> The answer is that it's much simpler to send everyone a check. The rich person will pay more in taxes than the amount of their check, so it doesn't matter.
There's a more subtle reason: if everyone gets a check, the program is more politically popular, making it harder for the rich to build a political coalition to kill it. That means the people who really need it will continue to get it.
IIRC, FDR opposed mean-testing social security for this reason. Almost everyone gets it, and the middle class gets enough to make some kind of difference in their lives, even if they could get by without it. Compared to other welfare programs, it's been unkillable.
That's an answer, not the answer. A similar question is: “how much should UBI pay per month?”, and a similar answer is that “it's much simpler to just pay gazillion dollars than spend time figuring it out”. After all, the only difference is the cost.
IMO there's a proven balance in having a system (“bureaucracy”) to find out who need financial assistance, and simply assisting those. But then again, I fundamentally disagree with UBI because I have a differing view on society and the rights and responsibilities of its members, along the lines of “society takes care of you if needed for the price of you helping make this possible if you are able”.
Suppose we have some kind of assistance programs for food and housing. If you don't make enough money you can get a card and with this card you can buy specific kinds of food, but not alcohol and not restaurant food. You get housing assistance but you have to live in designated government housing.
Then somebody suggests that we extend these benefits to everybody. But that's stupid -- why would you want to pay taxes in cash in order to get a food allowance card which requires you to buy what the government says, or live where the government says, instead of just keeping your money and buying whatever you want with it?
So all of those programs have phase outs, because people who "don't need them" don't want them. They'd rather have the money instead.
A UBI is money to begin with. Lowering your tax rate so that you don't have to pay to give yourself a UBI is a no-op. It cancels out. The tax you would have to pay to fund it and the phase out you would need to not receive it are mathematically equivalent.
The difference is that by putting it into the tax rate, you can see what you're doing better. If you have a 25% tax rate and then implement a 50% phase out rate, you're effectively imposing a 75% marginal rate on lower and middle income people and then a lower marginal rate on higher income people. Requiring it to be set as part of the tax rate makes it more blatantly obvious how silly that is, and that's all. And then, seeing that more clearly, people might choose more sensible marginal rates than that, so that you're never taking more from people who make less.
Hum... No, on the case of paying everybody (with increased taxes) or just the poor there is no difference in cost or total distributed.
What you do lose is the hability to focus your help into an specific group. Every UBI proponent will tell you this is a positive, because governments just suck at this, but it's a very powerful politic tool.
I am always shocked by the general lack of awareness people have about world intricacies.
Social welfare, fiscality and related issue in modern developped countries is one of the most complex systems I know of. I am 100% serious. It's a huge mess of rules, exceptions, directives, conflicting aspirations, unforceable & not unforceable || not unforced rules, outdated scheme, 0,1% population targeting welfare, federal, state, regional, city size rules and much more.
It crosses to healthcare, food, housing, education and more.
This whole mess was built bit by bit, step by step, over decades.
Thinking "we could send everyone a check" is right down heresy to anyone having truly worked aroung these fields.
* Else the check amount is the same for everyone and good luck to 4 kids families in high rent area
* Else the check is calculated depending on all the above factors and this system will never roll out (check Obamacare implementation issues)
The people in the high rent area can move to a low rent area if they can’t hold a job: they have nothing holding them there under the UBI rules. As for kids, perhaps they should also receive (smaller) UBI that would go to their parents.
Seems even easier to increase the standard tax deduction we already have and are familiar with. Then you can increase tax rates to make sure those evil rich people don't see any benefit.
The EITC does, but it has a cutoff with the aforementioned problems, and if it didn't (and the amount was high enough to replace the other programs) it would be hard to distinguish from a UBI, outside of the easily-gamed income requirement which does little more in practice than discriminate against honest homemakers who don't get to claim it.
Realistically what you have to do at that point is to use a flatter rate structure instead of a phase-out so that the credit is paid back by the time you get to higher income levels, but that's much better than the existing nonsense where the marginal rate structure goes all over the place from sometimes >90% at low income levels (from phase outs) to ~20% in the middle and then back up to 30+%.
You get a strongly progressive effective rate just from the credit, so at that point you can use something like a 35% fixed marginal rate and simplify everything else too. Interestingly this also means it doesn't even have to be an individual income tax. You could use VAT or charge payroll tax to employers and get the same result without individuals even having to file tax returns anymore.
Meaning, your problem is only a one-time, short-term problem. You aren't arguing in good faith if you try to use that to discredit his proposed solution.
The answer is that it's much simpler to send everyone a check. The rich person will pay more in taxes than the amount of their check, so it doesn't matter. Indeed, the arguments that we should do otherwise are to the benefit of the rich, because the proposed cutoff invariably comes somewhere in the middle income range, resulting in higher marginal rates on middle income people rather than higher income people.
In other words, a cutoff allows the rich to pay lower taxes in the amount of the money that had been going to people in the middle.