The Free Enterprise Group of Conservative MPs caused a stink this week by calling for an end to VAT exemptions – including those on food and children’s clothes. Clearly, these are people who feel that the pasty tax wasn’t unpopular enough. Short of bringing back slavery, it’s hard to think of a more socially regressive or electorally disastrous policy.
On the other hand, there are some economically valid arguments both for simplifying taxation and for shifting it onto consumption. The problem is that the biggest losers from such a move would be those who spend the greatest proportion of their income of life’s essentials.
There is, however, a way around this obstacle. If every citizen received an equal financial payment from the state, this would offset the impact of the VAT rise. The catch is that a universal tax rebate of this kind would look very similar to a citizen’s income – a favourite pipe-dream of the ‘alternative’ left.
Reporting for the New York Times on the European citizen’s income movement, Annie Lowrey points out that some rightwingers also support the concept:
“…in the United States… certain wonks on the libertarian right and liberal left have come to a strange convergence around the idea — some prefer an unconditional ‘basic’ income that would go out to everyone, no strings attached; others a means-tested ‘minimum’ income to supplement the earnings of the poor up to a given level.”
“The case from the right is one of expediency and efficacy… A single father with two jobs and two children would no longer have to worry about the hassle of visiting a bunch of offices to receive benefits.”
Greater simplicity usually means less bureaucracy:
“Even better, conservatives think, such a program could significantly reduce the size of our federal bureaucracy. It could take the place of welfare, food stamps, housing vouchers and hundreds of other programs, all at once: Hello, basic income; goodbye, H.U.D. [the US Department of Housing and Urban Development]. Charles Murray of the conservative American Enterprise Institute has proposed a minimum income for just that reason — feed the poor, and starve the beast… He suggested guaranteeing $10,000 a year to anyone meeting the following conditions: be American, be over 21, stay out of jail and — as he once quipped — ‘have a pulse.’”
One of the key arguments against a citizen’s income is that it would disincentivise work. But this needn’t be the case. If it were used to substitute for means-tested benefits and set at the right level, it might actually help people out of worklessness.
Crucially, it would also give everybody something to lose. Deadbeat dads could have their citizen’s income diverted to pay for the care of their children, while criminals could be made to compensate their victims.
Annie Lowrey then touches upon what might become the most important consideration of them all:
“Wages are stagnant, unemployment is high and tens of millions of families are struggling in Europe and here at home. Despite record corporate earnings and skyrocketing fortunes for the college-educated and already well-off, the job market is simply not rewarding many fully employed workers with a decent way of life. Millions of households have had no real increase in earnings since the late 1980s.”
If the economy no longer provides ordinary working people with the hope of improved living standards, then, like those stuck on welfare now, the mainstream majority will look to the state instead. Needless to say, this would provide the left with all kinds of political opportunities.
The top priority for the right must be to get the economy working for everyone again, but if that fails, a citizen’s income could be the least worst fallback position. Instead of the tangled web of redistributive and ‘predistributive’ policies that the left would use to take control of our lives and expand the state, conservatives could make a stand for a simple payment with a minimum of interference.