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What you're describing (low taxes as an incentive to work) is a libertarian argument for small government. I'm not saying that's a bad thing, but it's the oppos
by 1123581321 10y ago
What you're describing (low taxes as an incentive to work) is a libertarian argument for small government. I'm not saying that's a bad thing, but it's the opposite of UBI which requires a per capita tax equal to the per capita basic income.
- flukus 10y agoNo, it's very different. Let's say I'm getting $100 worth of benefits a day (makes the math easier) And let's say I could do a days work and make $100, but I'd lose $90 worth of benefits. That extra $10 may not be worth a days work. With UBI you'd get that same $100, but if you took that days work you'd get an extra $100 (minus tax, let's say 20%). Now you're reward for that days work is $80. The UBI system taxes higher but also provides more incentive to the worker. Welfare cliffs are an awful demotivator.
- 1123581321 10y agoMost welfare systems don't have a cliff where you lose more than you earn; they phase out. For example, in the US, the child tax credit is reduced by $50 for every $1,000 earned above a threshold, so the phaseout is a 5% "tax" on income in that range rather than being a welfare cliff. A phase-out reduces effective hourly wage, which theoretically reduces the incentive to work. That's no different than any other kind of marginal tax rate, though, and UBI would require a high marginal tax rate. Probably the best argument UBI is to replace current welfare systems with one cash payment because, in addition to theoretically reducing administrative costs, it would make phase-outs easier to understand. If there are welfare recipients who misunderstand when benefits apply, they might not want to obtain additional income even though it would benefit them.