Re:When Stockton gave people cash, they got jobs
by AnthonyMouse on Tuesday May 11, 2021 @02:05PM
(#27121378)
> The real question is how we pay for UBI. UBI, being universal, means everyone gets money. Where does that money come from, including over time and into the future?
Under the existing system there are benefits and they phase out aggressively. Some lower income people experience the equivalent of marginal tax rates in excess of 100%. It's a poverty trap -- you can't make a little more money because if you do, the government takes all of it. (And it's little better when they take 80% or 90% of it.) It's very bad.
Under a UBI the formal tax rate would be "higher" -- someone making low wages might be paying 30% compared to what is on paper 0% now, but it would really be 30% instead of 80+% after benefits phase outs that wouldn't exist. It effectively allows you to use a flat tax and end up with a system more progressive than the status quo. (Or you can make it more or less progressive as you please by changing the amount of the UBI.)
The largest beneficiaries of this are the working poor; the lower middle class. Right now they make "too much money" and have lost all the benefits. Under a UBI they would still receive some, e.g. at a 30% tax rate and a $12,000 UBI, someone making $30,000/year would net $3000.
The effect on people right in the middle would zero out. They'd nominally pay more in taxes and then get it all back.
But that $3000 has to come from somewhere, so the upper middle class might pay slightly more than they do now.
Maybe this means software developers would be paying slightly higher taxes. Or maybe not -- eliminating poverty traps is likely to produce economic benefits. First, people with less money have more, and are likely to spend it, which helps the economy. Second, it would likely produce an increase in wages, because people would be less desperate for jobs and employers would have to pay workers more. Both increase the tax base which allows the same level of benefits at a lower tax rate. Also, corporations would pay some of the taxes but only individuals would receive the UBI.
Under the existing system there are benefits and they phase out aggressively. Some lower income people experience the equivalent of marginal tax rates in excess of 100%. It's a poverty trap -- you can't make a little more money because if you do, the government takes all of it. (And it's little better when they take 80% or 90% of it.) It's very bad.
Under a UBI the formal tax rate would be "higher" -- someone making low wages might be paying 30% compared to what is on paper 0% now, but it would really be 30% instead of 80+% after benefits phase outs that wouldn't exist. It effectively allows you to use a flat tax and end up with a system more progressive than the status quo. (Or you can make it more or less progressive as you please by changing the amount of the UBI.)
The largest beneficiaries of this are the working poor; the lower middle class. Right now they make "too much money" and have lost all the benefits. Under a UBI they would still receive some, e.g. at a 30% tax rate and a $12,000 UBI, someone making $30,000/year would net $3000.
The effect on people right in the middle would zero out. They'd nominally pay more in taxes and then get it all back.
But that $3000 has to come from somewhere, so the upper middle class might pay slightly more than they do now.
Maybe this means software developers would be paying slightly higher taxes. Or maybe not -- eliminating poverty traps is likely to produce economic benefits. First, people with less money have more, and are likely to spend it, which helps the economy. Second, it would likely produce an increase in wages, because people would be less desperate for jobs and employers would have to pay workers more. Both increase the tax base which allows the same level of benefits at a lower tax rate. Also, corporations would pay some of the taxes but only individuals would receive the UBI.