To Emile:

Your writing on the issues of a flat tax, and land value taxation, is generally well-known. However, have you ever written anything on  whether the UK social security system can also be reformed and simplied? There seems to be nothing on your website on this topic.

I’m interested in knowing, because I’ve recently come across a short report written in 2007 for the Citizen’s Income Trust, in which the outline of a universal Citizen’s Income for the UK is given, and figures provided on how it might be funded.

I’d be interested in knowing if you think such a scheme could be successfully funded by the UK, especially if the Child Benefit element was limited to providing payment to only two children.

‘Citizen’s Income: A brief introduction’ –http://www.citizensincome.org/filelibrary/Citizen%27s%20Income%20booklet.pdf

If introducing a Citizen’s Income is indeed financially possible, and simplifies the current social security system, I’m sure there will be some economists and politicians (and members of the public) who will find the idea interesting.

Reply:

I have not encountered this particular idea before, and it has much to commend it – although that would be true of almost any simplification of the grotesquely complex system that currently prevails!

I particularly like the proposal for getting all those reliefs and allowances out of the equation altogether by replacing them with a weekly or monthly cheque, which would be far simpler and more transparent.

I haven’t got my head around the details, but at first glance there may be a problem with the proposal on page 4, which reads:

“The higher the Citizen’s Income, the higher the tax rate.”

This appears to run counter to the general tenor of the idea, and re-introduces the familiar notion of penalising high earnings. This would not happen with a neutral flat tax rate, of course. The flat rate tax could be used within the philosophy of the Citizen’s Income, and it would be interesting to know whether such a variant had been explored.

I have made the observation in my writings that the earnings of employed individuals do not represent a legitimate target for taxation for the simple reason that the tax is ultimately passed on to the employer anyway. People work for their take-home pay, and the employer has the statutory duty to pay the PAYE ‘deducted’ (from ‘gross’ pay, which no employee ever sees) over to the Revenue every month. For this reason I would be disinclined to start a tax-reform process by further institutionalising a system of tax on pay. However, I believe that the steps outlined in the CI paper would provide a far better platform for more fundamental reform.