Re:Policies that make the poor less poor
by compressedgas on Monday June 21, 2021 @04:52AM
(#27577430)
> “negative income tax” which is identical to a UBI
Some consider those distinct as they state the UBI would not decrease with additional earned income.
Re:Policies that make the poor less poor
by dragonwriter on Monday June 21, 2021 @05:04AM
(#27577477)
> Some consider those distinct as they state the UBI would not decrease with additional earned income.
They are the same; both have the effect that benefits are “drawn down” through marginal taxation of outside income, though Friedman’s specific NIT proposal had an exceptionally high (though still lower than the effective drawdown rates often faced by means-tested benefit recipients) marginal rate (50%) for the the below-break-even bracket (essentially, the bracket whose outside income was less than “Effective UBI”/(bottom tax rate)), which most UBI proponents would reject in favor of consistently progressive rates. But this isn’t an inherent feature of generalized negative income tax.
UBI may not decrease, but progressive taxation on income, coupled with adjusting rates (to pay for the substantial increase in federal expenditures) will have the exact same mathematical effect.
“UBI” isn’t actually a specific plan, its a broad concept within which there are many specific plans. But the broad concept itself does address this, though many of the more detailed plans do so in…more detail.
At a high level, one of the central points of UBI as a replacement for traditional means-tested welfare (and why some of its earliest advocates were right-libertarians, not lefties, such as Milton Friedman who advocated “negative income tax” which is identical to a UBI) is that it eliminates the disincentives to earning outside income that come with the sharp (sometimes greater than 1:1 when aggregated across all benefit programs a person qualifies for) funding reductions for outside income that come with means tested benefit programs, increasing the marginal reward (and thus incentive) to work.
> Rich people still eat the same amount of food for dinner.
No, they generally don’t. Oh, sure, that might be true by mass, or even by calories; but not by labor-hours of work that went into it, or dollar cost, which is what is relevant here. And that’s true across all categories of consumption.