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The GBI would have to decline gradually as your income rose, not all at once, as marginal income tax brackets do now. Say it gives 1000 a month to someone earn

The GBI would have to decline gradually as your income rose, not all at once, as marginal income tax brackets do now. Say it gives 1000 a month to someone earning 0 a month, and grants 500 a month to someone earning 1000 a month, and nothing to someone earning 2000 a month (shortly followed by the positive tax rates for income beyond that).

scarmig 7y ago
That would work, but it makes the GBI much more expensive. If you did the decline gradually enough such that there was no effective disincentive for 99% of the population, you'd have something that looks and costs very similar to a UBI.
s_y_n_t_a_x 7y ago
You misunderstand tax brackets. You don't get taxed on your entire income for a higher rate if you get bumped into a new bracket, only the income that is over the threshold.
SkyBelow 7y ago
>The GBI would have to decline gradually as your income rose, not all at once, as marginal income tax brackets do now. By itself it works, but not when combined with other programs. For example, take someone on 2 different forms of help. Both give $1000 a month, but for every $1 you earn, they decrease benefits by $.50. So each slopes off at 50%. So a person gets a part time job making $800 a month. The first program cuts its benefits by half of that value, giving only $600. The second program does the same. Either way they take home $2000, meaning they earn nothing for working part time. Now, this is a simple scenario and can be fixed by making the decline very gradual in this case. But it shows one immediate problem, this solution doesn't apply at scale. So as long as you have enough sources of benefits the decline still ends up making working not worth it. Adding in taxes and private charity can end up complicating this further but the general result is that it produces local maximums that act like a trap. Also, if you fix this my making each one decline slower, you end up with it not being as easy to sell because of how high it kicks in. For example, instead of 50% decline, making it a 20% decline. So someone making $4,500 a month still gets $100 in benefits (1000 - .2 * 4500). That can be a hard sell politically regardless of how much benefit it is because it allows people to make the true claim that those earning $4900 a month still benefit from this benefit, despite it being only $20 a month. There is another complication with marriage and how it impacts this benefit (and if that creates an incentive for or against marrying). Lastly, even if you do design a system that works well enough, will the public even understand it? Look at how many people, even people who have jobs dealing with money, struggle with tax brackets. As such, I think it seems much easier to just say everyone gets $1000 (though there are still other questions, such as anything involving children).

scarmig 7y ago

That would work, but it makes the GBI much more expensive. If you did the decline gradually enough such that there was no effective disincentive for 99% of the population, you'd have something that looks and costs very similar to a UBI.

s_y_n_t_a_x 7y ago

You misunderstand tax brackets. You don't get taxed on your entire income for a higher rate if you get bumped into a new bracket, only the income that is over the threshold.

SkyBelow 7y ago

>The GBI would have to decline gradually as your income rose, not all at once, as marginal income tax brackets do now. By itself it works, but not when combined with other programs. For example, take someone on 2 different forms of help. Both give $1000 a month, but for every $1 you earn, they decrease benefits by $.50. So each slopes off at 50%. So a person gets a part time job making $800 a month. The first program cuts its benefits by half of that value, giving only $600. The second program does the same. Either way they take home $2000, meaning they earn nothing for working part time. Now, this is a simple scenario and can be fixed by making the decline very gradual in this case. But it shows one immediate problem, this solution doesn't apply at scale. So as long as you have enough sources of benefits the decline still ends up making working not worth it. Adding in taxes and private charity can end up complicating this further but the general result is that it produces local maximums that act like a trap. Also, if you fix this my making each one decline slower, you end up with it not being as easy to sell because of how high it kicks in. For example, instead of 50% decline, making it a 20% decline. So someone making $4,500 a month still gets $100 in benefits (1000 - .2 * 4500). That can be a hard sell politically regardless of how much benefit it is because it allows people to make the true claim that those earning $4900 a month still benefit from this benefit, despite it being only $20 a month. There is another complication with marriage and how it impacts this benefit (and if that creates an incentive for or against marrying). Lastly, even if you do design a system that works well enough, will the public even understand it? Look at how many people, even people who have jobs dealing with money, struggle with tax brackets. As such, I think it seems much easier to just say everyone gets $1000 (though there are still other questions, such as anything involving children).