Universal Credit for [merged]

Sixer

zagfles wrote: »

That sounds quite regressive - generally land value used doesn't rise at the same rate as income (eg someone on twice your salary may have a house 50% bigger rather than 100% bigger). It would also penalise families as they need a bigger house than a couple with no kids.

I don't mind the idea of taxing land as it's in short supply and is often "wasted" eg people buying second homes which they leave empty while others can't afford to buy due to sky high prices. But I'd have an "allowance" eg x value of land or property area per person before tax kicks in.

But I can't see it being realistic to replace all other taxes with this particularly if you'll need to raise more than now to pay for the CI.



I'd set it at a level enough to live on but not an amount most people would really want to live on. That way you could probably get rid of conditionality rules and all the bureaucracy which goes with them. Nobody would starve, everyone getting a low paid job would be significantly better off, no hassle or complications if you move in and out of work regularly.

Ah no, but even minors would have an allowance or similar. So it wouldn't penalise families.

For interesting posts on this topic: markwadworth.blogspot.com. He's done some brilliant calculations if you have a spare hour or two to read through.

That guy would have a lower LVT and Citizen's Income than I would, but as I say, it leaves people something to choose between when voting.

zagfles

Sixer wrote: »

Ah no, but even minors would have an allowance or similar. So it wouldn't penalise families.

For interesting posts on this topic: markwadworth.blogspot.com. He's done some brilliant calculations if you have a spare hour or two to read through.

That guy would have a lower LVT and Citizen's Income than I would, but as I say, it leaves people something to choose between when voting.

Sorry, but it sounds like cloud cuckoo land! Either that or I've missed something fundamental.

He talks about an average LVT-CI of about £1000 per person, which would only raise £60 billion, with the rest coming from businesses.

Then on his calculations only pensioners are exempt (his calculations on how much it would raise only excludes pensioners). So how would a non-pensioner household out of work survive? I can't see any exemptions for the unemployed - and if you did have them it'd effectively be back to means testing (which the whole point of CI is to avoid).

So someone in an average house who becomes unemployed would find themselves with a tax bill of £1000 more than their CI? How would they pay it? Sounds like anyone losing their job would immediately have to move into a cardboard box, or give up their house and kip on a mate's sofa, as they wouldn't be able to afford their LVT?

If you then introduce a "LVT benefit" in the same way as CTB then you'd end up with the high marginal rates/disincentive to work you have with the current system.

Have I missed something?

Sixer

I think you'll need to read for a bit longer! He's got it raising £233bn - so fiscally flat. But his plan isn't set in stone. There's an interesting research paper on rents/citizen's income/current housing benefits somewhere on http://www.citizensincome.org, which is worth a read.

zagfles

Sixer wrote: »

I think you'll need to read for a bit longer! He's got it raising £233bn - so fiscally flat.

Yes, but as I said this seems to assume that everyone except pensioners will pay it. How does an unemployed person pay it?

But his plan isn't set in stone. There's an interesting research paper on rents/citizen's income/current housing benefits somewhere on http://www.citizensincome.org, which is worth a read.

Well there is this http://www.citizensincome.org/discussion/index.shtml but that's not assuming a LVT, it's assuming the CI is paid through income tax, and has much higher withdrawal rates for the poorest, which the whole point of the CI is to avoid.

If you're then going to massively increase housing costs by having a LVT to replace income tax, then this problem gets far worse - you will need a benefit like CTB, say LVTB, or much higher HB if the landlord pays the LVT (which would obviously massively hike rents).

So you would either need

1) very high marginal withdrawal rates on the poorest, ie like now, solving nothing, or

2) you'd have a lower withdrawal rate which goes high up the income scale - for instance if LVT was £10,000 average, a 33% withdrawal rate would mean it wouldn't be withdrawn till income was over £30,000, ie over the average wage!

And 2) is about the same as income tax & NI!! So a LVT would be the same as an income tax for most people!

Or is there another solution to this? I couldn't see one on either site.

Personally I'd include housing costs in the CI (probably regionalised - based on the LHA rate for shared accomodation), and raise income tax rates to pay for it.

Sixer

I think the point is that the LVT is paid by the landlord.

He's also tried it as an RVT with a PAYE tax code which is capped at 60% marginal rate - is that more the type of thing you're getting at?

http://markwadsworth.blogspot.com/2011/09/georgism-without-land-value-tax.html

zagfles

Sixer wrote: »

I think the point is that the LVT is paid by the landlord.

And landlords will obviously pass that onto the tenant in rent. So you just shift the problem from LVT to rent.

He's also tried it as an RVT with a PAYE tax code which is capped at 60% marginal rate - is that more the type of thing you're getting at?

http://markwadsworth.blogspot.com/2011/09/georgism-without-land-value-tax.html

Yes - that's a fudge half way between my 1) and 2) above. Higher marginal rates for those on lower incomes, defeating the whole point of the CI, and meaning the system is as regressive as now, if not more so.

quintwins

sorry to bump up an old thread but...

will there be a savings cap on universal credit?, we currently get working and child tax credits so i assume we will be entitled to universal credit aslong as were earning enough, however we're saving for a house and will hopefully have some savings by then, but as housing benefit will be included in universal credit will there be a £6-£16k rule?

Sixer

quintwins wrote: »

sorry to bump up an old thread but...

will there be a savings cap on universal credit?, we currently get working and child tax credits so i assume we will be entitled to universal credit aslong as were earning enough, however we're saving for a house and will hopefully have some savings by then, but as housing benefit will be included in universal credit will there be a £6-£16k rule?

Yes. The proposal is to have the same capital rules as other benefits, thus disqualifying the better-off out of the pool of tax credits claimants.

BigAunty

DWP briefing note - treatment of capital, policy rationale

"People with substantial savings or other capital clearly have sufficient capital to meet their needs – it is right that they should draw on these resources before looking to the taxpayer for support, particularly as many taxpayers themselves have savings well below these limits. While nearly one in three pensioner households have savings in excess of £16,000, only 13% of households with a working age adult in them have this much savings. A typical working age household has only £300 in savings.

1. A £16,000 cut-off with assumed tariff income from savings above £6,000 strikes the right balance between protecting people with modest savings and placing responsibility for their own support on those with substantial capital. We believe that £16,000 is an appropriate level, particularly since fewer than one in five families have higher savings.

Savings intended for mortgage deposits [FONT=Arial,Arial][FONT=Arial,Arial]– We have been asked whether provision can be made for people saving for a home but there are no ring-fenced deposit accounts for savings intended for a mortgage and there is no satisfactory way of confirming future intentions, which would make it impossible to frame an exemption to capital rules on this basis. [/FONT][/FONT]
[FONT=Arial,Arial]
[/FONT]http://www.dwp.gov.uk/docs/ucpbn-3-capital.pdf

quintwins

thanks for clearing that up, i had thought that would be the case i just like to kow where i stand in advance, fingers crossed we might even be on the property ladder by 2013 so it hopefully won't be an issue