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>2/ Regardless of what version of UBI you personally support, it is probably not a good idea to give money to those who don't need it. Wrong. The system doesn

by magduf 9y ago

>2/ Regardless of what version of UBI you personally support, it is probably not a good idea to give money to those who don't need it. Wrong. The system doesn't work if you don't give people to money who don't need it: the administrative requirements of assessing who and who doesn't need it, and then policing all this, is just too high. This is the reason UBI was invented in the first place! It's very simple: you give the same money to everyone, even if they're a billionaire. To make up for this, you raise the taxes a commensurate amount on the people who don't need it (and more for the really rich people, because the idea is wealth redistribution). So someone making $100k, for instance, obviously doesn't need a handout, so you raise their taxes that same amount so they're paying back in taxes what they're getting from the UBI, and netting zero. It's much easier to do this than to have thousands of government workers auditing everyone to make sure they aren't "cheating" by receiving money they're not qualified for, which is what we do with current welfare schemes. >Sooner or later people will realize that what they really want is tax/benefit reform No, tax reform doesn't do anything to reduce the administrative burden of current welfare systems. UBI does. Less money you pay out for unnecessary government office workers is more money you can end up giving to people in need, and society will be better off with those government workers finding more productive professions which might actually generate more wealth and taxable income, instead of just being a drain on taxpayers.

dandare 9y ago
Thank you for proving my point. And now look at the numbers in my diagram, the administrative costs are negligible compared to the cost of giving money to those who don't need it.
- ghaff 9y ago
  And, in the US, the administrative overhead is apparently less than about 10%, [1] which you're not actually going to completely eliminate unless you plan to cut pretty much all social support programs other than sticking money in a bank account every month. [1] https://www.cbpp.org/research/romneys-charge-that-most-federal-low-income-spending-goes-for-overhead-and-bureaucrats-is https://www.cbpp.org/research/romneys-charge-that-most-feder...
- bryanlarsen 9y ago
  You're missing a section on the bottom of your chart. Who will pay for UBI? -- income tax. Raise the per capita income rate an average of £12,000, (£15,000 pounds minus the ~3,000 in savings you calculated earlier). No net impact on the average taxpayer, little impact on the rich and massive impact on the poor.
  - notahacker 9y ago
    25% of the working age population is economically inactive (with more being below the income tax floor) most of whom do not receive benefits (they're living off savings or others) even before you actively incentivise people not to look for work. It's going to cost a lot more than £12k per taxpayer, and with median UK household income being only £27k the taper for the working poor is going to be steep, and the middle classes seeing a net tax increase is going to include an awful lot of people struggling to pay off their mortgages. And the thing is, many people who are actively looking for work or disabled already receive more than the UBI in other benefits being cut to fund this. The true beneficiaries? Upper middle class people who've paid off their mortgage, built up savings and wish to retire a decade or two earlier and traditional housewives. The losers? The working young and single people.
  - dandare 9y ago
    I did the calculation for UK 2015-2016: There are about 31 million taxpayers in the UK. The basic income tax rate of 20% for income up to £42k/year generates 33% of the income tax revenue. Let's agree that these are not the rich people we want to tax. (88,7% of Britons earn less than £50k/year.) The higher (40%) and additional (45%) tax rates generate the rest 67% or £117 billion of the £174 billion income tax revenue. In order to raise additional £472 billion, we would have to increase the higher and additional tax rates to approximately 211%. As you can see, taxing the "rich" cannot raise enough money to give everyone unconditional poverty line minimum income. Source: https://www.gov.uk/government/statistics/income-tax-liabilities-by-income-range https://www.gov.uk/government/statistics/income-tax-liabilit..., https://www.gov.uk/income-tax-rates https://www.gov.uk/income-tax-rates
    - bryanlarsen 9y ago
smokeyj 9y ago
> the administrative requirements of assessing who and who doesn't need it, and then policing all this, is just too high Oh okay this makes sense. > To make up for this, you raise the taxes a commensurate amount on the people who don't need it Wait just a second..
- Bjartr 9y ago
  I think the point is that you have one audit system, the IRS, instead of two, the IRS and welfare programs.
swebs 9y ago
That sounds very similar to the FairTax bill that's been proposed since the 90's. Only with FairTax money comes from sales tax rather than income. https://en.wikipedia.org/wiki/FairTax https://en.wikipedia.org/wiki/FairTax
- magduf 9y ago
  "FairTax" doesn't work because sales tax is extremely regressive. Rich people don't spend nearly as much of their income as poor people, and they frequently don't even spend it inside the country. Sales tax just ends up hurting the working class the most.
  - ApolloFortyNine 9y ago
    Quote from page: >Internet purchases would be taxed, as would retail international purchases (such as a boat or car) that are imported to the United States (collected by the U.S. Customs and Border Protection).[53]
  - swebs 9y ago
    Technically, it's a flat tax. You can argue that it's "effectively" regressive if you divide mean spending by income across the income distribution or something, but it doesn't really matter since as long as the prebate value is large enough, the poor still come out ahead. Needless to say, I'm not claiming that FirTax would work. I'm just pointing out the similarities between it and UBI. If this experiment shows evidence that UBI doesn't work, then that gives me less confidence in FairTax as well.
    - dragonwriter 9y ago
      > Technically, it's a flat tax. It's a flat tax on consumption, which is a regressive tax on income; when unspecified, progressive/flat/regressive in regard to taxation conventionally refers to relation to income. > but it doesn't really matter since as long as the prebate value is large enough, the poor still come out ahead. The size of the prebate (and the 23% rate) is part of the FairTax proposal (though a slighlty incoherent part, since it is defined in terms of income, not spending)—it is defined at the level that a taxpayer would pay 0 net FairTax with poverty level income (presumably, this assumes 100% spending at poverty level.)
vorg 9y ago
> you give the same money to everyone, even if they're a billionaire. To make up for this, you raise the taxes a commensurate amount on the people who don't need it (and more for the really rich people, because the idea is wealth redistribution This has already happened in various countries like the UK until the 1970's. In New Zealand the top income tax was 66%, and a "UBI" for everyone 60 and over, regardless of their income, was introduced. Of course those with high incomes paid up to 2/3rds of this back to the govt as income tax. In the 1980's, NZ followed the UK in slashing income taxes to the levels found in the US. The qualifying age for the "Universal Basic Income" was progressively increased to 65, with tentative plans to raise the age even further in the near future. If the experiment there was to be extended, then the top income tax would have remained at 66% and the qualifying age for this "UBI" progressively lowered in stages down to 18 as the country could afford it. To see why the experiment was cancelled, I think we should look at why the income tax was lowered in these countries. Perhaps the rich lobbied for less taxes, and threatened to shift their businesses to Australia and other countries.

by magduf 9y ago

dandare 9y ago

Thank you for proving my point. And now look at the numbers in my diagram, the administrative costs are negligible compared to the cost of giving money to those who don't need it.

ghaff 9y ago
And, in the US, the administrative overhead is apparently less than about 10%, [1] which you're not actually going to completely eliminate unless you plan to cut pretty much all social support programs other than sticking money in a bank account every month. [1] https://www.cbpp.org/research/romneys-charge-that-most-federal-low-income-spending-goes-for-overhead-and-bureaucrats-is https://www.cbpp.org/research/romneys-charge-that-most-feder...
bryanlarsen 9y ago
You're missing a section on the bottom of your chart. Who will pay for UBI? -- income tax. Raise the per capita income rate an average of £12,000, (£15,000 pounds minus the ~3,000 in savings you calculated earlier). No net impact on the average taxpayer, little impact on the rich and massive impact on the poor.
- notahacker 9y ago
  25% of the working age population is economically inactive (with more being below the income tax floor) most of whom do not receive benefits (they're living off savings or others) even before you actively incentivise people not to look for work. It's going to cost a lot more than £12k per taxpayer, and with median UK household income being only £27k the taper for the working poor is going to be steep, and the middle classes seeing a net tax increase is going to include an awful lot of people struggling to pay off their mortgages. And the thing is, many people who are actively looking for work or disabled already receive more than the UBI in other benefits being cut to fund this. The true beneficiaries? Upper middle class people who've paid off their mortgage, built up savings and wish to retire a decade or two earlier and traditional housewives. The losers? The working young and single people.
- dandare 9y ago
  I did the calculation for UK 2015-2016: There are about 31 million taxpayers in the UK. The basic income tax rate of 20% for income up to £42k/year generates 33% of the income tax revenue. Let's agree that these are not the rich people we want to tax. (88,7% of Britons earn less than £50k/year.) The higher (40%) and additional (45%) tax rates generate the rest 67% or £117 billion of the £174 billion income tax revenue. In order to raise additional £472 billion, we would have to increase the higher and additional tax rates to approximately 211%. As you can see, taxing the "rich" cannot raise enough money to give everyone unconditional poverty line minimum income. Source: https://www.gov.uk/government/statistics/income-tax-liabilities-by-income-range https://www.gov.uk/government/statistics/income-tax-liabilit..., https://www.gov.uk/income-tax-rates https://www.gov.uk/income-tax-rates
  - bryanlarsen 9y ago

smokeyj 9y ago

> the administrative requirements of assessing who and who doesn't need it, and then policing all this, is just too high Oh okay this makes sense. > To make up for this, you raise the taxes a commensurate amount on the people who don't need it Wait just a second..

Bjartr 9y ago
I think the point is that you have one audit system, the IRS, instead of two, the IRS and welfare programs.

swebs 9y ago

That sounds very similar to the FairTax bill that's been proposed since the 90's. Only with FairTax money comes from sales tax rather than income. https://en.wikipedia.org/wiki/FairTax https://en.wikipedia.org/wiki/FairTax

magduf 9y ago
"FairTax" doesn't work because sales tax is extremely regressive. Rich people don't spend nearly as much of their income as poor people, and they frequently don't even spend it inside the country. Sales tax just ends up hurting the working class the most.
- ApolloFortyNine 9y ago
  Quote from page: >Internet purchases would be taxed, as would retail international purchases (such as a boat or car) that are imported to the United States (collected by the U.S. Customs and Border Protection).[53]
- swebs 9y ago
  Technically, it's a flat tax. You can argue that it's "effectively" regressive if you divide mean spending by income across the income distribution or something, but it doesn't really matter since as long as the prebate value is large enough, the poor still come out ahead. Needless to say, I'm not claiming that FirTax would work. I'm just pointing out the similarities between it and UBI. If this experiment shows evidence that UBI doesn't work, then that gives me less confidence in FairTax as well.
  - dragonwriter 9y ago
    > Technically, it's a flat tax. It's a flat tax on consumption, which is a regressive tax on income; when unspecified, progressive/flat/regressive in regard to taxation conventionally refers to relation to income. > but it doesn't really matter since as long as the prebate value is large enough, the poor still come out ahead. The size of the prebate (and the 23% rate) is part of the FairTax proposal (though a slighlty incoherent part, since it is defined in terms of income, not spending)—it is defined at the level that a taxpayer would pay 0 net FairTax with poverty level income (presumably, this assumes 100% spending at poverty level.)

vorg 9y ago

> you give the same money to everyone, even if they're a billionaire. To make up for this, you raise the taxes a commensurate amount on the people who don't need it (and more for the really rich people, because the idea is wealth redistribution This has already happened in various countries like the UK until the 1970's. In New Zealand the top income tax was 66%, and a "UBI" for everyone 60 and over, regardless of their income, was introduced. Of course those with high incomes paid up to 2/3rds of this back to the govt as income tax. In the 1980's, NZ followed the UK in slashing income taxes to the levels found in the US. The qualifying age for the "Universal Basic Income" was progressively increased to 65, with tentative plans to raise the age even further in the near future. If the experiment there was to be extended, then the top income tax would have remained at 66% and the qualifying age for this "UBI" progressively lowered in stages down to 18 as the country could afford it. To see why the experiment was cancelled, I think we should look at why the income tax was lowered in these countries. Perhaps the rich lobbied for less taxes, and threatened to shift their businesses to Australia and other countries.