Basic Income: Implementation

Continuing the discussion from Tax & welfare policy (v2.0), as apparently linked topics are preferable to thread necromancy:

(No doubt this has all been said before, but it’s not in the wiki and took a long time to occur to me.)

So I’ve been thinking about the actual implementation of basic income. Given PPAU’s policy is for a Negative Income Tax, it’s much more complicated than just ‘give every citizen 1000 dollarydoos a month’ - for that, you only need to determine recipient aliveness and uniqueness.

For PPAU’s system, income needs to be paid out in near-real time, but it needs to be paid out in appropriate amounts, which may vary substantially month to month. This is the crux of its existence as an effective and efficient safety net.

So the system at some level needs to be monitoring people’s income in near-real time. Obviously for government to do that has massive privacy implications which we really don’t want.

Luckily, there’s a way around it - get the banks to handle the fine detail of administration, using Tax File Numbers to keep track of it all.

Mechanism: most people already have TFNs and the banks know their client’s TFN (or, under the current system, charge withholding tax). You would designate one account to receive basic income payments; these would be paid fortnightly (or whatever) or not, depending on your external income to that account.

(External means I’m carving out a loophole for (e.g.) transfers between a savings and a transactional account. If people only ever used one bank this would be easier: we could say “net income to your group of accounts”.)

Any income received (from external sources) in your other accounts would effectively be pay-as-you-go taxed (in the strict case) or just sorted out at the end of the year (in the probably-too-lenient case).

Discrepancies sorted out at the end of the year as per normal. Undeclared income as per existing mechanisms.

And the government doesn’t need to get any information other than the fortnightly bank aggregates and the yearly personal aggregates.

That would probably work. FWIW I’d oppose any system that increased monitoring, but I don’t think ours does. The current system notes your income over a fortnight and then auto-calculates the tax bill. Our system would note income just the same, but a broader range of options would apply which could include top-ups as well as deductions.

So the amount of information collected on high and middle earners doesn’t change. But much less information is collected on low earners because all the monitoring done by the existing welfare bureaucracy ceases.