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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

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. 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 ago
  One 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.
  - bhupy 6y ago
    Medicare is like any other insurance company — there are monthly premiums into an insurance pool. I work in insurance, and I can tell you right now that your Oscar Healths, Aetnas, and United Healthcares all represent the monthly cost to administer some insurance for some pool by that monthly premium. That's THE WHOLE POINT of insurance, that everyone pays the same and the output is unevenly distributed. It's shared actuarial risk. Medicare likewise operates the same way, except it's government-run and non-profit. The government could, in theory, run the exact same insurance service, and collect monthly premiums to pay for it. The UBI could include in it the amount necessary to afford the Medicare monthly premium for everybody.
- elindbe2 6y ago
  I'm not quite following you, you still seem to be suggesting that they go from ~$18k avg. SS payment + $11k avg. Medicare payment = ~$29k to an $18k per year payment, a loss of $11k per year on average. Am I missing something? What about people who are entirely dependent on SS+Medicare for their meagre retirement? As you have noticed in your example, most of that money gets eaten up by healthcare costs leaving very little on which to live ($7k), so essentially are you suggesting that most people should no longer retire?
  - bhupy 6y ago
    I closed out the above math with the following: "We can play with different levels of progressivity and generosity, but the idea is the same." You seem to be making the argument that $18,000 is not enough, and that we actually need a UBI of $29,000, or in our fictional US-demographics-proportionally-scaled-down-to-10 person nation, $290,000 total. Okay sure, it would involve higher taxes for sure, but here's what that might look like: Unemployed #1-5: 0 Lowest: $10,000 Second: $27,000 Third: $37,000 Fourth: $44,000 Highest: $172,000 Total revenue: $290,000 Unemployed #1-5: $0 - $0 + 29,000 == $29,000 Lowest: $13,775 - $10,000 + $29,000 == $32,775 (effective tax -137%) Second: $37,923 - $27,000 + $29,000 == $39,923 (effective tax -5%) Third: $63,572 - $37,000 + $29,000 == $50,572 (effective tax 12.5%) Fourth: $101,570 - $44,000 + $29,000 == $86,570 (effective tax 15%) Highest: $233,895 - $172,000 + $29,000 == $90,895 (effective tax 61%) Now, a top marginal tax rate of 61% is the kind that you see in Sweden, Finland, Japan, Quebec Canada, or Denmark. But on the other hand, keep in mind that under these conditions, you are now able to completely swap out many of the Federal government's existing programs, per your constraint. Also keep in mind that I've completely ignored the payroll tax, which brings in 35% of the Federal government's revenue. The fundamental point is that you can play with different levels of progressivity and generosity and be able to fund a UBI at varying levels. It's very similar to how we go about funding universal welfare states in general, where the government directly provides goods & services that need to be paid for by taxation anyway.
    - NovemberWhiskey 6y ago
      >Now, a top marginal tax rate of 61% is the kind that you see in Sweden, Finland, Japan, Quebec Canada, or Denmark. You are not describing a marginal tax rate though. You're describing an effective tax rate, as you acknowledge immediately above. In Japan, the top marginal rate of income tax is about 55% on taxable income over ¥40M (say $370K). Let's see how the marginal tax rate between the fourth and fifth quartiles in your example compares with that, and also look at Japan's effective tax rate around the same income levels as your highest quintile. Your fourth quintile household takes home $86,570 on an income of $101,570. With an incremental income of $132,415 above that, your highest quintile household takes home only $4,325 more. The marginal rate of taxation is therefore 96.7% Someone with an salary of $250K in Japan (call it ¥27.2M) gets a standard earned income deduction of ¥2.2M plus a personal exemption of about ¥400K. The taxable income is about ¥24.6M. National income tax will be about ¥7M. Local income tax will be about ¥2.5M. Take-home pay will be about ¥17.7M and the effective tax rate approximately 35%.

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 ago
One 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.
- bhupy 6y ago
  Medicare is like any other insurance company — there are monthly premiums into an insurance pool. I work in insurance, and I can tell you right now that your Oscar Healths, Aetnas, and United Healthcares all represent the monthly cost to administer some insurance for some pool by that monthly premium. That's THE WHOLE POINT of insurance, that everyone pays the same and the output is unevenly distributed. It's shared actuarial risk. Medicare likewise operates the same way, except it's government-run and non-profit. The government could, in theory, run the exact same insurance service, and collect monthly premiums to pay for it. The UBI could include in it the amount necessary to afford the Medicare monthly premium for everybody.
elindbe2 6y ago
I'm not quite following you, you still seem to be suggesting that they go from ~$18k avg. SS payment + $11k avg. Medicare payment = ~$29k to an $18k per year payment, a loss of $11k per year on average. Am I missing something? What about people who are entirely dependent on SS+Medicare for their meagre retirement? As you have noticed in your example, most of that money gets eaten up by healthcare costs leaving very little on which to live ($7k), so essentially are you suggesting that most people should no longer retire?
- bhupy 6y ago
  I closed out the above math with the following: "We can play with different levels of progressivity and generosity, but the idea is the same." You seem to be making the argument that $18,000 is not enough, and that we actually need a UBI of $29,000, or in our fictional US-demographics-proportionally-scaled-down-to-10 person nation, $290,000 total. Okay sure, it would involve higher taxes for sure, but here's what that might look like: Unemployed #1-5: 0 Lowest: $10,000 Second: $27,000 Third: $37,000 Fourth: $44,000 Highest: $172,000 Total revenue: $290,000 Unemployed #1-5: $0 - $0 + 29,000 == $29,000 Lowest: $13,775 - $10,000 + $29,000 == $32,775 (effective tax -137%) Second: $37,923 - $27,000 + $29,000 == $39,923 (effective tax -5%) Third: $63,572 - $37,000 + $29,000 == $50,572 (effective tax 12.5%) Fourth: $101,570 - $44,000 + $29,000 == $86,570 (effective tax 15%) Highest: $233,895 - $172,000 + $29,000 == $90,895 (effective tax 61%) Now, a top marginal tax rate of 61% is the kind that you see in Sweden, Finland, Japan, Quebec Canada, or Denmark. But on the other hand, keep in mind that under these conditions, you are now able to completely swap out many of the Federal government's existing programs, per your constraint. Also keep in mind that I've completely ignored the payroll tax, which brings in 35% of the Federal government's revenue. The fundamental point is that you can play with different levels of progressivity and generosity and be able to fund a UBI at varying levels. It's very similar to how we go about funding universal welfare states in general, where the government directly provides goods & services that need to be paid for by taxation anyway.
  - NovemberWhiskey 6y ago
    >Now, a top marginal tax rate of 61% is the kind that you see in Sweden, Finland, Japan, Quebec Canada, or Denmark. You are not describing a marginal tax rate though. You're describing an effective tax rate, as you acknowledge immediately above. In Japan, the top marginal rate of income tax is about 55% on taxable income over ¥40M (say $370K). Let's see how the marginal tax rate between the fourth and fifth quartiles in your example compares with that, and also look at Japan's effective tax rate around the same income levels as your highest quintile. Your fourth quintile household takes home $86,570 on an income of $101,570. With an incremental income of $132,415 above that, your highest quintile household takes home only $4,325 more. The marginal rate of taxation is therefore 96.7% Someone with an salary of $250K in Japan (call it ¥27.2M) gets a standard earned income deduction of ¥2.2M plus a personal exemption of about ¥400K. The taxable income is about ¥24.6M. National income tax will be about ¥7M. Local income tax will be about ¥2.5M. Take-home pay will be about ¥17.7M and the effective tax rate approximately 35%.