations, art, research, politics, ...

+ Due to better technology we need less people to produce enough.

+ Nowadays many people lack motivation and deliver badly. Their productivity is far from optimum. They should leave their current job and choose something they really like to do.

+ People who freely choose their job are motivated. Their employer cares for good working conditions. This increases productivity. We need less working hours to produce enough.

+ Those who live on UBI couldn't afford high consumption and thus reduce negative impact on the environment (climate, pollution, ...).

That's communism?

Communism failed due to

  • Absolute power of the "representatives of the people"
  • Very powerful bureaucracy
  • Repression of initiative and freedom

Unconditional Basic Income (UBI) is better than communism

  • Personal initiatives get boosted
  • Everybody may have a successful life if he really wants
  • UBI reduces bureaucracy
  • UBI gives people maximum of freedom

Social tourism

- Migrants might invade our country to get Unconditional Basic Income (UBI).

+ This problem exists already today. Many people try to come to the rich, democratic countries hoping for a better life. Current solutions should work even in a future with UBI.

+ UBI should be introduced simultaneously in all European Union countries. If it works well the other countries will follow the example. Or introduce UBI first in the poor countries.

+ We should help people in poor countries and increase development aid budgets. Development aid should be paid as UBI to the people and not to corrupt or inefficient institutions. See Pilotproject in Namibia which shows that this is very efficient.

Jealousy

That's finally the real problem.

Nearly everybody knows people who shouldn't get UBI (the neighbour, foreigners, lazy youngsters, rich capitalists, ...). That's why Unconditional Basic Income (UBI) is considered a bad idea.

As this is not a "good" argument people stick to other arguments to justify their refusal of UBI.

Negative income tax is better

A negative income tax only covers the amount missing to get a basic income. That costs a relatively small amount and could be introduced more easily. This would eliminate poverty.

But with this solution it would be financially uninteresting to accept a job if the salary is not considerably better than basic income. Negative income tax would make black labour very attractive at least in the low salary sector.

With Unconditional Basic Income (UBI) every paid work is financially interesting because UBI is not reduced if you earn money.

UBI has many more advantages compared to negative income tax (see page Arguments/advantages) like reducing bureaucracy, positive impact on the economy, ...

 

What is the consumption tax ?

Consumption tax is another name for Value Added Tax (VAT).

What's the advantage of the consumption tax ?

In many countries paid work is very expensive partly due to heavy taxation.
Investments in machines, ... are often supported by the state with subsidies or reduction of taxation.
This incites companies to increasingly use machines and reduce jobs for human beings.
If we wouldn't tax paid work but mainly consumption, paid work could become more competitive.

We could substantially simplify the complex taxation system if we would replace many complex taxes by a high consumption tax.
This would reduce administrative overhead for the state, companies and private persons.
It would become easier to avoid loopholes in taxation laws.

Consumption tax rate ?

In many countries about 50% of GDP are used for public spendings (infrastructure, education, social welfare, ...) and raised via multiple taxes.
If the consumption tax were the only tax, then the tax rate should be about 50% of selling price i.e. 100% of price without the tax.
The price without the tax would be much lower than in complex taxation systems because it would not already contain many indirect tax costs.
The price including taxes would remain +- the same. Instead of many taxes included in the price we would have a single tax.

Why is consumption tax linked to basic income ?

1. The consumption tax increases the effect of basic income reducing the price of work force

Those with basic income can work for very low wages and live decently.
This causes wages to decrease (at least when the employer offers jobs which are not only financially attractive).
If we tax consumption instead of wages then work force price will become even lower and increase this effect of basic income.
This is good for the economy (products and services will become competitive)
and for employees (employers offer attractive jobs and conditions to attract and retain workforce).

2. Basic income makes the consumption tax socially fair

Consumption tax rates are the same for all.
Basic income is needed to reduce the burden for those with low incomes.

If tax rate were 50% of price including the tax we would have the following situations depending on income added to unconditional basic income:

Additional income
Net taxation rate
Lower than basic income Negative. They get more from the state then they pay.
Higher than basic income Positive. They pay more income tax than the amount of basic income.
Very high Up to a maximum of nearly 50% of total income.

3. Basic income reduces tax income on wages but not on consumption

With unconditional basic income (UBI) more people will work for lower wages or even unpaid in jobs or for purposes they really like.
Even if more people would work less hours it would be easy to produce enough goods and services because technology and improved motivation would increase productivity substantially.
As only a surplus to basic income will be paid the total amount of wages would be substantially reduced.
Tax income on wages would shrink dramatically.
With basic income people could continue to buy and pay consumption taxes.

Gibt es Schlupflöcher um die Konsumsteuer nicht zu zahlen ?

Ist der Steuersatz sehr hoch, wird es interessant Schlupflöcher auszunutzen, sogar wenn dies kompliziert und teuer ist.

Schlupfloch 1

Ich kaufe alles im Ausland.

Wie schon bei der Beschreibung der Konsumsteuer erläutert, wird der Verkaufspreis kaum durch die Konsumsteuer verändert.
Viele kleine Steuern im Gestehungspreis werden durch eine hohe Konsumsteuer ersetzt. Der Verkaufspreis bleibt +- unverändert.
Verschiedene Waren oder Dienstleistungen können im Ausland billiger sein. Es kann aber auch umgekehrt sein.
Die Konsumsteuer verändert das Gleichgewicht des grenzüberschreitenden Handels nicht wesentlich.

Schlupfloch 2

Will man sich z.B. ein Haus kaufen könnte mam den Preis halbieren wenn mann die Konsumsteuer nicht zahlen müsste.
Dies ist relativ einfach.
Ich gründe eine Firma welche das Haus kauft und es mir als Geschäftsinhaber gratis zur Verfügung stellt.
Firmen zahlen die Mehrwertsteuer beim Einkauf von Waren und Dienstleistungen.
Beim Verkauf kassieren sie die Mehrwertsteuer für den Staat.
Periodisch zahlen sie die Differenz an die Steuerverwaltung. Dies enspricht der Steuer auf dem geschaffenen Mehrwert.
Meine Firma hat sehr viel Mehrwertsteuer bezahlt und keine kassiert. Die Differenz ist negativ und die Firma bekommt die ganze Mehrwertsteuer zurückerstattet.
Damit kann sie die Hälfte des Darlehens zurück zahlen. Das Haus hat mich nur die Hälfte gekostet. Es gehört meiner Firma und damit mir.
Renovierungen und laufende Kosten werden über die Firma mit der gleichen Methode steuerfrei abgewickelt.
Die Kosten für die Gründung und Verwaltung der Firma sind gering verglichen mit dem erzielten Gewinn.

Lösung 1 (naheliegend aber nicht gut)

Firmen müssen die ganze kassierte Konsumsteuer an den Staat zahlen. Sie können also die gezahlte Steuer nicht mehr abziehen.

Dies ist leider schlecht für kleine Betriebe. Sie kaufen viele Produktionsgüter und Dienstleistungen und zahlen viel Konsumsteuer.
Riesige Betriebe können fast alles selbst produzieren (von den Einzelteilen bis zum Endprodukt inklusive verschiedenste Dienstleistungen) und kaufen sehr wenig. Sie zahlen wenig Konsumsteuer.
Kleine Betriebe würden fast alle verschwinden und es würde extrem schwierig eine neue Firma zu gründen.

Lösung 2 (naheliegend aber nicht gut)

"Fiktive" Firmen werden nicht erlaubt.

Wie definiert mam "fiktive" Firmen ?

Notfalls verkauft meine Firma einige Waren oder Dienstleitungen um als "richtige" Firma anerkannt zu werden.
Wenn nötig bezahle ich einen Angestellten welcher das Haus reinigt oder ich zahle der Firma eine bescheidene Miete oder ...

Der Wettkampf zwischen Gesetzgeber und "fiktiven" Firmen führt zu komplizierten Gesetzen und viel Bureaukratie. Dies wird allgemein Firmengründungen erschweren und den administrativen Aufwand ins Absurde steigern.
Nur reiche Leute werden noch vom Schlupfloch profitieren.

Lösung 3 (einfach aber effektiv)

Der Staat zahlt keine negative Differenz an die Firmen.

Im Beispiel bekäme meine Firma die Mehrwertsteuer nicht zurückerstattet und ich hätte nichts gewonnen.
Negative Differenzen (kurz nach Firmengründung oder während Saisonal- oder Konjunktur-bedingten schlechten Verkaufsperioden) könnten auf spätere Geschäftsperioden angerechnet werden so dass kleine Betriebe auf Dauer nicht benachteiligt werden.

Miscellaneous models

Many proposals and models have been imagined to introduce Unconditional Basic Income (UBI) and to compensate the expenses.

Most (important) advantages and arguments depend on the chosen model.

Some advantages only exist if the state pays UBI and not the employers.

One proposal is to compensate expenses for UBI by a high tax on consumption. It should be a good idea to tax consumption instead of human work.

 

Unconditional is easier!

Laws and rules can be simplified and bureaucracy can be significantly reduced!

Civil servants could be liberated for tasks which are really useful for citizens.

This is especially true if you combine UBI with a tax reform (tax consumption instead of human work). A simple tax is easier than many different complicated taxes.

This simplification would give a boost to the economy.

Human work will be affordable for employers

Employers pay a supplement to Unconditional Basic Income (UBI). An employee can accept a job paid e.g. 500 € / month and live well above the poverty limit.

Companies will be more competitive compared to countries with low standards

Unconditional Basic Income (UBI) will reduce costs of human work.

This is particularly important in the service sector and production of goods involving much human work.

Boost of Entrepreneurship

When my family and me are secured by UBI, it's easier for me to take risks and create a new company.

If I have a good project I can find people who will work with me (at least during the difficult launching phase) without or with a very low salary.

End of exploitation of the poor

With UBI everybody can live decently even if he refuses bad jobs.

Employers have to motivate employees to work for them.

Increased flexibility of labour market

When employees are secured by UBI, dismissal protection rules can be simplified. Then an employer can hire employees without risk to regret it for years.

When my family and me are secured by UBI, I can change jobs without fear.

Employers will offer more employees to work more often at home and avoid daily commuting. Employers have to offer good conditions to attract employees who work for a (small) supplement to UBI.

It will be easier to invest months or years to qualify for a new job when decent living is guaranteed by UBI.

Those contributing unpaid to society will have a decent income

E.o. those working for non-profit organisations (sports, music, protection of the environment, help to the poor, ...) or those renouncing paid work to have more time to care for elders or children.

Increased freedom for everybody

Aquire new qualifications when you have to care for a family.

Take a time off (months or even years) to resource after exhausting years or terrible events.

Renounce paid work to better care for family (elders, children, invalid persons).

Artists, reporters, philosophs, researchers, world rescuers, ... can work full time without caring for a decent income.

Cultural progress

It's easier to acquire new qualifications when you have to care for a family.

Artists, reporters, philosophs, researchers, ... can work full time without caring for a decent income.

Bio-products get affordable

Biologic agriculture needs much human work which is partly funded by UBI.

Health insurance costs will be reduced

The health sector needs much human work which is partly funded by UBI.

Employees can refuse bad working conditions. This reduces health problems due to stress, bad working environment, ...

Prevention, needing much human work, could become cheaper than pills.

Bio-products, needing much human work, could become affordable and reduce bad industrial food consumption.

Funding of retirement pensions will be easier

Pension funds only pay a (small) supplement to Universal Basic Income (UBI).

Elders will probably retire later because

  • Employers have to offer good conditions to attract employees who work for a (small) supplement to UBI. That's why elders will easily find good jobs.
  • Elders don't liberate jobs for young people needing an income (because all have UBI).
  • They can have a (well) paid job without loosing UBI.

Those living from UBI are not 2nd class humans

When everybody receives UBI this is something positiv and normal.

Today people receiving RMG (an allocation for the poor) often have a bad image (lazy freeloader ...). After receiving RMG it's very difficult to get a job.

No illegal immigrants

They want UBI and have to register to get it.

They are not interesting for employers because they need a higher salary than those receiving UBI.

Less crimes

Nobody needs to do illegal things to have a decent living.

Even in rich Luxembourg some people get no support because of the complex bureaucratic social system.

With the same budget prevention actions needing much human work can be increased because salaries will be reduced +- by the amount of UBI.

UBI in practice

Some projects have shown the positive impact of UBI.

In Alaska all inhabitants are paid an unconditional grant from the revenues of petrol. Since the start of this the economy grows better than in the rest of the USA and people have stopped leaving the country.

A pilot project in Namibia has shown that Unconditional Basic Income (UBI) has a very positive impact.

It's a fundamental human right (The Universal Declaration of Human Rights)

Article 25:  «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...».

All member states of the United Nations have declared to protect these rights.

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