7 ms·

Negative income tax makes more sense to me. (NIT is a system where you either get or give money from/to the governement, depending on your income.) First it's

Negative income tax makes more sense to me. (NIT is a system where you either get or give money from/to the governement, depending on your income.) First it's both a simple welfare and tax system in one package. Basic income as typically understood is only half of the story. It's also easier to reason about, the money flows are way more obvious, it's immediately clear whether you are a net contributor or receiver and it's easier to set the (few) parameters.

mmanfrin 11y ago
NIC is analogous to basic income. At a certain point, the taxes you pay in a basic income scheme are equal to the basic income you earn. Those who earn less than you are earning a NIC, those above are paying income tax. It is the same thing.
- randyrand 11y ago
  No its not in practice. NIC is generally tied to working. A part time employed person will make less than a full time one. Under BI it is not tied to working. The incentives are worse.
  - mmanfrin 11y ago
    How? A full time employed person will still make more than a part time. Basic Income is flatly applied, everyone gets it; earning more then means you still have more. This isn't some cutoff-if-you-make-too-much thing.
    - randyrand 11y ago
      > Basic Income is flatly applied Thats the difference. Of course it depends on the model used, but generally NIC is applied based on how much you work. Generally a non-working person makes $0 , and a fully employed person makes the BI amount. To get the BI you need to work for it. That's the difference. To take this argument any further we would need to compare specific models. But NIC and BI are not the same and have similar but different purposes.
      - kr7 11y ago
        > Generally a non-working person makes $0 Not according to Milton Friedman. https://youtu.be/xtpgkX588nM?t=191 https://youtu.be/xtpgkX588nM?t=191
        randyrand 11y ago
        Good source. That is of course one valid way to implement it and is essentially BI in calculation. Still even under miltons NIC, an important difference between NIC and BI is intended purpose. BI proponents want enough to live on with little hardship, NIC implies nothing in that regard and most NIC proponents I imagine would be opposed to that. I would not be a proponent of BI for that important 'scalar' reason.
        aninhumer 11y ago
        I agree that the main difference between UBI and NIT is framing, and I prefer UBI for that very reason. It's much simpler to understand, and it separates the notion of creating a social baseline from the tax system. Also, this framing could also make a practical difference to the interface. If the benefit is administrated separately, you don't need to think about tax until you get a job. Having to submit a tax return to get your money is potentially intimidating, not to mention somewhat degrading if it says $0. With UBI, rich and poor alike get the cheque. >BI proponents want enough to live on with little hardship Certainly many do, but I feel this is more of an aspiration than a requirement. I think there are huge economic benefits that will come about from the stability and freedom that even a smaller UBI provides. In the longer term, complete sustenance may become trivial.
        randyrand 11y ago
        > In the longer term, complete sustenance may become trivial. This can already be done easily with the right mindset. We do not need any more technical advancements to achieve this goal. Water is cheap. Agriculture technology is already amazing. Food can be as little as a few dollars a day if you buy cheap foods (beans, rice, bread, ect). Its possible to live rather well on $300 a month or $3600 a year if you live in the right location, and live within your means. Heck, most of the world already does this. But the problem to living like this in in america is our wealth drives up the cost of certain inherently supply limited resources. The biggest ones being those resources which are tied to land. And the biggest example being shelter. Shelter prices are mainly determined by people 'one upping' each other. Competing with each other. Given these obstacles, the biggest beneficiary of UBI may not be the common person, but land owners. Building skyscrapers is a great partial solution to the problem, but resistance is everywhere.
  - deleted 11y ago
    [deleted]
- RivieraKid 11y ago
  Equavalent to basic income with a specific tax system. But the whole system would be harder to understand and have 1 redundant parameter.
  - mmanfrin 11y ago
    NIC would be harder to understand, or BI would? If the latter, I wholeheartedly disagree. Normal taxes would remain, the only difference is that you get BI as well.
    - RivieraKid 11y ago
      I meant that BI would be harder to understand... It would take more thinking to answer questions such as "what's the effective tax rate for net contributors?", "what's the level at which you're a net contributor", "if we switch to BI, will I become richer or poorer?".
      - aninhumer 11y ago
        The people who care about those questions are clearly already fairly well off, and they can afford to work it out for themselves. For the people who really benefit, only the last question matters, and the answer is obvious.
  - aninhumer 11y ago
    UBI is far easier to understand. It's exactly what we have now (with perhaps higher taxes), except you get a cheque for $Xk as well. NIT is a counter-intuitive trick to achieve the same thing within a tax bracket framework. Maybe it's more elegant, but understanding it requires a comprehension of mathematical concepts that many people (especially on lower incomes) simply don't have.
philwelch 11y ago
The only downside is that you can con the government into paying you to commit tax evasion.
enraged_camel 11y ago
I'm not sure how any of the things you said are true. How is negative income tax easier to reason about than "every citizen gets X dollars per month, unconditionally"? How is the money flow more obvious? Furthermore, why is it important to identify whether someone is a net contributor or receiver?
- pyoung 11y ago
  A lot of folks like to argue against BI by pointing out population*(BI $/person) = $$$$$ (really big number). The counter argument is that most people won't be netting the full BI as they would be paying it back in taxes somehow. The NIC is essentially BI, but with better visibility into where the break even point is on the income scale.
narrator 11y ago
I agree that it would be much better and fairer to have a negative income tax as the only form of social support. One of the worst things about the current social support system in the U.S is the welfare cliffs. There's a gap between $25,000 a year and $80,000 a year where there's a greater than 100% marginal income tax because people lose access to benefits at these income levels. This chart displays it very nicely: http://www.zerohedge.com/sites/default/files/images/user92183/imageroot/2015/07/WelfareState1.png http://www.zerohedge.com/sites/default/files/images/user9218... The full study examining this phenomenon is here: http://www.scribd.com/doc/273843288/Welfare-Report-Final http://www.scribd.com/doc/273843288/Welfare-Report-Final
- RivieraKid 11y ago
  I think that NIC could be some sort of a base system with a set of modifications to handle various corner cases (people with disabilities etc.). Yes, the cliff is definitely a problem with the current system.
sharemywin 11y ago
I read any NIC can be translated to basic income by raising income taxes. So, they are very similar.
yk 11y ago
The trouble with negative income tax, or at least the simplest models is, that you have to be very careful with the models. I once tried to calculate an admittedly very simple model and the results were a rather absurdly high tax already at rather low incomes. A slightly larger parameter space then produced a model of taxation with extrema. Plus there are a lot of very good reasons for tax breaks (for example screen readers for the blind). So while I fully agree that a well engineered tax system would be a lot simpler than what we have now, I am not sure if a basic income should just be dealt with by taxation.
- RivieraKid 11y ago
  > Plus there are a lot of very good reasons for tax breaks I agree, I think that the negative income tax could be a base system with a systematic way to give / tax more various groups of people or other modifications.
protomyth 11y ago
Plus, everyone doesn't need the income and we cannot afford it anyway. I'm partial to trying pro-rated guaranteed minimum income paid weekly or nightly (one can dream). I have seen several proposals that include a clause affecting voting rights of the receivers.
- tikhonj 11y ago
  I am generally in favor of a negative income tax, but fiddling with voting rights is a complete non-starter. Disallowing people to vote, or giving some people more voting power, skews all politics in ways that are inherently hard to fix or even address. It creates a weirder incentive scheme for the government which already behaves oddly thanks to odd incentives. A plan that took voting power away from its beneficiaries would sow the seeds of its own undoing—if not in a single action than over hundreds of small amendments and exceptions. The end-game I'd expect is for most of the benefits of the plan to be chipped away, leaving only the changed voting rights. That's really not the way to go.
  - brbsix 11y ago
    People still donate to charity, don't they? Or voluntarily sign up for insurance programs? If the programs were effective in reaching their stated goals, I wouldn't expect them to be entirely chipped away. If instead the programs revealed some perverse disincentives on the other hand, I'd expect the result you described, and rightly so.
  - protomyth 11y ago
    I'm a on the fence as your argument mirrors my own, but I can see the fear of basically voting yourself a raise with pandering politicians. I think the line of thinking is inspired by professional voting blocks which is a more as likely scenario.
    - rspeer 11y ago
      Why is "voting yourself a raise" something that needs to be prevented when poor people do it, but not when rich people do it?
ThomPete 11y ago
Thats solving a very different problem. UBI is based on the premise that there are fewer and fewer jobs to be had which gives a proper salary. So negative income tax under this premise makes no sense.
- RivieraKid 11y ago
  Not sure I understand you... Negative income is a version of basic income - if you don't have a job, you automatically get money. With a specific tax system and parameter setting, negative income is equivalent to UBI.
  - ThomPete 11y ago
    Negative income is based on the idea that there is something taxable on the other end to strive for. That it's there for those who don't have jobs but the second they get it they will be taxed. Negative income requires a system of control and so it's basically not very different than a normal conditional social wellfare system. UBI is basically working on the premise that there wont be any jobs in the ned. That there wont' be any income to tax. So it's not really equivalent to UBI as it's premise is that there will the number of available jobs just fluctuate but we will get more over time.
Turing_Machine 11y ago
While negative income tax might be "simple" in theory, in practice I think it would likely turn into the same mess of loopholes and bizarre rules that we have now. A big benefit of the basic income model is that there's really no room for lawyers, accountants, etc. to pervert the process. If everyone gets the same amount, there's no way to game it that I can see (now, I'm sure someone, somewhere will figure out a way to game it... that's what people do, but at least on the face of it it seems far less gameable than our current tax and welfare setup). If it were made a part of the FairTax model (which would be easy to do, given that that model already requires cutting everyone a check), then gameability would take another huge hit.
InclinedPlane 11y ago
Incentives. Incentives. Incentives. People respond to incentives, it's been proven time and time again. A negative income tax isn't the worst idea, but it has all the wrong incentives. The more money you earn, the less help you get. Which seems sensible on the surface but can lead to situations where people ask themselves "why should I even bother working a job I hate when I can get the same money without working?" The advantage of basic income is that no matter what you do you still get that money. You're still incentivized to work because a life on basic income won't exactly be a life of luxury. In fact you might be more incentivized to work for several reasons. One because working will get you money you can spend on stuff you want, not just stuff you need to survive. This is significant from a quality of life aspect. Also, working will enable you to get ahead, instead of just being on a treadmill as so often happens today. You'll be able to have more choice where you work and how much, and you'll be able to set aside some of your time to pursue new careers. I don't think people understand just how much potential and talent is being wasted and misused in our economy at present. Human beings aren't meant to be drones, that's not our calling. And it's an insult to the human race to imply that a significant portion of the population is somehow genetically fit for nothing other than menial labor. That's never been my observation. In the vast majority of people I've met there is almost always a depth and a potential that is not being tapped by the current economic system. And you see some of this coming out with new economic models enabled by the internet. More freelancing, more startups, more people engaging in their passion projects through crowd funding or what-have-you. More people learning new things and trying new things because the internet makes discovery of knowledge a lot easier. That's true of musicians, artists, inventors, and so many others. I can only imagine the world we'd have if we could unlock that huge untapped potential.
- tempestn 11y ago
  It is possible to set the tax rates such that the two are financially identical. However, I agree with you that psychologically the basic income has better incentives than a negative income tax.
- RivieraKid 11y ago
  I sympathise with the general sentiment but most of what you're saying about BI and NIT is simply incorrect. > The advantage of basic income is that no matter what you do you still get that money Only a minority of people would get money. Because if you get $10000 (basic income) and pay $20000 (taxes), you're not actually not getting money. > A negative income tax isn't the worst idea, but it has all the wrong incentives. The more money you earn, the less help you get. Well, obviously, this is also true for basic income. Most people with jobs would not get any help, they would give help. Welfare works by income redistribution. You take money from one part of the population and give it to another part. As for incentives, that's the thing that NIT does right. It doesn't have the "lose welfare when you start to work" problem.

mmanfrin 11y ago

NIC is analogous to basic income. At a certain point, the taxes you pay in a basic income scheme are equal to the basic income you earn. Those who earn less than you are earning a NIC, those above are paying income tax. It is the same thing.

randyrand 11y ago
No its not in practice. NIC is generally tied to working. A part time employed person will make less than a full time one. Under BI it is not tied to working. The incentives are worse.
- mmanfrin 11y ago
  How? A full time employed person will still make more than a part time. Basic Income is flatly applied, everyone gets it; earning more then means you still have more. This isn't some cutoff-if-you-make-too-much thing.
  - randyrand 11y ago
    > Basic Income is flatly applied Thats the difference. Of course it depends on the model used, but generally NIC is applied based on how much you work. Generally a non-working person makes $0 , and a fully employed person makes the BI amount. To get the BI you need to work for it. That's the difference. To take this argument any further we would need to compare specific models. But NIC and BI are not the same and have similar but different purposes.
    - kr7 11y ago
      > Generally a non-working person makes $0 Not according to Milton Friedman. https://youtu.be/xtpgkX588nM?t=191 https://youtu.be/xtpgkX588nM?t=191
      - randyrand 11y ago
        Good source. That is of course one valid way to implement it and is essentially BI in calculation. Still even under miltons NIC, an important difference between NIC and BI is intended purpose. BI proponents want enough to live on with little hardship, NIC implies nothing in that regard and most NIC proponents I imagine would be opposed to that. I would not be a proponent of BI for that important 'scalar' reason.
        aninhumer 11y ago
        I agree that the main difference between UBI and NIT is framing, and I prefer UBI for that very reason. It's much simpler to understand, and it separates the notion of creating a social baseline from the tax system. Also, this framing could also make a practical difference to the interface. If the benefit is administrated separately, you don't need to think about tax until you get a job. Having to submit a tax return to get your money is potentially intimidating, not to mention somewhat degrading if it says $0. With UBI, rich and poor alike get the cheque. >BI proponents want enough to live on with little hardship Certainly many do, but I feel this is more of an aspiration than a requirement. I think there are huge economic benefits that will come about from the stability and freedom that even a smaller UBI provides. In the longer term, complete sustenance may become trivial.
        randyrand 11y ago
        > In the longer term, complete sustenance may become trivial. This can already be done easily with the right mindset. We do not need any more technical advancements to achieve this goal. Water is cheap. Agriculture technology is already amazing. Food can be as little as a few dollars a day if you buy cheap foods (beans, rice, bread, ect). Its possible to live rather well on $300 a month or $3600 a year if you live in the right location, and live within your means. Heck, most of the world already does this. But the problem to living like this in in america is our wealth drives up the cost of certain inherently supply limited resources. The biggest ones being those resources which are tied to land. And the biggest example being shelter. Shelter prices are mainly determined by people 'one upping' each other. Competing with each other. Given these obstacles, the biggest beneficiary of UBI may not be the common person, but land owners. Building skyscrapers is a great partial solution to the problem, but resistance is everywhere.
- deleted 11y ago
  [deleted]
RivieraKid 11y ago
Equavalent to basic income with a specific tax system. But the whole system would be harder to understand and have 1 redundant parameter.
- mmanfrin 11y ago
  NIC would be harder to understand, or BI would? If the latter, I wholeheartedly disagree. Normal taxes would remain, the only difference is that you get BI as well.
  - RivieraKid 11y ago
    I meant that BI would be harder to understand... It would take more thinking to answer questions such as "what's the effective tax rate for net contributors?", "what's the level at which you're a net contributor", "if we switch to BI, will I become richer or poorer?".
    - aninhumer 11y ago
      The people who care about those questions are clearly already fairly well off, and they can afford to work it out for themselves. For the people who really benefit, only the last question matters, and the answer is obvious.
- aninhumer 11y ago
  UBI is far easier to understand. It's exactly what we have now (with perhaps higher taxes), except you get a cheque for $Xk as well. NIT is a counter-intuitive trick to achieve the same thing within a tax bracket framework. Maybe it's more elegant, but understanding it requires a comprehension of mathematical concepts that many people (especially on lower incomes) simply don't have.

philwelch 11y ago

The only downside is that you can con the government into paying you to commit tax evasion.

enraged_camel 11y ago

I'm not sure how any of the things you said are true. How is negative income tax easier to reason about than "every citizen gets X dollars per month, unconditionally"? How is the money flow more obvious? Furthermore, why is it important to identify whether someone is a net contributor or receiver?

pyoung 11y ago
A lot of folks like to argue against BI by pointing out population*(BI $/person) = $$$$$ (really big number). The counter argument is that most people won't be netting the full BI as they would be paying it back in taxes somehow. The NIC is essentially BI, but with better visibility into where the break even point is on the income scale.

narrator 11y ago

I agree that it would be much better and fairer to have a negative income tax as the only form of social support. One of the worst things about the current social support system in the U.S is the welfare cliffs. There's a gap between $25,000 a year and $80,000 a year where there's a greater than 100% marginal income tax because people lose access to benefits at these income levels. This chart displays it very nicely: http://www.zerohedge.com/sites/default/files/images/user92183/imageroot/2015/07/WelfareState1.png http://www.zerohedge.com/sites/default/files/images/user9218... The full study examining this phenomenon is here: http://www.scribd.com/doc/273843288/Welfare-Report-Final http://www.scribd.com/doc/273843288/Welfare-Report-Final

RivieraKid 11y ago
I think that NIC could be some sort of a base system with a set of modifications to handle various corner cases (people with disabilities etc.). Yes, the cliff is definitely a problem with the current system.

sharemywin 11y ago

I read any NIC can be translated to basic income by raising income taxes. So, they are very similar.

yk 11y ago

The trouble with negative income tax, or at least the simplest models is, that you have to be very careful with the models. I once tried to calculate an admittedly very simple model and the results were a rather absurdly high tax already at rather low incomes. A slightly larger parameter space then produced a model of taxation with extrema. Plus there are a lot of very good reasons for tax breaks (for example screen readers for the blind). So while I fully agree that a well engineered tax system would be a lot simpler than what we have now, I am not sure if a basic income should just be dealt with by taxation.

RivieraKid 11y ago
> Plus there are a lot of very good reasons for tax breaks I agree, I think that the negative income tax could be a base system with a systematic way to give / tax more various groups of people or other modifications.

protomyth 11y ago

Plus, everyone doesn't need the income and we cannot afford it anyway. I'm partial to trying pro-rated guaranteed minimum income paid weekly or nightly (one can dream). I have seen several proposals that include a clause affecting voting rights of the receivers.

tikhonj 11y ago
I am generally in favor of a negative income tax, but fiddling with voting rights is a complete non-starter. Disallowing people to vote, or giving some people more voting power, skews all politics in ways that are inherently hard to fix or even address. It creates a weirder incentive scheme for the government which already behaves oddly thanks to odd incentives. A plan that took voting power away from its beneficiaries would sow the seeds of its own undoing—if not in a single action than over hundreds of small amendments and exceptions. The end-game I'd expect is for most of the benefits of the plan to be chipped away, leaving only the changed voting rights. That's really not the way to go.
- brbsix 11y ago
  People still donate to charity, don't they? Or voluntarily sign up for insurance programs? If the programs were effective in reaching their stated goals, I wouldn't expect them to be entirely chipped away. If instead the programs revealed some perverse disincentives on the other hand, I'd expect the result you described, and rightly so.
- protomyth 11y ago
  I'm a on the fence as your argument mirrors my own, but I can see the fear of basically voting yourself a raise with pandering politicians. I think the line of thinking is inspired by professional voting blocks which is a more as likely scenario.
  - rspeer 11y ago
    Why is "voting yourself a raise" something that needs to be prevented when poor people do it, but not when rich people do it?

ThomPete 11y ago

Thats solving a very different problem. UBI is based on the premise that there are fewer and fewer jobs to be had which gives a proper salary. So negative income tax under this premise makes no sense.

RivieraKid 11y ago
Not sure I understand you... Negative income is a version of basic income - if you don't have a job, you automatically get money. With a specific tax system and parameter setting, negative income is equivalent to UBI.
- ThomPete 11y ago
  Negative income is based on the idea that there is something taxable on the other end to strive for. That it's there for those who don't have jobs but the second they get it they will be taxed. Negative income requires a system of control and so it's basically not very different than a normal conditional social wellfare system. UBI is basically working on the premise that there wont be any jobs in the ned. That there wont' be any income to tax. So it's not really equivalent to UBI as it's premise is that there will the number of available jobs just fluctuate but we will get more over time.

Turing_Machine 11y ago

While negative income tax might be "simple" in theory, in practice I think it would likely turn into the same mess of loopholes and bizarre rules that we have now. A big benefit of the basic income model is that there's really no room for lawyers, accountants, etc. to pervert the process. If everyone gets the same amount, there's no way to game it that I can see (now, I'm sure someone, somewhere will figure out a way to game it... that's what people do, but at least on the face of it it seems far less gameable than our current tax and welfare setup). If it were made a part of the FairTax model (which would be easy to do, given that that model already requires cutting everyone a check), then gameability would take another huge hit.

InclinedPlane 11y ago

Incentives. Incentives. Incentives. People respond to incentives, it's been proven time and time again. A negative income tax isn't the worst idea, but it has all the wrong incentives. The more money you earn, the less help you get. Which seems sensible on the surface but can lead to situations where people ask themselves "why should I even bother working a job I hate when I can get the same money without working?" The advantage of basic income is that no matter what you do you still get that money. You're still incentivized to work because a life on basic income won't exactly be a life of luxury. In fact you might be more incentivized to work for several reasons. One because working will get you money you can spend on stuff you want, not just stuff you need to survive. This is significant from a quality of life aspect. Also, working will enable you to get ahead, instead of just being on a treadmill as so often happens today. You'll be able to have more choice where you work and how much, and you'll be able to set aside some of your time to pursue new careers. I don't think people understand just how much potential and talent is being wasted and misused in our economy at present. Human beings aren't meant to be drones, that's not our calling. And it's an insult to the human race to imply that a significant portion of the population is somehow genetically fit for nothing other than menial labor. That's never been my observation. In the vast majority of people I've met there is almost always a depth and a potential that is not being tapped by the current economic system. And you see some of this coming out with new economic models enabled by the internet. More freelancing, more startups, more people engaging in their passion projects through crowd funding or what-have-you. More people learning new things and trying new things because the internet makes discovery of knowledge a lot easier. That's true of musicians, artists, inventors, and so many others. I can only imagine the world we'd have if we could unlock that huge untapped potential.

tempestn 11y ago
It is possible to set the tax rates such that the two are financially identical. However, I agree with you that psychologically the basic income has better incentives than a negative income tax.
RivieraKid 11y ago
I sympathise with the general sentiment but most of what you're saying about BI and NIT is simply incorrect. > The advantage of basic income is that no matter what you do you still get that money Only a minority of people would get money. Because if you get $10000 (basic income) and pay $20000 (taxes), you're not actually not getting money. > A negative income tax isn't the worst idea, but it has all the wrong incentives. The more money you earn, the less help you get. Well, obviously, this is also true for basic income. Most people with jobs would not get any help, they would give help. Welfare works by income redistribution. You take money from one part of the population and give it to another part. As for incentives, that's the thing that NIT does right. It doesn't have the "lose welfare when you start to work" problem.