Re:The Indian government is set to endorse Universal Basic I...
by surfmike on Friday January 06, 2017 @01:03PM
(#13338540)
Assuming a 40% tax (no idea what it would actually be in practice), everyone earning less than $50 a month would be a net cost.
As a thought experiment, imagine that you increased the UBI payments so that they took up all the gross income of the country. Now your tax rates are 100%, even though the "net impact" of the redistribution is 0. A smaller UBI is the same concept, just the percent of income distributed is smaller. The bigger the UBI, the larger your tax rates on all workers. As those tax rates reduce the supply of labour, the costs mount even more.
As a thought experiment, imagine that you increased the UBI payments so that they took up all the gross income of the country. Now your tax rates are 100%, even though the "net impact" of the redistribution is 0. A smaller UBI is the same concept, just the percent of income distributed is smaller. The bigger the UBI, the larger your tax rates on all workers. As those tax rates reduce the supply of labour, the costs mount even more.