3 ms·
When UBI comes up lot of people on HN ferociously debate the merits of UBI vs. negative income tax, but they are mathematically equivalent. For example, a UBI
by 0-_-0 6y ago
When UBI comes up lot of people on HN ferociously debate the merits of UBI vs. negative income tax, but they are mathematically equivalent.
For example, a UBI of $1000 and 25% tax is the same as a (possibly negative) income tax of 25% above $4000. That's because:
(1-0.25)*x+1000 = x+0.25*(4000-x)
You can convert from one to the other.
- zajio1am 6y agoThey are equivalent under certain assumptions, but there are still differences (assuming negative income tax would operationally work in the same manner as current tax systems), e.g.: 1) UBI is targeted to citizens, while income tax affect tax residents, these may be different groups of people. 2) tax refund is paid once a year, which would be problematic for people with bad money management abilities.
- imtringued 6y ago2) Taxes are already being deducted from your paycheck every month. Negative taxes would instead increase your monthly paycheck.
- imtringued 6y agoOk, then let's go with a negative income tax instead. Other than avoiding welfare traps there is not much merit to the idea of a UBI anyway. People have always worked, the only ones that really need a UBI are those that cannot do work or are in the process of seeking better work but are trapped in their existing one. A negative income tax serves them just as well but people won't associate it with "free money for everyone". I know a friend who would love to work as a software developer but can't afford even the relatively small tuition that a German university charges its students with his current job. A negative income tax would help him out.