GUEST BLOG: Geoff Simmons – UBI and the working class

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As I write this, headlines are flooding in. Today, New Zealand has recorded zero new cases of COVID-19. This is a tremendous achievement. Well done to our team of 5 million and our Government that made it happen.

COVID-19 has had a lot of media coverage. What hasn’t got a lot of coverage is the growing lines at food banks. It’s clear that winning this battle has come at enormous cost.

Our problems aren’t new. We had 50,000 working families living in poverty before the novel coronavirus came along. More than 50% of renters and young people lived paycheck to paycheck. One in eight children live in households reporting material hardship, those households which cannot afford essentials such as electricity bills or doctor appointments.

The big problem is still the cost of housing. House prices and rents have risen faster than incomes for a generation. If we want to help the most vulnerable, we must reverse that trend and restore affordable housing over time.

But that won’t happen overnight. However, what could happen overnight is a Universal Basic Income (UBI).

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The idea of a UBI is simple. Give $250 per week to everyone 18-65. The over 65s already have their UBI (NZ Super) and we could afford a modest UBI for children too.

A UBI honours the unpaid work of parents, carers, volunteers. It encourages training, starting businesses, and removes the poverty trap. Currently, beneficiaries lose income when they pick up some work – so employment doesn’t seem worth it. Mental health in vulnerable demographics would hopefully improve as this pressure dissipates.

The Government could and should introduce a UBI in the upcoming Budget. This should be coupled with a flat tax rate of 33%. Together, a UBI and flat tax would give us a far more progressive tax system than we have now.

This package could also act as a post-COVID stimulus package, injecting money into people’s pockets at a time when it is sorely needed.

Finally, a UBI and flat tax would allow for a huge simplification of our tax and welfare system, saving money spent on bureaucracy and time spent on paperwork.

Everyone would be better off under the above package, but the real winners would be the working class. Someone on minimum wage would be around $6,000 per year better off, sending them well over the living wage. This is the pay rise that our essential workers deserve.

One criticism of the UBI is that it doesn’t do anything for beneficiaries. Some beneficiaries would be better off, and none would be worse off. But the best part of the UBI is that people don’t lose it if they work or train. Nor do they lose it if they cohabit with someone. A UBI would restore people’s dignity, protect them from the battle of negotiating with WINZ, and allow them to organise their lives in a way that worked for them.

COVID-19 has shown us a glimpse of what we face in the future – a hugely disrupted job market. A UBI of $250 per week and a flat tax of 33% would put cash in pockets, simplify the tax and welfare system and stimulate the economy.

As the economy recovers then an asset tax could be phased in to make up any shortfall in revenue. This would ensure that the wealthiest New Zealanders – many of whom pay less tax than a teacher or nurse – pay their fair share. This would also put off any speculators from putting more money into our housing market.

Our best bet is to future-proof our economy and incomes through a UBI. COVID-19 has sucker-punched our confidence in businesses. We cannot go on as we were. If we want to help the working class, something needs to change. It’s time for some courage.

Geoff Simmons, The Opportunities Party (TOP) leader and economist

 

33 COMMENTS

  1. How about selling your property and joining the renting underclass, Geoff? On ya mate! Crash the housing market…

    • it is typical of the hard left to want people to come down to their level rather than applaud the successfull and want others to push themselves to get ahead. it is called envy.

      • What the he’ll are you talking about? You just speak for your self. Left wing politics is non of your concern. The left reserves the right to promote religious values. Want to play this game then I’m all in.

  2. So lower and lower wages that mean that working people are worse off than beneficiaries and more and more people are being paid below minimum wages has nothing to do with it?

    Are we going to add another 20% of our population of new people with low or zero incomes into NZ in the next decades that is really helping NZ’s wage earners to turn to food banks to survive?

    Remember TA, her mother had a job! Soon afterward Campbell Live was taken off air, so now we don’t actually see what it going on, apart from the growing poverty charities all asking for donations while the state gives taxes to big overseas business and NZ’s growing SME’s made up of takeouts and liquor barons caught underpaying staff.

    TA, aged 11, living at the marae, her mother, father and five siblings had been living in their van since February.

    She said she only slept some nights, and while her mother had a job it was not enough for the family to afford a place to live.

    “There’s no space for by yourself. But we shower at my mum’s job, in the morning.”

    “They’re not happy, but they’re okay. They’re all sick, even I’m sick right now.”

    She said she had just missed out on a scholarship to St Cuthbert’s College, made all the more difficult because of the family’s living conditions.

    “The hardest part is actually not being able to read in the van, because you don’t have space. They’re all up in your face,” she said.

    “And there’s not much light because it would waste the battery [so] I can’t read.”

    “It just made me push myself more to do better.”

    With roughly 30 families taking shelter at Te Puea, TA said it was nice to have some space.

    “It’s cool how they opened up their doors to us, but we just want a house.”

    “And they have good food … we used to have takeaways but we’re all sick of takeaways.”

    https://www.rnz.co.nz/news/national/305949/child-who-has-lived-in-van-has-message-for-pm

    • If I remember correctly, wasn’t there also a hatchet job on the Marae involved by Mrs Bennet shortly afterwards?

      • @ Alan – The hatchet job was on the kaumatua at Te Puea, a then senior police officer, Hurimoana Dennis.

        As a professional courtesy, Dennis informed the visiting Bennett, that he was on leave/suspension from the police, pending an investigation/complaint, about what was primarily a whanau matter – shopped it seemed, by the said whanau.

        Not to be outdone, “someone from Bennett’s office”, promptly did likewise, and shopped him to the media; if I remember rightly, Bennett said she thought that the media already knew about the Hurimoana Dennis issue – which begs the question of why then bother telling them again?

        The bottom line was that Te Puea Marae had been able to achieve something that the avoirdupois-burdened Paula Bennett had been unable to : successfully implement a programme of immediately sheltering the homeless, and help them into permanent accommodation, and obtain jobs.

        This may have been too much for Bennett to stomach – even though it was before she got that then ample organ stapled – and the adolescent snitching to the media to unnecessarily and totally irrelevantly sully a man’s name, might suggest that’s a shame that she didn’t have her mouth stapled too.

    • I think many working poor are worse off now than beneficiaries aren’t they save NZ?
      The constant humiliation and degradation of the beneficiaries would be removed, as well as the huge disincentive to get what work they can and benefit from it would be transformational.
      D J S

  3. $250/week aint gunnah cut it when your rent is $450. The current unemployment rate of all beneficiaries 18-63 as of the end of March 2020 is 12.3% or 309,000. Theres an additional 50,000 ‘in the process’, meaning going through the WINZ Grinder at Gestapo HQ.

    What about the ‘Growing’ masses? No amount of infrastructure building bullshit is going to fix this or opening the floodgates to tourism again. Its a global economic depression that little ole is at the bum end of the world.

    The only real solution is a complete Economic Structural and political ideological shift away from this neoliberal bullshit.

    I know its all shite from last night when I read the article from Roger Douglas! (Stuff/HNZ) He was congratulating Robo & Cinders and the Labour party for ‘completing the circle’ for him! He want them to accept his membership to the party!

    So I dont mean to rude, but youre so far behind the ‘8 ball’ mate ….

    • No matter how we slice it a UBI will never meet the wants of every one. Yknow when inequality spikes you’re not rich, you’re just a con artist. In a real crises we need everyone working as one, earning a dignified life. It’s the people going to work that generates all the wealth not some smart ass devising new ingenious ways to seperate them from there wealth, and the left suffers from this autocratic syndrome as well, people like…, Weka.

      A UBI in all realistic sense will only ever be enough to pay for food and medicine. There’s no vibrations in universalism once it’s in its almost impossible to dismantle a bit like trying to dismantle WINZ. So then we have to come over the TOP with universal state housing, universal healthcare, and universal access to legal representation. A UBI would be just one pilar of TOPs right-to-rule you’d need at least 4 to stand on.

  4. Nailed it and I’d be happy to pay more tax to contribute to such a system. Convincing the rest of NZ’s voters that this is a good idea will be an electoral battle of epic proportions. There’s nothing the working and middle class despise more than someone they consider unworthy getting something for free. They’d sooner close down their local public hospital and cut off their own limbs than countenance more progressive taxation or general wealth redistribution. Even as many of them face personal financial ruin.
    The belief in morality economics is very, very strong in most communities and financial deprivation deemed valid and necessary.

    • Yes exactly .
      They would rather someone pay a bucketload of money for unfunded meds than pay a bit more tax at the over 200,000 mark.

    • Yes exactly .
      They would rather someone pay a bucketload of money for unfunded meds than pay a bit more tax at the over 200,000 mark say 40 to 45%. Leave the current tax rates alone up to 70,000 . Ditch Gst and bring in a financial transaction tax on every transaction as the social credit party suggest of 2% on every damn transaction carried out within and going out of the country. If as the Greens said in 2014 is true that just in money transferred in and out of the country at a 1% tax rate can bring in $65 million a day then why cant we do it for the whole country .

    • No one need be worse off. The extra tax need never exceed the UBI income. It depends how it is funded. It should be where new money is introduced into the banking system instead of directly to the banks.
      D J S

    • Great…YOU contribute, but you have no right to demand or expect other taxpayers also contribute to prop up the lives of losers who don’t actually want to set an alarm clock and go to work. No one has a problem contributing to infrastructure that benefits us all as a society. A new hospital for Dunedin or another city in NZ that needs such things. But YOUR income is up to YOU to generate! No me, not your neighbour, not the taxpayer.
      And even if UBI became the next “stupid left wing idea”, how does one deal with the inflationary effect it would have on the cost of ALL goods & services, much like that other stupid idea Labour had called GST!

  5. Hear hear.

    A UBI would probably even save money re: Gareth Morgan’s, Big Kahuna.
    Plus it’d level the playing field for ALL the MASSIVE tax loops the wealthy are able to use.

    UBI at $250 OR MORE, plus a transaction tax to catch speculators in finance, the FAANG fiddlers etc

    But is Jacinda ‘control file’ sufficient bare that she can or would be brave enough to do what’s right?
    It’d be a welcome change to see ANY Labour Govt ACTUALLY do what is best for the working class AND in this case the country also.

    SADLY I fear not.

  6. As a working class pensioner continuing to work Your damn 33% tax on the lower income people is a kick in the teeth to get a pathetic $250 a week ubi. Get real leave the current progressive taxes alone and bring a new tax of 40 % in at $250,000 and as the social Credit party suggest, ditch Gst and bring in a 2% financial transaction tax on all transactions. If as the Green party said in 2014, a 1% FTT tax just on off shore transactions could bring in $645 million a month, then a 2% FTT tax on every damn transaction carried out in this country, would be more than enough to pay a UBI and also provide a better healthcare and medicines funding. We just have to have the balls to do it.

    • I agree that if we’re going to retain “progressive” taxation we need a higher tax rate on the big earners, and that we should reduce or eliminate GST. The move to indirect taxation is one of the factors that’s really hurt people on low incomes, by increasing the cost of living – another nasty being the privatization of the electricity supply.

    • By my calculations someone earning, say, $750 /w would be about $100 /w better off, as compared with his situation at the present day, if he paid tax at a flat rate of 33% but received $250 back from the government.That doesn’t sound like a “kick in the teeth” to me, though of course I don’t know how much to base my calculations on in your case, Geoff.

  7. The idea is right, but I can’t help feeling the numbers are too low. I think we’ll need a flat tax rate of 50 per cent to haul us out of the abyss of debt that Covid-19 is plunging us into. By the end of the Second World War the top tax rate was 90 per cent, by the end of the Muldoon era it was still 66 per cent, so 50 is just something to wince about. But a 50 per cent flat tax rate would have to be offset by a UBI much higher than $250. Make it $423 a week, the net rate of NZ Super’s single-living-alone allowance, throw in a child benefit half that for everyone under 18, add an annual tax on wealth: everyone earning under $76,000 a year would be better off, and you’d come close to winding up the so-called Ministry of Social Development altogether. And all those currently low-paid people with extra money in their pockets would be spending, reviving the economy, creating extra jobs, and paying lots of GST to fund state housing, hospitals, schools … and more UBI.

  8. This is a rather extraordinary article. When apply basic arithmetic to $250 UBI + 33% flat tax then it shows that TOP can’t count or they do know how to count and hope that no one else can

    Basic arithmetic:

    Tradie (current tax regime): $30 an hour. 1200pw wages. $226 tax. $974 in the hand (nett).
    Tradie ($250 UBI + wages + 33% tax): $1450pw wages. $478.5 tax. $971.5 nett

    Earn more than 30 dollars an hour in wages or salary then you are top fucked you rich wage slave bastards! /sarc

    If TOP do want to get into faux-neoliberalism then at least drop the faux part and read the works of Milton Freidman. Who has done the sums for you TOP and developed the methodology. Negative income tax.

    Freidman (an actual neoliberal, god rest his heathen soul) advocated for a minimum income for all and a progressive negative income tax. Freidman might have been a neoliberal economics heathen but at least he could count. And after meeting his burning bush in the monetarist economics desert of his own creation, he found compassion for working people previously missing from his heathen heart. Unlike these TOP bros it would seem, at least to date based on their numbers.

    Negative income tax: Earn less than 250pw then the tax department tops you up to $250 in your hand each week. Earn more than 250pw then progressive tax rates apply on the amount over $250 a week. Have a child and your negative income threshold rises proportionately.

    Do this and the beneficiary section of Social Welfare and the department of Work and Income can be shut down immediately.

    Low and medium wage and salary earners are better off with negative tax. As are beneficiaries who currently have to grovel at the feet of the departmental temple missionaries for alms. There won’t be any beneficiaries. The State will not have to set a minimum wage. The State only need set the negative income tax level. Have a dependent child? Your negative income threshold will be higher. Have a business and can’t afford to pay market wages that will attract human workers to you? Automate your business.

    The version of UBI as advocated here by TOP is faux. To a person earning one million dollars a year the cost of TOP UBI is $370 per annum.

    The people who get soaked by this TOP scheme are wage and salary earners. Tradies, team leaders, school teachers, firefighters, etc. Workers who go to work every day and do the mahi.

    To my fellow lefties, If you do want to see re-distribution of wealth from the top to the bottom without fucking up the workers, and want to hasten the closure of State-sanctioned alms-giving missionary temples, then advocate for a negative tax regime – UI – UBI with a heart.

    • Hi, John
      I think you don’t understand the system that is being proposed: the $250 per week is not subject to tax. Therefor, in your second calculation above, the tax is still only $226.

      A negative income tax is all very well, but a flat tax combined with a UBI will usually produce the equivalent of a negative income tax at the lower end of the income scale.

      • PS: It should be obvious, given the amount to be paid and the proposed 33% tax rate on other income, that the equivalent tax rate for the system would become negative for all incomes below $39,000 p/a. This doesn’t mean that all lower incomes would be topped up to $39,000, but it is probably not appropriate that they should be: There should be some allowance made for differences in contribution, I think, even at the lower ends of he income scale.

        • PPS: Someone earning $1,000,000 would pay $333,000 tax under TOP’s scheme; He would receive back $13,000 by way of UBI; So his net payment to the government would be $320,000.

          Under the present tax regime he pays 33% on all income above $70,000. Under TOP’s scheme he loses the “subsidy” he gets from paying less than 33% on income up to $70,000. That “subsidy”, I think, is approximately $9,000, so TOP’s scheme actually gains him $4,000. being the UBI of $13,000 less $9,000 rather than a loss of $370.

          “The people who get soaked by this TOP scheme are wage and salary earners. Tradies, team leaders, school teachers, firefighters, etc. Workers who go to work every day and do the mahi.”

          This obviously untrue . If someone on $1,000,000 is gaining $4,000, then anyone earning less than that must also be gaining.

      • Yeah so even if you earn above $13k, your first $13k will still be taxed free, and then a flat 33% or what ever after that so its like

        ($0-$13,000) tax free threshold
        ($13,000-$250,000) taxed at a flat rate of 33%

        So that $4,290 or 33% that goes untaxed in the tax free threshold bracket is carried over to the flat tax bracket makes the whole transition slitly better than neutral for most people and the top tax rate is 33% anyway. It’s about time we had a $13k tax free threshold to make it impossible for neoliberalism to force the weakest amongst us to pay for the bad bets on Wall Street.

  9. I think TOP is absolutely fantastic, and I hope they get more votes this time around.

    Not 5%, but just enough to f**k Labour over 😉

    • If you think they are “absolutely fantastic” why would you not want them to get over 5?. Do I detect an inconsistency? I think TOP’s ideas are “fantastic” and I would also like to see the get over 5%; though I don’t know whom they would support.

      It’s “absolutely, absolutely” great see you using our beloved leader’s favourite word.

      • No Mike I don’t think they’re fantastic – it was sarcasm.
        TOP is the Hipster Party. The people that vote for it have man-buns, ride fixy bicycles and drink soy lattes.

        • Sarcasm isn’t really an argument, but I guess the aren’t any. TOP’s policies are just too reasonable.

  10. I don’t like this line being repeated.
    Currently, beneficiaries lose income when they pick up some work – so employment doesn’t seem worth it.
    It’s a silly smart-alec remark being tossed off, from people who don’t have a clue what being poor is like, with damned unreasonable demands being made on you, especially flet if you are a parent or are supporting someone who is handicapped, or addicted. The problem is that going out to work takes the time of travel and the work time out of your day. It may not pay you much more than the pension/benefit and there is the cost of transport, also there will be the cost of cellphone top-ups so you are able to be contacted at any time, and there is constant demand to rely on new technology like having a smartphone, computer etc for messages. Then there is childcare, time to get to the supermarket between work and buses, if a car is just affordable, there is registration, wof, fuel and repairs. All this to cope with on top of the usual poverty and misogynistic Welfless Dept. and how do you help your children at school, get them to the dentist, doctor etc.

    So don’t dish out that nasty little remark about ‘it’s not worth them working – the point is probably they can’t afford to work. The preachy, censorious and ruthless government agencies make up their own rules and the comfortably off don’t make time to keep themselves informed on the truth of what is going on. They can’t say they didn’t know, they don’t care to know and accept their responsibility to ensure that distribution is spread evenly.

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