> In economics, a negative income tax (NIT) is a system which reverses the direction in which tax is paid for incomes below a certain level; in other words, earners above that level pay money to the state while earners below it receive money.
[1] https://en.wikipedia.org/wiki/Negative_income_tax
Edit: I'm not economically literate enough to say I fully support this, but the idea is appealing
1. UBI aims to streamline redistribution of wealth and remove a lot of bureaucracy around it, reducing a lot of the cost of the current system
2. Why the middle class specifically? Upper class could shoulder most of the costs (if there are) easily
>I would not be ok going to work to pay people that have decided that they are fine living on the UBI and don't want to work anymore.
Then don't work. We already have taxes for things which are way less useful for society. You could choose not to work and live on with the bare minimum. That's the freedom UBI brings. Now probably you'd do something or another out of boredom which would end up being useful to society anyway. You'd just do it for free instead of having to convince someone to pay for it.
EDIT: A better way to put it is to see UBI as an investment into people instead of as a cost. You give them what they need to live so that, in aggregate, they can innovate more and worry less about making ends meet. Notwithstanding the fact that this is something we can do, for somewhat cheap and would help a lot of people.
What makes you think so?
There are a lot of discussion online about the costs/benefits of UBI. This article has an US-centric view on how this could be afforded
https://www.cnbc.com/2020/01/14/budget-neutral-universal-bas...
I'm not sure which veteran benefits they want to get rid of specifically, but this could be a bad idea. One of the main ways to increase economic class if one is poor is to serve in the military and have the pay for college after they get out (yes, the payment could cover part of it, assuming they aren't using it for living expenses which would be mostly covered during their enlistment). The VA is under funded and doesn't have a great record, but that's so highly beneficial to many.
… as well various special-purpose programs including housing benefits, SSI, SNAP, TANF, veteran's benefits, WIC, Medicaid, SS Disability, and disaster relief. I'm sure those currently receiving these benefits will be thrilled to find out that they're being replaced by a flat UBI payment of $15k/yr (minus taxes) with no allowance for special circumstances or hardship.
> [SS and Medicare removal] would be a massive windfall for most if the money paid-in was returned.
Undoubtedly, but what are the odds of that happening?
That's just Medicaid; it gets worse when you consider all the other programs being cut.
Even allowing for realistic reductions in bureaucratic overhead, you can't just cut narrowly targeted programs and spread the same amount of money evenly across the entire population without significantly reducing the money available, on average, to the original beneficiaries.
[0] https://www.cms.gov/newsroom/fact-sheets/medicaid-facts-and-...
The sensible move would be to keep disability, etc. as a form of insurance where costs are spread across the populace.
And now you're back where you started—you haven't eliminated these need-based programs at all, or reduced the bureaucracy. You've just added the UBI as an extra expense.
To whom? The government, sure. The individuals using those programs, probably not. Healthcare costs alone would likely wipe that out (for the demographics using Medicare). Rent in many areas would eat more than half.
Affordable housing is a separate issue and point of concern no matter who is paying.
You could say that housing costs are a larger issue. However that issue is largely a non-issue for the demographic we are talking about currently since they qualify for stuff like HUD assistance (which would be removed under the plan).
The actual amount varies by region and income, but e.g. the Housing Authority of the City of Los Angeles (which is financed by HUD) says[0]:
> For CY2020, HACLA paid more than $582 Million to private Landlords on behalf of more than 44,000 participant families.
That works out to an average (mean) of $13.2k per year per family—and they're only covering a portion of the rent. A couple living on UBI and no longer receiving Section 8 vouchers would spend about half of two UBI payments making up for the loss of Section 8, while the other $16.8k/year needs to cover the rest of their rent, food, clothing, transportation, medicine, and any other necessary expenses for both of them.
Spending 50% of household income is fairly cost burdened, but not unworkable. The same problem exists under the current scheme as well.
Living in a big city affords more opportunities to earn income. Some would use their initial UBI payments to move to cheaper locales. Grants could help.
Over 85% of HACLA's revenues in 2020 came directly from HUD[0]. Another 10% were from other government grants (which would also be cut). The numbers reported before were just for the Section 8 program, which AFAICT is administered by HACLA but fully funded by HUD.
> Spending 50% of household income is fairly cost burdened, but not unworkable.
That 50% is the part paid by Section 8. The part not paid by Section 8 is expected to be about 30% of income, which at the 2020 poverty level for a family of two would be about $5k (30% of $17.2k), so the total rent is more like $20k or 65% of their pooled UBIs. And again, this is just Section 8. If you qualify for Section 8 housing you probably qualify for some of the other programs which are also being eliminated.
> Living in a big city affords more opportunities to earn income.
Possibly, but then again we're talking about people who are already living in these places and still qualify for housing assistance. Telling them to get a (better) job or move somewhere cheaper isn't a viable solution. If these were reasonably solutions with UBI they would also be reasonable solutions without UBI.
> Grants could help.
I hope you're not suggesting federal grants since those, too, would be eliminated under this proposal. And really that just gets back to programs targeting specific needs.
An excellent point to keep in mind that receiving assistance doesn’t mean you have no other source of income, so the situation likely would not be as dire as you suggest.
You seem to be hung up on the proposal from the CNBC link? Which is a strawman purposely designed by the right wing think tank AEI with the flaws you’ve keyed in on, so that it can be easily batted down like a strawman should.
No, and it's pretty disingenuous for you to put words in my mouth.
It's not so much what HUD spends as what those individuals would need to pay. $500 is an extremely low estimate that would still mean $6k per year (assuming they live in the cheapest stuff they can find). Average costs in most cities for a studio apartment are generally over $1k, giving about $12k per year.
This is only one of the many things eliminated under the proposal. Healthcare is the real big rock and could bankrupt anyone needing substantial care. Even just premiums run from $150-300 per month for the cheapest plans (depending on various factors).
This is a transfer from the very poorest to the middle and upper middle class (how much revenue does a tax on millionaires really accomplish?)
I'll take it because it would benefit me, but that doesn't make it great policy. Also most UBI supporters aren't usually on the same side of an issue as AEI.
Although this is fixable by taxing more the middle class if that's what we wish to do (aka, not being "budget-neutral")
Reach people have disproportionate political influence so the can carve some exemptions for themselves and they have resources to exploit unintentionally created loopholes. Middle class typically have no ways to avoid taxes.
It seems like 45tn in asset seizures would cover the additional 15k/yr for around 10 years.
But I would be very worried about the impact on capital markets and company formation.
I would immediately leave the US if this kind of seizure got through the House and looked like it might pass the Senate.
And the country did not collapsed. It actually entered a era or unparalleled prosperity ( but that had little to do with taxes )
In 1945 tax rate was around 90% IIRC
Honest question : you do understand that a 100% tax rate means that 100% of revenu are taxed correct. ( as opposed to 100% are taken by the state ). Of those 100% only a percentage of it is actually “lost”.
Sorry if it’s obvious but the catastrophic scenario you are describing seems to correspond to “let’s take all the rich folks money, all of it”
Source on high historical tax rate in the US around 1950 https://teachinghistory.org/history-content/ask-a-historian/...
Marginal income tax rate of 90% != Wealth tax (for which we haven't even tested constitutionality)
Also, nobody paid close to 90% thanks to generous loop holes and strategic tax avoidance: https://www.latimes.com/business/la-fi-nocera-tax-avoidance-...
I was pointing out a historical period where taxes were setup differently than now. We tend to forget it was the case; and it seems to be out of the collective psyché.
Indeed in 2022 nobody pays close to 90%. I was referring to the 1945 to 1960 period. ( see linked article, nice read )
Then you replied "It actually happened not that long ago, in the US" and cited that the US used to have a 90% marginal income tax bracket.
A 90% marginal income rate is not in the same universe as a 100% wealth tax rate.
> see if its worth the second earner working or if they make more just staying home
The available experimental outcomes show that by and large, people that stay at home on a properly-designed UBI are those who can thereby make highly-valued contributions to the household, such as by raising young kids. Otherwise, they choose to work just as much.
No, ideally, we would raise taxes on the upper class, to give money (compared to the status quo system where we already have means-tested poverty support aid) to the people choosing to do more work (since means-tested aid gets cut with additional income, but UBI doesn't, except by the effects of progressive taxation.)
One way to do part of this:
* Roll payroll taxes into progressive income tax (including basing eligibility for payroll-tax funded programs on total income, not just income currently subject to payroll taxes.) For Social Security, this may involve adding one or more additional “bend points” to the benefit formula.
* Eliminate favorable rates for long-term capital gains, taxing them at normal income tax rates; to better target fairness for gains that genuinely require an extended period and which would be overtaxed if treated as income in the year of realization, allow freely recognizing income (not just capital income) for tax purposes in advance of realization, and additionally allow deferral of some portion of windfall (based on recent past years as baseline) gains over a period of several years.
You already pay taxes, and they are already used to fund other people. The idea would be to allow people to choose individually how to spend this money. The goal is efficiency, fair distribution of benefits and elimination of bureaucracy and administrative overhead.
Of course, there's a huge administrative overhead involved as well, plus there's a big case going on now of people falsely being accused of defrauding the system because some department got rewarded for finding fraudsters, or whatever the issue was. It financially ruined many people because they went from getting a bit of money to help make ends meet, to getting charged €30,000 or more in back pay and fines.
2. we put almost a trillion dollars into welfare every year.
3. You don't have to provide Equal UBI to every citizen regardless of their income. You can make it like a reverse tax that decreases as you go higher in income that peters out at 100k or so (which 30% of Americans make).
No point in taking the plan someone gave as an example so literally. These are econimic problems that experts spent decades thinking aobut and would take months to draft in order to prevent these obvious counterarguments.
GDP grows instantly by at least 13% (in the US) if doing a $1,000/month UBI, for example.
Etc.
Andrew Yang has looked into this a lot - his last two books: “The War On Normal People: The Truth About America's Disappearing Jobs and Why Universal Basic Income Is Our Future”, and “Forward: Notes on the Future of Our Democracy”
And do you think people who are struggling to just survive, who are constantly stressed (which causes mental health issues, poor decision making, and long-term dis-ease progression) will become more productive to society, become more valuable/useful to society if their basic needs are covered - and that people will become less counter-productive (which has a cost too)?
What makes you think people who get UBI also aren't going to want to work? People being lazy isn't attractive.
The logic that people think people given money won't work doesn't fit because billionaires still keep working; yes, some people won't work, but better they don't work than go into crime and hurt society - and then cost society even more if they're caught and we have to pay for them to be in jail.
Dilettantes, neat word - it seems like you're the one who's under-studied in this area though - you seem to have all-or-nothing thinking as well, while catastrophizing while not working from first principles; I am certain you could create a system to efficiently clean a conveyor belt in a mushroom packing plant: high pressure air/water washers, robotic arms that can target specific areas (like how robotic arms move around material to then weld vehicles together, etc) - perhaps requiring innovation on the conveyor belt technology itself.
Have you ever searched for self-washing mushroom packing plant conveyor belt? Maybe someone's already developing/developed one?
What I think is the greatest about automating as much as possible is that that means we free up more time for humans to be creative, to develop themselves and their mind and knowledge, to raise healthy families, to build and strengthen community, etc.
Increased automation will raise living standards but it generally doesn't free up time for humans to do non-work things. People contine working just as much but on different tasks. And let's be realistic. Most people aren't very creative, and even the ones who try to be creative never produce much of value. If they don't have to work then a lot of them are going to sit around getting high and playing Xbox. I'm not a moralizer, I have nothing against people choosing to spend their time on such activities. But there's no way I'm going to vote to raise my own taxes in order to provide UBI for people who are capable of working but choose not to.
What if you don't actually have to raise your taxes because the productivity increase, and reduced inefficiency, actually pays for itself? Or what if it is a temporary tax but then not only elevates the quality of life of the poorest who would arguably benefit the most (at least who's basic needs aren't met so Maslow's Hierarchy of Needs aren't met anywhere near adequately) but that also your own quality of life improves as well - more than the "$1,000"/month you're receiving in addition?
Also realize that companies/businesses avoiding taxes can't avoid a VAT, so that revenue leak is fixed and puts more money into the system that otherwise is draining it without replenishing it.
That really does not track though, sure GDP will go up if the money is spent, but its just spending money that we either borrowed or just printed. Not to mention a ton of that money would be saved, essentially removing it from circulation. Inflation would go out of control. If not, then why not just print 100,000 for each person?
12k a year for 300 million people is ~3.6 trillion. ~20% of gdp a year being printed.
Yang also has said you make up most of the difference with a Value Added Tax (consumption tax) - and you can say make Facebook ads have an 80% tax, and diapers - necessities having 0% tax, that way poorer people aren't impacted by the tax; if everyone's receiving $12,000 / year in UBI then you can design it so only people spending more than $200,000 per year are actually paying back into the system - otherwise the taxes you pay is just putting that $12k UBI back into the system. What Yang points out is with the UBI tied to inflation + VAT you can have many levers to pull on if you need to to increase/decrease tax.
Another chunk of covering that UBI comes from cash and cash-like social assistance programs that people will have to decide for themselves if the $1,000/month is better for them or if their current social assistance programs (for cash and cash-like things) is better for them; and no, it's not a Trojan Horse, Yang doesn't want to cut social assistance programs - but if people choose the cash because that's better for their specific circumstances (and they get to decide that, not a bureaucratic government) then that program's spending is going down - the cost of what's provided goes down (turned into the UBI) but then also the management/bureaucracy cost of managing different programs will go down as well depending on how many people chose the UBI over the cash/cash-like options.
And then there's even more that ties into this that reduces costs; stress going down, crime going down, emergency services costs (fire/ambulance/police) go down, etc.
Otherwise, you’d have looked at other comparable economic powers worldwide that provide a more socialist alternative and see that they are nowhere near the inflation rate you’re describing, e.g. France.
Granted, it’s not $30K a year, but $7.5K for a single person, with free healthcare & education that could be considered a form of income. Doing the same maths as you did, round it $10K per person and you’re at 30% of GDP.
It’s been running for years and debt levels didn’t skyrocket much higher than the US.
Is a VAT a regressive tax? The poor likely spend 100% of their income so are taxed 20% on everything. The rich are able to save a good portion of it, so get to keep it tax free after income taxes.
Not sure I would be willing to pay essentially 30 - 35% more in taxes for 'free' health care. That's more than I save for retirement. How would I retire? Retirement would essentially be living on the UBI.
Frances Debt to GDP is similar to the US. What happens as population decline affects France and less people work? The Debt to GDP keeps climbing and begins to do so faster and faster.
Doctors and medical professionals would likely have to take paycuts as the federal government cannot afford to pay them 325k a year. You could argue that we could make up the difference by cutting military spending which I agree with, but the military is very much a jobs program as is, so a ton of those soldiers and military contractors including high paying engineering jobs at places like Lockheed go away now. Once that happens and the US can no longer afford to project force in europe, what happens in France when Russia gets aggressive, do they in turn have to raise defense spending and reduce benefits. If we have a military conflict, are we bringing back the draft?
So again I am not disagreeing, I think certain benefits should be given, including universal health care, I am just saying its very complicated and I don't have all the answers and would love to hear some.
Yes taxes are higher in France. Yes some budgets and jobs might need a pay cut to apply a similar model in the US. That doesn’t sound like an impossible task.
All I’m saying is that dismissing the whole idea of your parent comment by saying that a basic income representing a high portion of GDP would imply absurdly high inflation rates is not true, as there are at least a few counter-examples. Maybe the amount is too high. But the idea is not as unreasonable as you made it sound.
Note regarding population decline: France is reaching its peak of aged population / younger blood to infuse the economy following WW2’s baby boom. It will likely not have a higher impact than it currently has today in the upcoming years.
Then the important part is to not think of those jobs as disappearing. Think of those bodies - educated, professionally trained bodies - that can now alleviate the hiring shortage faced by industry.
Think of the boost to GDP when that effort is applied to productive enterprise.
Also I don't understand how any low-trust society like ours would survive the transition phase into UBI when people (even though they like working) might take an extended holiday if the UBI pays for all living costs. Suddenly millions of critical positions would be left unoccupied.
But, putting that part aside, the idea is that it's just the barest of basics. So if you have a decent salary now, the UBI that is 1/5th or less than that is not gonna help you pay your rent/mortgage that has gone from 30% of your salary to 150% of your UBI. People could likely realign their life though over time which would be massively impactful. Perhaps some would prefer having their basic needs met + working a very part amount of time for some spending money + engaging in a different core life pursuit. But, with that part taking time the market could presumably correct.
That's just for high earners though who can't currently just drop out / transition overnight due to present obligations. The folks who are closer to where a UBI would be putting them anyway it gets way more difficult. A negative income tax might work there, so that keeping the job is still more regardless of what that currently salary is. That flat UBI tends to have some problems in that regard. Then again, those same folks might be over night doubling their take home cash or being able to have no change in cash for a complete reduction in work and the temptation to just go to zero hours would be high (assuming they aren't in financial pain already where the current amount is still not enough). A flat UBI would probably need to be slowly rolled out. Basically get folks used to being more well off so that the flat UBI only can be appropriately viewed as less ideal than their (new) current situation.
If a position is critical enough it should probably be a higher paid position.
No one is going to raise wages for a particular position just because it was arbitrarily classified as "critical".
The increase profit margins will attract competitive companies or existing companies will be forced to pay workers more for overtime to satisfy the demand.
The negative of this is that the poor or unemployed have very few dollars with which to vote. A UBI solves this by giving them at least some small percentage of the vote.
The working poor do get a lot out of social services that are available if they take advantage of those programs, though some states make it as hard as possible.
But I’m on the same page that UBI is a good thing and better for everybody. People have basic needs and they should be provided for.
I still don’t see how we get there in the US, sadly. The fact that the childcare tax credit was enough to lift so many families out of poverty speaks volumes and yet it seems to be politically ignored by conservatives/republican voters despite the fact that these programs and other social services benefit those communities in red states more than blue states.
The best trick the wealthy pulled was convincing the working poor that all the people they don’t like are abusing the system and living like kings while the working stiff is just getting by.
Taxing the middle class.
Nobody starves to death in the US. Nobody is denied medical care in the emergency room. In many places (though not everywhere), there are shelters where a person can sleep inside. There are food stamps and a patchwork of welfare programs.
However meager they may seem, things like this amount to a form of universal basic income. Does it prevent people from working?
In some cases, you could say it does--there are populations in every city that survive off this safety net, though they don't live well.
But in most cases, it doesn't prevent people from working. The vast majority of people are willing to work for a better life than what the US "basic income" can provide.
What makes you think this would be any less true if the basic income was, say, $30k per year instead of whatever the equivalent is now to provide the meager safety net we have?
It's certainly possible to survive on a $30k basic income in many places in the US, but for most, it won't be an easy or especially pleasant life. Most people will want better.
With a basic income that's a bit more substantial (and has no strings or stigma attached), people will have more freedom to make choices that can truly improve their circumstances, rather than being stuck on a treadmill of barely making ends meet with no space to come up for air and consider education or career changes.