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The problem with a basic income is that for it to be close to enough to live off, it'd be very very expensive — way too expensive. Giving everyone in the US eno

The problem with a basic income is that for it to be close to enough to live off, it'd be very very expensive — way too expensive. Giving everyone in the US enough to be above the poverty line, say $12,000 (which is hardly enough to live off in many areas), would cost $3.8 trillion, which is what the entire US federal budget is now. So, people with disabilities and people who are unemployed would be left worse off, with an amount they can barely live off. Not exactly the situation we want after enacting our utopian basic income program. The only way around that would be to give people with disabilities and the unemployed more money. But then that means you can't eliminate the welfare institutions needed to identify them and cut them checks.

danieltillett 11y ago
I need to sit down and go through your numbers, but something does not seem right. Are you assuming everyone gets $12000 regardless of age?
- enraged_camel 11y ago
  Isn't it unconditional basic income, as in everyone gets the same flat amount? The moment you add conditions and variables, you basically turn it into the complex mess that's the current welfare system.
  - danieltillett 11y ago
    It can be unconditional and not apply to children and people collecting pensions. It would not create a huge mess by limiting it to people over 18 and under 65.
    - mason240 11y ago
      Wouldn't the simpler solution be to simply reduce the pensions by the amount of UBI? For example, a pensioner gettin $40k/year would get $25k under a $15k UBI. You would have to get them to agree to the renegotiation, so I suppose it's not a realistic solution.
      - danieltillett 11y ago
        Yes it would, although getting people to give up something is hard. Personally I would structure a UBI as a large negative income tax to try and avoid these problems.
    - 3pt14159 11y ago
      Why should people with pensions not get UBI? They saved their money into a pension vs into a bank account. Unless you are talking about replacing Social Security, but even there the math isn't as straightforward. As for 18 and under, I think it's a bit tough. A 6 person household with 4 kids needs much more than a 2 person household. If we don't supply UBI to the children / wards of the children then we risk needing to recreate social assistance programs. Although it does run the risk of having kids for money, which admittedly probably already happens.
      - danieltillett 11y ago
        I was making the point that a UBI can have age exclusions and still be simple. I would be reluctant to provide a full UBI to children since they don't have the freedom to spend the money themselves.
- jholman 11y ago
  http://www.census.gov/popclock/ http://www.census.gov/popclock/ 321.5 million residents gives $3.86T. Looks like each year of age under 18 makes up about 1.33% of that, for a total of 77M residents under the age of 18. Suppose you don't give a cent to anyone under 18 (which is not consistent with the UBI arguments I've seen, but whatever). 244.5M residents, times $12k, gives $2.9T. Sure, that's "residents", not "citizens". Otoh, non-resident citizens might be entitled as well. Either way, how can you argue with "over 300M times over $10k gives over 3 trillion"? Edit1: screwed up reading the graph, fixed above numbers. Edit2: oh, just saw your comment suggesting "18 to 65" Fine, integrating by eyeball the graph from my link, I see 47 years at more than 1.2% of the pop per year, gives roughly 60% of the population in your age bracket. Now it's 200M recipients, or $2.4T.
  - Retric 11y ago
    Bi has two main savings, direct welfare and indirect welfare from a flat tax rate. The vast majority of workers make over to 9,225$ per year which is taxed at 10%. If they had a 39.6% tax that's 2730.6 new taxes to offset a BI of 12000$ for a net cost of -9269.4. Next $9,226-$37,450 is at 15%, bump that to 39.6% and someone making 37,450 costs -9269.4 + 6943.104 = -2,326.30$. Now if you continue this you find a medean income gets a bigger tax break than 12,000$ per year from the graduated tax rates. Also, with BI you don't need a standard deduction... Net impact BI's are not simply whatever the BI is * the population.
    - notahacker 11y ago
      > Now if you continue this you find a medean income gets a bigger tax break than 12,000$ per year from the graduated tax rates. You're going to struggle to sell BI on the basis that the person with a median income should make higher net tax contributions to subsidise those that won't work as well as those the present system determines "can't" work at the moment...
    - rue 11y ago
      Basic Income does not imply a flat tax rate.
    - 11y ago
barrkel 11y ago
You can correspondingly increase taxes on people earning substantially more than the basic income. Unconditionally increasing everybody's final (post-tax) yearly income by $12k isn't an outcome anybody expects (or should expect). One way of modelling basic income is as a negative income tax. However one of the advantages of making it "unconditional" (but not necessarily actually beneficial to high income people) is that it buys political acceptance from the middle classes especially.
- surfmike 11y ago
  That doesn't mean the cost goes away. You'll still have to increase marginal rates by at least 20% across the board, or if you have lower marginal rates for the poor, then even higher for the rich. ($12K is about 20% of the per-capita income in the US). A 20% increase in marginal rates is definitely going to affect the incentive to work. Middle class wage earners will be paying 50% to 60% of their income. If you want to save on the cost by scrapping existing benefits, the $12,000 a year would probably not fully replace the social security pension, disability benefits, or EITC/food stamp/TANF benefits people get, or at best be approximately the same. So you haven't changed things much for people at the bottom, in exchange for a massive tax hike.
  - barrkel 11y ago
    > So you haven't changed things much for people at the bottom, in exchange for a massive tax hike. A massive tax hike combined with a simplification in government should result in larger revenues. If things don't change for people at the bottom, who did they change for - all that extra money has to go somewhere, holding all other government spending constant. Presumably the lower middle classes ended up the recipients of this massive tax hike, in your perspective. But this is just a function of the progressive tax curve; it and the fixed payment can both be adjusted to achieve a particular redistribution. The more interesting thing, to me, about an unconditional fixed income, is that it changes the nature of work at the margin. Benefits don't turn into poverty traps if they're unconditional. Incremental part-time work doesn't come hand in hand with the risk of losing your benefits. I think employment overall, and productivity, would increase.
thenomad 11y ago
I've been reading about this lately. Here are two articles arguing that it's entirely affordable even at the level you suggest: http://www.huffingtonpost.com/scott-santens/the-economist-just-came-o_b_7447312.html http://www.huffingtonpost.com/scott-santens/the-economist-ju... https://medium.com/basic-income/universal-basic-income-as-the-social-vaccine-of-the-21st-century-d66dff39073 https://medium.com/basic-income/universal-basic-income-as-th... (particularly interesting, IMO)
- surfmike 11y ago
  In the first article, he says we'd need to increase taxes 35% if we don't cut any programs. If we cut them, he says we'd "only" have to increase taxes 18%. Neither seems particularly affordable to me — remember, this is on top of our existing rates. If we cut existing beenfits, it still seems to me many disabled/unemployed people would be worse off with BI, or about the same, as the current system. So we're left with massively higher taxes, and people who can't work will be left poorer. The second article mentions all the secondary social benefits, and all the costs we'll avoid associated with people living in poverty. I buy that, but a 18%-35% tax rate itself is also going to have a massive deadweight losses as well which he's not accounting for. Current marginal rates are 30-40%, so we'll now have 48%-75% marginal rates (or assuming a 35% increase, 65% to 75%). Think that won't make society poorer and decrease the incentive to work? I want a stronger social safety net. But BI seems to me like a extremely costly way to do it. There are many things we can do that would have higher bang for the buck.
netcan 11y ago
Generally, I think a strong version of BI is a payment of similar value to an unemployment/disability pension. I don't think this is impossible, but it's pushing the limits of what's possible. To take one example, "social welfare" in Ireland is widely quoted as costing 20bn, about €370 per person. Maybe close to 500 per adult. If you could scoop 75% of that amount into a BI fund, you would be about half way to funding a BI scheme. The other half would come from increased income tax, a low band increase. Realistically, there will be a break even point that probably should sit around median income. IE, for a median income person, their increased tax equals their BI income, more or less. So, a lot of that tax come from people who are still net beneficiaries. Most people are close to break even. There is an extra tax burden but it's not an impossible one.
- sokoloff 11y ago
  So, if I'm following your math right, you're proposing a basic income of €1000 per person annually? That would indeed be basic and probably too low to achieve what proponents want, which is to allow the elimination of other welfare programs for the truly disabled, etc.
xienze 11y ago
There are additional problems: 1. It's not going to be an amount barely above the poverty line. If it's implemented "correctly" it needs to be enough to do away with all the other welfare programs. Think way, way higher than $12K per person per year. 2. With less revenue coming in, guess who's going to be hit with higher taxes? All those suckers working to make a marginally higher income. 3. If the BI is sufficiently high (think in the $45K range), there will be a lot of people leaving their jobs to live a life of leisure and avoid having their income taxed at a >50% rate. I know I would. This utopian idea is like every other: sounds great on the surface, may even work reasonably well at a small level, but doesn't scale. Human nature is what it is.
- prawn 11y ago
  Surely income tax would only apply to additional income. e.g., the higher tax rates would apply only to higher brackets. e.g., 0% on first $20k, 30% on the next $20k, 40% on the $60k after that, and so on. I think in Australia, the tax-free threshold these days is around $12k.
- evanpw 11y ago
  $45k is way too high. A basic income is per person, not per household. Median personal income in the US is only about $24k (https://en.wikipedia.org/wiki/Personal_income_in_the_United_States https://en.wikipedia.org/wiki/Personal_income_in_the_United_...). About 20% of adults with income currently make less than $12.5k. And if children also receive a basic income payment (which seems to be the case in the parent post's calculation), then no one will be starving at $12k/person.
  - xienze 11y ago
    Right, but like I said, if this is to be implemented correctly your BI has to be high enough to replace existing welfare programs. One of the benefits is that you eliminate the overhead of maintaining said programs and just cut everyone a check. You need to look at this in the "end game" scenario, which is, we need BI because there will be so much automation that hardly anyone needs to work anymore. You're not going to sell this to the poor by telling them that they're now unemployable and their BI is going to be less than their previous income + food stamps + housing subsidy + etc. So right off the bat, yeah, the BI floor needs to be the cash value of a person with full welfare benefits. And that's a lot more than $12K. You're also discounting the inevitability that politicians will promise bumps to the BI for votes, people protesting that they can't afford to live in Manhattan on their BI, etc. It will quickly reach a point that even skilled workers will say "F this" and join the ranks of the unemployed.
zo1 11y ago
That doesn't make sense. You're not going to give everyone that 12000. Just those that make less than that per year, right? If that's the case, then the amount is a whole lot less than $3.8 trillion. The calculation is then 12000 * (Amount_of_people_that_get_less_than_12k). Latest poverty numbers (2013) that I could find indicate only 45million are living in poverty. Assuming that poverty maps to less than 12k (and assuming they get all of it, and not simply the difference), then the calculation is: 12000 * 45,000,000 = $540 billion. Which is a lot less than what you mentioned, and would probably be even less. That is definitely do-able, if the political and social will is there.
- fez909 11y ago
  No, one of the great things about a BI is everybody gets it, whether rich, poor, working, unemployed, deserving or otherwise. It's often called a Universal Basic Income for this reason. Those who earn more than $12k in the above example would still receive it, but it would mostly be taken back off them in taxes.

danieltillett 11y ago

I need to sit down and go through your numbers, but something does not seem right. Are you assuming everyone gets $12000 regardless of age?

enraged_camel 11y ago
Isn't it unconditional basic income, as in everyone gets the same flat amount? The moment you add conditions and variables, you basically turn it into the complex mess that's the current welfare system.
- danieltillett 11y ago
  It can be unconditional and not apply to children and people collecting pensions. It would not create a huge mess by limiting it to people over 18 and under 65.
  - mason240 11y ago
    Wouldn't the simpler solution be to simply reduce the pensions by the amount of UBI? For example, a pensioner gettin $40k/year would get $25k under a $15k UBI. You would have to get them to agree to the renegotiation, so I suppose it's not a realistic solution.
    - danieltillett 11y ago
      Yes it would, although getting people to give up something is hard. Personally I would structure a UBI as a large negative income tax to try and avoid these problems.
  - 3pt14159 11y ago
    Why should people with pensions not get UBI? They saved their money into a pension vs into a bank account. Unless you are talking about replacing Social Security, but even there the math isn't as straightforward. As for 18 and under, I think it's a bit tough. A 6 person household with 4 kids needs much more than a 2 person household. If we don't supply UBI to the children / wards of the children then we risk needing to recreate social assistance programs. Although it does run the risk of having kids for money, which admittedly probably already happens.
    - danieltillett 11y ago
      I was making the point that a UBI can have age exclusions and still be simple. I would be reluctant to provide a full UBI to children since they don't have the freedom to spend the money themselves.
jholman 11y ago
http://www.census.gov/popclock/ http://www.census.gov/popclock/ 321.5 million residents gives $3.86T. Looks like each year of age under 18 makes up about 1.33% of that, for a total of 77M residents under the age of 18. Suppose you don't give a cent to anyone under 18 (which is not consistent with the UBI arguments I've seen, but whatever). 244.5M residents, times $12k, gives $2.9T. Sure, that's "residents", not "citizens". Otoh, non-resident citizens might be entitled as well. Either way, how can you argue with "over 300M times over $10k gives over 3 trillion"? Edit1: screwed up reading the graph, fixed above numbers. Edit2: oh, just saw your comment suggesting "18 to 65" Fine, integrating by eyeball the graph from my link, I see 47 years at more than 1.2% of the pop per year, gives roughly 60% of the population in your age bracket. Now it's 200M recipients, or $2.4T.
- Retric 11y ago
  Bi has two main savings, direct welfare and indirect welfare from a flat tax rate. The vast majority of workers make over to 9,225$ per year which is taxed at 10%. If they had a 39.6% tax that's 2730.6 new taxes to offset a BI of 12000$ for a net cost of -9269.4. Next $9,226-$37,450 is at 15%, bump that to 39.6% and someone making 37,450 costs -9269.4 + 6943.104 = -2,326.30$. Now if you continue this you find a medean income gets a bigger tax break than 12,000$ per year from the graduated tax rates. Also, with BI you don't need a standard deduction... Net impact BI's are not simply whatever the BI is * the population.
  - notahacker 11y ago
    > Now if you continue this you find a medean income gets a bigger tax break than 12,000$ per year from the graduated tax rates. You're going to struggle to sell BI on the basis that the person with a median income should make higher net tax contributions to subsidise those that won't work as well as those the present system determines "can't" work at the moment...
  - rue 11y ago
    Basic Income does not imply a flat tax rate.
  - 11y ago

barrkel 11y ago

You can correspondingly increase taxes on people earning substantially more than the basic income. Unconditionally increasing everybody's final (post-tax) yearly income by $12k isn't an outcome anybody expects (or should expect). One way of modelling basic income is as a negative income tax. However one of the advantages of making it "unconditional" (but not necessarily actually beneficial to high income people) is that it buys political acceptance from the middle classes especially.

surfmike 11y ago
That doesn't mean the cost goes away. You'll still have to increase marginal rates by at least 20% across the board, or if you have lower marginal rates for the poor, then even higher for the rich. ($12K is about 20% of the per-capita income in the US). A 20% increase in marginal rates is definitely going to affect the incentive to work. Middle class wage earners will be paying 50% to 60% of their income. If you want to save on the cost by scrapping existing benefits, the $12,000 a year would probably not fully replace the social security pension, disability benefits, or EITC/food stamp/TANF benefits people get, or at best be approximately the same. So you haven't changed things much for people at the bottom, in exchange for a massive tax hike.
- barrkel 11y ago
  > So you haven't changed things much for people at the bottom, in exchange for a massive tax hike. A massive tax hike combined with a simplification in government should result in larger revenues. If things don't change for people at the bottom, who did they change for - all that extra money has to go somewhere, holding all other government spending constant. Presumably the lower middle classes ended up the recipients of this massive tax hike, in your perspective. But this is just a function of the progressive tax curve; it and the fixed payment can both be adjusted to achieve a particular redistribution. The more interesting thing, to me, about an unconditional fixed income, is that it changes the nature of work at the margin. Benefits don't turn into poverty traps if they're unconditional. Incremental part-time work doesn't come hand in hand with the risk of losing your benefits. I think employment overall, and productivity, would increase.

thenomad 11y ago

I've been reading about this lately. Here are two articles arguing that it's entirely affordable even at the level you suggest: http://www.huffingtonpost.com/scott-santens/the-economist-just-came-o_b_7447312.html http://www.huffingtonpost.com/scott-santens/the-economist-ju... https://medium.com/basic-income/universal-basic-income-as-the-social-vaccine-of-the-21st-century-d66dff39073 https://medium.com/basic-income/universal-basic-income-as-th... (particularly interesting, IMO)

surfmike 11y ago
In the first article, he says we'd need to increase taxes 35% if we don't cut any programs. If we cut them, he says we'd "only" have to increase taxes 18%. Neither seems particularly affordable to me — remember, this is on top of our existing rates. If we cut existing beenfits, it still seems to me many disabled/unemployed people would be worse off with BI, or about the same, as the current system. So we're left with massively higher taxes, and people who can't work will be left poorer. The second article mentions all the secondary social benefits, and all the costs we'll avoid associated with people living in poverty. I buy that, but a 18%-35% tax rate itself is also going to have a massive deadweight losses as well which he's not accounting for. Current marginal rates are 30-40%, so we'll now have 48%-75% marginal rates (or assuming a 35% increase, 65% to 75%). Think that won't make society poorer and decrease the incentive to work? I want a stronger social safety net. But BI seems to me like a extremely costly way to do it. There are many things we can do that would have higher bang for the buck.

netcan 11y ago

Generally, I think a strong version of BI is a payment of similar value to an unemployment/disability pension. I don't think this is impossible, but it's pushing the limits of what's possible. To take one example, "social welfare" in Ireland is widely quoted as costing 20bn, about €370 per person. Maybe close to 500 per adult. If you could scoop 75% of that amount into a BI fund, you would be about half way to funding a BI scheme. The other half would come from increased income tax, a low band increase. Realistically, there will be a break even point that probably should sit around median income. IE, for a median income person, their increased tax equals their BI income, more or less. So, a lot of that tax come from people who are still net beneficiaries. Most people are close to break even. There is an extra tax burden but it's not an impossible one.

sokoloff 11y ago
So, if I'm following your math right, you're proposing a basic income of €1000 per person annually? That would indeed be basic and probably too low to achieve what proponents want, which is to allow the elimination of other welfare programs for the truly disabled, etc.

xienze 11y ago

There are additional problems: 1. It's not going to be an amount barely above the poverty line. If it's implemented "correctly" it needs to be enough to do away with all the other welfare programs. Think way, way higher than $12K per person per year. 2. With less revenue coming in, guess who's going to be hit with higher taxes? All those suckers working to make a marginally higher income. 3. If the BI is sufficiently high (think in the $45K range), there will be a lot of people leaving their jobs to live a life of leisure and avoid having their income taxed at a >50% rate. I know I would. This utopian idea is like every other: sounds great on the surface, may even work reasonably well at a small level, but doesn't scale. Human nature is what it is.

prawn 11y ago
Surely income tax would only apply to additional income. e.g., the higher tax rates would apply only to higher brackets. e.g., 0% on first $20k, 30% on the next $20k, 40% on the $60k after that, and so on. I think in Australia, the tax-free threshold these days is around $12k.
evanpw 11y ago
$45k is way too high. A basic income is per person, not per household. Median personal income in the US is only about $24k (https://en.wikipedia.org/wiki/Personal_income_in_the_United_States https://en.wikipedia.org/wiki/Personal_income_in_the_United_...). About 20% of adults with income currently make less than $12.5k. And if children also receive a basic income payment (which seems to be the case in the parent post's calculation), then no one will be starving at $12k/person.
- xienze 11y ago
  Right, but like I said, if this is to be implemented correctly your BI has to be high enough to replace existing welfare programs. One of the benefits is that you eliminate the overhead of maintaining said programs and just cut everyone a check. You need to look at this in the "end game" scenario, which is, we need BI because there will be so much automation that hardly anyone needs to work anymore. You're not going to sell this to the poor by telling them that they're now unemployable and their BI is going to be less than their previous income + food stamps + housing subsidy + etc. So right off the bat, yeah, the BI floor needs to be the cash value of a person with full welfare benefits. And that's a lot more than $12K. You're also discounting the inevitability that politicians will promise bumps to the BI for votes, people protesting that they can't afford to live in Manhattan on their BI, etc. It will quickly reach a point that even skilled workers will say "F this" and join the ranks of the unemployed.

zo1 11y ago

That doesn't make sense. You're not going to give everyone that 12000. Just those that make less than that per year, right? If that's the case, then the amount is a whole lot less than $3.8 trillion. The calculation is then 12000 * (Amount_of_people_that_get_less_than_12k). Latest poverty numbers (2013) that I could find indicate only 45million are living in poverty. Assuming that poverty maps to less than 12k (and assuming they get all of it, and not simply the difference), then the calculation is: 12000 * 45,000,000 = $540 billion. Which is a lot less than what you mentioned, and would probably be even less. That is definitely do-able, if the political and social will is there.

fez909 11y ago
No, one of the great things about a BI is everybody gets it, whether rich, poor, working, unemployed, deserving or otherwise. It's often called a Universal Basic Income for this reason. Those who earn more than $12k in the above example would still receive it, but it would mostly be taken back off them in taxes.