Yep, call it a negative income tax if it goes down better than UBI, but many other things would be better than the system we have now.
A negative income tax might work out a lot better on the numbers, but it won't help the people that need it the most (the ones that can't get a job).
But hey, maybe it can work. The US has a deficit spending of $1.7 trillion in 2023, $1.4 in 2022, $2.7 in 2021. That $1.7 would cover almost half of a $12k ubi. But how long could that last?
1. The federal government doesn't have tax revenue. It issues a currency and then taxes go toward countering inflation. The notion that a currency-issuing government needs to "balance its budget" in its own currency is a political fiction. Also, policies that benefit people at the lower end of the income spectrum disproportionately actually move money around in the economy, which generally speaking is less inflationary than allowing it to accumulate in various silos like hedge funds
2. A "negative income tax" doesn't have to require employment. You can make zero dollars in income as a self-employed person, and the self-employed still track their income for taxation purposes
3. There are many unnecessary-to-malicious subsidies and inefficient welfare programs that could easily have their rationale subsumed by UBI, and doing so would save considerable cost that is mostly the overhead of all the means-testing personnel and in some cases (like SNAP) completely separate financial machinery necessary to maintain them
Even setting all that aside, you could make considerably more "tax revenue" by funding the IRS or reversing some of the nakedly corrupt corporate tax breaks that have been created over the last several decades. There always seems to be more money to subsidize artificially lowering the price of certain goods, fund incredibly inefficient private government contractors to do things that once cost considerably less for the government to do itself, fund drug research only to then allow the resulting breakthroughs to be patented by a private firm and then gouge people for treatment, or buy ludicrously expensive weapons for militarized police forces, but propose anything that actually benefits people and suddenly everyone's worried about the costs.
Not to put too fine a point on it, but all this "Well have you considered the cost?" handwringing people do when UBI comes up just drastically misunderstands how governments use money, while claiming to be "responsible" and "realistic"
See eg https://www.econlib.org/library/Columns/y2021/Sumnermodernmo...
The US government expenditure as percentage of GDP is now over one-third, as opposed to the pre-WW1 long-term average in the single digits. Keep in mind that massive infrastructure projects like the Transcontinental Railroad were able to be built in those single-digit percent times, or that US educational spending per pupil has been going up year after year for decades yet student achievement flatlined, and of recent years been trending down. Clearly, more tax revenue is neither necessary nor sufficient for the public good.
> reversing some of the nakedly corrupt corporate tax breaks
No arguments from me there.
> fund drug research only to then allow the resulting breakthroughs to be patented by a private firm and then gouge people for treatment
Fundamental research and bringing a drug to market are markedly different areas that require very different skills and incentives. An organization that is good at one is not necessarily good at the other. And this isn't confined to drug research; an architect can draw up plans for a house, but a family cannot live in a plan. Foundations need to be poured, chalk lines snapped, lumber nailed together, and plumbing and wires laid, all in the context of a competitive marketplace.
Similarly, bringing a drug to market with a patent is not a competitive marketplace, by design, and it consistently creates an outcome wherein people are charged exorbitant sums of money because of this non-competitive market. Doing a bunch of government-backed R&D and then getting a patent for it is the government picking a winner, not creating a market
Basically, it seems like the government was and remains a lot more efficient when it directly builds the capacity to provide goods and services it determines to have an interest in providing, rather than try to do this through "the market" (again, this is almost never an actual market)
In principle this is supposed to be a competitive bidding process, and then the winner is chosen by the most competitive bid rather than the government. In practice the process is corrupt and regulatory barriers are created to prevent smaller companies from submitting bids or project requirements are set such that only one company can satisfy them.
The problem here is corruption, which has nothing to do with whether the corrupting entity is a corporation. Public sector unions lobby for the same kind of labor-inefficient practices because they know that more jobs give them more members which give them more power, even (or especially) when the jobs are unnecessary or inefficient.
The advantage that existed pre-WWII is that neither large government contractors nor large public sector unions already existed in order to lobby for corrupt practices and their continued existence, so the government could just pay someone to do work and then have them to return to the private sector when the work is done. But WWII created such a large apparatus dependent on taxpayer revenue that it had enough lobbying power to sustain its continued existence, and now it needs to be disassembled before we can have nice things again.
But probably the best way to do it is under anti-corruption. You still want roads and ships to be built, but if you could get the corruption out of the bidding process then they'd be built by smaller and less consolidated companies with less individual lobbying power, and then you could address efficiency issues without having to fight a multi-billion dollar corporation or huge public sector union because that inefficiency is their profit margin/job. Another possibility would be anti-trust -- break the big government contractors up.
Yes, we should reduce corruption and break up existing entrenched players, but the core issue is in the structure of that kind of arrangement. I do also think that there's no good reason to have a "corporate veil" in the first place, but that's a broader problem
But that's just a mechanism for the corruption. The contract for the design of something and its manufacture and maintenance should each be separate bids. Even each stage of the design should be a separate contract that could go to someone else. The government says "we need a design for a ship" and they put it out to firms who submit their proposals and then the government picks one and buys it outright. Then they say "we need a design for a propulsion system for this ship" and take bids again. If you need to modify the ship's design some to facilitate it, that's fine, because none have been built yet and the necessary change gets incorporated into the design before you put out contracts to build any of it.
What you want is for each of the contracts to be as small as practicable, to maximize the number of potential bidders. None of this "single contract to design and build an entire fleet of ships and maintain them for 30 years" nonsense.
Claims that you can increase the efficiency of a system by reducing competition should be met with the same level of skepticism as claims that you can violate of the second law of thermodynamics.
But let's try one that should get their ears to perk up. Monopoly suppliers are systemic risk, which is a threat to national security.
Governments should be paid royalties for the patents (and other IP) they issue and protect.
For IP subsidized with public money, maybe auction off those rights.
The "universal" part of a UBI is serving the same purpose as the progressive rate structure in the income tax, i.e. you want an effective rate curve which is higher for the rich than the poor. Which means that you don't need both. What you use instead is a flat tax rate which serves as the de facto "phase out" for the UBI. Except that because it's all in one place, there are no cliffs, and there are no poor people paying higher de facto marginal rates than rich people, and there are no mountains of paperwork to apply for benefits.
Yes, but marginal rates are important, too.
If whatever fiscal policy you have makes overall nominal spending go up (or down), that would have an impact on inflation, so the central bank will remove money from circulation (or add money to circulation) to counteract.
Thus neutralising any multiplier, you might naively expect.
(Also keep in mind that when you don't tax some money, it also gets spend or invested etc.)
Which is exactly the point. What's the "marginal tax rate" on low and middle income people of the existing benefits phase outs?
The >100% marginal rates that create actual cliffs are so patently absurd that no one can look at them and find any way to justify it, but even when the combined tax+phase out rates are in the neighborhood of 80-90% of marginal income, that's still not what we want, is it?
Yeah the subsidies also will not cover the entire cost of housing. So you probably have to drive a lot farther than someone else who is not using welfare to pay for the same kind of housing.
A lot of welfare stuff looks like a great deal when you put an amount on it but completely falls apart when you look at how challenging it is to access and what the conditions are around continuing in the program. It gets to the degree that getting that extra $40-50k a year requires you to give up a LOT. And it's a full time job to maintain. So you have to do all of that on top of your full time job, often with agencies who have no hours after work. And god help you if you have to show up somewhere regularly to pick something up.
As a bonus nuking welfare and replacing it with UBI would help a lot of the chronically homeless because it would allow them to get assistance without needing to have a permanent physical address.
And it's still costing the taxpayer ~$45k -- more than that, because the government has its own administrative overhead on top of that.
But people still use it, because they're doing $30k in work to get $45k in benefits, it's just that they were supposed to be getting $45k in benefits. Which the taxpayer is still paying for even though the net benefit is far less.
The people asking how to pay for it haven't understood the math. If you subtract both the government's administrative overhead and the recipient's, we could provide a higher level of true benefits to people and still lower taxes on everyone else, just by splitting the efficiency gains between them.
Worse than someone who doesn't have to pay raise a kid isn't the same thing as worse than someone else with kids who makes $8000 more and therefore loses the $16,000 credit.
And the cliffs are only half the problem. Did you get a childcare subsidy? Only if you use approved providers, which charge more than your older niece would to watch the kids, and now the money goes to some bureaucratic corporation with lawyers and lobbyists instead of your own family, and you see your niece less often and don't talk to her dad as much and now he's less likely to offer to do you a favor when you need one or realize that you do.
You also get a housing subsidy, but only for particular housing, which isn't as close to your job or doesn't allow you to pool resources with roommates, so now you have to pay more for transportation or most of the subsidy gets eaten by higher rents etc.
The entire welfare system should be vaporized and replaced with a tax credit for the poor (i.e. a UBI).