7 ms·
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 thing
by 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 agoWouldn'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 agoValue-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 agoIt 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 agoIt is possible to run out of other peoples' money.
- el_cujo 7y agoNot according to this website: https://www.usdebtclock.org/ https://www.usdebtclock.org/
- hugs 7y agoI haven't done the math on this particular case, but I believe it is incorrect to say a UBI program will simply cost number-of-people multiplied by dollar-amount. Income tax would likely go up, too, so top earners will likely "give back" that dollar amount they received in UBI when they pay their taxes.
- bsimpson 7y agoDid you read the bill? It says right in there that it's funded by a 10% VAT. I can't tell if you're hypothesizing about future taxes or just didn't read the bill.
- ocdtrekkie 7y agoA big thing not really detailed, but briefly mentioned here, is presumably a lot of social services like CalFresh and CalWORKS would presumably be scrapped in exchange. Instead of having a bunch of different support systems for poor people with all of the administrative overhead that comes with it, you'd just issue people money, and get a lot of it back in taxes. Note that Amazon has to charge state sales tax these days too, as do many other online retailers. So "buying out of state" is going to be pretty hard. People's eBay or Craigslist game might get interesting though with the new margins. As much as California is one of the few states that might be progressive enough to attempt this, it'd be far better if a less populated (and smaller) state attempted UBI first. If Montana torches it's economy, it's probably a lot easier to reassemble than California's.
- BitwiseFool 7y agoI'm skeptical of that. Scrapping those programs means scrapping the jobs of the state employees that run them. I don't think the state politicans want responsibility for that.
- ocdtrekkie 7y agoWell, presumably as many people as you needed to administrate this program could be taken from the old programs you'd scrap. But worst case, any state employee jobs you lost are still getting $1,000 a month.
- djannzjkzxn 7y agoI think the California State Employees Association would have something to say about their members’ total comp decreased from ~six figures to 12k/year.
- t-writescode 7y agoThe ones making that much money would certainly be able to find other jobs making similar amounts, elsewhere; and it would be good that they had this safety net, hopefully with medicare for all too.
- PaulHoule 7y agoWhy don't they just pay people to leave so they don't have to build any housing?
- chrisdhoover 7y agoThey’d rather create an inhospitable environment for people and businesses that will cause a net out migration
- el_cujo 7y ago>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? I'd be curious to see a way of doing this that didn't depend on the arbitrary "X dollars per month" stipulation and was instead just "we're putting in this tax, whatever we pull in each month will be evenly split among the citizens". If nothing else, it would allow us to get our feet wet with UBI without people worrying about it not being financially feasible.
- CuriousSkeptic 7y agoAnd instead of a general VAT, which impacts all trade negatively. Make it a carbon tax, a consumption that actually needs to be more expensive.
- mikem170 7y agoI think it's $320 billion spent per month. ($320 billion x 10% vat = $32 billion revenue / 32 million people = $1000 per person per month) That just over $3.8 trillion per year of California spending that needs to be taxed at 10%.
- JMTQp8lwXL 7y agoCalifornia's GDP is $2.75 trillion, or $229 billion monthly. Giving each adult $1k costs $32 billion a month. Assuming none of GDP is attributable to the exclusions, the program seems mostly possible, at a cursory glance. Not fully funded, but reasonably close to fully funded. The state currently spends $220 billion a year. This program would be a substantial increase to the state's expenditures, more than doubling them.
- tryitnow 7y agoYes, the California economy could absorb an additional $32B in additional taxes if that money is then just re-routed back into consumers' pockets via a UBI. So the overall tax impact isn't my concern. My concern is why do this at all if just routes money through the state treasury then back into consumers' pockets? Unless, the UBI is highly distributive,taking money from the well-to-do and giving it to the poor. But...if it's highly re-distribute then that will incentivize the rich to leave the state and incentivize the poor to come, over time that's not sustainable. Having said all this, I still 100% support the idea behind a UBI, I just don't think we're ready to implement on a national level much less a state level.
- subsaharancoder 7y ago> Unless, the UBI is highly distributive,taking money from the well-to-do and giving it to the poor. s/highly distributive,taking money from the well-to-do and giving it to the poor/Forced wealth redistribution
- t-writescode 7y agoYes, correct, forced wealth redistribution. Similar to tax dollars going to defense contractors, teachers, farmers, the elderly and medicare. The federal government is in the business of forced wealth distribution.
- subsaharancoder 7y agotaxation is the backbone of most if not all governments, no argument there and most rational people would agree, but the foaming in the mouth "blame the wealthy for all the ills facing the world and go for their bone marrow" is what I'm totally against YMMMV. At some point you run out of the billionaires and guess who is next in line to get strip mined in the form of additional taxes? the middle class and finally the poor.
- akvadrako 7y ago> Then I realized that this includes business purchases. That's not how VAT works in any country I'm aware of. As a freelancer I don't pay VAT for any expenses. Practically, companies often pay VAT and collect it from their customers for the government. But if they pay more then they collect they get a refund.