8 ms·
> What's stopping prices from rising accordingly? Short answer: supply & demand Long answer: if the supply of a thing isn't constrained (either naturally or a
by bhupy 6y ago
> What's stopping prices from rising accordingly?
Short answer: supply & demand
Long answer: if the supply of a thing isn't constrained (either naturally or artificially), then prices will rise in the near term, but will settle back down in the long term as production catches up with demand. This is why giving poor people food stamps (which is just food money) doesn't necessarily increase the price of food.
This mostly only breaks down in housing, for which there is a true supply scarcity — but even that ceases to be true in a regime with proper zoning reform. Even in regions without zoning reform, you now have people that have cash to move to cheaper neighborhoods — or even cities.
> How will the ~$3T yearly UBI bill be paid for?
Either progressive taxation, a VAT, or some combination thereof. I can try and give you a theoretical tax breakdown using real numbers.
In 2018, the household income quintiles were as follows[1]:
Lowest quintile mean: $13,775
Second quintile mean: $37,923
Third quintile mean: $63,572
Fourth quintile mean: $101,570
Highest quintile mean: $233,895
There were about 159M employed persons in the US in the most recent high[2], about 50% of the US population. We want our UBI to cover everybody.
To make this simple, because quintiles comprise an equally populated group of people, let's imagine that instead of there being ~32M people per quintile, that our nation has 10 people, where 5 people don't work, and each of the remaining 5 falls into one of the quintiles.
If we wanted to define a UBI of $18,000 per person, we need to somehow come up with $18,000 * 10 == $180,000 to distribute to everyone equally.
If we fund this progressively, each individual would have to pay:
Unemployed #1: 0
Unemployed #2: 0
Unemployed #3: 0
Unemployed #4: 0
Unemployed #5: 0
Lowest: $8,000
Second: $12,000
Third: $18,000
Fourth: $33,000
Highest: $103,000
Total revenue: $180,000
Then consider that everyone here is receiving back 18,000 under the UBI. The highest quintile earner’s net take-home is, thus 233,895-103,000+18,000 == $148,895, which effectively renders their net tax rate approx 36%. If you run this breakdown across all quintiles:
Unemployed #1-5: $0 - $0 + 18,000 == $18,000
Lowest: $13,775 - $8,000 + $18,000 == $23,775 (effective tax -73%)
Second: $37,923 - $12,000 + $18,000 == $43,923 (effective tax -16%)
Third: $63,572 - $18,000 + $18,000 == $63,572 (effective tax 0%)
Fourth: $101,570 - $33,000 + $18,000 == $86,570 (effective tax 15%)
Highest: $233,895 - $103,000 + $18,000 == $148,895 (effective tax 36%)
You'll notice that the top 2 pay a tax rate that’s comparable to today’s. We wouldn't necessarily need to increase everyone's taxes by the above amount, because there's some wiggle room in the Federal budget. Examples, we can probably eliminate Social Security (which would just be replaced by the UBI), Medicare (which is an in-kind donation that the UBI can be used to pay for), Medicaid (ditto), EITC/CTC (basically already a BI), and food stamps (ditto).
Also notice that because the lowest quintile still ends up with more than the unemployed person after their taxes, there isn’t a disincentive to work.
We can play with different levels of progressivity and generosity, but the idea is the same. We can scale up from single-person quintiles to million-person quintiles, but the percentages don't change.
[1] https://www.taxpolicycenter.org/statistics/household-income-quintiles https://www.taxpolicycenter.org/statistics/household-income-...
[2] https://tradingeconomics.com/united-states/employed-persons https://tradingeconomics.com/united-states/employed-persons
- elindbe2 6y agoI don't think it's reasonable to think that UBI could replace SS and Medicare, elderly people aren't going to give up those benefits for a significantly smaller lump sum. The average SS payment is already greater than $18k per year, not even including the value of Medicare. At best, you might make people who collect SS and Medicare ineligible for UBI, though that would no longer make it universal and the elderly might also vote en masse to collect both. The argument is similar for other forms of welfare. A single mom getting housing benefits plus food stamps plus Medicaid isn't likely to trade her much higher value benefits for a smaller lump sum. At best you might give her the choice between the two. Ultimately, most of the expense you are proposing would have to come from new taxes that are in addition to the current Federal budget.
- bhupy 6y ago> I don't think it's reasonable to think that UBI could replace SS and Medicare, elderly people aren't going to give up those benefits for a significantly smaller lump sum. My point is that you can compute the per capita benefit for each, and include that in the basic income. In FY2019, Medicare cost the Federal government $645 billion. In 2018, there were 59,869,402 Medicare enrollees, which works out to about $11,000 per year per person. Medicare is, therefore, an in-kind donation of $11,000 per year. You can either give people this money directly, or you can just deduct $11,000 from the yearly UBI and have it pay out $7,000 per year instead. While the elderly do indeed really like Social Security, it would probably be better for everybody for the elderly to accept less welfare so that everyone else can also receive some of the basic income. Households above the age of 55 hold 75% of American wealth, in part because most old people are rich: they've saved up money over their entire working lifetime. While there are senior citizens that are poor, the UBI would in theory be more than enough to meet their needs.
- nightski 6y agoOne huge problem with your reasoning is that the Medicare costs are equally distributed. As we know, that is very far from the case and your solution of equal cash payments will absolutely not work. That's the entire point of insurance in the first place.