4 ms·

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.
        SubiculumCode 6y ago
        Its funny how quickly people forget the purpose of competition. You can't arbitrarily raise prices just because you know they have more money, you have to have demand in the face of supply shortages. So housing might increase, but probably not the cost of USB cords.
        pmiller2 6y ago
        Yep, and that increased price of housing is, by definition, inflation.
        pmiller2 6y ago
        No, the entire point of UBI is to literally put $X extra into everybody's pocket. What they do with it after that is up to them. More importantly, half the people receiving the benefit, by definition, will be making the median income or less. Since wealth correlates highly with income, and the phenomenon of marginal propensity to consume means less wealthy people spend more of their income, most of this money is going to be spent. Since inflation is literally caused by too much money chasing too little demand, that solves the whole "competitive market" issue. Even more importantly, there are many goods with highly inelastic demand. So, no, as another commenter says, prices of USB cords are not likely to increase, but, if you start putting more money in the pockets of average folks, look forward to the prices of housing, education, food, healthcare, etc. all going up even faster than they are now over time.
    - sgerenser 6y ago
      Where can I buy a $30,000 Model 3?
      - AnthonyMouse 6y ago
        The base model is $32,190. That is close enough to $30,000 that you're being pedantic.
        sgerenser 6y ago
        $37,990, “excluding taxes and fees” in the US at least.

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.
      - SubiculumCode 6y ago
        Its funny how quickly people forget the purpose of competition. You can't arbitrarily raise prices just because you know they have more money, you have to have demand in the face of supply shortages. So housing might increase, but probably not the cost of USB cords.
        pmiller2 6y ago
        Yep, and that increased price of housing is, by definition, inflation.
      - pmiller2 6y ago
        No, the entire point of UBI is to literally put $X extra into everybody's pocket. What they do with it after that is up to them. More importantly, half the people receiving the benefit, by definition, will be making the median income or less. Since wealth correlates highly with income, and the phenomenon of marginal propensity to consume means less wealthy people spend more of their income, most of this money is going to be spent. Since inflation is literally caused by too much money chasing too little demand, that solves the whole "competitive market" issue. Even more importantly, there are many goods with highly inelastic demand. So, no, as another commenter says, prices of USB cords are not likely to increase, but, if you start putting more money in the pockets of average folks, look forward to the prices of housing, education, food, healthcare, etc. all going up even faster than they are now over time.
  - sgerenser 6y ago
    Where can I buy a $30,000 Model 3?
    - AnthonyMouse 6y ago
      The base model is $32,190. That is close enough to $30,000 that you're being pedantic.
      - sgerenser 6y ago
        $37,990, “excluding taxes and fees” in the US at least.