National Insurance and "Reallocation"
I see a few people complaining about reallocating money to the poor who are on benefits. Reading some of the comments here I'm led to believe you're all for a system where no one who is unemployed should receive a penny in benefits as they're clearly all scroungers on the take. As I've already stated this is not the truth, nearly everyone I know who is unemployed (I say nearly, there are scroungers who need a good kick up the arse) wants to work. Most of them have worked at some point and this is where the following becomes important.
One thing that seems to have been missed is that for many of us they aren't taking our tax money and giving it to the poor, the whole benefit system is based on your National Insurance contributions. The key word here is Insurance. Whilst in practise the government does effectively take our tax money and redistribute it what is actually being distributed is your insurance payments. These are the payments you make while working so that when you aren't working they can provide you with a basic income, be that unemployment benefit or pension once you retire. When I'm unemployed I'm not taking your tax money, I'm getting money back from my Insurance payments. My point here is that it shouldn't be a privilege that can be taken away. It's a right that should be payable to me when I require it. You expect your insurance company to pay out in the event of a car accident, and in the same manner you should expect the government to pay out in the event of unemployment. The reality is the government will do everything it can to not payout and tarnishes the unlucky person who has worked their entire life to be suddenly unemployed a couple of months away from retirement with the same brush as the long term unemployed who cannot find a job because they live in the once thriving coal mining valleys of Wales and the real scrounger who has played every trick in the book to stay on the dole and spend as much time in the pub as possible.
Where tax money is reallocated is the tax credit system, which is a system based around working. And again the arguments I've read don't add up. They aren't taking your tax money and giving it to someone sat watching Jeremy Kyle all day. They're giving it to someone who is working, doing the low paid jobs that us, in the IT industry, would never think twice of applying for (although in reality the truth is you have to be quite high up in the IT industry before you no longer qualify, you can still claim some tax credits even if your combined family income is around £30,000).
With UBI all they are doing is combining both pots, your NI and your tax, and rolling the benefits and the tax credits together to provide what is your basic income. And it's a much better system in theory than both the NI scheme or the Tax Credit scheme or even the new Universal Credit system. The reason is quite simple, with NI, Tax Credits and UC the money you receive is means tested. As a result there are diminishing returns on every pound you earn. With Tax Credits this can be very expensive as an increase is salary over the threshold can result in a rather large (potentially) demand for money to be returned. So unless you're able to make a considerable jump in income there is little incentive to move up the pay scale. Why chase that extra 50p an hour down the road if you won't actually see any of the money at the end of the week? So with UBI there is no disincentive to work, every extra pound (after tax) becomes yours so the incentive is there to go for the higher paid jobs and to demand the higher wages if you merit them. The disincentive is there for the people who simply want to sit at home or in the pub all day, they will never see an increase in their standard of living. You have now built into the system the ethic that if you want that holiday, or that new car you can have it. You just have to work for it.