Nov 13, 2012

Myth: Citizen income means more tax.

It is often said that citizen-ownership income, or other forms of basic income, means more taxation. This is a myth. It is false.

In principle, citizen-ownership income is getting back what the government has been taking from citizens. Money that rightfully belongs to citizens is being taxed away. Getting your citizen-ownership income is a reduction in tax.

In practice, the total effect depends on each country.

In some countries, everyone will end up paying less tax. For example, Norway has this sovereign fund that is not used in any way. Getting the investment returns distributed as citizen income has no effect at all on the government expense and revenue. The total effect is everybody pays less tax by the amount of the citizen income. Similarly for Singapore, much of the investment return from its sovereign fund is put back into the fund. Distributing the return as citizen income has zero effect on its budget.

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