Re:The Libertarian Case for a Basic Income
by AnthonyMouse on Thursday December 05, 2013 @02:26PM
(#6856549)
I want to point out that that there is no difference between a basic income and a negative income tax. Suppose you have a negative income tax rate of 30% up to $50,000, then an income tax rate of 30% thereafter. Compare this to having a $15,000 annual basic income and a flat 30% income tax rate starting from $0. They are the same thing using different words.
But the words matter, which is why I don't like calling it a negative income tax. Because if you call it that, people start asking questions like why should someone making up to $50,000 be getting the "subsidy"? And then people want to do something silly like make the negative income tax be something like 60% up to $25,000, then 0% to $50,000 and 30% thereafter, which is obviously very stupid if you stop to do the math on who gets screwed by that and what incentives to work it creates at the bottom: It's equivalent to a $15,000 basic income with the same tax brackets, and it makes no damn sense whatsoever for someone making $25,000/year to be paying a 60% marginal tax rate. But calling it "negative income tax" encourages people to think that way and expect high marginal rates on the poor to be Good when they are really quite Bad.
But the words matter, which is why I don't like calling it a negative income tax. Because if you call it that, people start asking questions like why should someone making up to $50,000 be getting the "subsidy"? And then people want to do something silly like make the negative income tax be something like 60% up to $25,000, then 0% to $50,000 and 30% thereafter, which is obviously very stupid if you stop to do the math on who gets screwed by that and what incentives to work it creates at the bottom: It's equivalent to a $15,000 basic income with the same tax brackets, and it makes no damn sense whatsoever for someone making $25,000/year to be paying a 60% marginal tax rate. But calling it "negative income tax" encourages people to think that way and expect high marginal rates on the poor to be Good when they are really quite Bad.