I'm slightly suspicious of the self-reported drinking levels. I'd be afraid that the aid recipients might fear having the money taken away from them (no matter how much they're assured otherwise) if they report their true amounts of drinking or other behavior they assume the study organizers don't approve of. Do surveys of people who drink typically reveal true results, when further investigation is done?
The incentives here are so painfully slanted. Is there a B Team investigating this adversarially? Ideally this study would be done by researchers who aren't true believers in basic income. If it really works, it works when those carrying it out don't believe in it.
Especially considering that if this does get implemented globally, a big percent of those running the show will be bored bureaucrats, not people passionate about the fate of the impoverished.
People drink because it's the cheapest entertainment. When people have more money they try out other forms of entertainment.
I imagine rich people use alcohol to spice up other entertainment and poor people more often entertain themselves with alcohol only.
These are the top Google results for "alcohol consumption by income level", by the way. There's no need to speculate about it without sources as people in this thread are doing.
So just add to the "basic income" scheme a "basic mental health" package, and where are good to go.
Personally, I don't see how UBI scales beyond small tests to whole countries/economies.
I do wonder though if it would be possible to fund with a combination of a sell off of public land plus technology. Theoretically, with a UBI, there would be little to no need for the government to provide subsidized housing, and a technological solution where money could be sent directly to landlords rather than via recipients would provide the sort of risk reduction that many landlords need. That could lead to a boom in sub $1,000 a month rentals, where landlords are guaranteed they will be paid.
Combine with a sell off of some public housing assets, and it might be possible to fund a UBI for several years, not so much to push the can down the line, but to see if the trillion dollars is recouped with economic growth as the entire amount would be spent by all recipients up to and slightly above the median US income, so there should be some positive economic growth.
That's the rub though, this is hard to pass. The left in particular won't like the replacement of programs for direct cash and a public assets sell off is kind of the left's idea of heresy. Conversely, the right won't let it through without MASSIVELY reducing the number of programs that are currently funded. There is virtually no country in the world with a sane and rational enough parliament to be able to perform the sort of radical surgery their budgets need to introduce a UBI.
The article says that one recipient was able to buy more milk and send his kid to school. Fine, how much does milk cost now and which kid is now unable to go to school because his son is sitting in the seat?
You can have as much money as the government wants, but goods are a limited resource (in the short term). Just printing money to give people more money is not a solution.
Venezuela just hiked minimum wage up to 797,510 BSF a month. That's 79,751 dollars at the official exchange rate (which is 10 to 1). On the black market it's about 6.50. And nothing is available on shelves.
> That's not what the OP is getting at. BI may work well given certain preconditions, and subpopulations. But what use is the money if resource supply and the productive capacity of the economy is limited?
I'd go further and say this is not true for most consumables within reasonable limits. Does this sound like a circular logic? I think my reasoning is flawed (I hope it is not) so pardon my thinking out loud. I mean if I define luxuries as superior goods[wiki] which we consume more of as we have more disposable income, then I imagine we might see prices increase on those things at some point but we don't mind because they are luxuries. But can we dismiss all superior goods as luxuries? If we can prove this connection, then I think we can put down this fear of inflation once and for all.
Thoughts?
[wiki] https://en.wikipedia.org/wiki/Superior_good Superior goods make up a larger proportion of consumption as income rises, and therefore are a type of normal goods in consumer theory. Such a good must possess two economic characteristics: it must be scarce, and, along with that, it must have a high price. The scarcity of the good can be natural or artificial; however, the general population (i.e., consumers) must recognize the good as distinguishably better. Possession of such a good usually signifies "superiority" in resources, and usually is accompanied by prestige.
But even still, I think you're better off considering that as a necessary condition, not a definition. Giffen goods[0] follow the same pattern, and they are almost always under "basic necessities".
I return to the basic question: can the PPF curve for the economy under which BI is instituted be reshaped to supply what its recipients would buy? That's the key question.
I appreciate your open-mindedness to "think out loud."
I think ~1 car per adult is enough transportation for everybody. http://www.latimes.com/business/autos/la-fi-hy-ihs-automotiv...
Half of produce in the US is thrown away. https://www.theguardian.com/environment/2016/jul/13/us-food-...
Healthcare is certainly lacking in the US but other countries with far lower GDP per capita have somehow managed to give everyone healthcare.
I think the vast majority of necessities are not really particularly scarce in the US and there is easily enough at the very minimum for i.e. absolutely zero homeless and starvation.
Again, it's only the rich who can afford to find tax havens and expensive accountants. The middle class is stuck paying taxes.
This is why we need the estate tax (Paris Hilton tax or death tax as opponents like to say) to stay and probably increase in rate.
> For 2017, the estate and gift tax exemption is $5.49 million per individual, up from $5.45 million in 2016. That means an individual can leave $5.49 million to heirs and pay no federal estate or gift tax.
This is plenty generous. We should tax any estate beyond that at a minimum of fifty percent and close all loopholes.
I am not a big fan of income tax on businesses but I can see why we need it.
How is it relevant to giving up citizenship and owning property or company? There's no death involved. If their children are not citizen either, they are not hit by inheritance tax too.
> I am not a big fan of income tax on businesses but I can see why we need it.
VAT is sort of like income tax for businesses. Except it's not taxed on B2B transactions. Which makes sense. Otherwise everybody would bring in whole production chain in-house and we'd be left with huge conglomerates and no SMBs.
Which is not the same as estate/inheritance/death tax at all. Which is double-taxing what a given person already paid for. Being a (grand)son of someone ain't a job to pay incomes tax for.. :)
On top of that, there're lots of ways to dodge the US income tax. For example, many countries have double-tax agreements. Where you pay taxes in your residence country. Stay 185 days in the other country, do most of the business remotely and you can forget US incomes tax.
> > Otherwise everybody would bring in whole production chain in-house and we'd be left with huge conglomerates and no SMBs. > Don't we already have that?
Huh? There're lots of SMBs in pretty much any country in the world. And most people are employed by them, not by a bunch of mega companies.
Double taxing happens all the time. There is no rhyme or reason to tax policy. It just is.
Why should I pay sales tax when I've already paid income tax? Why should a corporation pay income tax if shareholders will also pay income tax? This is a red herring. Property must not pass generation to generation unscathed. Too much concentration of wealth is good for nobody, even for the 0.0001%
> On top of that, there're lots of ways to dodge the US income tax. For example, many countries have double-tax agreements. Where you pay taxes in your residence country. Stay 185 days in the other country, do most of the business remotely and you can forget US incomes tax.
As with peering, I am sure there are knowledgeable people in positions whose job it is to ensure that we get something out of these double-tax agreements. If these entities become a nuisance, there are many ways (preferably peaceful) to deal with them.
Meanwhile heritage tax involves no additional action and taxes exactly what was already taxed.
> Property must not pass generation to generation unscathed. Too much concentration of wealth is good for nobody, even for the 0.0001%
There's no way to tax all generational wealth transfer. Parents will keep buying their kids houses and cars and paying for their education. I doubt you want to tax a regular family paying for kids' university. Meanwhile those who you want to tax already figured out all sorts of workarounds. Trust funds etc.
> As with peering, I am sure there are knowledgeable people in positions whose job it is to ensure that we get something out of these double-tax agreements. If these entities become a nuisance, there are many ways (preferably peaceful) to deal with them.
They do help everybody who do legitimate business across borders. There's nothing stopping for someone to move to another country and do business in their old country in such manner. It'd be 100% legitimate. Unless you'd ban your own ex-citizens/residents from such scheme :) Which would be a huge PITA to keep track of. Taxing any cross-borders business would mean other countries taxing your own businesses as well. Which would mean companies moving out their HQs and developing elaborate schemes to work around this.
All in all, what you want to do would hurt middle class and small businesses. While the ultra-rich couldn't care less. In fact, they'd just hide away even more assets. Effectively widening the gap.
Yes, there is; tax all receipts as income to the recipient.
> I doubt you want to tax a regular family paying for kids' university
That's not a matter of not being able to tax all generational wealth transfer, but not wanting to do so. Creating exceptions to cover things like that is simple enough, though.
> Meanwhile those who you want to tax already figured out all sorts of workarounds. Trust funds etc.
But there's no reason trust funds have to be a viable work around; even if gains in the fund are tax free, there's no fundamental reason individual receipts of disbursements from the fund must be.
What receipt is there if dad buys a house or car and gives to his son? Or lets him to build a house on his own land?
Use decades old original purchase price? Or "market value" which is pretty hard to calculate without actually selling the property on the market.
Another scenario - never cashes out money from his company and gives a super-well-paid position to his son?
> Creating exceptions to cover things like that is simple enough, though.
Yes. And exceptions lead to loopholes.
> But there's no reason trust funds have to be a viable work around; even if gains in the fund are tax free, there's no fundamental reason individual receipts of disbursements from the fund must be.
You're missing core bit in this scheme.
Let's say trust fund payouts are taxed regular incomes tax. So wether you cash out directly from a company or via trust fund, tax rate is ~ the same. I know in reality it's more complicated, but let's stick to this for the sake of clarity.
If you tax inheritance - you tax both original incomes and generational transfer. With trust fund, the recipient does pay incomes tax when receiving the money. But inheritance tax is avoided. Original incomes tax wasn't paid either since the fund itself doesn't pay.
Thus outcome is the same as taxing original incomes, but not taxing inheritance. But with added penalty for everybody who're not ultra wealthy to afford trust funds, but still fit into taxable bracket.
There's the receipt of the house or car; taxing in-kind transfers at fair market value is already done in other contexts.
> Another scenario - never cashes out money from his company and gives a super-well-paid position to his son?
Uh, that's easy, you are taxing the income from the position. The existing tax code, in fact, already covers this fairly completely.
> If you tax inheritance - you tax both original incomes and generational transfer.
The distinction is artificial; there is just income.
> With trust fund, the recipient does pay incomes tax when receiving the money. But inheritance tax is avoided.
Inheritances aren't taxed as income, so you aren't avoiding a tax event that you would otherwise hit by swapping one for the other. Historically the top estate tax rate was pretty similar top income tax rate; you could get a rate advantage by structuring choices that move from estate to income tax since estate tax is driven by the size of the estate and income tax by the individuals annual income, but that's a reason to just have one (income) system rather than two separate systems that you can choose between by structuring.
> Original incomes tax wasn't paid either since the fund itself doesn't pay.
Sure, but that just makes a trust fund work like a tax-deferred transfer at the time money goes into the fund. That is something of a structuring opportunity, and I'd have no problem not having private benefit trusts be tax exempt entities (and they certainly a trivial fix if that is your concern), but it's a fairly minor issue.
But then you're taxing just once. No generational transfer tax.
> There's the receipt of the house or car; taxing in-kind transfers at fair market value is already done in other contexts.
Keep house or car under parents' name forever. It'll be written off or value will be very different by the time the old generation dies. If value booms - sell property and do smth creative to pass the money without tax.
> > If you tax inheritance - you tax both original incomes and generational transfer.
> The distinction is artificial; there is just income.
The difference comes in when you want to double tax :) If original earner pays income tax and then inheritance tax is applied - tax is paid twice. If you work around original income tax (e.g. trust fund) and only the (grand)kid pays his income tax - you only tax once..
> Inheritances aren't taxed as income, so you aren't avoiding a tax event that you would otherwise hit by swapping one for the other.
But you're avoiding it. Double-taxing comes from taxing original earner his income tax AND inheritance tax on top of that. If you restructure that, you can get away with paying income tax only.
> Sure, but that just makes a trust fund work like a tax-deferred transfer at the time money goes into the fund. That is something of a structuring opportunity, and I'd have no problem not having private benefit trusts be tax exempt entities (and they certainly a trivial fix if that is your concern), but it's a fairly minor issue.
You defer income tax AND avoid inheritance tax or double income tax. Essentially you get free generational wealth transfer.
Even if getting rid of trust funds (or similar vehicles) is easy, it wasn't done yet. Probably because if you'd outlaw trust funds, there's a 1000 and 1 ways to work around that in a different legal structure.
It taxes exactly as many times as with the estate tax (or one more, since the estate tax actually misses virtually all generational transfers.)
> Keep house or car under parents' name forever.
That's a different scenario; but, again, there's a straightforward tax answer to it: treat such vehicle use the same way as it is treated with personal use of a company vehicle using the Annual Lease Value rule; the other mechanisms wouldn't apply.
> The difference comes in when you want to double tax :) If original earner pays income tax and then inheritance tax is applied - tax is paid twice.
Replacing the estate tax by taxing inheritances as income to the recipients would not reduce the scope of funds taxed both when originally received by the first owner and then again when transferred as inheritance; on the contrary, it would increase it and make it more consistent with the progressive income tax system, with the tax rate when inherited based on the total income of the heir, not the size of the estate.
> That's a different scenario; but, again, there's a straightforward tax answer to it: treat such vehicle use the same way as it is treated with personal use of a company vehicle using the Annual Lease Value rule; the other mechanisms wouldn't apply.
Good luck trying to figure out who is the actual user of a house or a car. What if family shares the vehicle? Tax parents whenever their kid drives?
Let alone that this would, again, much more affect middle class than the uber rich.
> Replacing the estate tax by taxing inheritances as income to the recipients would not reduce the scope of funds taxed both when originally received by the first owner and then again when transferred as inheritance; on the contrary, it would increase it and make it more consistent with the progressive income tax system, with the tax rate when inherited based on the total income of the heir, not the size of the estate.
So you split inheritance on small bits before death to fly under radar. Or split inheritance to different people. Possibly consolidating it back later on. Or do the trust fund trick...
To say that these things can't be done at all and that more demand is bad is a defeatist attitude.
Venezuela is a special case where the government is attacking production. It's not what happens in a healthy economy.
The 11 million percent price inflation rate in Zimbabwe was not caused by a 11 million percent reduction in goods supply.
Why would they take money in a rapidly depreciating asset instead of just demanding hard currency that holds value decently well?
That starts mattering when you have nothing really to export and still require supplies (parts and food) from foreign countries.
It's shocking how connected and interdependent industries are now. I can't think of a single thing produced that doesn't need foreign inputs for production. Even apples need ladders for harvest, when one breaks, pesticides and fertilizer.
As for Venezuela, and similar situations, look towards the exchange rate.
From [0], "However, Zimbabwe's peak month of inflation is estimated at 79.6 billion percent in mid-November 2008."
Even a private charitable organization cannot deal with that level of inflation by tweaking the minimum wage. Plus, you start running out of money (the physical paper kind) really quickly because you can't afford it anymore.
Or you can go further down the rabbit hole and enforce price controls. Which leads to shortages of goods and lack of supply because of zero incentive to work and produce. Seeing your children cold and hungry and fair prices is a huge incentive to be productive.
[0] https://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe
BI as a concept do not, and will never, fix exchange rate problems.
BI is for when on paper the nation has a functioning domestic economy, but one that exclude large parts of the population from taking part in said economy via jobs.
Weimar Germany was left with a non-functioning industry after WW1, and saddled with reparations denominated in foreign currency. Even Keynes warned that it would be a mess.
Zimbabwe similar ended up with a broken domestic industry, but in this instance it was the leadership that tried to keep up appearance via imports that ran things into the ground.
For Venezuela i would say that judge is still out, but the slide started with the bet on oil exports to shore up imports, only or for the oil price to take a dip. but in this instance i can't eliminate the potential for foreign meddling as the leadership had incensed certain world powers...
The only thing world powers would have to do is let Maduro continue his economic policies.
There doesn't need to be an external plot, just stupidity in economic powers.
With such high inflation, nobody wants to take the BSF, so they insist on hard currency. Thus, prices increases. Even when you make bread, you need hard currency to buy yeast and machine parts (baking and mixing machines) as most of them are imported.
With prices spiking, the government gets the bright idea to slap on price controls, at an artificially low bring to "ensure the common man" has access to goods. The price controls don't allow breakeven considering the cost of production and imports, especially when the price rises faster than price controls allow. So they don't make anything that is price controlled.
Also, the price control board is controlled by the government. Every year during Christmas and before elections, the government goes in and slashes prices. Sure, you get a big screen TV for cheap, but they never get imported any more. Same thing with airlines. They're not allowed to repatriate profits at anything close to a realistic exchange rate, so they just stop flying there.
OTOH, I do expect a good majority of basic income recipients to waste their time on stuff that tickles the meaningfulness receptors in the brain: video games, social media, and other easy tribe forming activities such as sports fandom.
But I agree with your basic point: you don't need very many geniuses and artists supported by BI to justify a large number of freeloaders IMO.
You know, instead of shaming kids.
https://www.google.com/search?tbm=nws&q=national+school+lunc...
But of course it does because there is a Big White Friendly Brother supplying the money. If it was coming from Kenya's budget, these people would have to be taxed at a higher rate just so there is enough money to distribute as basic income.
Factually speaking, the money involved would be about 16% of Kenya's GDP, which would indeed be a very substantial tax hike. If it had to be supplied by the village itself, rather than Kenyawide, it would presumably be a proportionally even larger burden; if it had to be supplied by the EAC or by Kenya and its neighboring countries, it would also be a proportionally even larger burden.
(Perhaps a useful point of comparison is that the Kenyan Defense Forces cost 5.3% of GDP.)
On the other hand, eliminating poverty entirely in exchange for only 15%–20% of taxation seems like it would be a pretty good deal; it falls far short of the costs of providing a Scandinavian-style welfare state. In the US, Social Security + Medicare + Medicaid adds up to US$1.97B per year, almost 11% of the US GDP. A substantial fraction of the US military budget also needs to be counted as poverty-reducing giveaways — whether to individual people for whom a job as a soldier is a path out of poverty, or to the military-supported industries that employ a substantial fraction of the US population. The US armed forces directly amount to 3.3% of US GDP, US$597B, but there's another half-percent split between DHS and DoE.
It's true that how much it costs to avoid this — if it can even be avoided with money — depends on where you live; here in Buenos Aires, I don't need a car to get around, because I can take the bus anywhere in the city for €0,44, or a taxi for perhaps €8 if I'm in a hurry. There are plenty of cultural events that are free or very cheap. When I lived in the US, I had to have a car, and that was more expensive. (I did try commuting by bicycle and public transport, but it wasn't very practical.) Public universities here are free, but few people can afford the time off work to study.
Poverty is vulnerability. Poverty is helplessness. Poverty is weakness. Poverty is not a lack of money; it is a consequence of a lack of money in a money-driven society.
> In the US, Social Security + Medicare + Medicaid adds up to US$1.97B per year, almost 11% of the US GDP
Yes, and you want to dismantle them and share that sum among everyone in the form of basic income. That would mean you'd be taking money from people who actually need it, to give to people who need it less. To counter that, you'd have to increase everyone's taxes just so the former welfare recipients aren't worse off. Of course, the taxes won't be raised just enough to offset the newly gained income, it will have to be raised more, probably substantially more because there will be people who haven't qualified for welfare before but will receive the UBI.
My post has no racist tone, you're seeing something that isn't there.
We ban accounts that post flamebait, whether racial or otherwise, so please don't do this again. If you'd instead read https://news.ycombinator.com/newsguidelines.html and really take the spirit of this site to heart, we'd appreciate it. As you'll see, it means a lot more than editing flamebait out, though that's definitely required.
Double-check your numbers, mate. The US GDP is more than $15 trillion.
Personally, I believe that basic income would be a net good if 99% of basic income recipients wasted money on booze, as long as there’s a 1% doing interesting things with their lives.