Universal Income Revisited

Written By: - Date published: 11:44 pm, February 28th, 2011 - 96 comments
Categories: tax - Tags:

The tax system we currently have is a relic of the pre-IT age. In the days of manual clerk-handled accounts, it was impractical to reconcile tax accounts more than once a year. The introduction of PAYE in 1958 was welcomed as it eliminated the need for ordinary people to find the cash for a large tax bill at the end of the tax years. It effectively transferred the annual responsibility for paying the tax from the taxpayer, to the payroll dept of his/her employer on a weekly/fortnighly/monthly basis and greatly smoothed the cash flow for both taxpayer and govt.

The advent of IT technology meant that tax could be paid at any interval you wanted; daily even. But the big opportunity missed by almost everyone… tax could not only be paid… but could be equally received with the exact same facility. Receiving tax is a novel concept to many people.. it’s can be thought of as ‘negative tax’.

Such a negative tax paid on a regular basis is usually termed “Universal Basic Income” (UBI). It’s an idea with a long and respectable history and numerous variants, but for the purposes of this article I’ll go with a simple model.

1. Every adult over the age of 18yrs has one single tax linked bank account, into which IRD pays $200 pw… or $10,000 pa. Over the age of 65 the amount is raised to be equal to superannuation around $300 pw. This is the ‘negative tax’ component.

2. All income is taxed at a single flat rate… say 40%. This is the ‘positive tax’ component.

3. All first-tier individual benefits such as the dole and superannuation are eliminated.

4. There would remain a range of smaller and targeted secondary benefits such as sickness/disability/accommodation etc that would be administered by the department most directly responsible for that social function. (eg the sickness/disability benefit is logically a function of Health)

(For a more sophisticated analysis I’d direct readers to this country’s one it’s most stalwart proponents of UBI …Keith Rankin. )

At $25k income total tax = (25,000 * 0.4) – 10,000 = 0. Total nett tax rate = 0/25 = 0%

At $40k income total tax = (40,000 * 0.4) – 10,000 = 4,000. Total nett tax rate = 4/40 = 10%

At $60k income total tax = (60,000 * 0.4) – 10,000 = 14,000. Total nett tax rate = 14/60 = 23%

At $80k income total tax = (80,000 * 0.4) – 10,000 = 22,000. Total nett tax rate = 22/80 = 27.5%

At $100k income total tax = (100,000 * 0.4) – 10,000 = 30,000. Total nett tax rate = 30/100 = 30%

At $200k income total tax = (200,000 * 0.4) – 10,000 = 70,000. Total nett tax rate = 70/200 = 35%

In other words total nett tax starts at zero for those earning $25k and asymptopically approaches the flat tax rate of 40% for those on very high incomes.

Looking at the immediate and practical merits of this reform, first and most fundamental is that it treats ALL citizens exactly the same, everyone receives exactly the same UBI and every dollar earned, whether it’s the first dollar earned by an apprentice, or a bank executive’s ten millionth, it’s taxed at the same flat rate. While at the same time the overall nett tax paid as income increases remains progressive. But the best thing about UBI is what it gets rid of:

1. Eliminates all benefit abatements and high marginal tax rates are inherent in the current system whenever you have any form of targeted benefit or tax rebate.

2. Eliminates all the ‘poverty traps’ that people encounter especially when transitioning from welfare to work.

3. Eliminates the soul-crushing complexity and costs associated with administering social welfare.

4. Eliminates the distortions created when IRD assesses individual’s for tax liability, while WINZ assesses households for benefit eligibility. (In NZ only 35% of people who loose their job qualify for the dole because their partner income is too high, while all earners pay tax regardless of their partner’s)

5. Eliminates the argument for income splitting and empower’s non-earning partners in a household, providing them an income stream of their own..acknowledging the value of their otherwise invisible contribution to society.

6. Eliminates the incentive to game the tax system by manipulating personal income into a lower tax bracket and the distortions this creates.

7. Eliminates ‘fiscal creep’ caused by inflation pushing people into higher tax brackets.

8. Eliminates the needless stigma and shame many associate with being ‘on a benefit’, by the simple fact of providing a living income for everyone.

Perhaps the most deplorable feature of our current system is that it’s just so inefficient which creates all manner of opportunities for both politician’s and taxpayers to game it. By contrast UBI as I’ve outlined it here is simple and almost impossible to game. In any given tax year the Minister of Finance has only two numbers to announce… the UBI income and the flat tax rate. The political and social implications of changing these numbers would be direct and difficult to spin.

Again I have to emphasis the version I’ve presented is not complete. There is plenty of room to debate the numbers I’ve used for this example. With roughly 3m adults in this country the UBI at $10k pa adds up to $30b pa. With the average income at $45k over roughly 2 m wage and salary earners the 40% flat tax rate adds up to $38b… so the numbers do potentially add up. I would suggest the rest of govt expenditure could be funded from existing GST and Company Tax and a widened tax base…especially a Financial Transfer Tax (FTT) and a moderate CGT.

Is UBI too radical to implement? Not necessarily. The efficient flat rate income tax aspect appeals to right wingers while the nett progressive overall rate satisfies the left’s call for social justice.It would be relatively simple to include a universal ‘child benefit’ in the same mechanism, eliminating the need for WFF. The remaining benefit normally targetted at households the accomodation supplement which could perhaps be better administered by a somewhat expanded Housing NZ. Ultimately the entire WINZ organisation costing close to $1b pa in administration costs alone, could be dismantled. As vital as it’s work has been, few would mourn it’s passing.

The Greens long supported the idea, (but seem to have soft-pedalled it in recent times), while Gareth Morgan prominently pushed the UBI idea when he dissented from the Tax Working Group he served as a member of a year ago. It is not an obscure nor innately ‘left-field’ proposal. As every year passes the failings of the current system become more apparent, the more attractive UBI becomes as a sound alternative. Whether it was National or Labour who adopted this reform (and either are capable of doing so) nothing could more clearly signal to the electorate a determination to make a genuine break with the past.

Nothing shows so clearly the character of a society and its civilisation as does the fiscal policy it adopts.

Åsa Gunnarsson, Senior Lecturer in Tax Law, University of Umeå, Sweden; quoting Joseph Schumpeter.

96 comments on “Universal Income Revisited ”

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  1. weka 1
    1 March 2011 at 12:30 am

    Nice.

    Presumably there would be supplementary benefits to replace DA and TAS/SpB? There are others too. Who would administer those?

    WINZ now consider the main part of their brief is to ‘help’ people find work. I can’t see that changing.

    Also, given the nature of politics, what would you see the potential skewings that could happen under National or Labour?

  2. Colonial Viper 2
    1 March 2011 at 12:35 am

    Love your work RL.

    BTW spellcheck “asymptotically”. [Thanks…fixed. RL]

    As for any revenue numbers which do not quite add up, the Government could just, ahem, fund the bank accounts with freshly minted NZ Government credit. This has the added benefit of reducing the hold of interest bank credit on our money supply.

    • RedLogix 2.1
      1 March 2011 at 5:50 am

      I understand this, but realistically it’s not likely to happen in any immediately foreseeable future.

      I first saw this idea over a decade ago, and in all that time I’ve never seen any fatal objection to implementing it. Many senior politicians (Dr Cullen for instance) have been aware of it, if not persuaded that the electorate was ready for it.

      In the form I’m outlining… it’s doable.

      • Vicky32 2.1.1
        2 March 2011 at 12:23 am

        It sounds brilliant, really, but I can’t see it ever happening! I know absolutely nothing about tax/economics etc. but it makes sense to me.

  3. Draco T Bastard 3
    1 March 2011 at 12:45 am

    1. Every adult over the age of 18yrs has one single tax linked bank account, into which IRD pays $200 pw… or $10,000 pa. Over the age of 65 the amount is raised to be equal to superannuation around $300 pw.

    Why the ageism and why the complication of a “universal ‘child benefit’”? Everyone needs close to the same minimum amount to live on and the Universal Income is supposed to be that minimum so, to remove any silly complications, just give the same amount to everyone.

    Also, $10k/year isn’t enough as you don’t have enough to do anything (talking about starting a small business or going to work). It pays the rent and food and that’s about it. IMO, the amount should be ~$20k

    With the average income at $45k over roughly 2 m wage and salary earners the 40% flat tax rate adds up to $38b… so the numbers do potentially add up.

    The numbers can always be made to work it’s more a question of if they’re palatable 😛

    IMO, the flat rate should be set at 50% (or, a maximum of 50%) with the rest made up from CGT, FTT and a consumption tax on luxury items (ie, true consumption items rather than necessities like food). The 50% is partly from the fact that I think the UI should be higher than $10k so you need more “income” and partly from the fact that no one is going to settle for having more than half their income going in tax.

    Another aspect of the UI in regards to taxes is that everyone would have to be treated as a business which would mean business expenses would also be available to everyone. This is good in that it brings everyone (individuals and businesses) under the same rules but it would mean that those business expenses would have to be more clearly defined else everything would quickly become a business expense. This would also mean that accounting software would have to be available through the IRD.

    In any given tax year the Minister of Finance has only two numbers to announce… the UBI income and the flat tax rate.

    Actually, the finance minister should still be announcing the budget and the UBI and flat tax rate would be set by the RBNZ in relation to the budget. Probably reset every quarter so as to maintain a balanced budget. Done in association with the printing of money removed from private banks and given over to the RBNZ (printed at 0% interest of course) as well it would help bring our economy back under our control.

    The advent of IT technology meant that tax could be paid at any interval you wanted; daily even.

    Actually, IMO, the big advantage of IT and the UI is that the taxes could be done in real time if we moved to a cashless society (it’s happening anyway) and all financial transactions went through the IRDs computers.

    • Colonial Viper 3.1
      1 March 2011 at 1:12 am

      Need real notes and coins to provide a resiliency back up in the system.

      Think post earthquake for instance.

      • Draco T Bastard 3.1.1
        1 March 2011 at 2:38 am

        Not really. Smart cards can remember the transaction even if the telecomms is down. If power goes down then it may be a little more complicated but people can always use an UPS.

        After a disaster like an earthquake people in that region shouldn’t be paying for stuff anyway. It should be allocated/rationed so as to stop price gouging and to ensure that resources are going where they need to go.

        • Colonial Viper 3.1.1.1
          1 March 2011 at 11:11 am

          Not that I can’t see the advantages of a real time system, but still really iffy about it. Misuse, hacking, inappropriate accessing of information, use by unfriendly forces, or system failure could become a very big problem. The big banks will do their darndest to have it privatised into their hands over time.

          Whole commercial areas go down when the EFTPOS falls over for an hour, I can’t help thinking that this is yet another interlinking dependency therefore it is more likely to add systemic fragility not reduce it.

          • Draco T Bastard 3.1.1.1.1
            1 March 2011 at 2:04 pm

            It’s coming no matter what we do so we’ll just have to deal with shortcomings.

            The big banks will do their darndest to have it privatised into their hands over time.

            They’ve already done that – the banks already control the economy. My suggestion is to take it back off them because if we make a system mandatory it can’t be left to the private sector as it will allow them to charge excessive rents.

            Whole commercial areas go down when the EFTPOS falls over for an hour,

            That’s probably because there’s more and more people who just don’t carry cash.

      • Vicky32 3.1.2
        2 March 2011 at 12:29 am

        Also such things as buses, the lawnmower man etc. Could never do without cash, sorry, I have tried!
        Deb

    • RedLogix 3.2
      1 March 2011 at 5:28 am

      Why the ageism and why the complication of a “universal ‘child benefit’”?

      An interesting question.

      The UBI system implicitly anticipates that a lot more people of working age would find part-time, short-term casual or low-level self-employment to supplement their UBI. At present such enterprise is fiercely punished with absurdly high abatement rates. Most of it’s proponents accept that the UBI couldn’t be practically set at such level that living on it alone would be ‘comfortable.’ for an extended period…. that there would remain a reasonable incentive to supplement it with other income.

      (On the other hand the UBI might enable small collectives/cluster households to thrive more or less indefinitely if a number of people were able pool their individual UBI’s and operate more efficiently than a one or two person household could.)

      Secondary benefits such as Sickness and disability benefits would have also dissappeared. In this case I would suggest that the supplementary support needed for these people could be best administered by the Health system, specifically a function of a somewhat expanded DHB’s, and delivered as part of primary health care.

      But once at retirement age the opportunity to supplement the UBI diminishes rapidly and $10k pa is simply not enough for people to live on into their 80’s or even 90’s. Even with Gold Card the $300 pw Super at present is still pretty minimal. UBI is not a magic wand.. it doesn’t directly solve all the problems of an ageing population, and insufficient personal or national savings.

      The idea of a ‘universal child allowance’ aligns with conventional thinking that children are neither fully wards of the state, nor fully the chattel’s of their parent’s. Most people accept some realistic middle ground between the two… which we currently reflect in the tax system with WFF.

      But otherwise DtB … as usual the rest of your thoughts are right in the game. Thanks.

      • uroskin 3.2.1
        1 March 2011 at 9:35 am

        Re the universal child benefit. Why not assign everyone in NZ from birth with UBI linked to age, i.e. in your first year you get $10pw, when you’re 19 you get $190pw. This would eliminate the need for WFF, allow children to amass a fund (if their parents don’t charge them for living in their household) for study or business investment later. At the other end of the age scale, Kiwisaver should be able to cover shortfalls for aged people on $200 UBI. The concept of pensioners can be abolished then too.

      • Draco T Bastard 3.2.2
        1 March 2011 at 1:55 pm

        The UBI system implicitly anticipates that a lot more people of working age would find part-time, short-term casual or low-level self-employment to supplement their UBI.

        I’m aware of that but I’m of the opinion that the level that you’ve set will actually prevent them from doing so as it won’t cover the added expenses the same way that the UE doesn’t now. It certainly isn’t high enough for them to start their own small home business which I think is something that the UI should support as it would encourage innovation within the community.

        But once at retirement age the opportunity to supplement the UBI diminishes rapidly and $10k pa is simply not enough for people to live on into their 80′s or even 90′s.

        For some but not all, I’ve met plenty of people in their 70 and 80s that are still working, and the level I’ve suggested would more than cover the living expenses for those that choose not to add to their income.

        The idea of a ‘universal child allowance’ aligns with conventional thinking that children are neither fully wards of the state, nor fully the chattel’s of their parent’s.

        Just have them on the UBI as well but have it paid to their parents until they reach majority. This would effectively prevent any children living in poverty. Admittedly, you’d probably want to make it less than the full UBI. I’d also like to see some of it given to the children some years before they leave school so that they can be effectively taught budgeting skills.

        • RedLogix 3.2.2.1
          1 March 2011 at 2:18 pm

          It certainly isn’t high enough for them to start their own small home business which I think is something that the UI should support as it would encourage innovation within the community.

          This kind of support, beyond basic living needs, is best addressed by the most relevant govt dept. Everyone still gets the UBI, but:

          Sick or disabled with extra needs over and above the UBI? Then your local primary health care provider is funded to help meet YOUR specific needs.

          Need help with the rent? Then Housing NZ either finds you a state house, or funds you into a private rental.

          Need help starting a business? The Dept of Commerce has various entities specifically funded to help develop and support small business.

          Need more qualifications? The Education system would manage the funding to support you through the required courses.

          And so on. Similar examples could be developed for virtually every govt dept that has an explicitly social function.

          Just have them on the UBI as well but have it paid to their parents until they reach majority.

          Yes that is exactly what I had in mind.. I just failed to make it clear.

  4. weka 4
    1 March 2011 at 12:53 am

    Also, $10k/year isn’t enough as you don’t have enough to do anything (talking about starting a small business or going to work). It pays the rent and food and that’s about it. IMO, the amount should be ~$20k

    I thought it was $10,000 each and the rest made up in supplementaries to $25,000.

    • RedLogix 4.1
      1 March 2011 at 5:42 am

      If you earn no other income… then the UBI at $10k pa would be your sole income. (Other than a Housing NZ managed accomodation allowance.) Agreed… not all that flash.

      But the point is that the every dollar you earn you get to keep 60cents… at present someone on a benefit is lucky to keep 20cents (after the first $80 pw).

      The crucial point to get is that if you are earning less than $25k pa (which is a little less than a full-time minimum wage) your fixed UBI ‘negative tax income” is still greater than any PAYE that you pay. Essentially you could think of UBI as a universal benefit of $10k pa that is abated at 40cents in the dollar.

      Which is a lot better than the 80cents in the dollar (or more) that current beneficiaries face.

      The Fig 2 on Keith Rankin’s graph that I linked to shows this visually.

  5. Just Me 5
    1 March 2011 at 6:44 am

    Red Logix, Do you know if any country implemented this type of solution? and if so what their experience has been?

    • RedLogix 5.1
      1 March 2011 at 10:02 am

      Much of South America has programs in place that can be loosely categorised as UBI systems.

      Brazil has an on going legislative program in place that is being progressively implemented. It’s not the same as the more ‘pure’ version I’ve outlined above… but the idea of a ‘guaranteed liveable income’ is embedded at it’s core.

      Curiously Alaska is another surprising example.

      • Lanthanide 5.1.1
        1 March 2011 at 10:45 am

        One could then say that it is only “poorer countries” that have implemented UBI then. I don’t have a problem if NZ followed the same path, I mean it is the most logical tax system to implement, but I think there would be some objection about essentially throwing our lot in with the ‘poor countries’, as well as talks of communism (Key called WFF communism in a National Radio interview in January (after he said that “basically National invented it” back in the 90’s)).

        I guess the bigwigs at the top who implement the policies don’t like it, because it severely curtails their scope for cheating.

        • Colonial Viper 5.1.1.1
          1 March 2011 at 11:14 am

          Hmmmm speaking of throwing our lot in with the poorer countries, are we talking about the same Key who has just launched a global relief appeal for Uganda and Haiti? Ummmm I mean, New Zealand?

  6. crashcart 6
    1 March 2011 at 7:11 am

    I like the sound of it I only have one concern. I wonder how long it would take employers to start lowering the wages they pay workers to compensate for the extra they are getting in UBI. Business owners would quickly work out that if they pay someone who was on 40K 30K they essentially still have the same buying power but the employer now has an extra 10K per worker that he can either invest in his business (good) or funnel back to himself (bad). The idea of this of course is what may make it palatable to the right, although I can already hear the cry “you are turning all hard work Kiwi’s into beneficiaries”.

    • toad 6.1
      1 March 2011 at 8:50 am

      Given that no-one would be work-tested under threat of loss of their subsistence income any more, it would actually strengthen the bargaining power of workers. Currently workers who take industrial action can’t get the dole. But they would continue to get the UBI while on strike, which would mean employers would not be able to starve them into submission.

      • just saying 6.1.1
        1 March 2011 at 9:06 am

        Yes industrial relations would be a whole different ball game if there were no people lving permanently on ‘struggle-street’.

        • Colonial Viper 6.1.1.1
          1 March 2011 at 11:16 am

          This is what employers hated in the 1970’s. Workers who were fucked off with high handed BS from a bad employer would literally walk down the street and get another job, that same afternoon.

          Can’t have that now can we.

  7. Peter 7
    1 March 2011 at 7:41 am

    This looks interesting, thanks for sharing your ideas. Is this the sort of thinking that Labour should be promoting? They need to make an impact and lead the agenda. National have come up with their Welfare ideas. What will Labour do to demonstrate leadership and innovative thinking that makes sense and wins wide support?

    • Lanthanide 7.1
      1 March 2011 at 10:47 am

      I think Labour has already painted themselves into a corner with their 5k free taxband for this upcoming election. They could have another shot at it in 2014 though, regardless of the outcome of this election.

      If they win this election it would give them a much stronger platform to work from as well – they could set up the infamous “working groups” in early 2012 to look at the issue, and publicly announce that they’re getting Gareth Morgan to head it.

      • Rex Widerstrom 7.1.1
        1 March 2011 at 5:07 pm

        First off, thanks RL for this… it’s a cogent outline even I can get my head around.

        But I wonder whether:

        Every adult over the age of 18yrs has one single tax linked bank account, into which IRD pays $200 pw

        isn’t less efficient than Labour’s (and Australia’s) policy of simply having a portion of income free of any tax, be it benefit, superannuation, investment, wages or whatever.

        “First $X tax free” is a single transaction; from source to recipient. A UBI (while I applaud its aims) seems to involve several. From source to recipient and from source to IRD; then from IRD to recipient.

        Has anyone done any work round the relative efficiencies?

        Of course it’s entirely possible I’ve missed something glaringly obvious, in which case, be kind 😛

        • RedLogix 7.1.1.1
          1 March 2011 at 5:21 pm

          Thanks Rex. Yes you did kick my ass into gear.

          There are many variants on the UBI idea, but I’d consider the ‘tax free bracket’ a sort of partial half-way house towards a true UBI.

          Crucially while a tax-free bracket has merits, it doesn’t bring with it the inherent efficiency of a flat marginal tax rate for all income. Most of the advantages of a UBI are missing.

          Yes the UBI does involve two transactions as against one… which is one reason why in the old days of manual clerk driven accounts such a system could never have been contemplated. But with fully automated banking systems, money can be transferred as often as you like at almost zero cost.

          With IT technology, once a system it is established, the costs of running it are usually relatively modest.

          • Rex Widerstrom 7.1.1.1.1
            1 March 2011 at 6:08 pm

            Good point, though not one I’m sure the IRD would agree with. In my experience their attitude seems to be that we’re all on the fiddle (unless we’re a wage earner who no longer needs to file a return and lets them decide what we pay) and they need buildings full of “compliance” officers to check and double check every transaction (and then go back seven years and disallow them) 8-/

            Then if we instituted a financial transactions tax on all that money moving round, we could afford to do lots of other good stuff too (including perhaps lower other taxes, at least after we’ve rebuilt Christchurch, put some other infrastructure in place, etc)… but that’s another post.

  8. Rob 8
    1 March 2011 at 7:44 am

    It seems to me a 40% flat tax rate would be unlikely to cover the cost of current expenditure on services + the universal income, universal income is actually really quite expensive. The largest income tax source for us is sort of the middle/upper middle bracket who would be paying less than they are now to fund a much more expensive scheme. Would FTT be enough to cover it? Or would we have to raise GST again to pay for it? With this also being aware National would still probably promise tax cuts at some point within a decade of this scheme being announced.

    The further danger is the benefits stigma. The benefits stigma was not a naturally occurring event. It was a strategy to make blue collar workers vote right by pitching them against each other and making them think they worked hard to support the lazier of them. Yes it would be eliminated by getting rid of the benefits system but might National/ACT then merely begin attacking people who live only on the universal income? What is to stop them simply coming into power, changing it back to an unemployment benefit system and then keeping the flat tax at a lower rate.

    It is a good scheme but would need some serious consideration I think. We have to plan not only for the left in government but also the right following it.

    • Colonial Viper 8.1
      1 March 2011 at 8:53 am

      Regulations and policies are certainly poor tools to change peoples values, as you have implied Rob. To do that one needs societal change and a change in messaging and debate throughout communities, *gasp* social engineering: from the grassroots up and from the top down.

    • just saying 8.2
      1 March 2011 at 9:17 am

      I do think much of the stigma and perceived free-loading, not to mention the systems and procedures, would be likely to remain or recur, where a significant proportion of people still have to go begging cup in hand to plead their case for supplementary income to live on, and for necessary services. There would be too much temptation for things to gradually slide back to the way they were. (with plenty of prompting from vested interests, who, by the way would not take this lying down…)

      I can’t see how this could work unless the basic rate was set at the super rate, and supplementaries were formulaic and non-discretionary. A certain level (ie high) of public services would need to be guaranteed. But of course many people would build jobs around their provision too.

  9. TightyRighty 9
    1 March 2011 at 7:51 am

    All the things UBI gets rid off, so does a flat tax rate. Where a UBI falls down, it has disincentives to work harder and earn more. You really would rather everyone be poor than everyone be wealthier. Typical socialist bollocks. Hell, your own logic is wrong. 1 and 6 are easily proved wrong by your own maths. Except if the IRD controls your income (shudder). Also tax avoidance is a moral obligation, only poor people complain about gaming the system, ironically while trying to burn the candle at the other end.

    • Colonial Viper 9.1
      1 March 2011 at 8:50 am

      it has disincentives to work harder and earn more. You really would rather everyone be poor than everyone be wealthier.

      Except we figured out your game already mate. The majority of people are working harder and for longer hours than 30 years ago – and are poorer now. Families need two incomes to get by and working only 40 hours in a week is a luxury.

      So newsflash – doing even more of the same shit for less money is not the way to get ahead in this world. Which by the way, the moneyed elite already know full well.

      Also tax avoidance is a moral obligation, only poor people complain about gaming the system,

      And do you know why that is? Because it is obvious to all that those wealthy who do not pay their taxes are the same ones who continue to take the most from society and who continue to cut social services to those who need it.

    • Rosy 9.2
      1 March 2011 at 9:39 am

      “Also tax avoidance is a moral obligation, only poor people complain about gaming the system”
      People who game the system really bug me. My other half earns enough to consider restructuring his affairs (and is often advised to do so) to avoid tax and but considers it ethical as a citizen and a as person who uses services paid for by taxpayer to pay his share. I admire that. A lot.

    • Draco T Bastard 9.3
      1 March 2011 at 1:18 pm

      Where a UBI falls down, it has disincentives to work harder and earn more.

      Actually, it’s got more incentive to work than the present benefit system as you don’t lose the UBI when you go to work so you’ll always be better off working.

      Except if the IRD controls your income

      The IRD would no more control your income than it does now – it would just record it as it does now.

      Also tax avoidance is a moral obligation,

      TR showing his psychopathy by stating that stealing from everyone else is a moral obligation.

      • Colonial Viper 9.3.1
        1 March 2011 at 1:22 pm

        It’s a moral obligation if you are a Toff.

        But then again, Toff’s tend to believe that a different set of rules in life should apply to them, compared to the working class and the underclass.

        • felix 9.3.1.1
          1 March 2011 at 2:22 pm

          “It’s a moral obligation if you are a Toff.”

          Or a troll. I don’t think TR believes half of the shit he writes.

  10. nadis 10
    1 March 2011 at 9:41 am

    What a UBI looks a lot like is a less efficient form of a high tax free threshold.

    I haven’t fully thought through the implications but the first thing that strikes me is the same type of problem that farm subsidies created – the present value of the subsidy just gets capitalised into land prices. Likewise with our tax system which tends to favour property investment – the subsidy gets capitalised into house prices.

    I think there’d be a similar effect which would be negative on low paid workers – the UB would get get capitalised but subtracted from wages.

    Personally I question the signal it sends – that an adult doesn’t have to work for their income. I’m quite happy to see essential services provided by the state (health, education) but just don’t see why it is efficient to create a whole new class of people who rely permanently on the state for some or all of their income. Easy to argue from a politics angle but I suspect harder from a rational economics basis.

    • aj 10.1
      1 March 2011 at 9:56 am

      ” harder from a rational economics basis”

      How about from a humanitarian basis? or do we just let the sick, disabled, unemployable and unemployed and their children starve?

      Anti spam ‘fun’ – and people reckon it knows what we are typing?

      • Colonial Viper 10.1.1
        1 March 2011 at 11:39 am

        The word “rational” as used in the field of economics, is bullshit. People, agents and organisations do not believe in ways which are rational at all, except from a very limited point of view.

        These same economists have created a system where you need to work 45-55 hours per week just to stay afloat.

        In the 1970’s full employment and rising wages/productivity were such that people were seriously talking about 20 hour work weeks.

        The only “rational” thing about this is from the point of view of the wealth holders who have expanded their holdings based on more people working harder for less.

      • The Baron 10.1.2
        1 March 2011 at 2:35 pm

        Of course not. We are talking about UI as an alternative to traditional welfare. The only person who has thrown in “nothing” as an option is you. Stop fighting your emotive shadow battles and engage the argument.

        I struggle to see how anyone can reasonably argue that there isn’t damage to incentives when you provide people with a no-obligation income. A UI is likely to be less strenuous in terms of obligations than the current system – so all other things being equal, you would expect more people not to bother looking for employment based topups.

        Conversely, the incentives to get more are greater because the abatements are far more reasonable than under the current welfare system. Maybe this would balance out the above – maybe not. That’s why I’d love a bit more thinking about this and policy development from someone, anyone…

        Though I assure you though that the answer is neither “all beneficiaries wanna work” OR “all beneficiaries are lazy bludgers”. If your policy prescription relies on either form of crass generalisation then your either a useless blind ideolog or a bit dim.

        • Colonial Viper 10.1.2.1
          1 March 2011 at 2:49 pm

          I struggle to see how anyone can reasonably argue that there isn’t damage to incentives when you provide people with a no-obligation income.

          The point is to damage incentives to work 50+ hour weeks. That’s a good thing for society. We need to be pushing for the 4 day/30 hour work week to become a practical reality.

          That’s good for family life, good for work life balance, good for people re-engaging with their communities and with politics ( 🙂 )

          Also employment is going to have to be designed to be more intrinsically rewarding, interesting and enjoyable, quite apart from the money aspects. Staff will have to be treated better (and I am not talking in terms of pay, but in terms of working conditions and working relationships).

          Oh yeah, time for the move to 5 weeks annual leave a year.

        • RedLogix 10.1.2.2
          1 March 2011 at 4:03 pm

          @TB

          Yes there are two possible forces at work here, the disincentive to work provided by a guaranteed income and the incentive to work created by an efficient, clean flat tax rate.

          My belief is that at any practical and affordable level, the UBI is likely to be too low to live on ‘comfortably’ for most people. (Sure there will always be some who happily get by on very little, and more power to them… but by and large I’m not too stressed out over their choices.) For most capable and productive folk there will remain a reasonable incentive to earn a more income.

          Most people do choose to work when worthwhile, suitable jobs are available. The fact numbers on the Unemployment Benefit dropped to such very low levels during the boom times in 2007/8 is strongly supportive of this.

          • The Baron 10.1.2.2.1
            1 March 2011 at 5:05 pm

            Yeah that’s why the level debate becomes so important. I think most people would agree that it needs to be sufficient, but not luxurious. Of course there will always be those that can make some form of luxury from not much – I’m not too worried about them either.

            But this is why the debate about where you would set this UI so vital. I agree that if it is at that sort of level, most people will be inclined to work, particularly with the incentives increased through the effective abatement change. But hell, can you imagine how tricky that debate would be? What are we trying to fix with the UI:

            – Ensuring that everyone has enough to subsist on?
            – Reducing child poverty?
            – Ensuring full participation in society?

            Depending on your answer to that, you end up with completely different UI amounts – or at least as far as I see it. And completely different UI amounts mean completely different incentives to go out and top that up.

            I’d still stick to a set percentage of the average wage myself – about say 40%.

    • RedLogix 10.2
      1 March 2011 at 10:15 am

      Personally I question the signal it sends – that an adult doesn’t have to work for their income.

      Well actually we already have a lot of such people who either cannot work, or cannot find work. Besides why the Calvinistic insistence on work? What’s wrong with being able to relax, fish, tramp, have fun with the kids, fuck all afternoon? After all it’s what wealthy people aspire to… on what ‘moral’ grounds are you objecting to having plenty of leisure time?

      In pre-agricultural hunter-gatherer societies, most adults lived long, healthy lives with less than 10-20hrs ‘work’ per week. What’s ‘better’ about a society that forces most people to work 2-3 times longer than that… for far less reward?

      On a more practical level it’s my contention that relatively few people would be content to live on the UBI alone. With a flat-tax rate (and no absurdly high benefit abatement rate) they have exactly the same incentive to earn a little extra cash as does every other tax-payer.

      but just don’t see why it is efficient to create a whole new class of people who rely permanently on the state for some or all of their income.

      It’s not a ‘new class of people’… it’s everyone. The distinction vanishes.

      • Lanthanide 10.2.1
        1 March 2011 at 12:08 pm

        “It’s not a ‘new class of people’… it’s everyone. The distinction vanishes.”

        It would actually make labour a lot more mobile and flexible, which is something the righties are telling us is important for business. This gives people much more of an option of taking a risk and quitting the job they’ve been at for 7 years and finding a new one, or starting their own business.

        It also significantly lessens the impact of the 90-day fire at will legislation, because those workers that are taken on as a trial will have something automatic to fall back on.

    • Draco T Bastard 10.3
      1 March 2011 at 1:19 pm

      Ah, I see, you think forcing people to live in poverty is rational.

      • The Baron 10.3.1
        1 March 2011 at 2:29 pm

        And you think banning the importation of tropical fruits is rational.

        People in glass houses…?

        How about you try not being such an arrogant c*ck for about 2 minutes and see if you get a more positive response.

        • Colonial Viper 10.3.1.1
          1 March 2011 at 2:33 pm

          And you think banning the importation of tropical fruits is rational.

          Won’t have to do any banning Baron.

          The Hubbert curve will do all the work.

          In 10 years time the only people eating Californian oranges and Ecuadorian mangoes are going to be the Mubaraks and the Saddam Husseins of the world who can afford it.

          How about you try not being such an arrogant c*ck for about 2 minutes

          DTB didn’t resort to name calling mate, you did.

        • Draco T Bastard 10.3.1.2
          1 March 2011 at 2:47 pm

          And you think banning the importation of tropical fruits is rational.

          Can you point me to where I said that? I seem to recall using bananas as an example of something that could still be traded after Peak Oil as we just can’t grow them here but, because of the added costs, they would become a luxury item.

          • The Baron 10.3.1.2.1
            1 March 2011 at 3:13 pm

            You know how to Google pal – you clearly know everything else. So you go find it.

            Worst case scenario is that I’ve misrepresented you about as badly as you misrepresented nadis. Would that make you feel better?

            • Draco T Bastard 10.3.1.2.1.1
              1 March 2011 at 4:42 pm

              You’ve misrepresented me and I haven’t misrepresented nadis.

              Personally I question the signal it sends – that an adult doesn’t have to work for their income. I’m quite happy to see essential services provided by the state (health, education) but just don’t see why it is efficient to create a whole new class of people who rely permanently on the state for some or all of their income. Easy to argue from a politics angle but I suspect harder from a rational economics basis.

              There is no other way that that paragraph can be interpreted other than that he wants to force people into poverty as some form of inducement to work. Which is what the WWG has pretty much recommended and National have said they will put into policy.

              • The Baron …
                1 March 2011 at 4:53 pm

                I’m not nadis – I can’t comment on what he or she intended.

                But I don’t follow your supposedly irrefutable conclusion. I see a comment purely about how this will change incentives – which it almost certainly will. Instead of explaining how you disagree, you just leap into your standard shrill assessment of someone being stupider than you, or call them on being a partisan hack.

                I don’t really understand why you turn up here. Most people come to discuss – whereas you seem to see it as an opportunity to show off about how brilliant you are, and how much you know already. I’m a bit tired of it, so I’ve decided to turn it around on you.

                • RedLogix …
                  1 March 2011 at 5:05 pm

                  I see a comment purely about how this will change incentives – which it almost certainly will.

                  Which it almost certainly will not hurt.

                  The present system effectively has a guaranteed basic income… it’s called social welfare. Now it’s subject to endlessly complex and pointless rules… but since the First Labour Govt there has been a social safety net for more or less everyone who needed it… in one form or another.

                  And the evidence is that when there are worthwhile and suitable jobs available… people happily transition off welfare and into work… even when the abatement rates are punishingly high and it almost makes no rational economic sense for them to do so.

                  But as we all know, the existing system is over-complex and inefficient. No-one likes it. I’m arguing that the UBI alternative retains both an adequate social safety net (like we have already) but with a far simpler and more efficient incentive to find paying work or generate income.

                • Draco T Bastard …
                  1 March 2011 at 5:56 pm

                  I’m a bit tired of it, so I’ve decided to turn it around on you.

                  And which you failed to do because you misrepresented what I said.

  11. Bill 11
    1 March 2011 at 10:45 am

    Sounds like an emminently sensible idea.

    But, as Toad points out (8:50 am), the bargaining power of workers would increase. And that’s not a good thing. What with NZ’s export orientated growth model, the mechanisms for driving down wages (necessary for the so-called competition between international business elites) would be lost.

    The divide and rule strategy applied to the unemployed and lower paid workers would be lost. Also, not a good thing.

    The gaming of the present system that profits the wealthy more than most would be lost. Not a good thing.

    The potential for an emergent culture of work/life balance where a majority, or sizable minority of people chose to work a lot less and live a lot more would disempower economic elites… and maybe even encourage some strange ideas among people about what they could usefully do with all that spare time (strange ideas such as taking back control over aspects of their community life etc…12 people on 10k p/a using the guaranteed $120 000 to establish intentional communities and experiment with and develop robust democratic alternatives to atomised nuclear family life and market competition?) Not a good thing.

  12. The Baron 12
    1 March 2011 at 11:31 am

    I’m in love with this idea, though indeed the devil is in the detail. And forgive me a fanboi moment, but I would point out that Roger Douglas was also a proponent of these ideas too during the 4th Labour Govt (one of the things Lange called time on perhaps). So the idea certainly has merit regardless of where in the political spectrum you fit.

    Some devils in the detail though:

    1. Can you have a “one-size fits all” UI? You’ve already proposed exceptions for the elderly, for kids etc etc… all of this is adding up to complexity that you’ll still need a MSD to calculate. In other words, don’t get too excited about savings.

    2. Where oh where do you set the level for UI? I suggest a similar approach to super – i.e. a certain proportion of the average wage.

    3. And the really tricky bit… what percentage. I’d like to think that everyone here recognises that the UI needs to be sufficient for someone to live on – food, housing and reasonable expenses. But it also needs to be at such a level that people give up on striving to earn more so that they contribute at the top as well. These incentives really matter too.

    I’d love to see a party actually develop some detail around this that works those three issues through.

    • Colonial Viper 12.1
      1 March 2011 at 11:35 am

      It’s been though discussion about the UI that I’ve come to understand how harsh the existing benefit abatement regimes are. They really seem to totally pile it on against people who would like to get back into the workforce and supplement their very minimal benefits with the most commonly available type of jobs – low wage/part time.

      • The Baron 12.1.1
        1 March 2011 at 11:38 am

        Same as secondary taxes, which I’ve never quite got either. I like how this proposal effectively deals with abatements.

        • Colonial Viper 12.1.1.1
          1 March 2011 at 11:41 am

          We have a semblance of agreement Baron, nice 🙂

          • The Baron 12.1.1.1.1
            1 March 2011 at 12:18 pm

            Yes, well I guess we’re both behaving ourselves for a change.

            • lprent 12.1.1.1.1.1
              1 March 2011 at 12:30 pm

              To tell the truth I don’t notice you guys squabbling much. Regardless of the acrimony, it isn’t close to my moderating behavior thresholds because at least you’re squabbling about something.

          • Rex Widerstrom 12.1.1.1.2
            1 March 2011 at 6:57 pm

            Actually it’s little wonder you two agree when, as the Baron points out above and I warned RedLogix yesterday, Roger Douglas would give this post the thumbs up.

            It’s logical, workable, and benefits everyone (albeit that there’s a few wrinkles that some people think need ironing out… I agree with TightyRighty, for instance, that having the IRD involved is… worrying. They’re not about giving money out, they’re about getting it in. But that’s just detail).

            It’s been round for aeons. It has across-the-political-divide support. So why has it not only never been implemented but also (aside from Labour’s aborted intent in 1984) never been policy?

            If it’s about not wanting to increase the bargaining power of workers as Toad and Bill suggest above (and it’s certainly a viable theory) and about allowing the continued gaming of the system by a small elite as Bill suggests (and there’s certainly plenty of evidence this is an effect of the present system, which gives credence to the idea that it’s also a cause) then it raises some worriesome questions about who’s been running our country for the past 25 or so years.

            • RedLogix 12.1.1.1.2.1
              1 March 2011 at 7:27 pm

              Roger Douglas would give this post the thumbs up.

              Yes I know that. For several years back in the early 80’s, under Roger Douglas I think, NZ did have a flat income tax of 25%.

              Unfortunately Douglas implemented only half the deal… the flat tax. We didn’t get the UI to go with it. I don’t know the history of why not. Typical of the man… not all of his ideas were completely wrong, but his arse about face chaotic implementation of them was. I recall an interview with the man about a decade ago when in more restrained terms he more or less admitted as much.

              then it raises some worriesome questions about who’s been running our country for the past 25 or so years.

              Oh indeed it does.

            • Draco T Bastard 12.1.1.1.2.2
              1 March 2011 at 7:51 pm

              …then it raises some worriesome questions about who’s been running our country for the past 250 or so years.

              FIFY

              Capitalism has been around a long time and the capitalists wrote the rules – especially at the beginning.

              • Rex Widerstrom …
                1 March 2011 at 9:37 pm

                See this is why we can never completely agree 😛

                When I hear “capitalist” I think of the guy who maybe learned a trade then, when he’d mastered it, remortgaged his house, maybe borrowed a bit from his obnoxious brother-in-law, and started his own business.

                Now he’s doing well, has maybe three branches, pays his workers a reasonable rate and is deservedly a “rich prick”.

                You, I think, hear “multinational oligarch”. I hear that too, but I think it’s important to draw a distinction. Capitalism in its “pure” form versus the way the game is played by the big names in the field is akin to… religious belief versus the Catholic Church. It’s not the principle that’s the problem, it’s the application.

                Just as we can’t judge every believer (or even every priest – look at, say, Jim Consedine) based on the actions of a few Popes and a few hundred Cardinals, surely we can’t judge every small business owner on the actions of BP, Telecom et al?

                • Colonial Viper …
                  1 March 2011 at 9:43 pm

                  The guy who remortagaged his house to play the game is, usually unbeknownst to him, usually the one being played.

                  Witness all the foreclosures and hard asset grabs in the US by the banks.

                  Mr Negative-Gearing-Here-to-Make-a-Buck property man (and small business man) has been in the game all of ten minutes. These banking institutions have centuries of know how playing the game and defining the rules. And choosing the refs.

                  Agree we can’t judge small business owners by the actions of the big corporates – but in the same breath I would say National the “natural party of business” is actually only the natural party of Big Corporate Business. They are not friends to the small business owner, they consider those guys just more grist for the mill.

                  • Rex Widerstrom …
                    1 March 2011 at 10:27 pm

                    Mr Negative-Gearing-Here-to-Make-a-Buck property man (and small business man)

                    Whoa, that’s just the lack of distinction I’m talking about. Negative gearing a property is just sitting on your arse contributing nothing and gaming the tax system while benefiting from the big banks’ even bigger gaming on property, as you’ve described. The usual aim is not to have to work and let tax breaks and rents provide an income. Sometimes those types do lose, but I have little if any sympathy for them.

                    Small businessman is a different kettle of cash. He’s borrowed to invest – in his belief in himself, in jobs for other NZers, and often in making something that raises our GDP and sometimes even our balance of payments. The aim there is usually at least partly a desire to prove oneself, gain security, make a contribution (and yes, to make money, but in a productive way). If (when) he gets screwed by the banks, he has my sympathy (and help, such as I can offer).

                    Other than that distinction though, agree with you entirely, including re National. A centrist party that went out of its way to back the real capitalists – the investors, not the speculators – would find a ready market methinks.

                • RedLogix …
                  1 March 2011 at 10:03 pm

                  then it raises some worriesome questions about who’s been running our country for the past 25 or so years.

                  In a credit based economy there are in fact three actors; workers, business owners and financiers. Unfortunately the term capitalist is rather ambiguous; some people think of business owners in one context, in another context they are thinking of the bankers…. or both.

                  Historically we were encouraged to think of the business owners as the ‘enemy’ of the working people, their interests directly in conflict. But I suggest that the events of the last decade should have shown most of us have that all along it was the financiers and bankers who were the real enemy of both workers and business owners.

                  I posted on this theme last year here.

                  • Rosy …
                    1 March 2011 at 10:15 pm

                    Hence 3 economic models – socialism, capitalism and financial feudalism. Capitalism and socialism have morphed at the boundaries to create some very successful economies that value their people as citizens, not simply as economic units. But financial feudalism still runs amok, screwing up economies, businesses and workers to line the pockets of gamblers in the financial sectors of banking and global corporations. We’re all in debt to the banks and politicians run their countries by bowing and scraping to big business needs, allowing enormous tax concessions and subsidising employment costs so the serfs can have a living wage – even if it means ruining homegrown businesses.

                  • Rex Widerstrom …
                    1 March 2011 at 10:31 pm

                    Missed that one at the time. Anyone else who did – well worth a read.

                    Wow… that plunging blue line (in the graph accompanying the story) should make even DtB shed a tear for the capitalists 😀

                    But seriously, with returns like that you can see why the likes of John Key don’t go to the trouble, risk, hard work and regulatory red tape of setting up a business and becoming a “real” capitalist, but instead head straight to a profession that makes money out of money.

                  • Draco T Bastard …
                    2 March 2011 at 1:27 am

                    In that graph the capitalists are actually the entrepreneurs and the bankers are the capitalists. As I intimated below, it’s a case of using the wrong words.

                • Draco T Bastard …
                  2 March 2011 at 1:20 am

                  I just go by the dictionary definition.

                  capitalist
                  entrepreneur

                  A capitalist is almost never an entrepreneur and vice versa. Entrepreneurs tend to take a lot of risks and so end up barely breaking even. Capitalists, on the other hand, almost never take risks and accumulate wealth.

    • erentz 12.2
      1 March 2011 at 12:38 pm

      “Where oh where do you set the level for UI? I suggest a similar approach to super – i.e. a certain proportion of the average wage.”

      What about doing what we do with CPI. Identify the basic living necessities, create an index of them, and make it a percentage of this, enough to keep someone above the absolute poverty line, but not so much that they aren’t encouraged to find additional income through work. That way it reflects a real basic cost of living, not some nice round number, or percentage of incomes that may not reflect real living costs.

      • The Baron 12.2.1
        1 March 2011 at 2:25 pm

        Agree, but not as simple as you outline. The cost of basic living expenses differs greatly between regions, so its very difficult to get a bead on “real living costs”. For this reason I go towards the super model – it seems to work (well, apart from the fact that it will bankrupt us).

        Unless you have different UIs depending where you live? Again, more administrative complexity. Methinks a UI ain’t a silver bullet of simplification (though the other bits still hold up well).

  13. mikesh 13
    1 March 2011 at 2:00 pm

    This proposal might increase the likelihood that one partner to a marriage could remain at home in the role of housewife or house husband. Could be good for child rearing.

  14. fermionic_interference 14
    1 March 2011 at 2:01 pm

    I think the biggest necessity of UI is that you can live on at more than just a subsistence level, because from as much of it as I understand everybody wants to work. People inherently like to do and be valued, productive and produce something for their efforts.
    So if we provide a livable UI that allows work where and when we need to then we are also inviting a higher paid workforce and more control to the workers if a job is poorly paid with poor conditions and an unpleasant boss, then this job would have to change it’s MO, either the Boss would need to provide better conditions and a more pleasant demeanor in which case people may work for them for a while until they tire of it and take a break, or the boss would need to pay more otherwise they’d go out of business (this being the mobile work force the right loves, rather than the current model of stick it out in this hell hole or you are held down by a metal object with a beveled inclined plane).

    Just a quick Q to other readers:
    How about clarifying the reasons you work, try the options below:

    I; you have to,
    II; you want to,
    III; that’s just the way it is,
    IV; it’s the only way to support a family,
    V; other, if so please define.

    now if you take a second and really evaluate your motives
    what do you find?
    Is it a mix of I, IV & II?
    How about this theory
    We attempt to chose a field of work in which we enjoy ourselves and are fulfilled by the work we do and the work we do allows us to provide food, clothing, shelter and entertainment for ourselves and our families.

    So what happens when you change the game such as with the UI that you can now choose to WORK when, where and for how long you want to at something you find fulfilling (and in such as my case that makes a difference to society) and know that you will still be able to provide security for yourself and your family.

    from the options above where do you think you would then describe/place yourself?

    One major problem I have found with this idea is that we are such a small country and the size of our market place means that without tariffs or some such equivalent in place as our economy transitioned we would be inundated by cheap product from outside markets, which we would then have a major impact on our trade equation and we would be back incurring a trade deficit as well as harming our homegrown industry because as the transition happens wages will increase due to people only working where and when they need to so bosses will have to pay more or do the work themselves therefore cost of NZ products would increase. With a National Govt in we wont be adding tarrifs back into the equation especially with all the FTA’s being bandied about lately which seems to leave us at a disadvantage in this endeavour.

    • Vicky32 14.1
      2 March 2011 at 1:32 am

      “Just a quick Q to other readers:
      How about clarifying the reasons you work, try the options below:

      II; you want to,

      now if you take a second and really evaluate your motives
      what do you find?
      Is it a mix of I, IV & II?
      How about this theory
      We attempt to chose a field of work in which we enjoy ourselves and are fulfilled by the work we do and the work we do allows us to provide food, clothing, shelter and entertainment for ourselves and our families.”
      I work whenever I can, even though with the present system it gets me into a power of trouble with WINZ and currently Housing New Zealand. (I can presently not get permanent work, only casual… I’d be one of the people happily working if I only could.)

      • RedLogix 14.1.1
        2 March 2011 at 4:08 am

        If it’s any encouragement to you… I dreamed up my first version of a UBI back in 2001 when I came to be aware of the circumstances of an acquaintance in exactly your position. (On the DPB I’m presuming… correct me if I’m wrong.)

        What struck me was exactly as you say, how very motivated she was to return to the workforce; while at the same time the system threw all these insane, pointless and counterproductive obstacles in her path.

        Thinking about the humiliation and frustration of her position one night the simple outlines of this UBI idea came to me. Subsequently of course I found that it was not an original idea; it had been around for yonks … but of the many merits of the scheme I’ve always felt that the elimination of this poverty trap for single parents to be the most worthwhile.

        • lprent 14.1.1.1
          2 March 2011 at 1:17 pm

          What struck me was exactly as you say, how very motivated she was to return to the workforce; while at the same time the system threw all these insane, pointless and counterproductive obstacles in her path.

          That was always my impression watching my sister coping with two kids under the age of 4 when her marriage broke up and she went on the DPB in the early 90’s. All of the impediments came from the government side. She was working a very very limited budget in money and time to bring up her kids, while also upgrade her work prospects when she would have the time to go back to work. The government services that were meant to help her just got in the way all of the time mostly by getting her to do meaningless activities to satisfy the prejudices of the Minister at the time.

          Every person I have seen on the DPB has had the same experience. The only difference is how much of a moron the minister was about wasting peoples time. It was a lot less hassle in the 00’s (mostly from hangover employees of WINZ) and a lot more people were able to get off the DPB earlier as a consequence.

  15. burt 15
    1 March 2011 at 7:27 pm

    Excellent post RedLogix. Great plan.

    • RedLogix 15.1
      1 March 2011 at 7:33 pm

      burt.

      I’ll accept that in good grace…. thanks. And of course it’s by no means my idea… it’s been around for a very long time and others have done a great deal of much deeper work on it.

      • burt 15.1.1
        1 March 2011 at 7:40 pm

        RedLogix

        Do take it in good grace, just the other day I tried to invoke discussion on exactly this subject but of course the messenger is more important than the message when engaging with partisans.

        see:
        http://thestandard.org.nz/tax-policy-for-economic-stimulus-and-growth/#comment-302466
        &
        http://thestandard.org.nz/tax-policy-for-economic-stimulus-and-growth/#comment-302535

        • RedLogix 15.1.1.1
          1 March 2011 at 8:15 pm

          Fair enough.

          Personally I could envisage either National or Labour implementing this reform. Well National could if it was not quite such a creature of narrow employer and wealthy tax-dodging interests… and Labour might if it was not quite so captured by the sheer weight of it’s own history.

          If only Key had the balls to have convened a truly independent Tax Working Group.. and given Gareth Morgan some leadership clout. It wouldn’t take all that much for this to gain some real public traction, if a handful of credible public voices put some weight behind it.

          • Rex Widerstrom 15.1.1.1.1
            1 March 2011 at 9:45 pm

            if a handful of credible public voices put some weight behind it

            Ahem, what am I, chopped liver? 😛 Nah just kidding, but the debate here today has been exemplary… and the congruence of views between people normally diametrically opposed, remarkable.

            This post (and again, kudos to RedLogix for it) is itself an advertisement for the robustness and potential acceptability of the idea.

            It’s not mine, so I won’t steal the thunder (and anyway, I have other ideas I want to promote) but if I were aiming to create some interest round it I’d start with the political / financial commentariat (whether or not they agree is moot… the idea is to get it mentioned in the MSM), try and get some of the more cerebral interviewers interested (Beatson is an obvious one… and…. err… well there’s always RNZ) and so on.

            The MSM love doing lazy “reporting” of what’s said on blogs. Use their indolence to your own ends!! (I should be stroking a cat and wearing a monocle right now, I feel).

            • RedLogix 15.1.1.1.1.1
              2 March 2011 at 4:15 am

              t’s not mine, so I won’t steal the thunder

              Actually I’d be delighted if you’d take it off my hands…

        • lprent 15.1.1.2
          1 March 2011 at 9:20 pm

          Or for the simpler reason of the way you presented it? I for one tend to just ignore people who shift the debate into a retrospective partisan look at the way they viewed Clark and Cullen. If you notice the way that RL framed this debate, he largely avoided retrospectively crawling through history except where it was relevant and just looked at the arguments for and against the proposal.

          Perhaps there is another lesson you could draw from this other than the one you prefer to believe. But I’m not sure you can resist trying to rewrite history with more bullshit..

          But as soon as you bring Clark and Cullen into a discussion about future tax policies, I just completely lose interest because it always winds off into a turgid meaningless discussion about what you thought 5 or ten years ago.

          I suspect most of the regulars here do that automatic dissociation as well.

          • burt 15.1.1.2.1
            2 March 2011 at 8:26 pm

            lprent

            I didn’t present it – I invited a myopic partisan to discuss it.

            BTW: Are you still in hospital lprent or are you just testing your blood pressure threshold going OTT at me ?

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