UBI model
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Income bracket
Number of people (2015)
Projected multiplier
Expected number of people
Expected annual UBI payout
Cost for this bracket
Average income for bracket
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$0k 343,000 1.5 514,500 $ 20,000 $ 10,290,000,000 $ -
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$0k-$10k 341,000 1.2 409,200 $ 18,875 $ 7,723,650,000 $ 2,500
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$10k-$20k 632,000 1 632,000 $ 14,375 $ 9,085,000,000 $ 12,500
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$20k-$30k 487,000 1 487,000 $ 9,200 $ 4,480,400,000 $ 24,000
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$30k-$40k 318,000 1 318,000 $ 4,250 $ 1,351,500,000 $ 35,000
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$40k-$50k 321,000 1 321,000 -$ 250 -$ 80,250,000 $ 45,000
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$50k-$60k 305,000 0.8 244,000 -$ 4,300 -$ 1,049,200,000 $ 54,000
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$60k-$70k 212,000 0.8 169,600 -$ 8,350 -$ 1,416,160,000 $ 63,000
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$70k-$80k 168,000 0.8 134,400 -$ 12,625 -$ 1,696,800,000 $ 72,500
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$80k-$90k 117,000 0.8 93,600 -$ 17,375 -$ 1,626,300,000 $ 82,500 (Upper rate)
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$90k-$100k 73,000 0.9 65,700 -$ 22,600 -$ 1,484,820,000 $ 92,000 (Upper rate)
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$100k-$125k 108,000 0.9 97,200 -$ 27,825 -$ 2,704,590,000 $ 101,500 (Upper rate)
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$125k-$150k 47,000 0.9 42,300 -$ 41,575 -$ 1,758,622,500 $ 126,500 (Upper rate)
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$150k+ 85,000 1 85,000 -$ 82,000 -$ 6,970,000,000 $ 200,000 (Upper rate)
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Total/Aveage 3,557,000 3,613,500 -$ 10,729 $ 14,143,807,500 $ 65,071
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Total adjusted revenue
$ 30,053,525,833
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2015 government revenue
$ 29,268,000,000
(revenue from income tax, budget 2015)
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Assumptions:Net difference $ 785,525,833
(If negative, this is the efficiency gain/cost reduction required from WINZ and/or IRD, or other long-term savings to make a UBI viable)
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(If it exceeds $20k, your UBI settings are probably unrealistic or require some short term debt, as you're looking for 66% budget cuts)
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UBI Tax rate
Assumed CG revenue
Savings in benefit costs
Savings in ending NZ Super
Carbon Tax revenue
Net cost of new system:
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45% $ 16,683,333,333 $ 8,100,000,000 $ 12,300,000,000 $7,114,000,000 $ 23,011,807,500
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UBI Benefit amount
UBI upper & CG taxrate
(set this to the same as the tax rate to simulate a flat tax UBI)
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$ 20,000 55%
(hardcoded to kick in at $80k per annum)
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Assumptions:
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Some people will quit working or work minimal hours as a result. Research shows that in fact UBI experiments have resulted in *better* uptake rates for work, but this model represents a worst-case.
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The model assumes that everyone in a bracket earns the average income, so people "moving down" a bracket are moving down one step in average income as far as the model is concerned. This should balance out between those quitting work and losing hours.
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The model assumes a slight population increase since the 2015 tax figures.
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All direct income tax and exemptions will be repealed and replaced with the two tax rates listed. A single-rate flat tax is possible, but would not sufficiently fund a livable UBI with an acceptable rate. The UBI replaces tax deductions such as WFF.
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Direct income below $80k P/A is taxed at the lower rate, even if your direct income exceeds that amount.
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The UBI is treated like a negative income tax sum that everyone gets, and is offset through PAYE by any income for those earning through wages. (effectively, your net UBI is income-tested by the higher flat tax rate, acting similarly but more generously to the abatement of Jobseeker Support)
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If you are a net UBI recipient, IRD pays you the correct fraction of UBI you are owed based on your expected yearly salary, with further deductions/additions based on any variance in income for that pay period.
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If you are a net taxpayer, it is deducted through PAYE. Otherwise you are paid the UBI and expected to pay tax as per usual.
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NZ Super can be repealed as part of the UBI rollout.
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Jobseeker support can be repealed as part of the UBI rollout, but other benefit costs will stay the same. In reality some other benefits or supplemental payments may be able to be reduced too, but this is a pessimistic model.
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The approach of measuring costs relevant to current government income was chosen for simplicity and avoids needing to factor in every current tax deduction.
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This model decreases income tax for everyone earning under $61.3k per annum.
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This model greatly increases total tax for the very wealthy to fund the UBI.
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This model uses the VUW CGT assumptions, but uses the upper tax rate for capital gains, rather than 30%. This is to create a financial incentive to stay invested at the lower corporate tax rate out at the CGT rate.
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Long-term savings such as reductions to costs from problems caused by poverty are not factored into the model, as this model is designed to assess whether it's viable to fund a UBI before such savings kick in.
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If significant savings eventuate, they can be reinvested in government programs, used to reduce some of the taxes on the wealthy, or to increase the basic income level.
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UBI Model