Taxing wealth is more difficult than taxing income, because wealth is simply harder to measure (you need to inventorise material possessions as well as stock holdings, bank accounts...). This is how the wealthy manage to dodge a lot of taxes. The wealthy, being wealthy, have plenty of money to hire smart tax advisors.

Closing tax loopholes is a nice political rallying cry, but I suspect it's going to be very difficult in practice.

So, in econo-speak, you are going to have a relatively large inefficiency on this tax, and a relatively large overhead. You'd have to take that into account when setting the rate.

Then again, that means there's gainful employment for your telemarketer :-)

(wrt telemarketing, I'd say there are other fixes, like having the option to set your phone for no marketing calls)

I remember seeing a programme that looked at some research into poverty and how people were living on benefits.  One mother thought it was more important to ensure that her son had a tv to watch, rather than certain other things because it would damage him socially if they did not have a tv.  I agree with that, when access to so many other things are cut off for children living in poverty, that a tv is important because it gives something in common with other children.  That doesn't equate to sitting a child in front of a tv all the time, but having access to social trends such as this programme or that is important for social development.

But would a policy maker think that a tv is a necessity or luxury?

A family member of mine is another example - on incapacity benefits but due to privatisation of social services care providers, her care costs went up something like 800%.  Whereas before recent shake ups, 75% of her income was taken into account for paying for care and bills etc, now 100% is. Food allowances are only for food, not for toiletries... So out of her benefits, her bills, care costs and food is paid, leaving almost nothing to 'live' on.  

Being housebound means that a decision has to be made around the cost of having a carer come in vs not having anybody to talk to all day long. When the care calls were first cut down, she very quickly became much more ill. Instead of a call in the morning and one in the evening, it became possibly one in the evening if affordable. Nothing to do, nothing to get up for. physical and mental well being then starts going further into decline.

These are the social costs of penny pinching. And the financial costs also.

Some 'luxuries' are actually necessities when they become something that keeps a person going, keeps them from declining further.

But it is so much more than purely a living income - it is whether services are joined up or not.  Do social services talk to mental health services?  Does the GP talk to social services? Or do people just keep being referred from one place to the next, with each place refusing to take any responsibility and obstructing provision of support?

When a trip to the hospital is too expensive, do you then not go? Get so ill that a few months later you go in by emergency ambulance?  What does that cost the NHS and the person involved?

Financial planning completely fails to look at social costs and long term consequences of different courses of action.  Fragmented services fail, privatised services fail.

How much should we give people to overcome all of these hurdles that public services put in their way?

The income guarantee is the social dividend for all the economic benefit provided by knowledge and social infrastructure that is in the public domain and used by people ... whether individually or with their activity organized by going concerns ... and the guarantee of the right to participate in the economy as a consumer, and the job guarantee is the guarantee of the right to participate in the economy as a producer.

And, yes, this is a thesis statement and not a detailed argument, but I'll try to slide it in under the heading of "comment".


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

Oh, and another consequence would be less frigthened people. Probably strenghtening democracy and so on.

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Not if they are working from India!

In both of the blog entries you can easily understand that telemarketing is not exactly the most cherished job in the western world. However, for India it is a booming business and according to a report in TMC Net, "For many people in America and Britain, outsourcing to India is synonymous with telemarketing and call-centres that try their patience."
For thousands of young and educated IT workers in India, telemarketing is like a dream job as the salary is good compared to the Indian standard. Before they start their job, they receive training to speak with an American accent and often they change their real name and adopt a common American name. Because of the time difference between America and India, these workers often have to start their work after sunset and work until sunrise. It's a tough job but most of these workers are happy to get a monthly salary of $250 or a bit more. And since more and more people in USA like Panda are not interested to work in telemarketing, the industry is going to flourish even better and more quickly in India.

Telemarketing: India is shining but at the expense of What!

So, for definiteness, assume the guaranteed living income is set at the conventional relative poverty threshold of 60% of current median income.

I got curious as to how much this would cost in comparision with current expenses for welfare grants of various kinds. I base everything on Sweden. First note: the closer median wage is to mean wage, the costlier this will get. So in Sweden it will be more costly then in countries with more unequal income distribution. I use a standard all-else-equal assumption.

Searching for median wage was not easy. Googling gave me this document Löneskillnader mellan offentlig och privat sektor (pdf, swedish). Published in 2004. Graph on page 72 gives median wage at about 22 000 SEK/month. That gives GLI = 13 000 SEK/month.

Another quick search gives that the governmental budget (including most welfare programs such as unemployment benefits, pensions, sick benefits, grants for students and children and various programs)Statsbudgeten och de offentliga finanserna for 2004 was 748 000 millions SEK.

To give each of 9 million inhabitants 13 000 (not taxed) SEK/month would cost 9 millions * 12 * 13 000 = 1 404 000 millions SEK. That is, the national taxation would need to be doubled and all national services (universities for one) would have to be scrapped (or keep other and raise taxes even more).

(Please note that I am so far only counting the national government. Lots of taxation is local, and goes mostly to services, such as schools, daycare, healthcare, elderly care. The only major welfare program which is locally funded is the bloody-poor-but-do-not-qualify-for-other-program program: Socialbidraget, which is funded by local taxes. It was 8 700 millions in 2004.)

Now I will go backwards and check what GLI could be instituted today by scrapping all other welfare programs.

Somewhere along the way I have picked up as a rule of thumb that half the national governmental spending is various programs and the other half is services (this might be false, but hey this is a rough calculation). Assuming that rule is right, that gives the government spending 374 000 millions on various welfare programs in 2004. Throw in Socialbidraget and we have about 380 000 millions SEK. Divide by 9 millions we have 42 222 SEK/year. Divide by 12 and we have a GLI = 3 520 (not taxed) SEK/month or about 350 euros. Not much, hardly covers a low rent.

Now, the richer half of the population (earning more then 22 000 SEK/month) can easily be taxed as much as the GLI more as they (presumably) see very little of the current benefit programs. Say we do that, then we can double the GLI on the same budget. Now GLI is 7 000 (untaxed) SEK/month. That is about what a student on full scholarship and student loans get (but only for the months they study, summer in recension times can be hard, local government can be harsh with Socialbidraget). It is more then the lowest level in unemployment benefits (about 5 000 SEK after taxes) and more then Socialbidraget. It is about the same as the lowest pension level.

The effects here is taking from benefit holders who today gets a higher benefit, generally as they have had  a higher salary previously. Many benefit programs are based on your previous salary. Most clearly so pensions. The winners are those that today has low or no income and get low or no benefits. And most clearly families with children as the basic children benefit skyrockets from about 1000 SEK/month to 7000 SEK/month. (Children are inhabitants too, I figure.)

And the large bureacracies that serves the current mess of systems would loose. Lots of vested interests there. And people to liberate from thankless jobs.

It is late, I will sleep now. Make of this what you will. I just figured I would crunch the numbers and see what the result was.

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My suspicion is there may be complentary and alternative ways to achieve that result - but any solution is going to require social engineering on a huge scale.

Moving money from one place to another can help if there's a well-defined strategy. But it's not a strategy in itself.