Working Life > Income > Basic Income

The Unconditional Basic Income

In search of new social safeguarding models, the basic income has been discussed for years. The unconditional basic income generally describes a model that guarantees the provision with basic supplies by the state without being linked to any conditions or means testing like is the case nowadays with unemployment benefit. It is based on the consideration that it is possible to satisfy the needs of the citizens by advancing productivity with less work. The basic income takes care of creating scope for development that gives birth to public and cultural initiatives. Each of us is freed from the fear for his/her existence and can turn to activities that are fun and appear to be sensible. The compulsion to work then disappears.

It should be financed by consumption tax and the reduction in bureaucracy. Payments like unemployment benefit, child allowance, unemployment insurance and civil servant's pensions could be omitted, tax declarations could become obsolete.

Models that are being discussed among others

• The Ulm Model
  This model was developed by Professor Helmut Pelzer at the University of Ulm. It determines that every citizen is paid an unconditional basic income of € 600.00 for example. Extra earnings are taxed at a basic rate of 50 percent until the so-called "transfer limit" has been reached. Pelzer defines the transfer limit as being when basic income and net earnings are the same. That means that in the case of a basic income of € 600.00 and a basic tax rate of 50 percent, the transfer limit is reached at a gross salary of € 1200.00. The employee would receive in this case € 600.00 basic income and € 600.00 from his wage. If the gross salary exceeds € 1200.00, each Euro is taxed at the usual income tax rate. The main point of criticism of this model is that the financing model can only be calculated on the basis of present incomes. Future developments are hard to forecast.
• The solidary citizen benefit
  Built up on the Ulm model, the Thuringian CDU prime minister Dieter Althaus developed the joint citizen benefit. With this model, each adult receives a maximum of € 800.00 per month. Own income is added to the citizen benefit at 50% (citizen benefit = € 800.00-1/2 income). Gross income – the sum of citizen benefit and own income – exceeding € 1600.00 is taxed at 25%. The maximum citizen benefit reduces taxes payable so that a personal exemption of €9600.00 per annum arises.
• Children up to the age of 18 receive € 500.00 per month. People over 67 years old receive an additional pension of € 600.00 as well as the citizen benefit, thus a maximum of € 1400.00. The additional pension depends on how much was worked and the income to present. Acquired claims for present pensions stay in effect.
  The citizen benefit includes € 200.00 for health and nursing care insurance.
• The basic income according to Götz Werner
  The founder of the dm drugstore market and entrepreneur Götz Werner demands the introduction of an unconditional basic income of € 1500.00 for everyone and a simultaneous abolishment of all income taxes and national insurance contributions. A high VAT on consumer goods finances this. He speaks of a 40-50% consumption tax. As this model requires a restructuring of the tax and national insurance systems as well its own introduction, realizing at can only be done step by step. One speaks of a transitional period of up to 10 years.