Universal Basic Income FAQ

What is Universal Basic Income?

Universal basic income (UBI) is a type of social security that guarantees a minimum amount of money to every citizen in a country. It is universal meaning everyone gets it. It’s not means tested, doesn’t matter if you’re rich or poor, working or not.

I am running as an Independent TD in the Dublin Rathdown constituency to implement a guaranteed income of €900 per month, or €10,800 per year, for all resident Irish citizens over the age of 18. Yes, that means you and pretty much everyone you know would get €900/month every month from the Irish government, no questions asked.

Why Do We Need UBI Now?

There are three main reasons why we need a UBI now:

  1. 40%+ of Irish jobs are at high risk of automation.

    Meaning they will be replaced by software, AI, automated machines or robots etc.

    It may sound like sci-fi but every new self-service kiosk in Tesco or McDonalds reduces the numbers of actual people working there.

    Anyone working in agriculture or as a driver (taxi, truck, bus, train), in retail, in fast food, in call centers, in office admin, bookkeeping, radiology, even basic front-end computer programming all have a very high chance of been automated away within the next 10 to 15 years.

    This is a massive social shift that no one in government is talking about.

    A UBI will not stop the automation wave but it will be required to help people become more adaptable while we all transition to the economy and jobs of the future.

  2. Our current social security net is too porous. People fall through it! UBI is a solid social foundation upon which we can build further, it ensures there is a minimum standard of living that no Irish citizen would fall below.

  3. Climate Change is an even bigger threat than automation but if the job displacement that automation will cause goes unchecked then we run the serious risk of scuppering the necessary fight against climate change.

    Implementing a UBI will ensure a basic level of quality of life and provide support to those affected by the automation wave. If we don’t have a UBI in place the Irish people will continue to focus on the short-term as opposed to the long-term. Without a long-term thinking electorate we won’t be able to make the necessary changes to fight climate change.

How Much Would I Get Each Month?

Everyone who is eligible would get €900 a month or €10,800 a year. The current poverty line in Ireland is just below €13,000 so a UBI of €900/month would go a long way towards eradicating poverty and homelessness.

This is enough to ensure a basic standard living but not enough to disincentivise work.

The UBI value would be reviewed each year and adjusted for inflation/cost of living if needs be.

Who Is Eligible For The UBI?

Any Irish citizen above 18 would be eligible. Likewise, with any spouse of an Irish citizen, or any EU citizen who has been resident in Ireland for 10 years or any asylum seekers.

To receive the UBI though you must be resident in Ireland. You can’t receive it whilst living, working or travelling abroad.

There might be some exceptions to this e.g. a student on the Erasmus program or someone getting medical treatment abroad.

If you meet the above criteria you are eligible regardless of your employment status or even income. You will receive the UBI from the day you turn 18 to the day you die.

How Much Will It Cost?

The current population of Ireland is 4.83 million.

There are 1.27 million people under 18. So that leaves 3.56 million eligible for the UBI.

Let’s call it 3.6 million people eligible. €900/month, is €10,800/year.

Multiply those numbers and you get: €38 billion and 880 million.

So, let’s call it €39 billion.

Yes, that is a big number. We currently only spend €60+ billion on our entire budget and to implement this plan we would need to change our budgetery rules with the EU.

This headline number might sound like it’s too much but if you drill-down in to the numbers it’s very achievable.

How Will You Pay For It? (Overview)

Here are the numbers (graphs below):

Action Description       Total Cost
(€/billion)
Universal Basic Income €900/month for everyone!       39
Action Description Revenue
(€/billion)
Reductions
(€/billion)
Savings
(€/billion)
Remaining
(€/billion)
2% Opt-out 2% of people don’t claim UBI     0.78 38.22
VAT returns 75% of new UBI money is spent, blended return of 18% VAT  4.59     33.63
Additional tax returns Remaining 25% of new UBI money, spent on savings, housing, stocks etc. Blended 5% return 0.425     32.205
Economic Growth Spending of UBI increases economic GDP by 5% 15     18.205
End Dole Replace Dole with UBI   2.2   16.005
Reduce pension by 25% Takehome money will increase by 65%   1.625   14.38
End Student SUSI grants UBI much higher payment   0.4   13.98
Better Health Reduce demand on HSE     1.1 12.88
Reduce demand for care 10% reduced demand for care services     0.4 12.48
Reduced Crime Savings for Gardaí, Prisons, Courts     0.35 12.13
Reduce Homelessness Demand UBI will reduce homelessness     0.5 11.63
Increase Corp tax from 12.5% to 17.5% Still 3rd lowest in EU 4.16     7.47
Increase VAT Increase standard 23% to 27% 1.5     5.97
AI Tax Robot tax 0.4     5.57
Financial Tax Micro-tax on Stock trades 0.32     5.25
Carbon Tax Raise to €100/per tonne 1.6     3.65
Increased Property Tax On 2nd, 3rd, idle homes 1     2.65
Higher taxable income UBI will push up peoples taxable income 1.44     1.21
Remove higher married tax range No difference in single/married income tax 0.5     0.71
Additional Income Tax ranges 45% for 100k+, 50% for 200k+, 55% for 1m+ 0.85     -0.14

And if you prefer a visual breakdown:

UBI Ireland

How Will You Pay For It? (In-Depth)

Introduction

UBI Ireland

A Universal Basic Income(UBI) of €900 a month for every resident Irish person may sound far-fetched but once you dig into the numbers it becomes quite realistic, quite fast.

Also, this is just my proposal, there are numerous ways of achieving the same goal. When elected I would have a wide consultation period with as much people as possible. I would also run extensive trials and tests before any major adoption to test the underlying assumptions.

So, my UBI proposal breaksdown like this:

  • 12% recouped in taxes such as VAT
  • 38.4% recouped in 5% of additional economic growth
  • €6.5 Billion in cost reductions and second order savings
  • €11.7 Billion in new taxes
  • 2% Opt-Outs

I will discuss each of these in-depth here.

Opt Outs

OPtOUts

As hard as it might seem, there will be a small percentage of people who for a variety of reasons simply won’t bother going through the process of getting their UBI. Perhaps they are independently wealthy or they plan to emigrate or travel too frequently to qualify as a resident.

So, we can conservatively estimate that 2% of people won’t actually claim their UBI in a given year.

This represents an immediate saving of €780 million.

So, that brings the actual cost to €38.2 billion.

VAT Returns

VAT Returns

So, what happens when people get this €38.2 billion? They spend it! Sure, some people save it, some people invest it, some people put a deposit on a house. However, the vast majority of people and this money will be spent in the short-term on all the usually things we buy: food, clothes, nights out, a new TV, maybe a car.

Ireland currently has a standard VAT of 23% as well as lower VAT rates on certain items.

So, if someone spends money in Ireland the government eventually gets some of that back in VAT returns.

However, since some of this €38.2 billion comes from expenditure reductions (more below), we don’t want to double count that in the VAT returns, as this money is already been spent currently. My plan calls for €4.225 billion of reductions. So, the UBI will bring €34 billion ( €33.975) into the economy.

So, let’s conservatively estimate that 75% of this €34 billion is spent,within a year of receiving it, on items that have some form of VAT already incorporated into them.

This comes to €25.5 billion. Let’s say the blended average VAT across that €25.5 billion is 18% (some of it at 23%, some of it 12.5%, some at 9% etc.). That comes to €4.59 billion.

So, of the €34 billion spent on UBI, the government would eventually get back €4.59 billion from VAT. Effectively reducing the cost to:

€33.63 billion

Other Tax Returns

Other Tax Returns

But that’s not all. 75% of the originally €34 billion was spent on VATable products and services. The other 25% (€8.5 billion) was spend on savings, stocks, houses etc. Each of these has their own taxes associated with them e.g. DIRT, financial transaction taxes, capital gains tax, stamp duty etc.

So, we would also expect to recoup a % of this too. If we estimate a blended average of 5% from this 8.5 billion we get a further reduction of €0.425 billion.

So this coupled with the VAT returns brings the initial cost, before raising any taxes, or cutting any spending to:

€32.205 billion

UBI is good for economic growth

Economic Growth

What happens when €34 billion is spent into an economy every year?

People buy stuff, they have much higher consumer confidence. A previously struggling coffee shop suddenly finds the locals are buying more coffee and some of them are even splurging on a muffin. Magnify that across the entire economy, not just in Dublin or the big cities, but in every town and every farm up and down the country.

Not only that, someone previously too hesitant or risk averse to start their own business, now gets that extra push they need to explore their ideas. A guaranteed income ensures that if someone tries something and fails, they don’t starve!

So, someone starts a business. A few months later they’re up and running, a few more months later and they’re hiring people.

Multiple this story out across the economy and it becomes an economic stimulus for everyday people.

UBI is not a handout, it’s an economic stimulus every year.

A study of the US economy and UBI by the Roosevelt institute found that by giving $1000 to every citizen it would permanently increase GDP by 12.5%

Similar economic growth would be seen in Ireland if we did the same.

But it’s always better to err on the side of caution. So let’s only forecast a 5% increase in economic GDP, not 12.5%. This would be quite a conservative estimate.

In 2017, Ireland’s total GDP was just under €300 billion. 5% of that is €15 billion.

So, from an original cost of €39 billion by factoring conservative tax returns throughout the year and incorporating economic growth the remaining cost becomes:

€18.205 Billion.

Still a hefty price but by no means unattainable.

Reducing Costs

My plan calls for €4.225 Billion in reduced costs:

UBI Ireland

This €4.225 breaks down like this:

UBI Ireland

1. Replace Jobseekers Allowance/Benefit Entirely

UBI Ireland

Entirely removing Jobseekers allowance and jobseeker benefit, along with a good chunk of the admin that goes with it would save around €2.2 Billion a year.

UBI is a far more preferable system that collecting unemployment.

The absolute maximum someone can get on dole is €203 a week, which is €812 a month. So a UBI of €900 is much better for anyone currently on the dole.

There is no reporting requirements, no need to sign on, you don’t need to live in fear of not filling out a form correctly and also there would be no social stigma. Also, you continue to get the UBI when you find a job, so there is no disincentive to finding a new job.

Under the current jobseekers system, someone could logically refuse some part-time work because accepting it would mean they would no longer be eligible for their benefits. An unconditional UBI removes that scenario, any work anyone does will always be a net-gain and people don’t have to live in fear of arbitrary reporting requirements.

Some people on the dole can claim an extra €134 euro per week for a dependent adult. This is €536 a month. Under a UBI that dependent person would also be getting €900 per month themselves (on top of any other disability payments they may be getting), so again under a UBI everyone comes out much further ahead.

Someone on the dole can also claim €34 for children under 12, €37 for child over 12. This child supplement would still be available but incorporated into the current child welfare payment.

So the absolute maximum someone on the dole can get now is €408.70 a week. And that’s with one dependent adult and 2 children. Which is €1634.8.

Under a UBI they could still claim for the children separately but even without that would receive €1800 per month. A full €165 euro more.

If you’re under 25 or on the standard dole rates of €182, then the €900 is even better for you.

So, a UBI of €900 makes the need for jobseeker payments obsolete. This would help transform the jobseeker department in to a proper institution entirety focused on helping people find work and not have to worry about the bureaucracy of welfare payments.

2.Reduce Pensions

UBI Ireland

Sacrilege, I know, but hear me out.

By reducing the state pension by 25% we would save €1.625 billion. However, the same as with the jobseekers above, even though we would reduce it, everyone on the state pension would come out massively ahead.

For example, someone getting the maximum state pension of €248.30 a week, Gets €993.20 a month.

Under a UBI they’d receive €744.90 each month for their pension but also an additional €900 UBI. A total of €1,644.90.

This would, aptly, represent a 65% increase in a pensioners take-home money. The effect would be even more pronounced for pensioners currently on lower levels of a pension.

No widower or other pension payments would be cut. The 25% reduction would only apply to the contributory and non-contributory pension.

3.Stop SUSI Student Grants

UBI Ireland

We could save €0.4 billion by eradicating the SUSI student grants and replacing it entirely with a UBI. Again, a UBI would be far more beneficial for students.

The standard SUSI grant is €3,025 a year. There is a special higher rate of €5,915 too. However, a €900 UBI , coming to €10,800 a year blows this out of the water.

Students also wouldn’t be dependent on the bureaucracy of the grant , not knowing when their payment will arrive. With a UBI they can plan accordingly.

Second-Order Cost Reductions

Implementing UBI makes us stronger and healthier. Overtime this reduces our spending on things like crime, homelessness etc. which all adds up to €2.35 Billion:

UBI Ireland

This €2.35 billion breaks down like this:

UBI Ireland

Giving people money can do wondrous things. We can expect there to be natural cost savings in certain programs as the UBI improves peoples lives naturally. For example:

1.Improved Health, Reduces HSE Costs

UBI Ireland

UBI would generate €1.1 billion saving in healthcare each year, and even more over time. Numerous UBI studies and trials show how it improves peoples health, increases private insurance coverage, improves mental health, lowers stress levels and increases physical exercise and even nutrition.

2.Lower Cost of Care

UBI Ireland

Giving people more disposable income means they can spend it on what they best think they and their loved ones need. If an elderly person has 65% more income, coupled with their children having €900 to help out too everyone would be better able to care for the elderly and disabled.

A UBI would lead to 10% reduction in our care budget, amounting to €0.4 billion saving as UBI lifts more elderly and disabled people out of poverty.

3.Lower Crime

UBI Ireland

€0.35 Billion saving in police,prison and court costs as a UBI would reduce recidivism rates over time. Likewise with crime in general so fewer people committing crime to begin with.

4.Eradicate Homelessness and Poverty

UBI Ireland

20% saving on housing costs, representing €0.50 billion, as the UBI lifts people out of poverty and facilitating them securing their own accommodation.

The current poverty level in Ireland is just under €13,000. With a UBI of €10,800 we would lift millions out of poverty and as a society be better able to help those still in poverty.

All these costs reductions and natural savings combine to €6.575 billion, bring the remaining cost to €11.63 billion.

There will be other savings ,but these would be the main ones and these savings would compound over time.

Of course the biggest change of a UBI isn’t the money it could save us, it’s the society it creates. A society with a solid foundation we can all stand on.

Additional Revenue

My plan calls for an additional €11.7 billion in additional taxes.

This €11.7 billion breaks down like this:

UBI Ireland

Increase Corporation Tax

UBI Ireland

Increase the corporate tax rate from 12.5% to 17.5%.

This would generate €4.16 billion.

Whilst many will claim that Ireland’s’ corporation tax of 12.5% is sacrosanct. By increasing it to 17.5% we would only go from the 2nd lowest rate to the 3rd lowest rate in the EU. We’d still be 1.5% below the UKs rate.

Considering we are now the only native English speaking country in the EU, as well as one of the youngest, most educated countries with a vibrant skilled pool of workers in numerous booming knowledge economy sectors, companies will still view Ireland as a good place to set up in, even with a higher corporation tax rate.

Increase VAT rate

UBI Ireland

We would gain an additional €1.5 Billion from increases in VAT by:

1) Introducing an additional higher band of VAT on luxury goods. e.g. if you buy a yacht you can afford to pay a lot of VAT

2) Increase standard VAT rate from 23% to 27%

The EU currently has a max cap of 25% on VAT for member states, so we may have to petition to get these rules updated. However, even saying that some member states already go above that 25% max.

Robot Automation Tax

UBI Ireland

One of the driving forces behind UBI is that 40%+ of Irish jobs are at high risk of automation.

A special Robot Automation Tax will help with the social impact these technologies will invariably have.

This will generate €0.4 billion, raising more over time as more automation is adopted.

There are different variations of how to implement this tax. I would listen to the experts on the most efficient way e.g. A tax on a companies revenue generated from automation v.s. a direct tax on machines or software that replaces an existing worker etc.

Micro Stock Trading Tax

UBI Ireland

Another €0.32 Billion from a micro-tax on stock trades.

Carbon Tax

UBI Ireland

Another €1.6 Billion more from a carbon tax. I support immediately increasing the carbon tax to €100 per tonne, €120 by 2030 , raising to €200 by 2050

We currently generate €400k a year from the €20 per tonne rate.

Property Tax Increases

UBI Ireland

Another €1 Billion would be raised through different property taxes.

Currently, property tax on houses above €1 million is fixed at 2%. This should rise incrementally to a max of 5% if it’s the persons primary residence.

Additional compounding property tax should apply to people with more than one home and an even higher rate of tax if the property is idle.

Anyone buying a property with the intention of solely renting it would pay a higher stamp duty price of 10% for properties below €1 million and 12.5% on properties above that.

Changes to Income Tax

The final 2.8 billion would be made through changes to the income tax system.

UBI Ireland

These changes are:

1) The bands would be the same for all people regardless of whether they are single, married or in a civil partnership.

The current set up makes no sense. For example, a married couple both working will effectively pay 6% less income tax than a working single mother with a child.

An entirely individualistic income tax frame should be rolled out. The new tax from married couples will go towards UBI. The new tax coming from parents will go towards increasing child benefit.

UBI Ireland

2) The €10,800 of the UBI will count towards your taxable income. However the €10,800 itself won’t be tax but it could potentially push what you earn into a higher income bracket.

Note: Any income tax credits would apply as usual, so we’ll exclude them from this scenario.

For example, let’s say you have a salary of €50K. You currently pay 20% income tax on the first €33,200 and 40% on the rest. That’s €6640 at the 20% rate and €6720 at the 40%.

Under the UBI, your taxable income would jump to €60,800 (€50k + €10,800). You pay 0% on the €10,800. 20% on the income between €10,801 to €33,200, which would come to €4,480. Then you’d pay 40% on the income from €33,201 to €60,800, which would come to €11,040.

So, before UBI this person would have paid €13,360 in income tax. Afterwards they pay €15,520. This is an increase of €2,160. In take home money terms before UBI this person would take-home €36,640. After UBI this persons take home income would be €45,280. So an effective increase of €8,640 a year.

Obviously this graduates progressively so UBI is more impactful for people on lower incomes.

Approximately, 850,000 people earn between €30k and €70k a year, 30% of the states income tax revenue comes from this cohort. This represents €5.61 billion in taxes. If only 650,000 of this 850,000 paid the extra €2,160 as outlined in the above scenario this would generate €1.44 billion.

UBI Ireland

3) On top of this there will be a 50% income tax on income above €100k and a 55% income tax rate on income above €200k. Approximately, 160k people earn between €100k-€200k and they represent 25% of the income tax revenue and 28,000 people earn above €200k and they represent 20% of the income tax revenue. With these new tax bands we would raise an additional €0.85 billion.

Conclusion

My UBI plan takes a little from everyone, from students, from pensioners, from unemployed, from employed, from married, from single and the more you consume in our society the more tax you’ll ultimately end up paying too. But by taking a little from everyone we can pool our money together and in the end all come out better for it. As by pooling our money together we’re able to generate new economic growth and savings in our spending all whilst creating a safer more just society in which to live.

If you’d like to see this plan, or a plan like it, become reality then make sure and give your No.1 vote to Patrick Noonan in Dublin Rathdown.

If you’re not in Dublin Rathdown then please share with your family and friends or consider donating to the campaign

Wouldn't This Cause Inflation?

Between 2015-2018 the ECB printed €2.6 Trillion, this equated to €7,600 for every EU citizen. This ‘quantitative easing’ didn’t increase inflation. This is was money was printed outside the economy and then injected in. My UBI plan is mostly funded by money already within the economy now. In monetary economic theory inflation is based on changes in the supply of money. My UBI plan has minimal changes in the supply of money and so will have minimal impact on inflation.

Some companies will likely increase their prices in response to people having more buying power, and the increases in VAT and Carbon Tax would also increase prices on certain things. However, there will still be competition between firms that will keep prices in check so prices would normalise over time as standard competition kicks in.

Over time, technology will continue to decrease the prices of most goods where it is allowed to do so (e.g., clothing, media, consumer electronics, etc.). The main inflation we currently experience is in sectors where automation has not been applied due to government regulation or inapplicability – in Ireland this is primarily housing.

In terms of housing the problems are separate from inflation and UBI wouldn’t impact prices negatively. In fact, UBI would have a positive impact on housing prices and rental accommodation. Peoples biggest hurdle is saving for a deposit, a couple could save for a year with their UBI and have €21,800 saved. Since the Central Bank has a x3.5 salary cap on mortgages the max people could afford would stay the same but it would be easier to save for a deposit. Likewise if rental properties are too extortionate a group of friends could pool their money and buy a house together. All these changes would help ease the housing market.

Don’t take my word on it though, here are some studies/articles:

Will My Job Be Automated Away?

According to a recent UCC report 40% of Irish jobs are at high risk of automation.

The two major areas at risk of automation are:

  1. Routine Manual Work
  2. Example: Retail Assistant, Fast Food Cashier, Driving

  3. Routine Cognative Work
  4. Example: Accounting, Radiology, Pharmacy

You can use this handy site to check how likely a job is to be automated away and when: willrobotstakemyjob.com