There are various concepts for an unconditional basic income, each of which relies to varying degrees on different taxes as a source of funding. Most of the financing models are based on the insight that there are a myriad of regulations in today’s German tax system that are justified in terms of social policy, but in their interplay make the system so complicated that only professionals can still see through it. Citizens and companies can only take advantage of all the benefits to which they are legally entitled if they invest a lot of money in good tax advice – thus the social claim of our tax system is reduced to absurdity.
However, we can achieve many of the socio-political goals associated with tax regulations directly by paying an unconditional basic income. For example, the income tax allowance is intended to ensure that the subsistence minimum is spared from the grasp of the tax authorities. The subsistence minimum is considered the minimum amount necessary to live in this society. However, an unconditional basic income ensures the subsistence minimum and a material basis for social participation even for each individual, and of course the basic income itself is tax-free. Therefore, an income tax allowance is no longer required for further income earned in addition to the basic income. Similar arguments can be made with regard to many other regulations of our current tax system: They become dispensable through an unconditional basic income.
The basic income thus enables a radical simplification of our tax system, and this makes its own financing feasible: Tax allowances and countless other concessions can be dropped, so that in principle the entire national income can be included in the assessment base for financing via income tax. Differences between different types of income and the current difference between marginal employment and employment subject to social insurance contributions can be eliminated. A regular tax rate can apply to every income from the first euro. In combination with a sufficiently high basic income, this does not lead to social imbalances, because „low-income earners“ are fully covered by the regular tax liability, but at the same time receive more basic income from the tax office than they pay in taxes. The bottom line is that they do not pay any taxes at all, but merely bear part of the financing of their own basic income as net recipients.
As an alternative or supplement to income tax financing, it is also conceivable to finance the basic income through a consumption tax, i.e. a reformed and increased value-added tax. The frequently used argument that consumption taxes are socially unbalanced because they place too heavy a burden on the lower income groups is put into perspective if, in return, everyone receives an unconditional basic income. Those who have little or no „own“ income consume relatively little and, at the end of the day, pay less VAT at the checkout than they receive in basic income from the tax office.
Links to the topic
Different basic income models, comparative overview by Ronald Blaschke [.pdf] (in German only)
Wolfgang Strengmann-Kuhn
Financing a basic income through a „Basic Income Flat Tax“ [.pdf] (in German only)
The Basic Income Configurator from „Mein Grundeinkommen“
https://finanzierung.mein-grundeinkommen.de/ (in German only)
Read more at Hamburger Netzwerk Grundeinkommen link (currently available in German only)