A rise in consumer spending not matched by a concurrent rise in National Insurance contributions suggests many lower income people are working in the informal economy, possibly because taking on the small amounts of work on offer risks making their financial situation worse due to vagaries in the tax system. Can a citizens income get around this? Under this scheme, everyone would receive the same basic income financed by the phasing out of virtually every tax relief and allowance. Those on benefits would not face high marginal tax rates if they took a job, but merely pay PAYE at the current standard rate of 20% on every pound they earned on top. Those working 20 hours a week on the minimum wage could now work 40 hours a week without losing more than 50% of their extra earnings in lost tax credits. Critics say such a scheme might encourage people to sit at home all day and watch TV - but pilot schemes have not borne this out. Is a citizens income the way forward in a world where technology and globalisation is reducing the quantity of available work?
Posted on: Sun, 10 Aug 2014 15:00:01 +0000
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