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V233 - Poverty Abolition Bill watch

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    V233 - Poverty Abolition Bill - UniOfLife
    Poverty Abolition Bill

    An Act removing poverty in the UK by guaranteeing a minimum income for all citizens.

    BE IT ENACTED by The Queen's most Excellent Majesty, by and with the advice and consent of the Commons in this present Parliament assembled, in accordance with the provisions of the Parliament Acts 1911 and 1949, and by the authority of the same, as follows:-

    1. Minimum Income
    (1) The Treasury shall create and maintain an algorithm for calculating the minimum income required for every household.
    (2) The Treasury shall annually pay each individual the calculated figure.

    2. Other Direct Payments
    (1) All other direct welfare payments shall cease.

    3. Tax and National Insurance
    (1) All income above the calculated minimum shall be taxed at 37p per pound.
    (2) Employee National Insurance Contributions shall be abolished.
    (3) Children under the age of 16 shall be exempt from income tax.

    4. Definitions
    (1) For the purposes of this Act a "household" is defined as an individual living alone or a cohabiting or married couple.

    5. Commencement, short title and extent
    (1) This Act may be cited as the Poverty Abolition Act 2009
    (2) This Act shall come into force on the first day of the financial year 2010
    (3) This Act extends to all citizens of the UK.


    Analysis
    Short version:

    The cost of this scheme is approximately £285 billion. Loss of income from National Insurance is approximately £50 billion.
    Savings from removing direct welfare payments are approximately £185 billion. The changes to income tax will bring in an extra £150 billion. The figures are therefore balanced.

    The Joseph Rowntree Foundation has calculated a minimum income required for four groups of people in the UK. They have been somewhat overgenerous stating that:
    "This research aimed to find out what level of income people think is needed to afford a socially acceptable standard of living in Britain today, and to participate in society."
    source: http://www.jrf.org.uk/publications/m...t-people-think
    It can be argued that they overestimated the required income because, according to the BBC report:
    "Film tickets, a bottle of wine and a bird feeder were on the list of goods people need to participate in society."
    source: http://news.bbc.co.uk/1/hi/business/7481927.stm
    Nevertheless, we use these figures as the basis for a feasibility study. The report found the following requirements:
    * a single working-age adult needs a budget of £158 per week;
    * a pensioner couple needs £201;
    * a couple with two children needs £370; and
    * a lone parent with one child needs £210.

    From the Office of National Statistics it seems that 7 million people live alone (source: http://www.statistics.gov.uk/cci/nugget.asp?id=1162), there are 17.1 million families (source: http://www.statistics.gov.uk/cci/nugget.asp?id=1865) of which 7.4 million are families with dependent children (source: http://www.statistics.gov.uk/CCI/nugget.asp?ID=1163). A quarter of those families are single parents and the average number of children per family is 1.8 approximately.

    From these figures we approximate that there are:
    7 million single working-age adults
    9.7 million childless couples
    5.55 million couples with children
    1.85 million single parents

    Please note that these (and all other) figures are approximate and designed to show feasibility only!

    If we use those figures we find that the total cost to the State of the minimum income would be:
    7m @ £158 p/w = £57.5 bn
    9.7m @ £201 p/w = £101.4 bn
    5.55m @ 370 p/w = £106.8 bn
    1.85m @ £210 p/w = £20.2 bn

    Thus the approximate total cost of this scheme would be: £285.9 bn

    Now, current direct welfare payments from the State amount to approximately: £185 bn.
    source: http://image.guardian.co.uk/sys-file...c.spending.pdf

    This means that our scheme would leave a deficit of £100 bn.

    National Insurance currently brings in about £100 billion (source: http://www.hmrc.gov.uk/stats/tax_receipts/table1-2.pdf ). Approximately half of this comes from employee contributions and half from employer contributions. Thus removing employee contributions would leave a gap of £50 billion, combined with the above that leaves a gap of £150 billion.

    The flat-rate income tax of 33p would fill this gap.

    Table 3.3 from: http://www.hmrc.gov.uk/stats/income_...nu-by-year.htm gives details of earnings and how much the State accrues from income tax. Currently, the state brings in £150 bn from income tax. Using those figures and applying a flat rate of 37% we find that the new income tax would bring in £300 bn thus covering the gap.

    Thus we suggest that this Bill's aims are feasible.

    Moreover, we point out that the figures from the Joseph Rowntree Foundation are probably higher than the minimum income needs to be, we also point out that tax figures in the source do not include those earning below the current threshold whereas our income tax would include those.

    The rationale for removing the minimum wage is obvious and we expect that its removal would increase employment (and income tax revenues). We consider that this Bill will help in the short term to boost employment and help bring the UK out of recession and in the long term we expect that the removal of the minimum wage and the creation of a population secure in its position would lead to a cheaper and more competitive work-force especially in the lower-paid manufacturing sector. We also note that the removal of any kind of means-tested payments removes the possibility of it being more worthwhile to remain unemployed than employed. Finally, the flat tax encourages entrepreneurship and makes Britain more attractive for the very wealthy who will end up paying large amounts of income tax.

    Overall we think that this scheme is feasible and even if it did not bring with it the many other advantages we believe it will then at least it will ensure that no one in the UK need ever worry about putting food on the table or a roof over their heads again. We commend this Bill to the House


    Speakers Note 04/10/10: This Act was amended by the B307 Welfare Amendment Act 2010. The Current version of this act can be found below:

    V233 - Poverty Abolition Bill - UniOfLife
    Poverty Abolition Bill

    An Act removing poverty in the UK by guaranteeing a minimum income for all citizens.

    BE IT ENACTED by The Queen's most Excellent Majesty, by and with the advice and consent of the Commons in this present Parliament assembled, in accordance with the provisions of the Parliament Acts 1911 and 1949, and by the authority of the same, as follows:-

    1. Minimum Income
    (1) The Treasury shall maintain a list of goods and services required to afford a socially acceptable standard of living and to participate in society in Britain.
    (a) The Treasury shall update the prices of each good or service by region.
    (b) The Treasury shall publish the list of goods and prices not less than once per month.
    (c) That the Treasury shall repeat the Minimum Income research from scratch ever 3 years.

    (2) The Treasury shall monthly pay each individual the income required to pay for the basket of goods and services at the prices in that individual's region.
    (3) Where applicable, payments shall include goods for dependent children under the age of 18.
    (4) For the purposes of this bill "region" refers to electoral region for national parliament as set out by the Federal Act 2010.


    2. Other Direct Payments
    (1) All other direct welfare payments shall cease.
    (2) "direct welfare payments" are defined for the purposes of this bill as "any monetary payment from the state to an individual for reasons other than direct employment or government error".

    3. Tax and National Insurance
    (1) All income above the calculated minimum shall be taxed at thirty-seven pence in the pound.
    (2) Primary National Insurance Contributions shall be abolished.
    (3) Persons under the age of 16 shall be exempt from income tax.


    4. Commencement, short title and extent
    (1) This Act may be cited as the Poverty Abolition Act 2009
    (2) This Act shall come into force on the first day of the financial year 2010
    (3) This Act extends to all citizens of the UK.
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    Wiki Support Team
    I think the Welfare State certainly needs reform. However, are disability benefits included in this as there is no mention of continued assistance of the disabled?
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    (Original post by Birchington)
    I think the Welfare State certainly needs reform. However, are disability benefits included in this as there is no mention of continued assistance of the disabled?
    The requirements of recipients is taken into account, that includes any disabilities.
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    I think we are yet to hear a reason why the flat tax is a bad idea.

    I am also yet to hear someone state their reasons for not voting for this.
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    Would it be too much to ask that those who choose to vote against the Bill give some indication as to what their objections are?
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    In the end I could not settle my misgivings about the consequences of the bill (I don't think it will overcome dependence) and so felt uncomfortable voting yes; at the same time I recognise the necessity of dealing with the system of welfare we have currently (I consider it a crucial first step to abolish means testing but that's a different argument) and so therefore could not logically vote no either. An abstention is the fairest vote I can make and I hope that my reasoning, however flawed it is perceived to be, is sufficient?
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    (Original post by Adorno)
    In the end I could not settle my misgivings about the consequences of the bill (I don't think it will overcome dependence) and so felt uncomfortable voting yes; at the same time I recognise the necessity of dealing with the system of welfare we have currently (I consider it a crucial first step to abolish means testing but that's a different argument) and so therefore could not logically vote no either. An abstention is the fairest vote I can make and I hope that my reasoning, however flawed it is perceived to be, is sufficient?
    I was mainly referring to the people who have voted no without engaging in any kind of discussion of this Bill at all. For many Bills there are obvious reasons to vote against but no obvious reasons were presented during the two readings so it would be nice to know why some people are voting no. This is especially so since so many of the points people raised about this Bill stemmed from a lack of understanding of it.
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    (Original post by UniOfLife)
    I was mainly referring to the people who have voted no without engaging in any kind of discussion of this Bill at all. For many Bills there are obvious reasons to vote against but no obvious reasons were presented during the two readings so it would be nice to know why some people are voting no. This is especially so since so many of the points people raised about this Bill stemmed from a lack of understanding of it.
    I appreciate that however I'm going to go out on a limb here and consider that you probably had me down as an automatic no. Hence I felt the need to explain my decision.
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    I really would like to vote for this, since it's admirable in terms of intent and the analysis behind it is pretty thorough.

    However, in the end I don't like the idea of a flat rate income tax. Sure, it kind of works out because of the differences in how much people are actually making, but at the end of the day I would prefer to see a sliding scale, even if it is more difficult to administer. This is all bearing in mind that I disagree with what the authors of this bill consider to be "fair" taxation.

    You also failed to change the wording of the bill to include simple things like saying what the requirements of each household actually are. I know you answered my question in the second reading, but then yoiu dropped the ball by not bothering to change the bill.

    'No' from me I'm afraid.
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    (Original post by Adorno)
    I appreciate that however I'm going to go out on a limb here and consider that you probably had me down as an automatic no. Hence I felt the need to explain my decision.
    I had no one down as an automatic "no".

    Seems to me that the Bill increases welfare payment to the poor, removes the poverty trap and make the scheme fairer and cheaper to administer. I really couldn't see much reason to vote against it. I still can't to be honest.

    T&J - I never intended to include wording in the Bill outlining what was required. The intent was understood but the list of required things is the algorithm and the Bill left the formation of the algorithm (ie the list) to the administrators of the scheme.
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    As Chancellor I wanted to provide a view on this and why I'm hugely for it. Also, I realise this is a complex bill in its effects - what it means for different parts of the population - and a lot of people on both sides of the House seem to have misinterpreted it. So here's my argument in short:

    • It cuts the amount of money we spend on the unemployed while ensuring that every unemployed person has enough to live on. Unemployment is designed not to be comfortable but to ensure people do not live in abject poverty due to the lack of a job. This bill does this cheaper and simpler than the RL system (it's worth bearing in mind that the poorest people can rarely make sense of an incredibly complex benefits system and thus many don't currently receive their full allowance).
    • It removes the disincentive to work - currently moving from benefits to a reasonably low paying job has a huge marginal tax rate - something like 50-95% of your extra income goes to the tax man as tax or reduced benefits, meaning you're not much better off, and thus some people choose not to work. This stops that by paying it to everyone, meaning that everyone faces a marginal tax rate of 37%.
    • This produces a slightly higher post-tax income for every worker, but especially for the poor (who need it most) and the very rich (who can move countries most easily).
    • It simplifies the tax and benefits system hugely, which is a surprisingly large benefit to companies and public sector institutions, probably worth low billions in efficiency savings in itself.


    I do feel there are reasons to vote against it - if you feel the unemployed should get more, especially those who are unable to work through disability, or if you feel the rich shouldn't have their tax burden reduced - however IMHO these are greatly dwarfed by the positives here, which are huge. As such, I urge people to vote yes.
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    (Original post by Drogue)
    I do feel there are reasons to vote against it - if you feel the unemployed should get more, especially those who are unable to work through disability, or if you feel the rich shouldn't have their tax burden reduced - however IMHO these are greatly dwarfed by the positives here, which are huge. As such, I urge people to vote yes.
    Thinking it through with your reasoning raises some issues for me about the consequences of the bill; it is claimed, perhaps with justification, that this bill will enable the poor rather than effectively disable them as they are under the present system but this bill doesn't remove the heavier burden of indirect taxation which is, lets be honest, where poverty really bites and this is why I don't think this bill will actually break the cycle of dependence but merely shift it. I could not vote yes because of that fear.
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    (Original post by Adorno)
    Thinking it through with your reasoning raises some issues for me about the consequences of the bill; it is claimed, perhaps with justification, that this bill will enable the poor rather than effectively disable them as they are under the present system but this bill doesn't remove the heavier burden of indirect taxation which is, lets be honest, where poverty really bites and this is why I don't think this bill will actually break the cycle of dependence but merely shift it. I could not vote yes because of that fear.
    While true that it doesn't remove indirect taxation, the huge easing of direct taxation and loss of benefits for an unemployed person choosing to work makes a large impact.
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    (Original post by Drogue)
    While true that it doesn't remove indirect taxation, the huge easing of direct taxation and loss of benefits for an unemployed person choosing to work makes a large impact.
    But is it large enough? Probably not and so whilst this may well produce favourable results in the short term is it really the answer in the long term? Not sure about that. The issue of indirect taxation remains and will become increasingly burdensome in the future as resources such as petrol become scarcer, as the availability of food becomes less because of the need to share with more and more people on the planet and the impact of climate change on arable land or the switch to alternative energy crops for the production of ethanol and biofuels. So as I said the fundamental problem of dependence remains and until dependence is broken poverty cannot be abolished.
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    So, if I understand you Adorno, you're position is that since this Bill is only an improvement not a fix you voted against it.
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    (Original post by UniOfLife)
    So, if I understand you Adorno, you're position is that since this Bill is only an improvement not a fix you voted against it.
    An abstention is not a vote against. It is a position that is neither for nor against. So please do not misrepresent me. However, my position is more that this bill has consequences that I don't think are sufficiently addressed. Ultimately, I'm just thinking aloud here.
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    (Original post by Adorno)
    An abstention is not a vote against. It is a position that is neither for nor against. However, my position is more that this bill has consequences that I don't think are sufficiently addressed. Ultimately, I'm just thinking aloud here.
    Apologies but an abstention is not an improvement. Since you seem to agree that the Bill is an improvement and your concern is only that it doesn't solve the problem (which I don't think is true anyway) I can't see why you wouldn't vote for it.

    But whatever. It's your vote and you're free to vote as you want. It's just very irritating to have a discussion about the Bill and then have people vote against it without at any stage giving any reason why they're voting against and therefore no opportunity for the people proposing the Bill to make changes or explain why their concerns are perhaps not warranted.
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    (Original post by UniOfLife)
    But whatever. It's your vote and you're free to vote as you want. It's just very irritating to have a discussion about the Bill and then have people vote against it without at any stage giving any reason why they're voting against and therefore no opportunity for the people proposing the Bill to make changes or explain why their concerns are perhaps not warranted.
    Funny that. The same thing happened in my bill - most of the people who voted against took no part in the discussions. That, ultimately, is the flaw of this place; not whether we have costs in bills or not. The fact is only certain views are being presented here and we have MPs who have voting rights but never engage in debates which is really annoying.
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    (Original post by Adorno)
    Funny that. The same thing happened in my bill - most of the people who voted against took no part in the discussions. That, ultimately, is the flaw of this place; not whether we have costs in bills or not. The fact is only certain views are being presented here and we have MPs who have voting rights but never engage in debates which is really annoying.
    It's all part of the same thing actually - MPs voting without analysing or debating the Bills first.
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    Actually both of you are bang on the nail there. I have MPs who don't actively engage in discussion outside the sub forum for varying reasons, and it's the same in most parties.
 
 
 
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