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From what I've understood, it solves multiple problems that the negative income tax didn't, because it didn't apply to everyone. To clarify for those coming la

From what I've understood, it solves multiple problems that the negative income tax didn't, because it didn't apply to everyone. To clarify for those coming later: The negative income tax is the idea that beneath a certain amount of income, you actually are given money by the government. If you're over the amount, you get nothing, and in fact are taxed a portion of your income. Depending on how far beneath the amount you are, you might get more, or less. But that system leaves some people in a bad spot: * Sporadic work? Now you have to wait until after you should've gotten your money to get the money to make up for it. Without a safety net(which you almost certainly do not have), you're behind on your bills already. * The above also applies to if you hate your job. * You're disincentivized from working if the amount you can make is beneath the amount that would give you the negative income bracket. * Politically, it's a lot easier when everyone can get the benefit. Less claims about abusing the system if it gives everyone the same thing. * As an employer, giving someone just 4-6 hours a week of work isn't bad unless the employee wants something different. With a NIT it might just not be worth it to the employee.

eksu 9y ago
Those are some great points - I didn’t think much about sporadic work. UBI is probably easier to implement administratively than trying to change check sizes every week. I think though politically it’s easier to stomach if you’re of a leaning that sees government giving as a good thing. I think politicaly you have a hard case saying we’re also giving sama and bill gates these checks (even if their effective rate still puts them under at the end of the year!) I would hope the incentives problem would be solved with a very gradual tax curve rather than brackets for NIT.
pc86 9y ago
In the US at least all the rates are marginal. The only "disincentive to work" is completely psychological and made up. If you make more money, you get more money. There is no financial scenario where you make $1 more and lose anything close to $1 in government benefits, tax credits, etc. I was on unemployment for approximately 6 months in 2008 and every $100 I made only decreased my unemployment benefit by $15-20. Anyone who thinks they can't work because their benefits will go away has such a passing familiarity with their own actual finances UBI or NIT won't help them anyway.
- rory096 9y ago
  >In the US at least all the rates are marginal. The only "disincentive to work" is completely psychological and made up. If you make more money, you get more money. There is no financial scenario where you make $1 more and lose anything close to $1 in government benefits, tax credits, etc. Well there's at least one, though you're generally right that welfare cliffs have been all but eliminated in the US. That said, here in Charlottesville our healthcare.gov market fell apart for 2018 and the one remaining insurer's second-cheapest silver plan is a tad over $10,000 per year. Under 400% of the federal poverty level, the ACA guarantees a subsidy of the difference between the second-cheapest silver plan premium and a certain percentage of your income (sliding scale, but no higher than 9.56%). That means if you're at 400% of the poverty line, $48,240 for a single-person household in 2018, your premiums are capped at $4,612 and thus you receive a subsidy for $5,468. At 401% of the poverty line, you get nothing. Thus, effective marginal tax rates are >100% between $48,240 and $53,709 — it does not make sense to earn any more than the lowest end of that range. A bit of an extreme case that won't hold in more functional markets, but... personally frustrating. /rant
  - pc86 9y ago
    You are right about the ACA subsidy, I completely forgot about that because I was only thinking about income taxes.
- quaunaut 9y ago
  But the disincentive to work is that your first X amount that is under the yearly amount you get from the negative income tax would be you working and getting absolutely no benefit. That's what I'm referencing.

eksu 9y ago

Those are some great points - I didn’t think much about sporadic work. UBI is probably easier to implement administratively than trying to change check sizes every week. I think though politically it’s easier to stomach if you’re of a leaning that sees government giving as a good thing. I think politicaly you have a hard case saying we’re also giving sama and bill gates these checks (even if their effective rate still puts them under at the end of the year!) I would hope the incentives problem would be solved with a very gradual tax curve rather than brackets for NIT.

pc86 9y ago

In the US at least all the rates are marginal. The only "disincentive to work" is completely psychological and made up. If you make more money, you get more money. There is no financial scenario where you make $1 more and lose anything close to $1 in government benefits, tax credits, etc. I was on unemployment for approximately 6 months in 2008 and every $100 I made only decreased my unemployment benefit by $15-20. Anyone who thinks they can't work because their benefits will go away has such a passing familiarity with their own actual finances UBI or NIT won't help them anyway.

rory096 9y ago
>In the US at least all the rates are marginal. The only "disincentive to work" is completely psychological and made up. If you make more money, you get more money. There is no financial scenario where you make $1 more and lose anything close to $1 in government benefits, tax credits, etc. Well there's at least one, though you're generally right that welfare cliffs have been all but eliminated in the US. That said, here in Charlottesville our healthcare.gov market fell apart for 2018 and the one remaining insurer's second-cheapest silver plan is a tad over $10,000 per year. Under 400% of the federal poverty level, the ACA guarantees a subsidy of the difference between the second-cheapest silver plan premium and a certain percentage of your income (sliding scale, but no higher than 9.56%). That means if you're at 400% of the poverty line, $48,240 for a single-person household in 2018, your premiums are capped at $4,612 and thus you receive a subsidy for $5,468. At 401% of the poverty line, you get nothing. Thus, effective marginal tax rates are >100% between $48,240 and $53,709 — it does not make sense to earn any more than the lowest end of that range. A bit of an extreme case that won't hold in more functional markets, but... personally frustrating. /rant
- pc86 9y ago
  You are right about the ACA subsidy, I completely forgot about that because I was only thinking about income taxes.
quaunaut 9y ago
But the disincentive to work is that your first X amount that is under the yearly amount you get from the negative income tax would be you working and getting absolutely no benefit. That's what I'm referencing.