The answer to our current (and future) economic slump is simple. Scrap all unemployment benefits, job seekers allowances, minimum wage legislation, tax credits etc - THEN - let everyone sign up for a taxable national salary.
Every person would be eligible - and could earn as much as they want on top of that wage - it would simply count as part of their taxable income (but would not actually be taxed unless they earned above their personal allowance).
This would in an instant abolish the fear of unemployment - it would allow people to be totally flexible in taking available, temporary work without the stigma and hassle of signing on and off the dole - it would free companies to pay less than the minimum wage, so making them hyper-competitive on the world stage.
This would effectively be a national subsidy to carers, stay at home parents and other. Sure the shirkers would also benefit - but they would have every incentive to earn a bit more on the side without fear of seeing their national salary clawed back. It is also progressive (with an element of equitable wealth redistribution).
This would make the economy more flexible and increase the circulation of money - so providing a support to consumer spending through economic ups and downs - it is in effect the ultimate stabiliser. A free-market solution with a social benefit.
Blessings for inventive ideas.
Father Ignatius Brown
http://www.father-ignatius-brown.com/ and http://my.telegraph.co.uk/father-ignatius-brown
Monday, 21 September 2009
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Further to this post:
not sure on an exact amount - probably somewhere between the basic job seekers allowance and the basic state pension - maybe as much as the state pension or the same as the national minimum wage assuming (assuming a 35 hour week) - but it needs to be below the personal allowance (which should be raised to about £10k anyway).
The move would probably be self funding as Hammer points out, since you could get rid of all the benefit offices and tax credit administrators. Plus the salary would cushion people in a downturn and so reduce the tendency for consumers to cut back sharply which can make the downturn worse.
Child allowance should be taxable in the same way.
With a simple national salary we could do away with all housing support benefits and disability benefits - everyone would be entitled to a basic national salary which would keep them off the breadline.
We could even be more lenient on cash in hand casual labour - since it would not affect their eligibility for the salary. Casual labour keeps cash flowing round the economy (we pick up VAT on most of it when it is spent). Plus there would be an incentive to declare earnings since this would boost your retirement earnings (because naturally we would have portable personal pensions funded out of income tax - again mildly redistributive but so preventing pensioner poverty and encouraging tax declarations.
National Insurance tax should be abolished too - we should simply have a standard rate of income tax at 33% - for everyone.
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