20 Feb 2018

Adding Children to my Negative Tax proposal for a French UBI

In my recent posts, I have suggested that we could provide all adults in France with an Unconditional Basic Income of €600 a month and pay for the entire system with a flat rate tax on all additional earned income of 30%.

I also suggested that it would be good to provide those under 18 with a €300 monthly payment that would be paid to the parent(s) or guardian. But I didn't provide the details of how that could be financed within the context of my Negative Tax proposal. Indeed, my original calculations didn't include the cost of payments to under 18s.

So, let's look at the numbers.

The latest official figures puts the total number inhabitants in France at 67.2 million, of whom  14.8 million (22%) are under 18. Providing a €300 basic income for each of them would cost €4.434 billion a month.

How might this paid? One option would be to increase the flat tax from 30% to 34%. This would indeed allow all adults to receive a €600 a month, and those under 18 to get haf that amount - namely, €300.

Relative to my original proposal, where 61% of the population receive something from the tax system (paid by the 39% who earn the most), the new figures mean that only 53% of the population would get a net payment from the system, paid for by the 47% that earn the most.

Of course, this particular set of numbers is pretty arbitrary. For example, if we decide to stick with the 30% flat tax rate (rather than 34%), the system could be made to balance by reducing the basic income for adults from €600 down to €529 (and sticking with the principle that under 18s would get half the adult value, i.e. €264.5 par mois).

It's up to us to decide the level of Basic Income and flat tax that we want.  Indeed, the French government has already voted to impose a flat tax of 30% on all income from capital (interest payments, dividends etc). Unfortunately, I have not yet been able to determine how much revenu this change will produce, but it would seem to me to be perfectly reasonable to unify these different sources of revenue. In other words, revenue should be taxed at the same rate whether it is income from paid work, or from capital investments. It is highly probably that such a more would produce enough  revenue to allow both the €300 for under 18s, and €600 for adults to be financed.

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