Saturday, 19 May 2012

Welfare Reform

1. People clearly have different levels of income and assets and the welfare system is an attempt to redistribute this somewhat, or to alleviate poverty:
2. For some reason, people like 'contributory benefits', where those who have earned most and paid most taxes are paid higher old age pensions or seen as more deserving recipients of unemployment benefit, despite this is just like a belated tax rebate and it would have been better to simply not collect the tax in the first place. Most pernicious of all are subsidies to certain assets, in particular land ownership (manifested with things like cash subsidies for buying a home; Housing Benefit payments which only benefit landlords in the long run and the fact that land ownership generally is nothing more than a state-sanctioned transfer of wealth, i.e. a subsidy):
3. Then there is a strange coalition of a) Socialists who think that people with low or no incomes deserve more than those who have (or have had) higher incomes and have built up some savings; and b) right wingers who like means-testing because they think it saves money (what they don't realise is that means testing is like a stealth tax on incomes and non-land assets which are taken into account for means testing):
4. So as things stand in the UK, we have a mish mash of subsidies to land ownership, means tested and contributory benefits, so the Socialists, right wingers, authoritarians, bureaucrats and land owners are all happy. The effect of having two overlapping and parallel systems means that people actually receive pretty much the same whatever their level of income or assets (ignoring the net subsidies to land ownership which are lightly taxed and not taken into account for most means-testing):
5. So why not merge the two systems with all the huge administration costs, fraud and error and traps and loopholes with a flat rate Citizen's Income, payable in cash. The cost of which can be largely funded by clawing back the subsidies to land ownership, i.e. by imposing a land value tax such as Domestic Rates, which would mean that the Citizen's Income received by a median household in a median home would be equal and opposite to the Domestic Rates due on that home?

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