3 ms·

In addition to what's been mentioned in other comments, one big difference between basic income and negative income tax is who receives them. Basic income is gi

by Riseed 11y ago

In addition to what's been mentioned in other comments, one big difference between basic income and negative income tax is who receives them. Basic income is given to everyone, and negative income tax is only given to those below a threshold amount -- creating two classes of people. The funding structure is substantially similar because in both systems some people pay more in taxes than they receive. However, by only distributing the payments to a subset of the population, there is a social stigma associated with receiving benefits. With a universal payment, there is no stigma. By virtue of being tied to the tax system, negative income tax operates on a year-based system and pays retroactively. Regardless of whether the year's overall income would qualify for negative income tax, individuals must self-fund any time off. A negative income tax does nothing to help those who are temporarily out of work, or who only want a few months off to help with childcare, learn/improve skills, or address an illness. Implementing negative income tax by making adjustments to withholdings would help employees with low incomes, but does not address the self-funding issue for low-income independent contractors, or those experiencing temporary/long-term joblessness.

eru 11y ago
> By virtue of being tied to the tax system, negative income tax operates on a year-based system and pays retroactively. That's a naive interpretation. In practice people are already paying their income taxes every month via withholding, so paying out the negative income tax as you go would be possible to implement similarly.
- Riseed 11y ago
  I did mention implementation of negative income tax via withholding in the final sentence of my comment. However, I haven't read/heard how adjusting withholding would work in a non-retroactive manner for independent contractors or those who are temporarily jobless. What's a non-retroactive negative income tax payment proposal for persons in those situations?
  - eru 11y ago
    Make an estimate, then retroactively fix the (hopefully small) delta?
    - Riseed 11y ago
      1. Adjust withholding. (Addresses "retroactive" issue for all near-normal employees.) 2. Allow regular payments for long-term situations, somewhat like the current US SSI system. (Addresses "retroactive" issue for unemployed & independent contractors.) 3. Allow immediate and regular payments for temporary situations, somewhat like the current US Unemployment Insurance system. (Addresses temporary/unplanned unemployment.) 4. Fix over/underpayments of negative income tax at tax time. Is that an accurate understanding of the proposal?
      - eru 11y ago
        I think that's one way to flash out my sketch a bit more. Yes. Basically, in effect you'd be folding Unemployment Insurance into the system.
        Riseed 11y ago
        In theory, that implementation of negative income tax (NIT) would cover everyone and seems to have nearly [0] the same effect as a basic income (UBI). However, in practice, the effects will not be equivalent. With UBI, future checks are already coming, and thus can be relied upon. This gives people the freedom to leave undesirable jobs/relationships without worrying about funding tomorrow's basic needs. With NIT, people would need to apply for an adjustment to their benefits and find a way to self-fund until the application is approved. That hurdle will prevent many from leaving undesirable jobs/relationships and impede numerous others. As an example, many citizens eligible for food stamps don't {re-}apply. Some don't know they're eligible, some can't navigate the application process, some don't want to go through the application process (many invasive questions, time consuming), and others don't want the stigma of receiving non-universal benefits. [1] [2] With a universal system like UBI, everyone is eligible, the application process can be simple and non-invasive [3], and there is no stigma.[4] Bonus: UBI (hopefully) allows for elimination of some bureaucracy, instead of folding existing bureaucracy into a new program. [0] While adjustments can be made to funding and payment structures to make NIT and UBI financially similar, no adjustment in NIT benefit timing addresses the fact that it's non-universal. [1] http://www.huffingtonpost.com/2013/08/14/food-stamps_n_3757052.html http://www.huffingtonpost.com/2013/08/14/food-stamps_n_37570... [2] CA study of Food Stamp participation: https://www.cdph.ca.gov/programs/cpns/Documents/Network-FSO-PerceptionPresentation.pdf https://www.cdph.ca.gov/programs/cpns/Documents/Network-FSO-... [3] Alaska PFD one-page application on p.9: http://csd.wustl.edu/publications/documents/pb09-65.pdf http://csd.wustl.edu/publications/documents/pb09-65.pdf [4] "Money for Free" https://www.youtube.com/watch?v=7hidqABq4Yc&feature=youtu.be&t=38m12s https://www.youtube.com/watch?v=7hidqABq4Yc&feature=youtu.be...
CydeWeys 11y ago
Excellent points. I think your comment was best out of the numerous ones I received based on insights:length ratio.

by Riseed 11y ago

eru 11y ago

> By virtue of being tied to the tax system, negative income tax operates on a year-based system and pays retroactively. That's a naive interpretation. In practice people are already paying their income taxes every month via withholding, so paying out the negative income tax as you go would be possible to implement similarly.

Riseed 11y ago
I did mention implementation of negative income tax via withholding in the final sentence of my comment. However, I haven't read/heard how adjusting withholding would work in a non-retroactive manner for independent contractors or those who are temporarily jobless. What's a non-retroactive negative income tax payment proposal for persons in those situations?
- eru 11y ago
  Make an estimate, then retroactively fix the (hopefully small) delta?
  - Riseed 11y ago
    1. Adjust withholding. (Addresses "retroactive" issue for all near-normal employees.) 2. Allow regular payments for long-term situations, somewhat like the current US SSI system. (Addresses "retroactive" issue for unemployed & independent contractors.) 3. Allow immediate and regular payments for temporary situations, somewhat like the current US Unemployment Insurance system. (Addresses temporary/unplanned unemployment.) 4. Fix over/underpayments of negative income tax at tax time. Is that an accurate understanding of the proposal?
    - eru 11y ago
      I think that's one way to flash out my sketch a bit more. Yes. Basically, in effect you'd be folding Unemployment Insurance into the system.
      - Riseed 11y ago
        In theory, that implementation of negative income tax (NIT) would cover everyone and seems to have nearly [0] the same effect as a basic income (UBI). However, in practice, the effects will not be equivalent. With UBI, future checks are already coming, and thus can be relied upon. This gives people the freedom to leave undesirable jobs/relationships without worrying about funding tomorrow's basic needs. With NIT, people would need to apply for an adjustment to their benefits and find a way to self-fund until the application is approved. That hurdle will prevent many from leaving undesirable jobs/relationships and impede numerous others. As an example, many citizens eligible for food stamps don't {re-}apply. Some don't know they're eligible, some can't navigate the application process, some don't want to go through the application process (many invasive questions, time consuming), and others don't want the stigma of receiving non-universal benefits. [1] [2] With a universal system like UBI, everyone is eligible, the application process can be simple and non-invasive [3], and there is no stigma.[4] Bonus: UBI (hopefully) allows for elimination of some bureaucracy, instead of folding existing bureaucracy into a new program. [0] While adjustments can be made to funding and payment structures to make NIT and UBI financially similar, no adjustment in NIT benefit timing addresses the fact that it's non-universal. [1] http://www.huffingtonpost.com/2013/08/14/food-stamps_n_3757052.html http://www.huffingtonpost.com/2013/08/14/food-stamps_n_37570... [2] CA study of Food Stamp participation: https://www.cdph.ca.gov/programs/cpns/Documents/Network-FSO-PerceptionPresentation.pdf https://www.cdph.ca.gov/programs/cpns/Documents/Network-FSO-... [3] Alaska PFD one-page application on p.9: http://csd.wustl.edu/publications/documents/pb09-65.pdf http://csd.wustl.edu/publications/documents/pb09-65.pdf [4] "Money for Free" https://www.youtube.com/watch?v=7hidqABq4Yc&feature=youtu.be&t=38m12s https://www.youtube.com/watch?v=7hidqABq4Yc&feature=youtu.be...

CydeWeys 11y ago

Excellent points. I think your comment was best out of the numerous ones I received based on insights:length ratio.