This is a continuation of a Scenario 5 – Human Federation in 2040
Growth of personal income has more than doubled in real terms in the last generation. That is having a remarkable impact on the changes of society’s behavioural patterns. We are slowly moving up to the top of the Maslow’s hierarchy from the physiological and safety needs levels, to the levels mainly pre-occupied with belonging, recreation and inspiration to learn new subjects and practice unknown things (self-fulfilment needs). That happened almost naturally because of affluence and the availability of spare time. The only problem people have is with their personal safety (mainly cybercrime) and national security – Russia and China, which are now less hostile, and a bit more cooperative but still not the countries people would trust.
There are no tax allowances, all personal income is taxable. The current rate of flat income tax is 15%.
Since 2035, there is a maximum value of assets that a person can have. It has been set this year at €200M and includes all assets, such as property, cash in bank, investment and shares, art objects and other personal belongings. Any excess of that amount is taxed at 100% but such a taxpayer may decide to allocate of up to 30% of taxed amount for charitable causes or social and scientific projects. That law applies also to all members in Zones 1 and 2. That was one of the stumbling blocks for the USA to join the EF Single Market area (Zone 2) but was finally agreed for two reasons. First of all, it eliminated the danger that individual people with fortunes exceeding the budgets of medium size states would have become a real threat even for democracy in the USA. Secondly, transactions in assets of those individual persons could destabilize the world markets. Passing of that law made a significant change in the so far sacrosanct right to private property.
Every person, whether a child or an adult gets, an unconditional Universal Basic Income, which for an adult and a pensioner is an equivalent of 20% of an average personal income. This income counts towards the minimum living wage.
Every adult person may get a conditional Universal Supplementary Income, which for an adult and a pensioner is an equivalent of 20% of an average personal income. To get that income the recipient must fulfil certain conditions such as be in full time employment, do a minimum number of voluntary work hours or attend various education courses. This income counts towards the minimum living wage.
Every adult person must have by law a guaranteed minimum income at the ‘poverty line’, which is 40% of an average personal income. This consists of unconditional Universal Basic Income (20%) and a conditional Universal Supplementary Income (also 20%). That minimum income is in real terms equal to what over 20 years ago was the EU’s average personal annual income of about €20,000. However, to be eligible for such an income, a person must be in partial education or engaged in voluntary work, unless such a person is certified as incapacitated.
People, who are not complying with the condition to be engaged in partial education or engaged in voluntary work, do not receive a conditional Universal Supplementary Income (10%). If such a person has no house or flat, he is offered a free studio flat in the Government Funded Social Housing (GFSH), where he is given free meals and also any non-hospital medical care on site (including mental care). No people can be homeless by law and nobody can ‘sleep rough in the street’.
There is a minimum living wage that is an equivalent of 40% of the current average personal income. Unconditional Universal Basic Income and conditional Universal Supplementary Income count towards a minimum wage. That means that any employer must pay net salary (after tax), which is worth at least 10% of the average personal income.