This is easily solved by making the personal standard deduction higher than the UBI.

So your first $10k (from BI) would be tax free. If you don't work, you don't pay any taxes.

Let's say you have a part-time job which pays $20k a year and the lowest marginal tax rate is 30%. You'd then pay $6k in taxes on that $20k.

Thus, your overall income would be $24k, much more than you got from just BI. This works if your only work is a single $100 lawn mowing job. BI, when coupled with an adequate standard deduction, eliminates disincentives to work.

Let's start with just calling the personal standard deduction 'income tax'. Then, I guess your tax system needs to be progressive, because just having everybody paying $6k tax wouldn't even be enough to pay for non-BI costs such as schools, infrastructure etc. So the highest incomes would probably see their BI disappear to the tax office.

Such a system looks a lot like the systems which are currently used in the Netherlands and Scandinavia. True, there are some differences: BI is called 'unemployment benefit' for those who don't work. And for those with a low income, there is no BI, but instead there are subsidies on housing, health insurance etc.

I don't think you understand my comment.

The personal standard deduction is not "income tax"—it's the opposite of a tax. It's the amount of your income which is not taxed.

This system wouldn't even necessarily require progressive taxation (though I would favor it). A flat tax rate of even 40% could be more than enough to provide for BI and everything else (and everyone would receive their BI tax-free).

It's very different from unemployment insurance because unemployment disappears once you start working. So there's no incentive to take on jobs which pay less than unemployment, or even to take on jobs which pay less than (unemployment + opportunity cost of working).

It might be helpful to do some research on how taxes (particularly deductions and marginal rates) actually work.

> So once you take BI received - taxes paid, people that earn more outside income get less from the BI program than those that don't. And we are back in the same situation where a welfare program creates disincentives for work.

If you fund a UBI program by, say, eliminating preferential rates for capital income, and adding supplemental brackets above the current maximum brackets, and tie the level of the UBI to (because the former actually simplifies reporting in a way which prevents doing this exactly rather than by estimates) an estimate of the revenue resulting from those changes, there's no actual disincentive to work compared to the status quo ante due to the UBI except for very high income workers(this isn't no additional disincentive compared to those in other welfare programs from the UBI, its no disincentive at all.)

There's a disincentive compared to the status quo ante to generating income from long-term capital gains, but the practical effect of that is probably only in the upper end of the distribution (in the lower and middle ranges, the relative comparative disincentive to earning that form of income is probably more than offset by the having more surplus income to invest.)

Yes, it creates a disincentive to work. The hope is that it creates much less disincentive to work relative to a means tested program. I don't think the structural economic advantages are enough of a reason to implement a BI (you have to start looking at fairness issues).

Typical proposed implementations just increase taxes at higher income levels. So there is a taper starting somewhere above the basic income where people that are working are benefiting less than people who aren't working, and there is some income level where the basic income is effectively a pure cost. But all those people have a higher effective income than they would have from the BI.

And it likely would represent a massive increase in spending for most countries, even if it was more efficient than welfare programs. Especially if you make payments outside the tax code, which ends up with a lot of spending that is just accounting.

Umm... No, that's the situation where taxes create a disincentive to work. Try solving that without having taxes be a flat fee.

Fine, but if BI is not funded through taxes, then how is it funded?

He didn't say _no_ taxes. He said _no flat_ taxes. Think progressive taxes instead: https://en.wikipedia.org/wiki/Progressive_tax

That isn't even strictly necessary. There is a difference between a "flat tax" (e.g. everyone pays 20%) and a "flat fee" (e.g. everyone pays $10,000). A UBI funded by a flat tax is completely unproblematic. People who make $80,000 pay $16,000 and this makes up the difference for the people who make $20,000 and pay $4,000 when they each get a $10,000 UBI.

$2-3 Trillion dollars in new taxes in the US.