> this works out to $2800/month or $33600/year.
Switzerland's per capita GDP is about USD 79000/year, so assuming 80% of the Swiss population are adults and citizens, this would cost about 34% of GDP, which may be unaffordable.
Switzerland's per capita GDP is about USD 79000/year, so assuming 80% of the Swiss population are adults and citizens, this would cost about 34% of GDP, which may be unaffordable.
It's really annoying that people say "it's unaffordable" to mean "we don't want to pay", when the phrase is supposed to mean "we can't pay, we don't have enough money". I understand why people don't want to part with money, but at least let's be honest.
If you sort everyone from poorest to richest, and plot their incomes on a graph, basic income just means that the slope is flatter than before [1]. As long as the area under the graph (GDP) remains the same, it's technically affordable.
The flattening is accomplished by (a) taxing the rich more, and (b) a gradual reduction of salaries and/or working hours as the market finds a new equilibrium.
What matters is political will, and it seems that Switzerland has more of it than most of the other developed countries.
[1] http://i.imgur.com/IGkHoma.png (Sorry, it looks like crap because I just drew it in MS Paint.)
Edit: Fixed graph. The red line is now curved properly.
In civilized countries you're not going to pay $30,000 for any required medical procedure... There are some advantages to universal health care...
The affordable question is one of: where the money's going to come from? How will small or large businesses, poor/middle-class/wealthy private individuals be required to support it?
The initiative's organizing committee said the basic income could partly be financed through money from social insurance systems in Switzerland.
I don't think the initiative people really have a clear idea.
Isn't that the whole point of any policy that implies a massive redistribution of wealth? Of course the money needs to come from higher taxes. Ergo, "What matters is political will."
As I said, it's really annoying that people say "it's unaffordable" to mean "we don't want to pay". This usage masks the real problem, which is political will (or lack thereof), not the physical scarcity of USD or CHF.
"It's unaffordable" can certainly mean "we don't want to pay". It can also mean "Are there enough rich enough people and businesses that can pay, that this can be passed, or can reasonably be collected?"
It is a question of political will, and it's annoying when people lambast that question with criticism as simple selfishness.
Redistribution often hits hard on middle income earners. I'll be impressed should something like this be passed, and the earning figure simply pivots on the median earner instead of gouging earnings from the middle-class.
I wonder at what point Swiss high earners, or wealthy Swiss companies, will move to somewhere like Luxembourg to protect that wealth? Or is it simply not possible in the mind of a Swiss national to do so?
Unless/until the money runs out, which might happen more quickly than you think if, indeed companies and wealthy individuals start packing up and leaving the country.
The Swiss people might not want to pay the amount of tax that would be necessary to have citizens income at that level.
I think Georgism ( http://en.wikipedia.org/wiki/Georgism ), which doesn't tax income, but it only taxes land (so, not earned income) is a better approach to get a sustainable and more fair distribution of wealth.
I try to look at the whole system, and I don't see how it would work.
Also, see http://thelastpsychiatrist.com/2012/11/hipsters_on_food_stam...
I understand the tax would be on the value of the land, not on its size (from your comment I'm not sure if you understood in the same way). The tax only "forces" you to sell assets/property that you don't need or use to generate your income. I don't think this is bad.
I don't see how taxing (land) property you are taxing liquid income too. The tax amount that you will have to pay doesn't depend on your income, so it doesn't penalize your productivity (which typical tax systems do, as they require you to pay more when you earn more).
Your statement about productivity might hold true, if it weren't for the fact that (at least here in my state), the tax value of land is based not only on unrelated market factors, but also on improvements and use of the land. Therefore, if you remodel your kitchen, the taxes on your home will increase. (Yes, they often do here - you have to pull permits to do this work within the city, and the county assessor monitors permit issues.)
However, I do generally agree with the concept that property taxes are better than income taxes (which is one reason why I live in a state that utilizes this model), however, I can see that it creates downstream problems, especially for renters. That is to say, if I am renting a property, I would be foolish to not charge a margin on all costs - therefore a 5% tax to me becomes a 5.5% cost to you - I would charge a margin for fronting the taxes for you, and to compensate for periods where the property is un-rented.
Actually, I think Georgism is designed to make it difficult to get money by renting property (unless you provide additional value)! This would help to better distribution of wealth because it would make it difficult for rich people to get richer by just buying and selling (or renting in this case) without providing additional value.
BTW, what's your state?
> This would help to better distribution of wealth because it would make it difficult for rich people to get richer by just buying and selling (or renting in this case) without providing additional value.
I can't disagree with this more. Typically, real-estate investors bridge a temporal problem between a selling user today, and a buying user tomorrow. If there were no such investors, selling users would be inhibited from realizing the value of their property until another suitable user was ready to purchase the land. This could create a complete standstill in some markets, and cause lots of property owner-users to face major issues in hard economic times, when selling their property could get them well over it. There is an entire section of town where live (Houston, EaDo) where this temporal bridging allowed a lot of industrial users to move out of the city to less expensive locales, and then eventually that area to turn into more residential and mixed-use because the industrial users were able to sell it at a reasonable price when they needed to, and the investors took the risk of holding on to the property for years (in some cases decades) until the market demanded more value for the area.
There are many that would argue (myself included) that the taking of risk by the investor to capitalize the user-seller today, even if there is no existing user-buyer, is providing additional value in the market. Without going into meta-discussion here, much of the underpinnings of our entire system are based on the recognition of value in resolving these sorts of temporal problems.
Moreover, making it more difficult to rent property will do more harm to the poorest amongst us, who can least afford to outright buy it. Most of the rental houses I've seen available are not owned by extremely wealthy people (for good reason: rental houses are generally poor performers in regards to ROI), but instead by middle-class families, who choose to rent out a house rather than sell it. There are, yes, rental blocks of apartments - but I would argue these are the kind of activity you want, most of the large ones I know of are owned by REITs, who tend to pool a large amount of money from a large amount of people (mostly institutional ownership, and IRS rules limit the individual ownership in a REIT) to purchase, develop, and then operate land. If there is no possibility to continue to rent land once developed, then what purpose is there to develop it?
The state I live in is Texas.
If you want to create better distribution of wealth, preventing people from investing in real-estate seems like a very rough and roundabout way of achieving this. Why not address the low-hanging fruit first, like incentives from the government. Here's one I'd start with: extend the time to hold on capital gains (and while we're at it, take a good look at carried interest and washing rules for tax-loss harvesting!), and give a refundable tax credit for putting money in qualified college savings accounts.
It would still be possible to continue renting land once developed, but people that want to do that should think about ways to provide an added value that they can charge for. The real-estate business would certainly change with this new taxation.
I agree that there may be small changes that could help to create a better distribution of health, but I don't think they would be so effective. Besides, things like what you suggest, even if helpful, they complicate the government even more, with more laws, more incentives (which I think distort the reality, sometimes causing more problems than solving them), and another aspect that I like of Georgism is that it simplifies things a lot (there would be only a single tax).
Maybe some people find it too radical, I don't know, but what's clear for me is that the current system is not sustainable. Maybe when the current system collapses completely it wont't be too radical anymore :)
By the way, one of the replies on Twitter says the curve on the right should be linear. Nope. The fact that the curve on the right still has a noticeable slope is the only thing that keeps Friedman, Hayek, and all your favorite (left|right)-libertarians on board the scheme.
We can argue of course about the indirect consequences to the economy, e.g. how it would affect the competitiveness of Switzerland if unpleasant jobs suddenly require a more attractive salary.
ii) You protect children, because they are innocent victims.
iii) People taking drugs might be addicts, and need health care to treat their addiction.
But other than that, once they spend the money it's gone and if they don't have food then they go to a charity or route around in bins.
We talk about the social housing in the UK, but it's hard to get social housing, and being a person who is homeless because of drink means you're going to end up in hostels at best.
Edit: fixed typo.
In today's Swiss welfare state, all people living in Switzerland already have full access to what actually already is a basic income (or even more), just not fully unconditional.
You're right -- so my initial figure was more accurate.
Basic income is just a redistribute tax mechanism, but it's one that tries to remove bureaucracy and politics from social security programs surrounding qualifications, etc.
So, yes, this programme would cost _something_, but it wouldn't cost 34% GDP.
If you consider progressive taxation as a high tax rate with a discount for lower incomes so they get enough money to live, then basic income, which provides enough money to live, can replace that discount. Just like it replaces welfare, unemployment benefits, etc. It's going to make social security and the tax system both a lot easier, and cut down a lot on bureaucracy.