9 ms·

California Legislature Proposes a Universal Basic Income Program

56 points by ceohockey60 7y ago

Bostonian 7y ago
I don't seen an exclusion of illegal aliens from the program. So citizens of California would be forced to subsidize people who should not be in the country. And the program would likely encourage more illegal aliens to come to California.
- t-writescode 7y ago
  Arguably, this should only be available to green card holders and citizens. H1B visa holders are sponsored by a company, so the company should be caring for them enough they don’t need UBI; and, the abuse potential for illegal immigrants should seem obvious. I would love to have someone change my mind here if I’m off base.
  - deleted 7y ago
    [deleted]
  - triceratops 7y ago
    Pretty much the entire point of a UBI is the "U". It's not meant to be need-based. Everyone - billionaires and destitute alike - gets it. H1B visa holders pay state income taxes, sales taxes, and state disability insurance. They're considered residents for tax purposes at the federal and state levels which means they pay taxes on worldwide income, just like citizens and green card holders. Why should they be ineligible? That would be a repeat of SSI/Medicare, which they also pay but may never collect.
- katmannthree 7y ago
  Does the phrase "California resident" include people who live there but aren't legal residents?
  - deleted 7y ago
    [deleted]
  - mrkstu 7y ago
    Seems to be a state by state idea of whether they care about national immigration status. Here's a link to a NYT article about differing treatment in various states, with Cali generally lenient: https://www.nytimes.com/interactive/2015/03/30/us/laws-affecting-unauthorized-immigrants.html https://www.nytimes.com/interactive/2015/03/30/us/laws-affec...
- analyst74 7y ago
  Citizens of California are also going to be subsidized by the large number of H1B workers, primarily those from India and China. Pay it forward I guess?
- Simulacra 7y ago
  I think economically there would have to be. The incentive for others to move to California to take advantage of this, might set off ..well.. a population migration. Surely they've considered this and have an idea of how to limit the scope so as not to bankrupt the state.
- JMTQp8lwXL 7y ago
  Do illegal aliens not buy goods and services? The UBI is funded by a 10% value added tax on Goods and Services.
- __jal 7y ago
  Many of us in California don't care if you think they "shouldn't" live here. I'm perfectly well aware of the economic and tribal arguments. The former are not convincing and the proponents of the latter can go pound sand - given my preferences, I'd exclude them long before I'd exclude immigrants over paperwork.
  - refurb 7y ago
    Many of us in California do care if you think they "shouldn't" live here.
    - atomi 7y ago
      People have been migrating to California long before the US existed. In fact, it was first colonized by migrants. There are people with family spanning generations on both sides and the border pretty much crossed them.
danem 7y ago
How about doing something to address the housing crisis first so all of this money doesn't just end up in landlords pockets? Land value tax maybe?
- t-writescode 7y ago
  Rather than adding another 10% tax on goods, you mean? Perhaps something to gradually adjust property taxes such that people with multi-million dollar houses aren’t paying taxes as though it’s a multi- thousand dollar house?
  - mdorazio 7y ago
    If only there were some kind of proposition that could be phased out over time to accomplish that... perhaps a proposition with an unlucky number. Like 13... This is the problem with the proposition system - it often encourages residents to enact policies in their personal best interests that screw over a huge number of people down the road.
    - riversflow 7y ago
      You know, it would be much more palatable, and much more likely to pass, if instead of phasing out prop 13 entirely, we carved out an exemption for people who only owned one property which was a single-family dwelling. Prop 13 is an important protection for a lot of people on fixed incomes who are also very vulnerable to being displaced from their housing in this high growth state. Kicking seniors out of the homes they’ve spent most of their life in isn’t a very ethical thing to do.
      - t-writescode 7y ago
        What's the percentage of people using it because they're poor, vs using it because it's cheap? At what point do the needs of society overrule the housing needs of the individual? The elderly person will end up a serious multi-millionaire by the end of this in most cases.
      - 7y ago
jeffdavis 7y ago
I can imagine this incentivizing semi-rural living. Cheap house, low COL, steady income.
- pengaru 7y ago
  Indeed. I regularly burn around $1k/mo when living simply in a cabin on my rural California property, with property taxes under $500/yr. There's a lot of rural California. The combination of modern tech enabling comfortable and connected off-grid living and UBI opens up pretty much all of it for residence, as long as there's a grocery store accessible.
- lukifer 7y ago
  It'd be a great business opportunity, to provide resources for turn-key homesteading. (It'd probably work best at the level of small communes, rather than individuals.)
- opportune 7y ago
  Depending on the area, that’s not something to encourage. There are a lot of people living in places where humans really shouldn’t be living due to the fire risk
jeffdavis 7y ago
My gut tells me a 10% VAT won't be enough. It's excluding medicine and housing and food. What else do people spend a lot of money on? Cars? Will that really bring in enough for tens of billions per month?
- Shivetya 7y ago
  services is the key, that means every business will be contributing. allowing clothing and food to escape helps those high up the income ladder immensely. I will be curious if it excuses elective medical treatments and supplements. consider how empty section 2 is this is just a trial balloon
- nostrademons 7y ago
  VAT includes B2B purchases. Presumably that means that 10% of every Facebook/Google/Netflix ad impression ends up going toward funding this program, as well as 10% of the profit of every iPhone. That's a lot of billions.
  - jeffdavis 7y ago
    Hmm. It's also pretty hard to imagine that. You're saying that we ask the big tech companies to pay tens of billions per month in taxes?
mrkstu 7y ago
I am sometimes glad that Californians are around as a polity. They try the things the rest of us think are loony, but are motivated by strong ethical underpinnings. Sometimes they fail badly and serve as a warning to the rest of us that 'here be dragons' and other times they unexpectedly succeed and the rest of us can learn that, in certain circumstances, living up to your beliefs with the collective wallet can work out positively, net-net.
- fennecfoxen 7y ago
  > Sometimes they fail badly and serve as a warning to the rest of us that 'here be dragons' You know, if you'd consider listening, ordinary economists could have also served as that warning in many cases — like, for instance, in the case of AB5 and its impact on freelance journalists... or the impact of not-building-housing on the housing crisis...
- JMTQp8lwXL 7y ago
  Just because a bill is submitted doesn't mean it's not immediately dead on arrival. Some bills are submitted just so a politician can say "I submitted the bill, but it was <other party> that killed it".
  - claydavisss 7y ago
    what "other party"? State Republicans don't have the votes to stop anything, they are virtually extinct. If a bill dies in Sacramento, it dies because (and only because) Democrats wanted it to die.
  - chrisdhoover 7y ago
    There is only one party in CA
    - JMTQp8lwXL 7y ago
      Not all Democrats within California Democratic party sit at the exact same point on the political spectrum. Some are more neoliberal & centrist, and others are more socialist Democrat. By submitting this bill, it could signal the expectation that centrist democrats need to move further left. Given CA is mostly a one-party state, it's more about intraparty influence over the party's platform, than it is about blaming the "other" party.
crobertsbmw 7y ago
My fear is that once this gets rolled into production, every other politicians campaign is going to be “increase the basic income” until we are all basically living off the top .01%
- Uhhrrr 7y ago
  Social competitiveness should keep most people chasing money.
- iron0013 7y ago
  Doesn’t the top .01% already live off the rest of us?
- lukifer 7y ago
  In a highly networked world, Metcalfe's Law [0] trends most services towards winner-take-all. Living off the 0.01% may be our least-worst alternative to neo-feudalism. One under-discussed aspect of UBI is that it might render minimum wage unnecessary; people could end up working for luxuries rather than subsistence. And of course, there are other non-monetary incentives to work (intrinsic rewards, passion projects, prestige/reputation). Still, the issue you raise is significant. The thing that bugs me about UBI as proposed, is that there isn't a clear Schelling focus, or organic emergent self-balancing process, for deciding how much it should be. I'm a fan of Yang, but the "$1000/mo" target is ultimately arbitrary, because it's a nice round number, and large enough to have a significant impact in people's lives. But why not $750 or $1250? Why shouldn't it index to regional cost of living and/or GDP? What metric do we use to decide when/if it should update? I don't think that's a reason not to do it, and I suspect any amount of UBI will result in better outcomes than spending the same money on bloated federal bureaucracies; but it feels very zero-sum / tug-of-war to just pick a nice-sounding number, and then have to fight over raising or lowering it every election cycle. [0] https://en.wikipedia.org/wiki/Metcalfe%27s_law https://en.wikipedia.org/wiki/Metcalfe%27s_law
rcpt 7y ago
Won't the money from this ultimately go towards landowners in the form of increased land rents? We could get around that by pairing UBI with a land value tax but the nightmare that is Prop 13 makes that impossible.
- arebop 7y ago
  Only to the extent that money from anything goes towards landowners in the form of increased land rents. There are other basic necessities and also some luxuries that the beneficiaries of this progressive redistribution would likely buy with the extra income.
  - rcpt 7y ago
    But those other things can increase supply if people start demanding more. The amount of land is fixed.
- gbronner 7y ago
  Homeless people will spend a lot of it on booze and drugs instead.
  - apta 7y ago
    Maybe then it's a good idea to can both of those.
bsimpson 7y ago
It's a $1000 payment funded by a 10% VAT (tax) on everything but food, clothing, medicine, and education. So unless you spend more than $10k per month on things that aren't food, clothing, education, or medicine; you come out ahead. My first thought: can this possibly be solvent? There are apx. 32 million adults in California. Are there $32 billion spent per month in-state on things that aren't those common categories? Then I realized that this includes business purchases. Everything sold in California would become 10% more expensive. There'd be a huge incentive to buy from out-of-state, and a huge disincentive for out-of-state purchasers to buy from California merchants. I also wonder what it does to the population/demographics over time. If you're poor in another state, there are 12,000 new reasons per adult per year to move to California. Including B2B purchases, could the current California economy absorb $32 billion per month in additional taxes? Even if it could, this would pervert the economics of the state so badly it's hard to know what the effects would be over time.
- secabeen 7y ago
  Wouldn't this just leverage the existing sales tax system? Now that local sales taxes are collected nationwide, it would be much harder to avoid.
  - bsimpson 7y ago
    Value-added tax means it's baked into the purchase price. Buy a $5.50 cup of coffee? You get charged $5.98 (after the existing 8.75% sales tax) and the merchant gets $5 (because 10% of the advertised price is VAT).
- daenz 7y ago
  It doesn't matter if it's solvent or not. Once it's implemented and people are dependent on it, it has to work going forward, and people will pass whatever laws necessary to ensure that it doesn't fail.
  - WalterBright 7y ago
    It is possible to run out of other peoples' money.
stazz1 7y ago
While I was a proponent of UBI several months ago, I have found some irreconcilable flaws and would urge everyone to consider Progressive Guaranteed Income, a basic income for people below a certain "climb-out bound." Reasons: +UBI Robs from the rich to give to the poor... and give back to the rich a little bit. "Billionaires will die without UBI." It's simply not good nor true to the intent of BI to give money to people who already have plenty. "But means testing will cost so much!" Actually means testing if you earn less than C.O.B is not very expensive, and giving UBI to everyone is very very expensive. Something like 6-12x more expensive. (PGI with C.O.B. of 24k would cost $800B annually, UBI would cost 3.6T) +aside from giving to the rich for no good reason, UBI causes an increase in commodity prices anytime the fund is issued. This is like having a highway turn at 340* and being very incensed when people crash because they are going too fast. There is no way to avoid a spike in commodity prices when giving UBI out and especially when you give it out to everyone, why? because everyone getting more money devalues money (for a brief while). See: Supply of Money (M0, M1, M2...) and the Kuwait attempt at UBI from 2011. They blamed their ministers of commerce for the crashes on the 340* turn, of course. + Value Added Tax is not good to fund B.I. of any kind because it's likely that this "luxury tax" will hit a lot of the recipients of the B.I. The Roosevelt Institute did a study on a potential UBI to "grow the economy / gdp by 12% annually" which is cool to consider, but one of the key assumptions is that a funding method like a VAT would not hit the households getting UBI. Plus, their study does not do UBI, just B.I. of different tiers. If the VAT hits the consumers who get the B.I. then it's taking with the left hand what was just given with the right. + In short: Don't give back to the rich. Don't make a VAT that taxes the poor inadvertently (B2B vat is the only vat we could support then it seems). UBI would cause commodity spikes during currency issuance and that's unavoidable, but the amount of issuance is proportional to spikes so: Only give B.I. to people below a Climb-Out-Bound. Give them ( C-Earnings )/ 2 to incentivize their working out of poverty. Example: Climb-out Bound 24,000. You earn 12k, the government gives you 24-12 = 6k, and now you're at 18k. The closer you climb out of poverty, the less you get, but you cannot get more than 12k, and if you work you'll make more than someone not working. Make sense? Because what people fail to remember is the Federal reserve act of 1913 and its FEDERAL mandate that employment be kept at a running maximum (keep them ponies movin' raw hide). +Progressive Guaranteed Income does not violate the 1913 Federal Reserve Act, but actually works with it.
heavyset_go 7y ago
VAT is a regressive approach to implement something like this.
- lukifer 7y ago
  Allegedly, "food, clothing, medicine, and education" costs are excluded. To what extent those exemptions don't matter in practice (the grocery store pays more for printer ink and passes the cost along to you) is debatable. Personally, I'd rather start with a revenue-neutral Pigovian tax+dividend [0] on environmental externalities like carbon and disposable plastic, which set a price of unsustainable behaviors while also functioning as a progressive tax for the vast majority of people. [0] https://en.wikipedia.org/wiki/Pigovian_tax https://en.wikipedia.org/wiki/Pigovian_tax
  - heavyset_go 7y ago
    > Allegedly, "food, clothing, medicine, and education" costs are excluded. To what extent those exemptions don't matter in practice (the grocery store pays more for printer ink and passes the cost along to you) is debatable. It still places an excessive burden on those the UBI proposal is supposed to benefit. Necessities like utilities, phones, fuel and transportation, etc will become more costly for those who are already struggling to pay for them. I could get behind a Pigovian tax, along with a land value tax or equity tax.
    - lukifer 7y ago
      > Pigovian tax, along with a land value tax or equity tax. While I'm not opposed to VAT a priori, 100% agreed that those options are vastly superior.
kangnkodos 7y ago
Give each resident $1,000 per per month. Paid for by a 10% value added tax. I can image a possible situation where this ends up taking money from poor people and giving it to rich people. Unlikely, but possible. That wouldn't be good.
- secabeen 7y ago
  Yes, but as a general rule, universal social welfare programs (medicare, social security, etc.) are much more robust and not subject to cost-cutting than means-tested ones (medicaid, welfare, food stamps, etc.)
randombit 7y ago
18992.1(b) excludes UBI for anyone "receiving benefits under the Medi-Cal program, the County Medical Services Program, the CalFresh program, the CalWORKs program, or Unemployment Insurance" so if you are currently receiving any form of welfare, f you, otherwise here's your free money? Seems like a really strange approach for something that is trying to improve economic security. Does anyone know what the reasoning here is?
- the_watcher 7y ago
  The most resilient case for UBI (by that I mean that it blunts more criticism) is that cash transfers are cheaper to administer and arguably more effective than welfare programs. I thought it was odd that this wasn't proposed to entirely replace those programs with a simple to administer system (no verification of income, no verification that you're looking for work, etc) that still "delivers" the benefits already received by people covered by existing programs. This proposal definitely seems framed poorly...
  - heavyset_go 7y ago
    If you look at the individual market for health insurance, premiums, deductibles and co-pays will exceed the total UBI benefit. Medicaid sets group rates that it will pay, so it is more efficient at reducing costs. I can't imagine that using UBI benefits to pay for health insurance on the individual market would be more effective than such a program.
    - the_watcher 7y ago
      I think the proposal is by far weakest in tying it at all to healthcare. Maybe UBI could be used to improve our health insurance headaches, but I was speaking specifically about things like unemployment benefits, CalFresh, etc. Things that are already just cash transfers but require an (arguably) bloated and too expensive bureaucracy to administer.
- notatoad 7y ago
  Isn't this a core tenet of all UBI proposals - it's an alternative to other aid programs, not a supplement to it. That's the only way it can possibly be economical. So either they kill off medi-cal, calfresh, and calworks, or they keep them around but disallow any "double-dipping". It seems like they've chosen the politically safer option of not killing the competing aid programs completely.
robomartin 7y ago
A 10% VAT added on top of our ~%10% sales tax? The $1,000 is going to be spent entirely on taxes! The range and domain of taxes being piled on CA residents has reached an unimaginable scales. I know many people and companies who have left the State for precisely this reason. Atlas Shrugged.
- rconti 7y ago
  I don't believe sales tax or income tax rates have changed substantially in the 20 years I've lived in CA. Perhaps 1 percentage point increase in sales tax in that time. The top income tax rate for "normal" folks has been, I believe, 9.3%, although there was an additional 1% tax on incomes over $1M added sometimes in the past few years. A quick search didn't turn up much in the way of useful historical charts, but it sounds like your post is more politics-based than economics-based. I'd welcome better data, I might well be wrong here.
  - ericd 7y ago
    IIRC the top income tax rate is 13.3%. I think sales tax is 9% but not sure how much that varies between locales.
    - rconti 7y ago
      Ah yes, this might be the change I was thinking of, in 2013: pre-2013: 9.3% marginal rate from $49k to $500k, then to 10.3% over $500k. post-2013: additional 1 percentage point at the $250-300k, another 1 percentage 300k-1m, and then a 3rd additional 1 percentage point over $1m. So the top rate is 13.3% up from 10.3%; with a tiered increase in the 9.3% rate to 10.3 and 11.3% depending on income. http://www.newhallstudios.com/images-lib/CA-taxes/California_Income_Tax_Rates_2013_01_621x438.gif http://www.newhallstudios.com/images-lib/CA-taxes/California...
      - ericd 7y ago
        Oh interesting, didn't realize it had been bumped like that in 2013.
nyxtom 7y ago
Seems like a Digital Tax like they are proposing in the EU would be something that could supplement this on top of general VAT. Would like to see more of this flushed out in principle, similar to what Yang was proposing.
njarboe 7y ago
This UBI excludes people who are: "California residents who are 18 years of age or older and receiving benefits under the Medi-Cal program, the County Medical Services Program, the CalFresh program, the CalWORKs program, or Unemployment Insurance shall not be eligible to receive a universal basic income under the CalUBI Program." Medi-Cal is state medical for poor families in California, so a lot of people who this would help would be excluded from getting the benefit. This bill seems like just creating another bureaucracy that moves money around without improving things much.
- heavyset_go 7y ago
  This creates the perverse incentive to forgo health coverage, putting a burden on the healthcare system when an uninsured person has an emergency. Then, when providers can't collect on the medical debt, they'll sell it to debt collectors and write off the difference at tax time, which the proposed VAT will have to make up for.
A4ET8a8uTh0 7y ago
I am first to admit that I don't follow CA legislature that closely. How likely is it to pass? If I remember correctly Ds have control over both chambers? I take it is really fresh news since I can't find a reference to governor addressing the bill yet.
allears 7y ago
That would be fine with me. It would definitely be a net gain in my case. However, how will they document/track monthly expenditures? Will I have to submit a verified expense report? Will the state collect data on every purchase by every citizen? What about cash?
homonculus1 7y ago
Kudos to California reps for attempting to make this happen, this is a good example of using states' rights to address local desires. Unfortunately coastal ideas are defined a priori to be everyone's best interest, so experiments on them can only return one type of data. When this creates massive unintended perverse incentives, proponents will blame its failure on lack of scale and insist that it be federally imposed on the other states that want nothing to do with it.
- stazz1 7y ago
  Haha, it couldn't possibly be due to the fact that the microcosm is riddled with snags. This is just moving the inequality gap vertically without shrinking it at all.
andrekandre 7y ago
i wonder how they came to a nice round number of 1000 a month... why not 1100 or 900 i’d love to see the rationale for that
tryitnow 7y ago
Low is positioning this as a response to "job losses" associated with automation. https://a28.asmdc.org/press-releases/20200221-expand-economic-security-wake-automation-assemblymember-low-introduces https://a28.asmdc.org/press-releases/20200221-expand-economi... This makes no sense to me. $12K/yr is a nice supplement to low incomes. But let's say I'm a trucker making $60K/yr and I lose my job. Making 20% of my previous income is definitely nice, but it's not exactly moving the needle that dramatically. If you're primarily concerned about job losses due to automation, why not radically increase unemployment benefits and make vocational education for adults tuition free (and maybe even offer a cost of living stipend for unemployed adults who retrain)? This approach is a LOT less expensive and far more targeted. I fully support a UBI as a form of income security, but as a corrective for technological unemployment it just seems like a really blunt, and ultimately not terribly effective instrument.
megaman821 7y ago
I feel this would be better if they didn't include the exact amount you would get each month. There are energy policies that impose a tax on your energy bill each month. At the end of the month the total pot collected is distributed evenly to the consumers. Large energy consumers get back less than they paid in tax and frugal energy users get extra money. There is no chance of the bankrupting the government because the total amount paid out is equal to whatever was collected.
tryitnow 7y ago
Here's the catch: "(b) California residents who are 18 years of age or older and receiving benefits under the Medi-Cal program, the County Medical Services Program, the CalFresh program, the CalWORKs program, or Unemployment Insurance shall not be eligible to receive a universal basic income under the CalUBI Program." So I don't really see what the point is. If you're targeting technological unemployment why make it so that people who have unemployment insurance are ineligible?
foolzcrow 7y ago
Native Americans have this exact thing and free medical and free housing. They are now fully dependant on the governent.

56 points by ceohockey60 7y ago

I don't seen an exclusion of illegal aliens from the program. So citizens of California would be forced to subsidize people who should not be in the country. And the program would likely encourage more illegal aliens to come to California.

t-writescode 7y ago
Arguably, this should only be available to green card holders and citizens. H1B visa holders are sponsored by a company, so the company should be caring for them enough they don’t need UBI; and, the abuse potential for illegal immigrants should seem obvious. I would love to have someone change my mind here if I’m off base.
- deleted 7y ago
  [deleted]
- triceratops 7y ago
  Pretty much the entire point of a UBI is the "U". It's not meant to be need-based. Everyone - billionaires and destitute alike - gets it. H1B visa holders pay state income taxes, sales taxes, and state disability insurance. They're considered residents for tax purposes at the federal and state levels which means they pay taxes on worldwide income, just like citizens and green card holders. Why should they be ineligible? That would be a repeat of SSI/Medicare, which they also pay but may never collect.
katmannthree 7y ago
Does the phrase "California resident" include people who live there but aren't legal residents?
- deleted 7y ago
  [deleted]
- mrkstu 7y ago
  Seems to be a state by state idea of whether they care about national immigration status. Here's a link to a NYT article about differing treatment in various states, with Cali generally lenient: https://www.nytimes.com/interactive/2015/03/30/us/laws-affecting-unauthorized-immigrants.html https://www.nytimes.com/interactive/2015/03/30/us/laws-affec...
analyst74 7y ago
Citizens of California are also going to be subsidized by the large number of H1B workers, primarily those from India and China. Pay it forward I guess?
Simulacra 7y ago
I think economically there would have to be. The incentive for others to move to California to take advantage of this, might set off ..well.. a population migration. Surely they've considered this and have an idea of how to limit the scope so as not to bankrupt the state.
JMTQp8lwXL 7y ago
Do illegal aliens not buy goods and services? The UBI is funded by a 10% value added tax on Goods and Services.
__jal 7y ago
Many of us in California don't care if you think they "shouldn't" live here. I'm perfectly well aware of the economic and tribal arguments. The former are not convincing and the proponents of the latter can go pound sand - given my preferences, I'd exclude them long before I'd exclude immigrants over paperwork.
- refurb 7y ago
  Many of us in California do care if you think they "shouldn't" live here.
  - atomi 7y ago
    People have been migrating to California long before the US existed. In fact, it was first colonized by migrants. There are people with family spanning generations on both sides and the border pretty much crossed them.

danem 7y ago

How about doing something to address the housing crisis first so all of this money doesn't just end up in landlords pockets? Land value tax maybe?

t-writescode 7y ago
Rather than adding another 10% tax on goods, you mean? Perhaps something to gradually adjust property taxes such that people with multi-million dollar houses aren’t paying taxes as though it’s a multi- thousand dollar house?
- mdorazio 7y ago
  If only there were some kind of proposition that could be phased out over time to accomplish that... perhaps a proposition with an unlucky number. Like 13... This is the problem with the proposition system - it often encourages residents to enact policies in their personal best interests that screw over a huge number of people down the road.
  - riversflow 7y ago
    You know, it would be much more palatable, and much more likely to pass, if instead of phasing out prop 13 entirely, we carved out an exemption for people who only owned one property which was a single-family dwelling. Prop 13 is an important protection for a lot of people on fixed incomes who are also very vulnerable to being displaced from their housing in this high growth state. Kicking seniors out of the homes they’ve spent most of their life in isn’t a very ethical thing to do.
    - t-writescode 7y ago
      What's the percentage of people using it because they're poor, vs using it because it's cheap? At what point do the needs of society overrule the housing needs of the individual? The elderly person will end up a serious multi-millionaire by the end of this in most cases.
    - 7y ago

jeffdavis 7y ago

I can imagine this incentivizing semi-rural living. Cheap house, low COL, steady income.

pengaru 7y ago
Indeed. I regularly burn around $1k/mo when living simply in a cabin on my rural California property, with property taxes under $500/yr. There's a lot of rural California. The combination of modern tech enabling comfortable and connected off-grid living and UBI opens up pretty much all of it for residence, as long as there's a grocery store accessible.
lukifer 7y ago
It'd be a great business opportunity, to provide resources for turn-key homesteading. (It'd probably work best at the level of small communes, rather than individuals.)
opportune 7y ago
Depending on the area, that’s not something to encourage. There are a lot of people living in places where humans really shouldn’t be living due to the fire risk

jeffdavis 7y ago

My gut tells me a 10% VAT won't be enough. It's excluding medicine and housing and food. What else do people spend a lot of money on? Cars? Will that really bring in enough for tens of billions per month?

Shivetya 7y ago
services is the key, that means every business will be contributing. allowing clothing and food to escape helps those high up the income ladder immensely. I will be curious if it excuses elective medical treatments and supplements. consider how empty section 2 is this is just a trial balloon
nostrademons 7y ago
VAT includes B2B purchases. Presumably that means that 10% of every Facebook/Google/Netflix ad impression ends up going toward funding this program, as well as 10% of the profit of every iPhone. That's a lot of billions.
- jeffdavis 7y ago
  Hmm. It's also pretty hard to imagine that. You're saying that we ask the big tech companies to pay tens of billions per month in taxes?

mrkstu 7y ago

I am sometimes glad that Californians are around as a polity. They try the things the rest of us think are loony, but are motivated by strong ethical underpinnings. Sometimes they fail badly and serve as a warning to the rest of us that 'here be dragons' and other times they unexpectedly succeed and the rest of us can learn that, in certain circumstances, living up to your beliefs with the collective wallet can work out positively, net-net.

fennecfoxen 7y ago
> Sometimes they fail badly and serve as a warning to the rest of us that 'here be dragons' You know, if you'd consider listening, ordinary economists could have also served as that warning in many cases — like, for instance, in the case of AB5 and its impact on freelance journalists... or the impact of not-building-housing on the housing crisis...
JMTQp8lwXL 7y ago
Just because a bill is submitted doesn't mean it's not immediately dead on arrival. Some bills are submitted just so a politician can say "I submitted the bill, but it was <other party> that killed it".
- claydavisss 7y ago
  what "other party"? State Republicans don't have the votes to stop anything, they are virtually extinct. If a bill dies in Sacramento, it dies because (and only because) Democrats wanted it to die.
- chrisdhoover 7y ago
  There is only one party in CA
  - JMTQp8lwXL 7y ago
    Not all Democrats within California Democratic party sit at the exact same point on the political spectrum. Some are more neoliberal & centrist, and others are more socialist Democrat. By submitting this bill, it could signal the expectation that centrist democrats need to move further left. Given CA is mostly a one-party state, it's more about intraparty influence over the party's platform, than it is about blaming the "other" party.

crobertsbmw 7y ago

My fear is that once this gets rolled into production, every other politicians campaign is going to be “increase the basic income” until we are all basically living off the top .01%

Uhhrrr 7y ago
Social competitiveness should keep most people chasing money.
iron0013 7y ago
Doesn’t the top .01% already live off the rest of us?
lukifer 7y ago
In a highly networked world, Metcalfe's Law [0] trends most services towards winner-take-all. Living off the 0.01% may be our least-worst alternative to neo-feudalism. One under-discussed aspect of UBI is that it might render minimum wage unnecessary; people could end up working for luxuries rather than subsistence. And of course, there are other non-monetary incentives to work (intrinsic rewards, passion projects, prestige/reputation). Still, the issue you raise is significant. The thing that bugs me about UBI as proposed, is that there isn't a clear Schelling focus, or organic emergent self-balancing process, for deciding how much it should be. I'm a fan of Yang, but the "$1000/mo" target is ultimately arbitrary, because it's a nice round number, and large enough to have a significant impact in people's lives. But why not $750 or $1250? Why shouldn't it index to regional cost of living and/or GDP? What metric do we use to decide when/if it should update? I don't think that's a reason not to do it, and I suspect any amount of UBI will result in better outcomes than spending the same money on bloated federal bureaucracies; but it feels very zero-sum / tug-of-war to just pick a nice-sounding number, and then have to fight over raising or lowering it every election cycle. [0] https://en.wikipedia.org/wiki/Metcalfe%27s_law https://en.wikipedia.org/wiki/Metcalfe%27s_law

rcpt 7y ago

Won't the money from this ultimately go towards landowners in the form of increased land rents? We could get around that by pairing UBI with a land value tax but the nightmare that is Prop 13 makes that impossible.

arebop 7y ago
Only to the extent that money from anything goes towards landowners in the form of increased land rents. There are other basic necessities and also some luxuries that the beneficiaries of this progressive redistribution would likely buy with the extra income.
- rcpt 7y ago
  But those other things can increase supply if people start demanding more. The amount of land is fixed.
gbronner 7y ago
Homeless people will spend a lot of it on booze and drugs instead.
- apta 7y ago
  Maybe then it's a good idea to can both of those.

bsimpson 7y ago

It's a $1000 payment funded by a 10% VAT (tax) on everything but food, clothing, medicine, and education. So unless you spend more than $10k per month on things that aren't food, clothing, education, or medicine; you come out ahead. My first thought: can this possibly be solvent? There are apx. 32 million adults in California. Are there $32 billion spent per month in-state on things that aren't those common categories? Then I realized that this includes business purchases. Everything sold in California would become 10% more expensive. There'd be a huge incentive to buy from out-of-state, and a huge disincentive for out-of-state purchasers to buy from California merchants. I also wonder what it does to the population/demographics over time. If you're poor in another state, there are 12,000 new reasons per adult per year to move to California. Including B2B purchases, could the current California economy absorb $32 billion per month in additional taxes? Even if it could, this would pervert the economics of the state so badly it's hard to know what the effects would be over time.

secabeen 7y ago
Wouldn't this just leverage the existing sales tax system? Now that local sales taxes are collected nationwide, it would be much harder to avoid.
- bsimpson 7y ago
  Value-added tax means it's baked into the purchase price. Buy a $5.50 cup of coffee? You get charged $5.98 (after the existing 8.75% sales tax) and the merchant gets $5 (because 10% of the advertised price is VAT).
daenz 7y ago
It doesn't matter if it's solvent or not. Once it's implemented and people are dependent on it, it has to work going forward, and people will pass whatever laws necessary to ensure that it doesn't fail.
- WalterBright 7y ago
  It is possible to run out of other peoples' money.

stazz1 7y ago

While I was a proponent of UBI several months ago, I have found some irreconcilable flaws and would urge everyone to consider Progressive Guaranteed Income, a basic income for people below a certain "climb-out bound." Reasons: +UBI Robs from the rich to give to the poor... and give back to the rich a little bit. "Billionaires will die without UBI." It's simply not good nor true to the intent of BI to give money to people who already have plenty. "But means testing will cost so much!" Actually means testing if you earn less than C.O.B is not very expensive, and giving UBI to everyone is very very expensive. Something like 6-12x more expensive. (PGI with C.O.B. of 24k would cost $800B annually, UBI would cost 3.6T) +aside from giving to the rich for no good reason, UBI causes an increase in commodity prices anytime the fund is issued. This is like having a highway turn at 340* and being very incensed when people crash because they are going too fast. There is no way to avoid a spike in commodity prices when giving UBI out and especially when you give it out to everyone, why? because everyone getting more money devalues money (for a brief while). See: Supply of Money (M0, M1, M2...) and the Kuwait attempt at UBI from 2011. They blamed their ministers of commerce for the crashes on the 340* turn, of course. + Value Added Tax is not good to fund B.I. of any kind because it's likely that this "luxury tax" will hit a lot of the recipients of the B.I. The Roosevelt Institute did a study on a potential UBI to "grow the economy / gdp by 12% annually" which is cool to consider, but one of the key assumptions is that a funding method like a VAT would not hit the households getting UBI. Plus, their study does not do UBI, just B.I. of different tiers. If the VAT hits the consumers who get the B.I. then it's taking with the left hand what was just given with the right. + In short: Don't give back to the rich. Don't make a VAT that taxes the poor inadvertently (B2B vat is the only vat we could support then it seems). UBI would cause commodity spikes during currency issuance and that's unavoidable, but the amount of issuance is proportional to spikes so: Only give B.I. to people below a Climb-Out-Bound. Give them ( C-Earnings )/ 2 to incentivize their working out of poverty. Example: Climb-out Bound 24,000. You earn 12k, the government gives you 24-12 = 6k, and now you're at 18k. The closer you climb out of poverty, the less you get, but you cannot get more than 12k, and if you work you'll make more than someone not working. Make sense? Because what people fail to remember is the Federal reserve act of 1913 and its FEDERAL mandate that employment be kept at a running maximum (keep them ponies movin' raw hide). +Progressive Guaranteed Income does not violate the 1913 Federal Reserve Act, but actually works with it.

heavyset_go 7y ago

VAT is a regressive approach to implement something like this.

lukifer 7y ago
Allegedly, "food, clothing, medicine, and education" costs are excluded. To what extent those exemptions don't matter in practice (the grocery store pays more for printer ink and passes the cost along to you) is debatable. Personally, I'd rather start with a revenue-neutral Pigovian tax+dividend [0] on environmental externalities like carbon and disposable plastic, which set a price of unsustainable behaviors while also functioning as a progressive tax for the vast majority of people. [0] https://en.wikipedia.org/wiki/Pigovian_tax https://en.wikipedia.org/wiki/Pigovian_tax
- heavyset_go 7y ago
  > Allegedly, "food, clothing, medicine, and education" costs are excluded. To what extent those exemptions don't matter in practice (the grocery store pays more for printer ink and passes the cost along to you) is debatable. It still places an excessive burden on those the UBI proposal is supposed to benefit. Necessities like utilities, phones, fuel and transportation, etc will become more costly for those who are already struggling to pay for them. I could get behind a Pigovian tax, along with a land value tax or equity tax.
  - lukifer 7y ago
    > Pigovian tax, along with a land value tax or equity tax. While I'm not opposed to VAT a priori, 100% agreed that those options are vastly superior.

kangnkodos 7y ago

Give each resident $1,000 per per month. Paid for by a 10% value added tax. I can image a possible situation where this ends up taking money from poor people and giving it to rich people. Unlikely, but possible. That wouldn't be good.

secabeen 7y ago
Yes, but as a general rule, universal social welfare programs (medicare, social security, etc.) are much more robust and not subject to cost-cutting than means-tested ones (medicaid, welfare, food stamps, etc.)

randombit 7y ago

18992.1(b) excludes UBI for anyone "receiving benefits under the Medi-Cal program, the County Medical Services Program, the CalFresh program, the CalWORKs program, or Unemployment Insurance" so if you are currently receiving any form of welfare, f you, otherwise here's your free money? Seems like a really strange approach for something that is trying to improve economic security. Does anyone know what the reasoning here is?

the_watcher 7y ago
The most resilient case for UBI (by that I mean that it blunts more criticism) is that cash transfers are cheaper to administer and arguably more effective than welfare programs. I thought it was odd that this wasn't proposed to entirely replace those programs with a simple to administer system (no verification of income, no verification that you're looking for work, etc) that still "delivers" the benefits already received by people covered by existing programs. This proposal definitely seems framed poorly...
- heavyset_go 7y ago
  If you look at the individual market for health insurance, premiums, deductibles and co-pays will exceed the total UBI benefit. Medicaid sets group rates that it will pay, so it is more efficient at reducing costs. I can't imagine that using UBI benefits to pay for health insurance on the individual market would be more effective than such a program.
  - the_watcher 7y ago
    I think the proposal is by far weakest in tying it at all to healthcare. Maybe UBI could be used to improve our health insurance headaches, but I was speaking specifically about things like unemployment benefits, CalFresh, etc. Things that are already just cash transfers but require an (arguably) bloated and too expensive bureaucracy to administer.
notatoad 7y ago
Isn't this a core tenet of all UBI proposals - it's an alternative to other aid programs, not a supplement to it. That's the only way it can possibly be economical. So either they kill off medi-cal, calfresh, and calworks, or they keep them around but disallow any "double-dipping". It seems like they've chosen the politically safer option of not killing the competing aid programs completely.

robomartin 7y ago

A 10% VAT added on top of our ~%10% sales tax? The $1,000 is going to be spent entirely on taxes! The range and domain of taxes being piled on CA residents has reached an unimaginable scales. I know many people and companies who have left the State for precisely this reason. Atlas Shrugged.

rconti 7y ago
I don't believe sales tax or income tax rates have changed substantially in the 20 years I've lived in CA. Perhaps 1 percentage point increase in sales tax in that time. The top income tax rate for "normal" folks has been, I believe, 9.3%, although there was an additional 1% tax on incomes over $1M added sometimes in the past few years. A quick search didn't turn up much in the way of useful historical charts, but it sounds like your post is more politics-based than economics-based. I'd welcome better data, I might well be wrong here.
- ericd 7y ago
  IIRC the top income tax rate is 13.3%. I think sales tax is 9% but not sure how much that varies between locales.
  - rconti 7y ago
    Ah yes, this might be the change I was thinking of, in 2013: pre-2013: 9.3% marginal rate from $49k to $500k, then to 10.3% over $500k. post-2013: additional 1 percentage point at the $250-300k, another 1 percentage 300k-1m, and then a 3rd additional 1 percentage point over $1m. So the top rate is 13.3% up from 10.3%; with a tiered increase in the 9.3% rate to 10.3 and 11.3% depending on income. http://www.newhallstudios.com/images-lib/CA-taxes/California_Income_Tax_Rates_2013_01_621x438.gif http://www.newhallstudios.com/images-lib/CA-taxes/California...
    - ericd 7y ago
      Oh interesting, didn't realize it had been bumped like that in 2013.

nyxtom 7y ago

Seems like a Digital Tax like they are proposing in the EU would be something that could supplement this on top of general VAT. Would like to see more of this flushed out in principle, similar to what Yang was proposing.

njarboe 7y ago

This UBI excludes people who are: "California residents who are 18 years of age or older and receiving benefits under the Medi-Cal program, the County Medical Services Program, the CalFresh program, the CalWORKs program, or Unemployment Insurance shall not be eligible to receive a universal basic income under the CalUBI Program." Medi-Cal is state medical for poor families in California, so a lot of people who this would help would be excluded from getting the benefit. This bill seems like just creating another bureaucracy that moves money around without improving things much.

heavyset_go 7y ago
This creates the perverse incentive to forgo health coverage, putting a burden on the healthcare system when an uninsured person has an emergency. Then, when providers can't collect on the medical debt, they'll sell it to debt collectors and write off the difference at tax time, which the proposed VAT will have to make up for.

A4ET8a8uTh0 7y ago

I am first to admit that I don't follow CA legislature that closely. How likely is it to pass? If I remember correctly Ds have control over both chambers? I take it is really fresh news since I can't find a reference to governor addressing the bill yet.

allears 7y ago

That would be fine with me. It would definitely be a net gain in my case. However, how will they document/track monthly expenditures? Will I have to submit a verified expense report? Will the state collect data on every purchase by every citizen? What about cash?

homonculus1 7y ago

Kudos to California reps for attempting to make this happen, this is a good example of using states' rights to address local desires. Unfortunately coastal ideas are defined a priori to be everyone's best interest, so experiments on them can only return one type of data. When this creates massive unintended perverse incentives, proponents will blame its failure on lack of scale and insist that it be federally imposed on the other states that want nothing to do with it.

stazz1 7y ago
Haha, it couldn't possibly be due to the fact that the microcosm is riddled with snags. This is just moving the inequality gap vertically without shrinking it at all.

andrekandre 7y ago

i wonder how they came to a nice round number of 1000 a month... why not 1100 or 900 i’d love to see the rationale for that

tryitnow 7y ago

Low is positioning this as a response to "job losses" associated with automation. https://a28.asmdc.org/press-releases/20200221-expand-economic-security-wake-automation-assemblymember-low-introduces https://a28.asmdc.org/press-releases/20200221-expand-economi... This makes no sense to me. $12K/yr is a nice supplement to low incomes. But let's say I'm a trucker making $60K/yr and I lose my job. Making 20% of my previous income is definitely nice, but it's not exactly moving the needle that dramatically. If you're primarily concerned about job losses due to automation, why not radically increase unemployment benefits and make vocational education for adults tuition free (and maybe even offer a cost of living stipend for unemployed adults who retrain)? This approach is a LOT less expensive and far more targeted. I fully support a UBI as a form of income security, but as a corrective for technological unemployment it just seems like a really blunt, and ultimately not terribly effective instrument.

megaman821 7y ago

I feel this would be better if they didn't include the exact amount you would get each month. There are energy policies that impose a tax on your energy bill each month. At the end of the month the total pot collected is distributed evenly to the consumers. Large energy consumers get back less than they paid in tax and frugal energy users get extra money. There is no chance of the bankrupting the government because the total amount paid out is equal to whatever was collected.

tryitnow 7y ago

Here's the catch: "(b) California residents who are 18 years of age or older and receiving benefits under the Medi-Cal program, the County Medical Services Program, the CalFresh program, the CalWORKs program, or Unemployment Insurance shall not be eligible to receive a universal basic income under the CalUBI Program." So I don't really see what the point is. If you're targeting technological unemployment why make it so that people who have unemployment insurance are ineligible?

foolzcrow 7y ago

Native Americans have this exact thing and free medical and free housing. They are now fully dependant on the governent.