Why it’s OK to pay billionaires a basic income

Michael Moritz and Douglas Perkins are the richest people in Wales with combined fortunes of billions of pounds. Surely giving them a basic income makes no sense because they don’t need it, right? Well, wrong.

By: Jane Dodds.

A point that is often missed is that a basic income scheme is not just a change to the welfare system. It is also a change to the tax system. Any serious proposal for a basic income scheme combines changes to both welfare and taxes.

So, any serious scheme (and there are many) ensures people who are considered rich enough actually end up paying back, in taxes, the basic income they receive. They will be net contributors and not net recipients from the pot.

If they are going to end up giving it back, why give it to them in the first place? Isn’t that a waste of time? Isn’t it better to target benefits to those who need them, by way of means-testing? Well, again, no. For a number of reasons.

The first is a universal payment (like a basic income, which goes to everyone) is much cheaper to administer than a means-tested one.

With a universal payment, there are no eligibility criteria (or if there are, they are incredibly simple ones, like age), which means you don’t need to set up expensive and intrusive systems to decide and monitor who is eligible and who isn’t.

Secondly, universality carries no stigma.

When everyone gets something, there is no shame in receiving it. We know hundreds of thousands of people are failing to claim benefits they are entitled to, to the tune of billions of pounds a year.

This is partly because people are ashamed of claiming benefits as the process is so humiliating: you have to convince someone you are in need.

In other words, you have to parade your poverty, or your disability, in front of strangers so they can decide whether or not you are ‘deserving’ of help.

Not surprisingly, lots of people prefer to go without than to demean themselves in this way.

The other reason benefits go unclaimed is they are designed, on purpose, to be difficult to get in order to minimise the number of claimants. Some of the most vulnerable in our society, the ones who are least able to navigate the system, simply give up.

These are the people that we, as a society, are supposed to be trying to help, but we have designed a system to do exactly the opposite and turn them away.

A third reason is they give everyone a stake in society and an interest in the system working well.

Have you ever wondered why the NHS (universal) is so much more popular than Universal Credit (means-tested)?

You are only rarely ill but you know the NHS will be there for you when you need it. Means-tested benefits are seen as ‘not for me, but for other people’, so they are easy to dismiss as unnecessary.

But the Covid pandemic has shown that lots of people in Wales, especially low and middle-income families, can and have been thrown into financial instability by situations over which they have no control.

A basic income could have helped them during Covid. It should be in place by the time the next economic shock comes. Let’s make sure it will be.

In short, although it may at first seem counterintuitive to offer a basic income to billionaires like Moritz and Perkins, it actually makes a lot of sense. So let’s do it. As Liberal Democrat leader in Wales. I support a basic income trial for our country.

I will be campaigning for it to be as broad and inclusive as possible so we can see and measure the positive impacts it will have on individuals and communities.

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