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Let the people decide which UBI model is our policy.

Let the people decide which UBI model is our policy.

A fiscally neutral costing of a UBI of $300 has shown that flat income tax increases of 18% results in 91% of people being better off by a net of $8266 each. While 93.6% of people are better off by a net of $8259 if the top tax rate is increased to 63%. While a GST increase of 14.6% funding a UBI of $350 results in 95.7% better off by a net of $12217 each. Finally a tax free earning for the first $100,000 and a $400 UBI would require a GST increase of 31.1% resulting in 99% of people being better off by $19605 each. This is assuming a 90% spend of the UBI. Can we get these numbers checked by economists? Put all UBI schemes onto an interactive internet site so people can see what it means to them and vote?

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    • Peter Brake
      commented 2016-12-01 16:00:27 +1300
      Hi Alan
      The total cost net of savings of the UBI is about 40 Billion dollars. The 18% increase means 10.5% increases to 28.5%, 17.5% increases to 35.5% etc. The bottom 91% of earners are better off but there are disincentives for people working.
      The increase of GST of 14.6% means 15% increases to 29.6%. The net of $12217 adds all the UBI received, deducts all the additional GST paid from normal spending and the additional spending of estimated 90% of the UBI. 95.7% of people get more money than they pay in GST.
      If we add all the net results for all the people including the big earners who have negative results we get a total enrichment of the population (no it is not zero) in this instance it is $43Billion dollars which I have divided by the number of tax payers to get the average result of $12217. The reason for the net wealth gain is the “velocity of the money”. The whole of the economy will be better off with people spending more money – I have left out any income or corporate tax increases however.
      The GST rate to cover the UBI and $100,000 tax exemption would need to rise 33.6% from 15% to 48.6% which is how the government books stay neutral. The enrichment of the population would be $69Billion dollars and to me this is the best option to take for financing a UBI.
      I am really hoping that Gareth’s team of economists will take some time to audit my financial models and take up the challenge of putting this and more into a website to engage the people. We could deliver all the results to political parties including how many voted for which scheme and importantly how much of the UBI individuals would be likely to spend. This really helps the modelling.
    • Alan Dawn
      commented 2016-11-30 10:11:26 +1300
      Peter, can you please clarify your figures? “A fiscally neutral costing of a UBI of $300 has shown that flat income tax increases of 18%…” do you mean all marginal tax rates increased by 18%?
      “…a GST increase of 14.6%…” do you mean increasing the current rate to 17.19%?, and how do you reach $12217 net gain?
      “…a GST increase of 31.1%…” i.e. take it to almost 20%? How is the rest of Government expenditure funded if income is tax free up to $100,000?
    • Peter Brake
      commented 2016-11-29 15:04:36 +1300
      Hi James – What I am asking for is a well advertised interactive website where people can input their yearly income, asset value, yearly savings, rent & mortgage payments & expected spend of the UBI received. The site would tell them what each of the schemes would mean for them personally. They would also be able to vote on their favorite model and we could use their inputted information to extrapolate what each of the models results would be. It would get the people involved in the UBI discussion, possibly get them more politically active and really give us a good idea as to the best direction to head.
    • Peter Brake
      commented 2016-11-29 14:56:27 +1300
      Hi Richard – the $100,000 tax free GST scheme costs anyone earning over $250,000 (the top 1% of New Zealanders). This simply puts the cost where your wealth tax was heading. Without any of the complications. The GST raise also costs travelers to NZ – which is also I think a TOP policy of getting tourists to pay for the environmental costs of them visiting. The extra $20,000 that about 97% of people get (this is after the effect of the GST raise is deducted) would mean a lot to the 50% of people earning less than $27,000.
    • Richard Wyles
      commented 2016-11-28 10:40:14 +1300
      Capital gains tax isn’t the way to go. The gain is too fickle as you rightly point out. Instead it is a tax on actual capital value.
    • Peter Brake
      commented 2016-11-28 10:12:27 +1300
      Richard, James & Duncan thanks for the post. I did some very quick calculations, the 2013 Census states 49.8% of people over 15 own or partly own a home. The search on residential homes show an average NZ price of $622,309 with an increase for the last year of 12.7% using the same UBI cost as for the my suggestion the tax on capital gains would need to be 26.46%. Leaving an average capital gain tax per house owner (50% of tax payers) of $20,900, when they are receiving $18,200 as a UBI. Very many people would be adversely effected by this. I know there is more then property as wealth but this is the most of it. The stated purpose of this tax is to decrease house prices, so if successful their is a lesser tax take next year. The government would be facing large deficits and needing to promote and support higher house prices for their tax take. We can argue for capital gains tax however – I don’t think it will work as a way to finance a UBI please tell me how I am wrong as I’m willing to support practically any sensible suggestion towards achieving a UBI.
    • Peter Brake
      commented 2016-11-28 09:43:50 +1300
      Yes James and with the GST and the first $100,000 earnings tax free there is no need to fly under the radar. The Finnish arguments for a UBI mention this quite strongly, the unemployed get little earnings from a days work. A GST financed UBI changes this. Their UBI does not get reduced for their earnings.
    • James Maclaurin
      commented 2016-11-28 09:31:26 +1300
      An important difference between a UBI and the unemployment benefit is that UBIs aren’t means tested so people don’t feel the need to top them up with ‘nefarious activity’ because they can top them up with legitimate part time work which decreases disengagement from wider society.
    • Alan Dawn
      commented 2016-11-27 22:00:10 +1300
      Various countries are trialing the idea, so let’s see what they find. My observation from living most of my life in what might be described as a rural disadvantaged area, is that the unemployment benefit has become a de-facto UBI. Income is topped up with other nefarious activity and participants commonly are disengaged from wider society. It’s not good for them or NZ. I’m not convinced that removing the ‘stigma’ of receiving a benefit will change such behavior, but I don’t believe it was there before the dole was widely available. Of course many other factors influence current culture and some serious discussion needs to be had.
    • Alan Dawn
      tagged this with interesting 2016-11-27 22:00:10 +1300
    • duncan cairncross
      commented 2016-11-27 15:39:24 +1300
      It is important to put the various options somewhere where people can read and criticize them
      Personally I think we should be looking at wealth taxes to fund a UBI
    • duncan cairncross
      tagged this with important 2016-11-27 15:39:23 +1300
    • James Maclaurin
      commented 2016-11-27 09:18:18 +1300
      I agree wtih Richard Wyles. NZ’s problem is untaxed wealth, not untaxed income so a UBI should be funded by a wealth tax.

      More imporantly — Voters are likely to be sceptical about referenda in light of recent US and UK democratic debacles, so we should be very wary of schemes to ‘let the people decide’…
    • Richard Wyles
      commented 2016-11-26 02:35:20 +1300
      UBI shouldn’t be paid for through income tax increases. All that would do is make the marginal cost of working versus not working become very imbalanced. Instead a low Capital or Wealth Tax of 1% would deliver substantial revenue and we have an easy mechanism to do it. For example if you have a $1M mortgage free home, a $500,000 bach, a $100,000 boat and $100,000 in savings you would pay $17,000 in Capital Tax. That would trigger some rethinking around where we put our wealth – and shift it to investing back into the economy where you can get a return, rather than an ever expanding list of toys.
    • Peter Brake
      published this page in Suggestions 2016-11-25 19:51:09 +1300