5 ms·

Wait, aren't they essentially the same thing?

by mbesto 9y ago

deleted 9y ago
[deleted]
wavefunction 9y ago
Presumably the difference is that at some income threshold you start paying taxes, whereas right below it you don't. So to me it sounds like a terrible implementation of a basic income scheme, since someone making X pays no taxes but x+n pays some fraction of n in taxes and presumably has little real incentive to work for n additional dollars when n is sufficiently small enough that x is close to x+(n - tax). And then you've got all the bureaucracy of figuring out who earned less than x and applying whatever specific payment y to bring them up to x.
- eksu 9y ago
  You don’t have a hard and fast threashold but have it taper off on a progressive curve.
  - wavefunction 9y ago
    Sure, but my main point about it being a terrible implementation is that it's still means-tested requiring a bureaucracy that our current non UBI system features, which would be unnecessary and a cost-savings under a UBI scheme where every citizen receives $x each year.
    - bryanlarsen 9y ago
      It's quite possible that the NIT would use less bureaucracy than the UBI because UBI would have it's own separate bureaucracy and doesn't eliminate the need for the department of revenue, whereas the NIT would just use the department of revenue for both. Either way, both require little extra bureaucracy.
    - pyoung 9y ago
      One of the main arguments in favor of a negative income tax is that it would require less bureaucracy, not more. With the tax, you could just let the IRS handle it, whereas with UBI you would probably set up another agency, similar to social security, to handle it. For what it is worth, from an economic perspective, the two ideas are basically identical. In a very hypothetically scenario: If someone gets a UBI of $500 a month, and then makes $500 in income with a 20% tax, than they would net $900 for the month. With an NIT, you would design it so that they get a tax credit of $500 per month, and then every $500 in income reduces their tax credit by 20%. So that same person would get $900 of the month.
- rory096 9y ago
  >So to me it sounds like a terrible implementation of a basic income scheme, since someone making X pays no taxes but x+n pays some fraction of n in taxes and presumably has little real incentive to work for n additional dollars when n is sufficiently small enough that x is close to x+(n - tax). This is true of any tax scheme. NIT/UBI are intended to fix the 'welfare cliff' problem of making significantly less money by earning an extra $1 at certain point of the income curve than at higher ones, by setting a fixed marginal tax rate (even if you're a net recipient of distribution) or guaranteeing a fixed amount to everyone regardless of need, respectively. There is no discontinuity in effective marginal tax rates under NIT.
frgtpsswrdlame 9y ago
Yes.
eksu 9y ago
No. Universal Basic Income is ‘Universal’, meaning there’s no qualification to receive it. Basically it’s flat and it goes to everyone equally, rich and poor. A negative income tax is a progressive tax system that starts off in the negatives and works itself up as you move up in brackets or (ideally) on a smooth curve or line.
- mbesto 9y ago
  > A negative income tax is a progressive tax system that starts off in the negatives and works itself up as you move up in brackets or (ideally) on a smooth curve or line. But if UBI says you get $30k/year in gross income and then if you choose not to do UBI, then you pay taxes on your income, isn't that essentially the same thing? Because if you get $30k/year in income from UBI, it wouldn't make any sense to tax an income that comes from taxes...right?
  - WorldMaker 9y ago
    Some theories of UBI believe UBI may only work if it is taxable income. Those theories include some sort of assumption that the defining characteristic of a fiat currency is it's value to pay taxes, so the way to control (hyper-)inflation is continue to set the value of the currency in tax policy. From that perspective the taxable portion of the income becomes a "year long loan" and that loan amount is useful to set expectations (versus interest/inflation) on the value of the overall UBI.
- balfirevic 9y ago
  Negative income tax is not necessarily progressive tax system (as that word is commonly understood), and negative income paid to you by the state is not a "bracket". It is pretty much the same thing as UBI, when you look at the numbers.
balfirevic 9y ago
They are usually very similar, depending on how your you set up your tax brackets. There might be operational differences, depending on concrete proposal (dispensing cash yearly vs. monthly, etc.)
- jpindar 9y ago
  >dispensing cash yearly vs. monthly Which is not at all similar if you're poor.
  - balfirevic 9y ago
    Of course not, but that's neither here nor there when looking at differences between negative income tax and UBI. Both can be implemented on monthly basis.
bryanlarsen 9y ago
Other than the assumption with Negative Income Tax that the money has to come from an institution that taxes (aka the government), yes they're essentially the same thing. Negative Income Tax is the term preferred by the right and UBI by the left, so there is probably a lot of very significant differences between any specific proposal labelled "Negative Income Tax" and any specific proposal labelled "UBI".

Wait, aren't they essentially the same thing?

by mbesto 9y ago

Wait, aren't they essentially the same thing?

deleted 9y ago

[deleted]

wavefunction 9y ago

Presumably the difference is that at some income threshold you start paying taxes, whereas right below it you don't. So to me it sounds like a terrible implementation of a basic income scheme, since someone making X pays no taxes but x+n pays some fraction of n in taxes and presumably has little real incentive to work for n additional dollars when n is sufficiently small enough that x is close to x+(n - tax). And then you've got all the bureaucracy of figuring out who earned less than x and applying whatever specific payment y to bring them up to x.

eksu 9y ago
You don’t have a hard and fast threashold but have it taper off on a progressive curve.
- wavefunction 9y ago
  Sure, but my main point about it being a terrible implementation is that it's still means-tested requiring a bureaucracy that our current non UBI system features, which would be unnecessary and a cost-savings under a UBI scheme where every citizen receives $x each year.
  - bryanlarsen 9y ago
    It's quite possible that the NIT would use less bureaucracy than the UBI because UBI would have it's own separate bureaucracy and doesn't eliminate the need for the department of revenue, whereas the NIT would just use the department of revenue for both. Either way, both require little extra bureaucracy.
  - pyoung 9y ago
    One of the main arguments in favor of a negative income tax is that it would require less bureaucracy, not more. With the tax, you could just let the IRS handle it, whereas with UBI you would probably set up another agency, similar to social security, to handle it. For what it is worth, from an economic perspective, the two ideas are basically identical. In a very hypothetically scenario: If someone gets a UBI of $500 a month, and then makes $500 in income with a 20% tax, than they would net $900 for the month. With an NIT, you would design it so that they get a tax credit of $500 per month, and then every $500 in income reduces their tax credit by 20%. So that same person would get $900 of the month.
rory096 9y ago
>So to me it sounds like a terrible implementation of a basic income scheme, since someone making X pays no taxes but x+n pays some fraction of n in taxes and presumably has little real incentive to work for n additional dollars when n is sufficiently small enough that x is close to x+(n - tax). This is true of any tax scheme. NIT/UBI are intended to fix the 'welfare cliff' problem of making significantly less money by earning an extra $1 at certain point of the income curve than at higher ones, by setting a fixed marginal tax rate (even if you're a net recipient of distribution) or guaranteeing a fixed amount to everyone regardless of need, respectively. There is no discontinuity in effective marginal tax rates under NIT.

frgtpsswrdlame 9y ago

Yes.

eksu 9y ago

No. Universal Basic Income is ‘Universal’, meaning there’s no qualification to receive it. Basically it’s flat and it goes to everyone equally, rich and poor. A negative income tax is a progressive tax system that starts off in the negatives and works itself up as you move up in brackets or (ideally) on a smooth curve or line.

mbesto 9y ago
> A negative income tax is a progressive tax system that starts off in the negatives and works itself up as you move up in brackets or (ideally) on a smooth curve or line. But if UBI says you get $30k/year in gross income and then if you choose not to do UBI, then you pay taxes on your income, isn't that essentially the same thing? Because if you get $30k/year in income from UBI, it wouldn't make any sense to tax an income that comes from taxes...right?
- WorldMaker 9y ago
  Some theories of UBI believe UBI may only work if it is taxable income. Those theories include some sort of assumption that the defining characteristic of a fiat currency is it's value to pay taxes, so the way to control (hyper-)inflation is continue to set the value of the currency in tax policy. From that perspective the taxable portion of the income becomes a "year long loan" and that loan amount is useful to set expectations (versus interest/inflation) on the value of the overall UBI.
balfirevic 9y ago
Negative income tax is not necessarily progressive tax system (as that word is commonly understood), and negative income paid to you by the state is not a "bracket". It is pretty much the same thing as UBI, when you look at the numbers.

balfirevic 9y ago

They are usually very similar, depending on how your you set up your tax brackets. There might be operational differences, depending on concrete proposal (dispensing cash yearly vs. monthly, etc.)

jpindar 9y ago
>dispensing cash yearly vs. monthly Which is not at all similar if you're poor.
- balfirevic 9y ago
  Of course not, but that's neither here nor there when looking at differences between negative income tax and UBI. Both can be implemented on monthly basis.

bryanlarsen 9y ago

Other than the assumption with Negative Income Tax that the money has to come from an institution that taxes (aka the government), yes they're essentially the same thing. Negative Income Tax is the term preferred by the right and UBI by the left, so there is probably a lot of very significant differences between any specific proposal labelled "Negative Income Tax" and any specific proposal labelled "UBI".