I’ve had this idea mulling around in my head for a few years now. I have no idea if its an original thought, or if I heard it somewhere, but it does seem to be an excellent idea – if the sums add up. That said it’s a bit on the alarmingly revolutional and would need some clever selling to get it past people.

The idea is that we cut the system down to the simplest system and in doing so save (probably) millions and millions of pounds every year on beaurocracy. All benefits (except maybe specialist benefits?) should be scrapped and we have one single tax rate for all. How is this possibly I hear you ask? Well, it is decided, probably annually, what is the minimum amount of money that an adult in the UK needs to live. That’s at a basic level, no frills and no excess, but an ability to exist on good wholesome food and accommodation.

For the purposes of this example I’m going to say that the basic living cost is £10k a year for everyone of 18 years and over (this is taken from something I heard on yesterday PM programme – that if you earn the minimum wage and nothing else, that’s what it equates to).

Under my system, the State gives every adult in the UK, irrespective of employment, a credit of £10k per annum, paid monthly by BACS (I believe there’s already a preposed policy/plan that everyone has a ‘basic’ current account if they haven’t got their own), and then any income they derive from their job is taxed at universal tax rate of 50%. Before everyone runs screaming at the unfairness of it, think about it…

Pay of £15k – 50% tax = £7.5k + £10k State Credit = £17.5k Net income

Even pay of £25k – 50% tax = £12.5k + £10k State Credit = £22.5k Net income

However, pay of £40k – 50% tax = £20k + £10k State Credit = £30k Net income

…you see how this is working? Proper redistribution of wealth, and a simple system to boot!

Edited to add: The level of the State Credit would have to be very carefully worked out so that it was the bare minimum for someone to live on (remember, under this scheme there would be no additional benefits available) but wouldn’t allow for any kind of luxuries. Thus, the need to work would be there to pay for, eg. beer money, books, music, cinema, holidays, meals out, etc… It would however mean that one could afford to give up work to leave work, retrain, and get new work in a new area.