The Universal Basic Income of $11,000 per year, as proposed by the Morgan Foundation to replace existing welfare benefits and NZ Superannuation, will benefit everyone except those for whom the modern welfare state was founded to protect.
The proposal will leave sole parent beneficiaries $150 per week worse off and NZ Superannuants $50 per week worse off under the Morgan Foundation’s own calculations.
This is something few are aware of. The Morgan Foundation now say that a UBI would not replace NZ Super for some decades, until a UBI is of the same value as current Super. However this means you don’t get the savings from abolishing Super to fund a UBI.
For the most vulnerable, such as sole parent beneficiaries, to be no worse off under a universal basic income, it would need to be at least $15,000 per year. The Treasury calculated that a flat rate income tax of 50% or more would be needed to fund a $15,000 per year universal basic income.
I suspect it would end up much more than this, as many people would avoid a tax rate of over 50%.
The Morgan Foundation’s universal basic income proposal keeps its flat rate income tax down at 30% by introducing a comprehensive capital tax of 1.8% per year. Note that this isn’t a capital gains tax but a tax on capital in and of itself. It would tax New Zealanders, including cash-flow poor retirees, simply for holding a family home.
This is key. They do not propose a capital gains tax but a tax on basically all assets. Even if your house doesn’t increase in value you’ll be taxed just for owning it. If your home is value at $1 million you’ll pay almost $20,000 a year just for owning it.
Ironically, it’s been the Labour Party which has been most honest about the challenge of funding a universal old age pension and health spending in an ageing society. Now, after years of being upfront about the need to cut the entitlements to NZ Super, Labour wants to extend the scheme to all New Zealanders over the age of 18.
Superannuation eligibility the day you leave school! You never have to work!