Rothstein correctly identifies as an advantage of such a reform that it ‘would force employers to create more acceptable and less demeaning types of work because people would not take jobs they consider unsatisfactory. Releasing people from the compulsion to have a paid job would, according to the proponents, also mean strengthening the voluntary/civil society sector and cultural life’. He equally correctly identifies as disadvantages that it ‘would be unsustainably expensive and would thereby jeopardize the state’s ability to maintain quality in public services such as healthcare, education and care of the elderly’, that it would lose political legitimacy, and that ‘people who can work [would] choose not to work’. [...]
So instead of a UBI scheme that pays £800 per month to every individual, and that abolishes means-tested benefits, let us instead pay £264 per month to every individual (with different amounts for children, young adults, and elderly people), and let us leave means-tested benefits in place and recalculate them on the basis that household members now receive UBIs. Instead of leaving undefined the funding method for a UK-based UBI, as Rothstein does, let us choose to fund it by abolishing the Income Tax Personal Allowance and the National Insurance Contribution (NIC) Primary Earnings Threshold (so that Income Tax and NICs are paid on all earned income), let us apply a flat rate NIC of 12% to all earned income (rather than the current two-tier 12% and 2% structure), and let us increase Income Tax rates by just 3%.
According to research published by the Institute for Social and Economic Research at the University of Essex, the effects of such a UBI scheme would be interestingly different from the effects of Rothstein’s. Far from being ‘unsustainably expensive’, it would require no additional public expenditure, and so would not affect expenditure on public services. Rothstein cannot show that his scheme would not impose significant losses on low-income households. This alternative scheme would not impose significant losses on these households, it would impose few losses on households in general, and it would still take a lot of households off some of our existing means-tested benefits. Rothstein cannot tell us how his scheme would redistribute disposable income, or how it would affect poverty or inequality indices. This alternative scheme would redistribute from rich to poor, it would reduce every poverty index and significantly reduce inequality. Rothstein tells us that his scheme would reduce the incentive to seek employment. This alternative scheme would reduce some important marginal deduction rates (or the rate at which additional earned income is reduced by taxation and the withdrawal of means-tested benefits) and it would therefore incentivize employment, self-employment, and new small businesses.
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