A guaranteed minimum income would help all Scots fulfil their full potential

While there are many good reasons to have a poverty reduction strategy, I am wondering whether we are selling ourselves short. Rather than an incremental poverty reduction strategy, why can’t we have a poverty elimination strategy? Why can’t we have bold action, over the next several years, for eliminating poverty in Scotland by introducing a Minimum Income Guarantee for all in Scotland? We are missing a Minimum Income Guarantee for working age adults without children. Those on social welfare only get about one-half of what they’d need to meet our considered poverty line. A Minimum Income Guarantee tops up people’s income to the poverty line, while incentivising paid work, by clawing back income at a rate of, say, 50 per cent. A Minimum income Guarantee has to work in tandem with the labour market, employment law and the tax system. Without this, it is destined to systemic failure. Yes, introducing a Minimum Income Guarantee would cost a lot of money. We don’t expect to be in this pandemic forever, and the beauty of a Minimum Income Guarantee is that it automatically puts more money into people’s pockets when they need it. We can finance a Minimum Income Guarantee by raising taxes. The rise of the new global superrich and the fall of everyone else is widely recognised: we could introduce a wealth tax. A two per cent tax on assets more than GBP 10 million could be worth GBP 4 billion per year. Another opportunity is to consider that while wages are taxed at 100 per cent, capital gains are taxed at less. 87% of the benefit of this lower tax rate goes to the top one per cent of income earners. Rectifying this would raise around 2 billion more in annual revenues. We could levy a micro-tax of say 0.2 per cent on financial transactions. This tax might dampen the amount of financial transactions, which would be welcome, because it would reduce the amount of speculation and short-term trading. So, let’s review the financial transactions taking place in Scotland, and without behaviour changes, a micro-tax of 0.2 per cent would raise a substantial annual contribution. We could do a lot of good things with that revenue, easily financing a Minimum Income Guarantee and a post-pandemic green recovery. Some people think that a Minimum Income Guarantee encourages laziness. There was no evidence of that from pilot schemes in Scotland and internationally. In general, 81 per cent of participants felt somewhat or much more motivated to find a better paying job: with over 1/3 reporting a somewhat or much better rate of pay. The safety net was enough to give participants the courage to start their own business (cf. the impact of the Enterprise Allowance in the 80s). MIG and BIS pilots internationally have reported 80% better overall health, while 4/5ths reported better mental health. Approximately 40% drank less, while 5% quit drinking. Better health and less alcoholism, aside from its intrinsic value for people’s lives, saves our health-care system money. We should seize this opportunity to try it out and will help all Scots reach their full human potential, and it can be financed by reducing wealth inequality.

Why the contribution is important

While there are many good reasons to have a poverty reduction strategy, I am wondering whether we are selling ourselves short. Rather than an incremental poverty reduction strategy, why can’t we have a poverty elimination strategy? Why can’t we have bold action, over the next several years, for eliminating poverty in Scotland by introducing a Minimum Income Guarantee for all in Scotland? We are missing a Minimum Income Guarantee for working age adults without children. Those on social welfare only get about one-half of what they’d need to meet our considered poverty line. A Minimum Income Guarantee tops up people’s income to the poverty line, while incentivising paid work, by clawing back income at a rate of, say, 50 per cent. A Minimum income Guarantee has to work in tandem with the labour market, employment law and the tax system. Without this, it is destined to systemic failure. Yes, introducing a Minimum Income Guarantee would cost a lot of money. We don’t expect to be in this pandemic forever, and the beauty of a Minimum Income Guarantee is that it automatically puts more money into people’s pockets when they need it. We can finance a Minimum Income Guarantee by raising taxes. The rise of the new global superrich and the fall of everyone else is widely recognised: we could introduce a wealth tax. A two per cent tax on assets more than GBP 10 million could be worth GBP 4 billion per year. Another opportunity is to consider that while wages are taxed at 100 per cent, capital gains are taxed at less. 87% of the benefit of this lower tax rate goes to the top one per cent of income earners. Rectifying this would raise around 2 billion more in annual revenues. We could levy a micro-tax of say 0.2 per cent on financial transactions. This tax might dampen the amount of financial transactions, which would be welcome, because it would reduce the amount of speculation and short-term trading. So, let’s review the financial transactions taking place in Scotland, and without behaviour changes, a micro-tax of 0.2 per cent would raise a substantial annual contribution. We could do a lot of good things with that revenue, easily financing a Minimum Income Guarantee and a post-pandemic green recovery. Some people think that a Minimum Income Guarantee encourages laziness. There was no evidence of that from pilot schemes in Scotland and internationally. In general, 81 per cent of participants felt somewhat or much more motivated to find a better paying job: with over 1/3 reporting a somewhat or much better rate of pay. The safety net was enough to give participants the courage to start their own business (cf. the impact of the Enterprise Allowance in the 80s). MIG and BIS pilots internationally have reported 80% better overall health, while 4/5ths reported better mental health. Approximately 40% drank less, while 5% quit drinking. Better health and less alcoholism, aside from its intrinsic value for people’s lives, saves our health-care system money. We should seize this opportunity to try it out and will help all Scots reach their full human potential, and it can be financed by reducing wealth inequality.

by JamesStuart on September 07, 2021 at 02:12PM

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