How big will a Basic Income be?

Calculations for New Zealand follow.

1. Without accommodation supplement

• As of April 2025, the New Zealand GDP was: $452 billion
• As of April 2025, the New Zealand population was: 5,305,600
• As of April 2025, the New Zealand GDP per capita was: $85,193.00 p.a. or $1,632.75 per week.
  • Gross: $85,193.00 p.a. or $1,632.75 per week.
  • Net: $67,201.81 p.a. or $1,287.95 per week.
• Therefore, the range of suitable gross values is:

• The New Zealand Jobseeker Support rate from 1 April 2025 is:
  • Gross = $412.51 Net = $361.32 per week.
    The gross amount is 25.26% of GDP/capita.
    The net amount is 28.05% of GDP/capita.
  • The New Zealand Jobseeker support rates lie within the recommended range of 20% to 30% of GDP/capita.
  • This indicates that the NZ JSS payment rates are in the right range of GDP/capita to convert to a Basic Income.
  • Note: that the NZ Jobseeker Support (JSS) payment rates are in the correct range for a Basic Income, and could be replaced by a Basic Income, does not confirm that the JSS rates are set at the only possible rate.

2. With accommodation Supplement

• People on Jobseeker Support also receive an accommodation supplement. The maximum payable rates are $165, $105, $80, and $70, depending on your living area.
• Adding the accommodation supplement to the net Jobseeker support payment gives:
  Net minimum = $361.32 + $70 = $431.32 per week
  Net maximum = $361.32 + $165 = $526.32 per week
  
  The minimum of $431.32 = 33.49 % of GDP/capita
  The maximum of $526.32 = 40.86 % of GDP/capita
  
  Both of these figures exceed the normal maximum of 30% of GDP per capita.

Conclusion

The New Zealand Jobseeker Support rates of payment lie within the normal range for a Basic income and could be replaced by a Basic Income of the same net value.

The sum of the New Zealand Jobseeker Support payment and the accommodation supplements exceeds the normal range for a Basic Income.

New Zealand minimum wage rates are included here to allow Basic Income proposal comparisons.

Gross hourly minimum wage rates are fixed by the government. Weekly rates assume a 40-hour week.

Annual rates assume an average number of days per year, allowing for leap years. Note: Some calculators assume a 52-week year (364 days) or use other simplifications.

Net rates are estimates assuming no other income source and standard income tax rates.

New Zealand Minimum wage rates from 1 April 2025

Adult

Starting out or training

• Adult:
  • Gross: $23.50 per hour, $940.00 per week, $49,046 .85 p.a.
  • Net: $19.91 per hour, $796.42 per week, $41,554.95 p.a.
• Starting out or training:
  • Gross: $18.80 per hour, $752.00 per week, $39,237.48 p.a.
  • Net: $16.03 per hour, $641.32 per week, $33,462.53 p.a.

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From 31 July 2024, New Zealand tax rates are as follows.

• Tax reduction.

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Various alternatives for a Basic Income have been suggested.

• The most common proposals are:

1. A minimal payment of say $194 per week.
2. Convert the existing jobseeker support payments to
   Basic Income payments.
3. Use the existing jobseeker support payment with an accommodation supplement included.
4. Choose a nice round figure.
5. Larger payment rates.
6. Basic Income is paid in addition to existing welfare payments. 

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New Zealand last revised its income tax rates and thresholds on 31 July 2024.

From that date, the two highest tax rates are 33% on income from $78,101 to $180,000 and 39% on incomes of $180,001 and over.

The following calculations apply to New Zealand, but may have some relevance for calculations for other countries.

• With a change to a two-stage tax rate of 33% from no other income up to $180,000 and 39% on income of $180,001 and above, the taxes paid by all income earners will increase.
  • Additional tax paid increases from zero with no other income to a maximum of $194 per week for incomes of $78,100 and above.
• If a net Basic Income of $194 is paid, additional net income will be $194 with no other income, declining to zero at $78,100 and remaining zero as other income continues to rise.
  • For each additional dollar Basic Income paid above $194, net incomes for those earning more than $78,100 will rise by the same amount.
• This achieves broad targeting of the Basic Income to those on low incomes.
• The suggested rate of payment is sometimes rounded up to ensure that more people gain a net benefit from the Basic Income. Common suggestions are.
  • $194.00 p.w. ($10,122.44)
  • $195.49 p.w. ($10,200.00)
  • $195.00 p.w. ($10.174.61)
  • $$201.24 p.w. ($10,500.00)
  • $200.00 p.w. ($10,435.50)
  • $210.82 p.w. ($11,000.00)
• These amounts are all less than the recommended minimum Basic Income of 20% of GDP per capita.
• However, a Basic Income payment of $194 to $200 per week is sometimes suggested because it gives a low-cost payment rate for the initial introduction of a Basic Income. 
• With a Basic Income of $194 per week, those who are on Jobseeker support at present will still require additional payments to increase their incomes to the current Jobseeker support levels.
  • As a consequence, administration costs remain higher than for other higher Basic Income rates. 
• Because the $194 rate is linked to the present progressive tax system, it will not be indexed to inflation.
  • As incomes increase with inflation, the value of Basic Income decreases as a percentage of an individual’s total income, reducing the benefit of receiving a Basic Income.
  • As the jobseeker support rate rises with inflation while the $194 level remains fixed, the payments needed to raise those on Basic Income of $194 per week to the jobseeker support level must also increase yearly to match inflation.
  • The Basic Income as a part of the total income for jobseekers also decreases over time, reducing its benefits.
• If adjusted for inflation, the $194 will cease to be a round number, and the cost of the scheme will rise as those earning over $70,000 per year will gain more from the Basic Income.
•  As mentioned above, a value of $194 per week may serve as a useful introductory level of Basic Income that can be increased at a later date.

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Internationally, many Basic Income advocates recommend using the current adult jobseeker support payment rate as the Basic Income payment rate.

• This rate will eliminate jobseeker support payments and significantly reduce administration costs. 
• Because a Basic Income is paid to everyone, the payments will replace all welfare payments of the same or less value, including student allowances. Larger welfare payments will be partially replaced.
• As Jobseeker support payment levels are already established, using current Jobseeker support rates avoids the need to justify and fund higher Basic Income payment rates.
• The Basic Income payment rate must be adjusted annually to keep pace with inflation and maintain its purchasing power. 
• Those on welfare benefits higher than jobseeker support will require additional payments to bring their total net payments up to present net income levels.
  • Alternatively, a higher level of Basic Income may be paid.
  • For example, those with special needs could qualify for a higher Basic Income, paid only to those with special needs.  

New Zealand

• The present levels for jobseeker support are a little above internationally recommended levels for a Basic Income. 
• Assuming a proportional tax of 33%, those with incomes over $78,100 p.a. who receive a Basic Income will receive an after-tax payment that increases by a dollar for each additional after-tax dollar that the Basic Income exceeds $194. 
• For those with earnings over $180,000 per annum, the current 39% marginal tax rate will be retained if considered desirable.
  • Using a uniform rate (flat tax) less than 39% or failure to retain the 39% tax rate with a two-stage or more stages tax, will result in a cut to the marginal tax rate for earnings over $180,000 and add to the overall cost of a Basic Income scheme. 
• There are two possible ways to convert jobseeker support payments to a Basic Income.
  1. Convert the jobseeker support to a Basic Income without the accommodation supplement.
     • The accommodation supplement will then be paid independently to those who require it.
  2. Add the accommodation supplement to the jobseeker support and convert the total amount to a Basic Income. 
     • As there are four different accommodation supplement rates, there will be four different Basic Income rates. 
• A Basic Income without the accommodation supplement. 
  • While the Basic Income will replace jobseeker support payments, other payments that those on jobseeker support receive, such as the accommodation supplement, will remain unaffected and must be paid in addition to the Basic Income.

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A Basic Income with the accommodation supplement included.

• With this proposal, an accommodation supplement is added to the jobseeker support rate to give a higher value Basic Income.
  • This occurs at present with New Zealand Superannuation, which can be considered to include an allowance for living.
  • However, those receiving New Zealand Superannuation may apply for additional payments if they can prove the need.
• Alternative a. – 4 different rates of BI for four different accommodation supplement areas.
  • At present, there are four different accommodation supplement rates that depend on the area where a person lives.
    • Four different rates of Basic Income will result if the principle of different rates for different areas is retained.
  • Four different Basic Income rates depending on the area will complicate the Basic Income scheme:
    • the Basic Income payment rate must be changed whenever a person moves from one area to another,
    • an annual reconciliation will be required, and
    • monitoring will be required to ensure that people do not attempt to obtain a higher rate than they are entitled to.
  • Problems will occur if a person moves from a high accommodation rate area to a lower rate area and forgets to report the move, or if a person frequently changes from one area to another during the year.
• Alternative b. – The accommodation supplement is added at the minimum rate only (area 4).
  • This will give a higher uniform Basic Income rate than a Basic Income paid without an accommodation supplement added. 
  • Only those who live in the three higher-cost accommodation areas will require an additional accommodation supplement, resulting in some simplification and reduction of administration costs.
• Alternative c. – the accommodation supplement is added at the maximum rate only (area 1).
  • This will give a higher but uniform Basic Income for the whole country that does not require the payment of additional accommodation supplements.
  • A uniform Basic Income will encourage people to live in or move to lower-cost regional areas which will boost regional economies and help counter urban drift.  
  • Poverty traps are eliminated.
  • A uniform Basic Income will eliminate most, if not all, administration costs associated with the payment of a separate accommodation supplement.
  • With the accommodation supplement included at the maximum rate only, the need for those on low incomes to report any additional income earned or to report when they have moved from one area to another is eliminated. 
• Alternative d. – The accommodation supplement is added at an intermediate rate (area 2 or 3).
  • The accommodation supplement is added at area 2 or area 3 rates.
  • Only those on low incomes living in areas with higher accommodation costs than are included in the payment would need to apply for an accommodation supplement. 
  • Administrative costs associated with manual reporting of incomes and abatements are not completely eliminated and poverty traps will remain for those who still receive an accommodation supplement.
  • The rate may still encourage some people to move to lower-cost areas. 
  • The problem of people moving from one area to another remains.
• Adding the accommodation supplement at a higher rate will result in a higher level of Basic Income and a more expensive scheme, but will eliminate the need to pay accommodation supplements to anyone who has no full-time employment and eliminate all the administration costs that go with this. Administration costs are considerably reduced or eliminated. 
• Adding the accommodation supplement to the Basic Income at a single higher rate to produce a uniform Basic Income rate for the country will give the most benefits from a Basic Income, but increase the cost of the scheme.
   

Some advocates suggest a nice round annual or weekly figure for the introduction of a Basic Income.

• The figure used is often the annual Jobseeker Support rate, rounded up to the nearest thousand or five thousand dollars.
  • Alternatively, it may be the weekly rate rounded up to the nearest fifty or hundred dollars.
• Nice round figures, particularly when they are larger than current rates, are often easier to sell politically.
• Examples using net or after-tax annual payments that have been suggested include:

•  For those amounts that are less than the current jobseeker support rates, the same comments apply as for the first alternative above.
• When the Basic Income is similar to the jobseeker support rate, the second alternative, there is little advantage when compared to the second alternative and the same comments apply as for the second alternative above.
  • The Basic Income payment rate could be increased to the next round figure above the jobseeker support rate, but the advantage of a nice round figure is lost with the first increase due to inflation.
• Again, care must be taken to ensure that those with special needs who currently receive more than the jobseeker support rate will continue to receive the same total income after the Basic Income is introduced. 
• If the payment rate is indexed with inflation to maintain its value, the annual payment will cease to be a nice round figure, defeating any advantage of having a nice round figure. 
• If the payment rate is not indexed with inflation, the value of the Basic Income payments will erode over time, and the advantages of the Basic Income will be progressively lost. 

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Higher payment rates than those indicated in the first three alternatives for the initial introduction of a  Basic Income are seldom recommended by International experts.

• As the payment level of a Basic Income increases, the overall cost of the scheme increases, and it becomes progressively more difficult or impossible to fund the scheme. 
• However, higher payment rates have been suggested by some advocates who consider that they are sustainable. The following points should be noted.
  • While alternatives one to three above may be paid for with little change to present taxation rates, payments higher than suggested in the first three alternatives will require additional taxation. 
  • This will not necessarily lead to an individual receiving less total after-tax income as the increase in tax is offset by the Basic Income payments that people receive.
     
  • Most people will work to increase their incomes above the levels received from a modest Basic Income.
    • However, it has been suggested, but not proven, that when the level of a Basic Income is greater than a certain level or the levels suggested above, there is a point where the number of people who decide not to work will increase as the Basic Income level increases.
    • In other words, there is likely to be a level of income that varies for each individual, above which a person will consider that they no longer need to work; however, the indications are that most people will always continue to work to boost their net incomes. 
  • Trials indicate that modest Basic Income payments do not result in increases in those opting not to work.
    • However, trials have not been done with larger Basic Income payments to see if there is a threshold above which people will progressively decide not to work.
    • If there is a threshold, it is likely to vary from person to person.
    • It is worth noting that most people who have high incomes now from sources other than work or have high wealth levels continue to work to enhance their incomes. 
  • If the Basic Income level is greater than current jobseeker support rates, those with special needs may feel that the margin, or extra payment level they receive for their special needs, has been eroded and ask for their payments to be increased to maintain their current margins.
     

Often known as an add-on Basic Income, the Basic Income is paid to all in addition to current welfare payments.

• Those who receive welfare payments now will continue to receive the full payments and also receive the full Basic Income.
• Paying a Basic Income as an additional payment to be added to all existing welfare payments is sometimes known as an “add-on scheme”.  
• A Basic Income is usually intended to replace and eliminate all welfare payments of equivalent or less value.  
  • Thus, a substantial portion of the existing welfare system is replaced, simplifying the welfare system, and saving costs.
  • Failure to replace this portion of the present welfare payments adds to the total cost of a Basic Income scheme and fails to eliminate many of the complexities and inefficiencies of the present system.
  • Failure to replace current welfare payments adds substantially to the total cost of a scheme, making it difficult to fund and implement. 
• Alternatively, to keep an add-on scheme affordable:
  • Basic Income payments must be kept very low, and
  • many of the advantages of a Basic Income will be either reduced or eliminated. 
• With an add-on scheme, if the Basic Income payments are set at a reasonable level:
  • The overall cost of the scheme will remain very high as there will be no welfare payment savings, and
  • many of the problems and costs associated with the existing welfare system will remain.

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