Basic income is the latest bad political idea that refuses to die

The practice, however, is very expensive. One rudimentary scheme worked out for the UK by Malcolm Torry – and remember that he is an advocate of the basic income – proposed an income of £8,320 a year, to replace all benefits except housing and council-tax benefit. That is hardly a generous annual stipend, and yet if it is to be funded through the income tax system it would require the rates of income tax to go up from 20, 40 and 45 per cent to 48, 68 and 73 per cent. That means anyone on today’s average full-time earnings of about £27,000 a year would lose out, because although the £8,320 a year would make up for losing the income-tax personal allowance, every pound of earnings would be taxed, and more heavily.

And that proposed scheme doesn’t even abolish housing benefit. One of the reasons it cannot is that housing is so much more expensive in London that to set the basic income high enough for the capital would make the scheme unaffordable at any tax rates.

The alert and sceptical reader will have noted that the Finnish scheme isn’t even remotely a basic income, because it is limited to unemployed people. It is therefore merely an experiment in the incentive effects of paying higher unemployment benefit.