Universal Income.

Darat said:
Tax bands don’t usually work like that do they?

People will have a tax free allowance, so in your example you make that £10,000. People are then taxed above that so your 25k earner is only paying 10% tax on 15k, not 25k. Your 60k earner is taxed at zero for the first 10,000, then 10% on their next 10k, then 25% on 30k, then 50% on 10k.
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That's what I (tried) to apply with the figures I showed. Let me know if I got the arithmetic wrong.

A 25k earner pays 0 on 10, 1 on the next 10 and then 1.25 on the next 5. That's 2.25k in total. For example.
 
psionl0 said:
That's not how tax scales work. Under your system, a person on 11k would pay 1.1k tax on the extra 1k that they earned.
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No. Sorry I might have described it ambiguously but the maths is correct.

The tables normally work as follows
0 to 10k - 0
10k to 20k - 10% of earnngs in excess of 10k
20k to 50k - 1k + 25% of earnings in excess of 20k
over 50k - 8.5k + 40% on earnings in excess of 50k

Person 1 earns 10k and takes home 10k
Person on 25k is taxed 2.25k and takes home 22.75k
Person on 60k is taxed 12.5k and takes home 47.5k
Person on 1m is taxed 399988.5 and takes home 600,011.5k
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Yeah. that's what I did. But one of us has done the 1m arithmetic wrong. And I think it's you. 40% of 950k is 380k + 8.5k in tax from the other bands in total.


then after receiving the UBI of 10k they should pay 18.5k tax on their 50 k which is a marginal rate of 37%.

If you keep the upper tax rate unchanged then persons on incomes over 50k would be no better or worse off because they would receive 10k but pay 18.5k plus 40% of their income over 50k in tax (the same as before).

Person 1 would be better off because they can do casual work and only be taxed 37% of these earnings instead of losing their benefits.

Person on 25k receives 10k UBI and pays tax of 7.375k so they take home 27.625k - marginally better off than before.

This is hypothetical of course but it shows how easy it is to adjust the tax scales to take UBI into account.
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Right so just to be clear is that what you are proposing? Eliminate the lower tax bands and then adjust the basic rate so that someone on 50k breaks even?

So before a person on 50k pays 8.5k in tax and after they earn 60k and pay 18.5k in tax? So roughly a 31% basic rate of tax for earnings from 0-50?

That's not gonna work for person 1 who just lost 31% of their 10k.

That's not gonna work I don't think. Or were you assuming UBI is not taxable income? That would give us your 37%

So person 1 is break even
Person 2 gains marginally (which is contrary to what you said before)
Person 3 and 4 break even

The sums on that seem to work. The issue I would have with it is that you have basically done away with progressive taxation and more or less equalised the basic rate and upper rate. I guess that could be overcome somewhat by putting the extra costs of UBI onto higher rate payers but 37% marginal tax rate on the lowest earners seems very high.
 
Just for giggles.... I wondered what that would look like in terms of cost.

If we assume basic rate taxpayers would be on average £2500 better off (is that about right? seem high?) then the total cost would be in excess of £60bn a year. Which is roughly what Universal Credit costs the UK currently - i.e. you'd be doubling that.

The UK currently takes about 200bn in income tax annually so you'd have to increase income taxes across the board by about a third to pay for it.
 
Archie Gemmill Goal said:
Just for giggles.... I wondered what that would look like in terms of cost.
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Dude, just because some of us idiots here on a web forum haven't figured it out using half a brain cell each doesn't mean there's no solution.

Let me have a crack at it:

Bracket 1: <=10k; 0%
Bracket 2: 10K to 20k; 10%
Bracket 3: 20k to 50k; 25%
Bracket 4: >50k; 40%

Person 1 benefit earns 10k and keeps 10k
Person 2: 25k, is taxed 2.25k and keeps 22.75k
Person 3: 60k, is taxed 12.5k and keeps 47.5k
Person 4: 1m, is taxed 388.5k and keeps 611.5k
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Now if we introduce 10k of UBI to replace welfare.
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Leaving aside that it's a dumb example because the person earning 10k already has the equivalent of your UBI making the change pointless...

Bracket 1: <=10k; 0%
Bracket 2: 10k - 30k; 30%
Bracket 3: 30k - 60k; 45%
Bracket 4: >60k; 50%

Person 1: 10k -> pays 0; keeps 10k
Person 2: 10k + 25k -> pays 8.25k; keeps 26.75k
Person 3: 10k + 60k -> pays 24.5k; keeps 45.5k
Person 4: 10k + 1m -> pays 489.5k; keeps 510.5k

See? Person at zero aside from benefits still gets living wage... people above get a slight upgrade, until the richer ones start paying into the system, some of them quite heavily so.
 
Archie Gemmill Goal said:
The sums on that seem to work. The issue I would have with it is that you have basically done away with progressive taxation and more or less equalised the basic rate and upper rate. I guess that could be overcome somewhat by putting the extra costs of UBI onto higher rate payers but 37% marginal tax rate on the lowest earners seems very high.
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It is a lot less than what somebody on benefits could get penalized if they earned extra income. In some cases, the benefits could be reduced dollar for dollar.
 
Orphia Nay said:
Here are the Australian tax rates.

https://www.ato.gov.au/rates/individual-income-tax-rates/

Note, the tax-free threshold is $18,200.
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If all Australians were put on the foreign resident tax scale then somebody on $45,000 would pay 32.5% or $14,625 as compared to $5,092 that residents pay. That makes for a possible $9,533 UBI that could be paid.

Not a lot but a good step forward towards the elimination of bureaucratic welfare systems.
 
Archie Gemmill Goal said:
Can you show your working please so we can see where we are differing? it doesnt matter if ubi is technically taxable or not all that matters is that your earnings and tax balance at the end of the year.

If you've earned enough in a year that your UBI should have been recouped then its going to have to be recouped. As I say the exact workings of the system are going to matter but the principle of the tax system still holds.
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If it doesn't count as taxable income, then it's not going to contribute to your taxable income.
 
Squeegee Beckenheim said:
If it doesn't count as taxable income, then it's not going to contribute to your taxable income.
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I didn't say it would. But I was working on the principle that someone earning a reasonable salary would have their UBI recouped in full. Which now appears to have been abandoned by those proposing it. Which is fine.

The worked example has helped clarify what people actually meant... are you in agreement with the system as described?
 
Archie Gemmill Goal said:
I didn't say it would.
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Yes you did. You specifically counted it as taxable income in post 865, for example, even after I'd said it shouldn't be taxable income.

The worked example has helped clarify what people actually meant... are you in agreement with the system as described?
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I haven't paid too much attention to the specifics, but I certainly support the general idea of people without any other income being able to survive on UBI, low-wage earners being better off than if they weren't working, and with tax brackets being massaged so that those on lower incomes are better off, while those on higher incomes are taxed more, offsetting the costs (whether wholly or in part while other funding comes from other sources). This would mean that higher earners would be worse off than they are now, but not necessarily by an amount that would really mean much to them.

I think everything is too back-of-a-fag-packet to come to any meaningful conclusions WRT the specifics of taxation and funding. But the general principle seems sound.
 
//Tangentially related and not worth a separate thread//

How Much Money Is 'Enough'? This Simple Thought Experiment Gives You an Exact Number to Aim For

Suppose you're one of five people who have been selected by a mysterious philanthropist to participate in a contest. The five of you all have comparable debt-levels and costs-of-living, as well as similar, middle-class financial situations. You're all roughly the same age, equally healthy, have the same number of children, and you all live moderately low-risk lifestyles. Privately, and one by one, a representative of the donor approaches each of you with a blank check and a pen, and poses the following question:

How much money would you have to be paid, right here and now, to retire today and never receive another dollar of income (from any source) for the rest of your life?

The catch this time is that whoever among the five players writes the lowest amount on the check will be paid that sum. The other four players will get nothing.
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Article: https://www.inc.com/jessica-stillma...-exact-number-to-aim-for.html?utm_source=digg
 
Squeegee Beckenheim said:
Yes you did. You specifically counted it as taxable income in post 865, for example, even after I'd said it shouldn't be taxable income.
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it can either be taxable or non-taxable income and the tax rates would reflect that. Obviously if it was non-taxable income it wouldn't be taxed but you would pay a greater % tax on your income than if it was considered taxable income to get the same net effect.

I haven't paid too much attention to the specifics, but I certainly support the general idea of people without any other income being able to survive on UBI, low-wage earners being better off than if they weren't working, and with tax brackets being massaged so that those on lower incomes are better off, while those on higher incomes are taxed more, offsetting the costs (whether wholly or in part while other funding comes from other sources). This would mean that higher earners would be worse off than they are now, but not necessarily by an amount that would really mean much to them.

I think everything is too back-of-a-fag-packet to come to any meaningful conclusions WRT the specifics of taxation and funding. But the general principle seems sound.
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Well the specifics kind of matter. A lot. Appreciate it's not your job to work them out but the method we saw proposed above for example left the poorest no better off and more or less did away with the idea of progressive taxation and still seemed to be hugely expensive.
 
psionl0 said:
If all Australians were put on the foreign resident tax scale then somebody on $45,000 would pay 32.5% or $14,625 as compared to $5,092 that residents pay. That makes for a possible $9,533 UBI that could be paid.

Not a lot but a good step forward towards the elimination of bureaucratic welfare systems.
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Plus the UBI could be higher if the beaurocratic welfare system was simplified and Centrelink was cut.

Squeegee Beckenheim said:
Yes you did. You specifically counted it as taxable income in post 865, for example, even after I'd said it shouldn't be taxable income.



I haven't paid too much attention to the specifics, but I certainly support the general idea of people without any other income being able to survive on UBI, low-wage earners being better off than if they weren't working, and with tax brackets being massaged so that those on lower incomes are better off, while those on higher incomes are taxed more, offsetting the costs (whether wholly or in part while other funding comes from other sources). This would mean that higher earners would be worse off than they are now, but not necessarily by an amount that would really mean much to them.

I think everything is too back-of-a-fag-packet to come to any meaningful conclusions WRT the specifics of taxation and funding. But the general principle seems sound.
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This.

We're only looking at taxation here, but the savings on welfare would mean the UBI would be higher.

psion10 have you worked out how much your taxation would raise?
 
Orphia Nay said:
psion10 have you worked out how much your taxation would raise?
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I can't do this without a lot of statistical data.

What I can point out is that anybody earning less than $45,000 would be better off because of the UBI while those earning more than $45,000 would pay the same amount of tax as before when you add in the UBI.

While UBI would replace part of the existing benefits that people already receive (remember, this is a start), that would leave a number of low income people and others who are not currently receiving benefits getting more money in their pockets.

The money for this would have to come from somewhere (possibly increasing the marginal rate to 37c or more for people earning more than $45,000).
 
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