A realistic basic income policy needs two pillars how to a adress the Trilemma Freiburg 11 October 2018 Alexander de Roo Chairman Dutch Branch BIEN alexanderderoo@gmail.com

The Trilemma see Luke Martinelli's work 1. The government can reduce poverty and preserve incentives to work, but only at great expense 2. The government can reduce poverty and keep the costs down, but undermine the incentives to work 3. The government can keep the cost down and preserve the incentives to work, but have little impact on poverty

A realistic basic income policy needs two pillars A basic income for all adults A household allowance for all households

Compare two proposals in NL 1.000 € for all adults 500 € adults + 500 € household Single 1.000 € Couple 2.000 € Costs 164 biljard € (20 % GNP) 10 % tax increase Single 1.000 € Couple 1.500 € Costs 94 biljard € ( basic income elderly untouched 36 biljard) …44 biljard € cheaper Tax neutral

the prise to pay is less simplicity. The government can introduce a basic income, reduce poverty and preserve incentives to work, at no expense... the prise to pay is less simplicity. But the basis Income for pensioners in Netherlands and social benefit have the same system The household allowance is the same for each and every household. So cheating makes no sense. The Dutch local authorities know exactly who lives in which house.

So a tax neutral basic income is possible Can we improve the effective marginal tax rates even further?

Incentives to work in the Netherlands Effective marginal tax rate between 66 en 103 % for people below average Effective marginal tax rate between 29 and 57 % above average income

A basic income proposal improving the effective marginal tax rates

Basic income: improving effective marginal tax rates Costs 174 biljard € ( 21 % GNP) Reducing social benefits 56 No tax allowances workers 46 No tax allowance houses 14 Less targeting (Care/child) 16 Less civil servants 3 Contribution employers 3 Total 138 biljard € Short 36 Basic income 650 € Housing allowance 600 € Child basic income 300 €

A basic income with 50 % effective marginal tax rate requires 12 % more taxes Rasing income tax from 37 % to 50 % brings € 40,5 biljard We were € 36 biljard short: Everybody 50 % income tax is enough (raising carbon tax and the wealth ( my favorite) is also possible or raising VAT If participation in paid labour really reduces 5 %, then a 60 % income tax for the top 5 % will bring € 8 biljard extra. This also needed for equity reasons

Income effects on lone mothers/Fathers

A basic income policy based on two pillars is the way forward The government can introduce a basic income, reduce poverty and preserve incentives to work, at no expense, with shifting existing taxes and tax benefits. ( in continental Europe) or The government can introduce a basic income, reduce poverty and increase incentives to work, at small expense. ( in continental Europe)

Thank you for your attention! Questions? BIEN Netherlands

500 € + 500 € Wat kan er vervallen in het huidige systeem van sociale zekerheid en belastingen? Aftrek Zelfstandigen 3 miljard € Re-integratiebudget 3 miljard € De heffingskortingen en arbeidskortingen 43 miljard € Hypotheekrente aftrek naar nul 14 miljard € Besparing op arbeidsongeschikten: 7,1 miljard ( is ¾ van huidige uitkeringen. Er blijft een kop op het basisinkomen voor arbeidsongeschikten; Bijstand 7 miljard ( 6,45 miljard op de rijksbegroting en nog eens 10 % voor de gemeenten is 0,645 miljard) Studiefinanciering 5,3 miljard WW 4,5 miljard. Wajong 3,3 miljard Bijdragen van de werkgevers 1 miljard ( schatting) Loonkosten subsidies 1 miljard ( schatting) Verlaging ziektewet uitkeringen 1 miljard Minder ambtenaren ¾ kan weg 3 miljard _______________ + Totaal 96,2 miljard € De Kosten Er zijn 13,5 miljoen volwassen tussen 18 jaar en de AOW leeftijd. Dat kost 12x500€x 10 miljoen mensen is 60 miljard € De huishoudtoeslag van 500 € per een, twee of meer personen woning kost: 500x12x 5,7 miljoen huishoudens is 34 miljard €. Er zijn 7,7 miljoen huishoudens in Nederland, maar circa 2 miljoen huishoudens worden bewoond door AOW’ers en die vallen buiten dit systeem. (   Totaal: 93 miljard €