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Means testing provides so many of the wrong incentives, and in terms of privacy it is quite intrusive. A big reason that a flat basic income can do social safet

Means testing provides so many of the wrong incentives, and in terms of privacy it is quite intrusive. A big reason that a flat basic income can do social safety net better.

throwaway201103 6y ago
Means testing should be simple. The IRS knows your income and number of dependents. Doesn't need to be any more intrusive than that. Giving everyone $X is simply going to increase demand for rent and consumables until we're back where we started. It will be wealth transfer to landlords and retailers via the poor.
- AnthonyMouse 6y ago
  A means tested phase out of a cash benefit is indistinguishable from a tax. If you had a $12,000 UBI with a 30% phase out up to $40,000 in income, that's the same thing as putting a 30% marginal tax rate on people making less than $40,000. On top of whatever other taxes they're paying. Which is probably not what you wanted if you have a 22% marginal tax rate on people making $50,000, right? What you really want is to forget about the phase out and just combine the UBI with a flat tax, so that the people making less money are paying the same marginal rate instead of a higher one than people who make more money.
  - pmiller2 6y ago
    Flat taxes are incredibly regressive.
    - AnthonyMouse 6y ago
      Flat taxes are regressive on their own. Combine them with a large fixed credit (i.e. UBI) and you can make them as progressive as you want, by increasing the size of the credit, despite having a uniform marginal rate. Also realize that the status quo, counting benefits phase outs as marginal taxes (which they are), is more regressive than a flat tax, because lower income people pay higher marginal rates.
      - pmiller2 6y ago
        Then, explain why UBI won't cause inflation.
        AnthonyMouse 6y ago
        Because it doesn't create money. Inflation is the devaluation of currency. A UBI just moves it from one person to another. So one person buys a $60,000 Mercedes instead of a $90,000 Maserati, then three other people buy a $30,000 Model 3 instead of a $20,000 Focus. It's not inflation, you're paying more money in order to get more valuable stuff. You're not bidding on a finite supply of $30,000 cars, if people have more money then they'll just make more of those cars, and more food and restaurants and whatever else people buy. There are very few things in the world that are genuinely scarce and have completely inelastic supply. And for those things, the price might increase. But that's not inflation, it's just supply and demand. You get the same result if the economy improves and wages rise or the unemployment rate goes down. You get the same result from any reduction in income inequality.
        pmiller2 6y ago
        So, the fact that everybody has $X per month extra in my pocket every month, and everybody knows everybody else has $X per month in their pocket isn't going to raise prices? Sorry, but I don't believe it.
        AnthonyMouse 6y ago
        > So, the fact that everybody has $X per month extra in my pocket every month, and everybody knows everybody else has $X per month in their pocket isn't going to raise prices? First, not everybody has $X per month extra -- that exact amount of money comes from somewhere. So someone at the 75th percentile eats in a restaurant six days a week instead of seven and someone at the 25th percentile eats in a restaurant two days a week instead of once, but there is no additional aggregate demand. But more importantly, how are they going to raise prices in a competitive market? If you're selling generic USB cables in competition with a thousand other sellers, and you raise your prices, your competitors are just going laugh at you as they take all your customers by leaving prices the same. Even if 95% of the sellers tried to raise prices, the customers would just sort by price and buy from the 5% that didn't, so there would be a huge incentive to continue to charge low margins and get all that sales volume.
- ReactiveJelly 6y ago
  > Giving everyone $X is simply going to increase demand for rent and consumables until we're back where we started. It will be wealth transfer to landlords and retailers via the poor. So if tomorrow a miracle occurred and all the poor people got better jobs that paid $X, that would also be a wealth transfer? Why is it better to create $X of jobs than to give $X of cash welfare? Or $X of non-cash welfare?
  - JKolodner 6y ago
    because then the people are generating value in the economy instead of just consuming it; which is objectively better for society. People get paid to do work because it is of value to someone, so the more people who get paid better to do things that other people need done, the better off everyone ends up.
eli 6y ago
One doesn’t necessarily lead to the other. You can easily run universal social programs that don’t have means testing. You don’t need to replace them with UBI.
- AnthonyMouse 6y ago
  You could, but why would you? All those programs do is create economic distortions and inefficiency. If you give people housing vouchers, it inflates housing costs and prevents people who need things other than housing more than they need housing from getting what they need. If you give people money and they need housing, they buy housing; if they need something else, they buy something else.
  - ReactiveJelly 6y ago
    Right. Money is political power, and it's as fungible as power can be. UBI / NIT is saying, "Let's give power directly to poor people."

Means testing provides so many of the wrong incentives, and in terms of privacy it is quite intrusive. A big reason that a flat basic income can do social safety net better.

throwaway201103 6y ago

Means testing should be simple. The IRS knows your income and number of dependents. Doesn't need to be any more intrusive than that. Giving everyone $X is simply going to increase demand for rent and consumables until we're back where we started. It will be wealth transfer to landlords and retailers via the poor.

AnthonyMouse 6y ago
A means tested phase out of a cash benefit is indistinguishable from a tax. If you had a $12,000 UBI with a 30% phase out up to $40,000 in income, that's the same thing as putting a 30% marginal tax rate on people making less than $40,000. On top of whatever other taxes they're paying. Which is probably not what you wanted if you have a 22% marginal tax rate on people making $50,000, right? What you really want is to forget about the phase out and just combine the UBI with a flat tax, so that the people making less money are paying the same marginal rate instead of a higher one than people who make more money.
- pmiller2 6y ago
  Flat taxes are incredibly regressive.
  - AnthonyMouse 6y ago
    Flat taxes are regressive on their own. Combine them with a large fixed credit (i.e. UBI) and you can make them as progressive as you want, by increasing the size of the credit, despite having a uniform marginal rate. Also realize that the status quo, counting benefits phase outs as marginal taxes (which they are), is more regressive than a flat tax, because lower income people pay higher marginal rates.
    - pmiller2 6y ago
      Then, explain why UBI won't cause inflation.
      - AnthonyMouse 6y ago
        Because it doesn't create money. Inflation is the devaluation of currency. A UBI just moves it from one person to another. So one person buys a $60,000 Mercedes instead of a $90,000 Maserati, then three other people buy a $30,000 Model 3 instead of a $20,000 Focus. It's not inflation, you're paying more money in order to get more valuable stuff. You're not bidding on a finite supply of $30,000 cars, if people have more money then they'll just make more of those cars, and more food and restaurants and whatever else people buy. There are very few things in the world that are genuinely scarce and have completely inelastic supply. And for those things, the price might increase. But that's not inflation, it's just supply and demand. You get the same result if the economy improves and wages rise or the unemployment rate goes down. You get the same result from any reduction in income inequality.
        pmiller2 6y ago
        So, the fact that everybody has $X per month extra in my pocket every month, and everybody knows everybody else has $X per month in their pocket isn't going to raise prices? Sorry, but I don't believe it.
        AnthonyMouse 6y ago
        > So, the fact that everybody has $X per month extra in my pocket every month, and everybody knows everybody else has $X per month in their pocket isn't going to raise prices? First, not everybody has $X per month extra -- that exact amount of money comes from somewhere. So someone at the 75th percentile eats in a restaurant six days a week instead of seven and someone at the 25th percentile eats in a restaurant two days a week instead of once, but there is no additional aggregate demand. But more importantly, how are they going to raise prices in a competitive market? If you're selling generic USB cables in competition with a thousand other sellers, and you raise your prices, your competitors are just going laugh at you as they take all your customers by leaving prices the same. Even if 95% of the sellers tried to raise prices, the customers would just sort by price and buy from the 5% that didn't, so there would be a huge incentive to continue to charge low margins and get all that sales volume.
ReactiveJelly 6y ago
> Giving everyone $X is simply going to increase demand for rent and consumables until we're back where we started. It will be wealth transfer to landlords and retailers via the poor. So if tomorrow a miracle occurred and all the poor people got better jobs that paid $X, that would also be a wealth transfer? Why is it better to create $X of jobs than to give $X of cash welfare? Or $X of non-cash welfare?
- JKolodner 6y ago
  because then the people are generating value in the economy instead of just consuming it; which is objectively better for society. People get paid to do work because it is of value to someone, so the more people who get paid better to do things that other people need done, the better off everyone ends up.

eli 6y ago

One doesn’t necessarily lead to the other. You can easily run universal social programs that don’t have means testing. You don’t need to replace them with UBI.

AnthonyMouse 6y ago
You could, but why would you? All those programs do is create economic distortions and inefficiency. If you give people housing vouchers, it inflates housing costs and prevents people who need things other than housing more than they need housing from getting what they need. If you give people money and they need housing, they buy housing; if they need something else, they buy something else.
- ReactiveJelly 6y ago
  Right. Money is political power, and it's as fungible as power can be. UBI / NIT is saying, "Let's give power directly to poor people."