3 ms·

You're right, I meant tax credit and not deduction. My point is that a negative tax rate would be straightforward to implement and would be the path of least re

You're right, I meant tax credit and not deduction. My point is that a negative tax rate would be straightforward to implement and would be the path of least resistance to a UBI.

AnthonyMouse 6y ago
Yes, having a large unconditional "standard tax credit" with no phase out would just be another name for a UBI. Realistically what you have to do at that point is to use a flatter rate structure instead of a phase-out so that the credit is paid back by the time you get to higher income levels, but that's much better than the existing nonsense where the marginal rate structure goes all over the place from sometimes >90% at low income levels (from phase outs) to ~20% in the middle and then back up to 30+%. You get a strongly progressive effective rate just from the credit, so at that point you can use something like a 35% fixed marginal rate and simplify everything else too. Interestingly this also means it doesn't even have to be an individual income tax. You could use VAT or charge payroll tax to employers and get the same result without individuals even having to file tax returns anymore.
dodobirdlord 6y ago
Sure, NIT + control of income tax rates is isomorphic to UBI + control of income tax rates in terms of how much money people get in a year. The core downside of piggybacking on the existing tax refund system is that individuals would get their NIT refund once per year, and spiky distribution has problems. One of the core benefits of NIT/UBI is that many inefficient means-tested welfare programs could be ended without people starving, going homeless, using the ER as healthcare, etc. But if the distributions are a year apart plenty of people are going to exhaust their money and require those welfare programs to continue, now all the more inefficient because the relevant population in smaller. NIT has to be tabulated based on income, but UBI can be monthly/weekly/daily/whatever frequency.

You're right, I meant tax credit and not deduction. My point is that a negative tax rate would be straightforward to implement and would be the path of least resistance to a UBI.

AnthonyMouse 6y ago

Yes, having a large unconditional "standard tax credit" with no phase out would just be another name for a UBI. Realistically what you have to do at that point is to use a flatter rate structure instead of a phase-out so that the credit is paid back by the time you get to higher income levels, but that's much better than the existing nonsense where the marginal rate structure goes all over the place from sometimes >90% at low income levels (from phase outs) to ~20% in the middle and then back up to 30+%. You get a strongly progressive effective rate just from the credit, so at that point you can use something like a 35% fixed marginal rate and simplify everything else too. Interestingly this also means it doesn't even have to be an individual income tax. You could use VAT or charge payroll tax to employers and get the same result without individuals even having to file tax returns anymore.

dodobirdlord 6y ago

Sure, NIT + control of income tax rates is isomorphic to UBI + control of income tax rates in terms of how much money people get in a year. The core downside of piggybacking on the existing tax refund system is that individuals would get their NIT refund once per year, and spiky distribution has problems. One of the core benefits of NIT/UBI is that many inefficient means-tested welfare programs could be ended without people starving, going homeless, using the ER as healthcare, etc. But if the distributions are a year apart plenty of people are going to exhaust their money and require those welfare programs to continue, now all the more inefficient because the relevant population in smaller. NIT has to be tabulated based on income, but UBI can be monthly/weekly/daily/whatever frequency.