UBI

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Along with my incredible actuarial analysis of our tax system over the weekend, I also figured out how much Universal Basic Income (UBI) would cost. If we were, straight off the bat, to give everyone in the UK over 18 £500 a month, it would cost somewhere in the region of £312 billion a year.

Which is a lot of money.

That said, it’s only half of what HMRC brought in in the 2017-18, but one would have to assume that they’d be less than impressed if the government suddenly nicked half of their ‘hard earned’ money and gave it away again.

It struck me you could do a phased rollout over a few years, which would have much less of an impact on the coffers.

YearAge Ranges

Annual Cost (Cumulative)

1

18 – 29

£61.4 billion

2

30 – 39

£113.6 billion

3

40 – 49

£165.4 billion

4

50 – 59

£218.5 billion

5

60 – 69

£260.9 billion

6

70 – 79

£292.6 billion

7

80+

£312 billion

Obviously, you’d have to take into account people getting older as you progress which will shift the figures about a bit, but it is probably do-able and I’m sure could it be used to replace various benefits and other payouts that many people get.

If I were running the system, I’d insist on three rules:

1) Everyone gets it, no exceptions (else it’s not universal)

2) What you do with it is up to you (no caveats)

3) If you don’t want it, don’t refuse it, give it away to someone who does

A lot of people assume that if you give people free money they will spend it on drink and drugs, which is a) very cynical and b) from the studies I’ve seen, not the case. Most use the money for helping with paying for life or for setting up their own businesses.

I think the latter is really important. Between 2012 and 2017 I worked as a freelance contractor, and it was hard but rewarding work. However, it wasn’t really what I wanted to do. I really wanted to make films or work on more speculative web projects, but with a young family to feed and not always knowing where the next month’s pay packet is coming from, I never felt able to take the risk and really go for it. If I’d had UBI, knowing that at least there would be food on the table each month, I think I could have achieved so much more.

(Data sources: statista.com)

Not great news for Mr McDonnell

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WARNING: Amateur economist possibly making rash comments about things he doesn’t know enough about.

With Labour making waves promoting Universal Basic Income, and threatening to raise taxes for the ‘rich’, I’d thought I’d do a bit of investigating to see how much tax we actually pay into the coffers each year.

Using some handy dandy stats from statista.com on UK population and earnings, and some genius coding by yours truly, I created some fairly rudimentary graphs like this, which shows the number of people per ‘salary band’ in the UK during 2018:

The first thing that struck me was just how many people are in the £20 – £30k salary bracket. I’m not sure what I was expecting, and it probably shouldn’t have come as much of a surprise, but there you go.

Then I broke the various salary bands down in the to current tax brackets to work out how much tax we paid last year – a healthy £116,867,500,000 (give or take a few pence), as it goes.

The obvious thing that sticks out is, even with the current tax regime, just how much more tax those earning over £50k pay. That got me thinking, how much would we have earned if Labour were in charge and had bought in their revised 45% for the £85k+ bracket, and 50% for over £123k.

That would have bought in £120,876,600,000, a good 4 billion extra. Healthy, if not somewhat annoying for the higher earners, who already feel they are shouldering a disproportionate amount of the tax burden.

But what if then, I wondered, should the recent article in the Times have come to pass and 1 in 10 of the higher earners (over £150k) had cleared off and got their salary paid in another country?

In that case you undo all the hard work of changing the tax system, and bring in just £117,080,680,000. That’s an improvement of a mere £213,880,000, which in the grand scheme of things, and with upsetting a lot of people to boot, hardly seems worth the effort.

Tomorrow: UBI, how will it work?