Arguments against BI+FT

"We can't afford it"

The usual argument against BI is that we couldn't afford it, but that is because people assume that the whole of a Basic Income would have to be paid to each person, and also because they assume it will continue to be partnered with a "progressive" taxation system roughly similar to what we have now.

If you do BI+FT together, do away with personal allowances, and administer it for everyone in work through the PAYE system, by netting off the BI against the FT and allowing companies to aggregate for all employees and then claim or pay any difference outstanding as the net amount of income tax due, you will end up with costs that are not so dissimilar to present with vastly reduced bureaucracy and disincentives to work. Benefits offices will have to continue to deal with those without any work at all, but the vast majority will be dealt with through PAYE.

It will be marginally more expensive for a given level of safety-net, because of the improvement in the marginal effective rate of tax on low-to-middle earners. We propose to make up that difference through a combination of abolishing all VAT exemptions and special rates, an increase in the rate of VAT if necessary, and replacing the vast numbers of hugely-expensive and ineffective environmental and energy interventions with a fossil-fuel tax applied "upstream" at point of import or production (with compensatory measures to protect industry and the "fuel-poor").

"People will just sit around"

The other main argument against BI is that it will increase the disincentive to work if people have a guaranteed income regardless of whether they are trying to find work or not. But this misunderstands the real impact of the tax and benefits system on incentives to work.

It isn't the headline rate that counts, it's the effective rate (the combined effect of tax and benefits, including withdrawal of benefits). And it isn't the gross effective rate that is most important when people are deciding whether it's worth trying to earn an extra pound, but the marginal effective rate (how much of the extra pound they would keep after allowing for changes to tax and benefits payments).

Most people aren't happy to live on an income that provides only for the most basic needs of life, if they can find work and it is worth doing. The real disincentives to work are such high rates of benefit-withdrawal (at the bottom end) and income-tax/NI and other deductions (at the top end) that you only keep a small proportion of any extra money you earn.

BI+FT would dramatically increase incentives to work, not reduce them.