9 ms·

I agree UBI is better than a minimum wage, but it seems a Negative Income Tax as advocated for by Milton Friedman would be still better. It would have the desir

by azey47 6y ago

I agree UBI is better than a minimum wage, but it seems a Negative Income Tax as advocated for by Milton Friedman would be still better. It would have the desired effect of supporting the poor with guaranteed income (something minimum wage can’t do because of the labor shortage it creates, especially amongst low-skilled employees), but do so a lot more cost effectively than UBI since you wouldn’t be guaranteeing payments to people who don’t need them and would avoid any welfare trap created by existing welfare programs.

guerrilla 6y ago
> would avoid any welfare trap created by existing welfare programs. How would it do that?
- cylon13 6y ago
  You're always incentivized to make marginally more money with the negative income tax because it gives you a monotonically increasing effective income vs job income curve, whereas some welfare systems end up with disincentives at various points of income where you'd make overall less by exiting the income level where you're receiving the aid (the same curve gets a negative slope or a downward jump).
  - SV_BubbleTime 6y ago
    I hate to ask, but can you dumb this down? I still don’t really get it. Are you saying that if you have no job that 100% of your income is tax funded, but if you have even a shitty job that you still get more benefit than the job alone but this is sliding scale down to some unknown point which you no longer receive any benefit at all?
    - Turing_Machine 6y ago
      It's actually worse than that. There's often not any kind of sliding scale. Make $x and you get rental assistance, medical care for your kids, food aid, whatever. Make $x+1, and you get jack and shit. There's no reason for it to be that way, in a world with ubiquitous calculators and computers, but that's how it often is.
      - usrusr 6y ago
        This. If you go on and calculate an effective tax rate "after welfare benefits", that "+1" could easily appear being taxed at six-digit percentages. Wealth people sob dearly when they see only 50 cent from a dollar they earned, but every welfare system striving for need-based distribution ends up having income points where you can consider yourself lucky if you don't see a net negative for a dollar earned.
      - Spivak 6y ago
        The crucial bit is that there's a gap. Say financial assistance worth $12,000 is available for people who make <$20,000. * If you make $20,000 then your effective income is $32,000. * If you make $32,000 then your effective income is $32,000. * If you make $25,000 then you're effective income is $25,000. This creates a terrible incentive structure where you actually don't want to make more then $20,000 unless you're sure you can make more than $32,000. Well actually more because there's really no incentive to move up to $32,000 exactly. You have to make sure that when a person makes more money they are always better off for having done so. Having a hard cutoff for benefits doesn't work and neither does a back-off system that matches income (e.g. at $25,000 you get $7,000)
        SV_BubbleTime 6y ago
        This makes sense, and I think it would be hard to argue against. For all the descriptions though, there is a key lack of how to easily describe it. It’s missing it’s catch phrase if you will.
    - cylon13 6y ago
      Imagine a graph where the x-axis is how much you make at your job, and the y-axis is how much spending money ends up in your bank account after the government gets involved by either giving you welfare money or taxing you. So without the government you just have y = x. At zero income you have zero money, which is not ideal, so we'll try to come up with a system to give the destitute money so they don't die of starvation. As a first crack at it, let's just give everyone who makes less than say $10k per year a bundle of aid that amounts to the fixed value of $1000 per month. This perhaps an improvement because we aren't ignoring the needs of the poor, but it creates a problem, which is what a welfare trap is. Imagine the graph for this situation. If you're making over $10k per year it's y = x, but if you're making less it's y = x + ($1000/month). So at x = ($1000/month) there's a sharp drop in take-home money. So people who would perhaps like to make a little more money are disincetivized from doing so because they would stop taking home that $1k per month and be exchanging it for a much smaller raise. The negative income tax proposal attempts to solve this first by just providing cash to poor people instead of various goods that are hard to measure, and then by ensuring that the curve we're talking about never has a negative slope or drop. For instance imagine if you make zero dollars, you're given $1000/month, but then for every additional dollar you make independently, you receive 25 cents less aid. You'll always want to make more independently in this situation even if you don't keep it all.
    - a1369209993 6y ago
      > I hate to ask, but can you dumb this down? Most actual examples are less blatant, but let's say our welfare system consists of a 12'000$ welfare for anyone who makes less than 12'000$ in income. If your job pays 11'000$, your take-home pay is 11+12 = 23'000$. If you do very well and get a 2000$ raise, your income is now 13'000$, so you don't get the welfare, and your take-home pay is now 13'000$, meaning you lost 23-13 = 10'000$ of effective income by getting a raise.
    - imtringued 6y ago
      I don't know about negative income taxes but UBI just gives you a flat amount no matter how much you earn or whether you are unemployed. It's always on top of your existing salary.
- codemac 6y ago
  Hypothetically they'd get rid of a lot of welfare programs and just institute a negative tax, which has a smooth curve upwards. More money always means you make more, just maybe not linearly. UBI can do this too - it's not clear to me what the practical differences between UBI and "negative income tax" are.
  - kwhitefoot 6y ago
    The advantage of UBI is that everyone gets it. Of course the puritans who believe that someone is only worth what a job gives them object that only those earning should get paid so some people regard this as a disadvantage.
    - codemac 6y ago
      > The advantage of UBI is that everyone gets it. As opposed to a negative tax rate below some amount? Why would everyone not get that? I guess it just feels like there are two equations that can be made equal so easily: UBI_POLICY(income) = income + ubi_income - progressive_tax(income + ubi_constant) NIT_POLICY(income) = income - progressive_tax(income) + negative_tax(income) income + ubi_income - ubi_progressive_tax(income + ubi_constant) = income - nit_progressive_tax(income) + nit_negative_tax(income) ubi_income - ubi_progressive_tax(income + ubi_constant) = nit_negative_tax(income) - nit_progressive_tax(income) which seems a super easy thing to make equal. Is it the payments to folks that are different?
- gcheong 6y ago
  I would surmise they mean that by giving people cash you don’t have them dependent upon any programs that dole out benefits depending on various eligibility factors. For example right now if you need food support in the US you can apply for food stamps (SNAP) but the problem is that food stamps can only be used for food and so you create a dependency on that particular program with the person needing food support. But if you give them cash you then allow the person to decide for themselves what mix of things they spend that on according to their specific needs and can probably do away with most of the specific programs that only deal with a specific benefit that may not be in the right proportion to other benefits depending on need.
AnthonyMouse 6y ago
The only difference between a UBI and a negative income tax is framing. Suppose you have a negative income tax in the amount of $12,000 which phases out at a rate of 25% up to $48,000 in income, and a 5% marginal tax rate on people who make less than $48,000 and a 30% marginal tax rate on people who make more. Suppose you have a $12,000 UBI and a flat 30% tax rate. These are really the same thing. The advantage of the UBI is that you see more clearly what you're doing, so that if somebody suggests to e.g. have a steeper phase out, what it really corresponds to is having a higher marginal tax rate on lower income people than higher income people. Which is maybe not what you want.
- randomdata 6y ago
  Isn't the practical difference the past vs. the future? A negative income tax is based on already reported income, whereas UBI is clawed back once income is reported.
  - AnthonyMouse 6y ago
    This is equivalent to whether the UBI is paid on the first day of the period or the last day of the period and is only a meaningful distinction in the first period of implementation.
    - randomdata 6y ago
      To wrap my head around this, let's assume the period is the calendar year. Let's assume that I made enough from January to March that I exceed a payout position under a negative income tax system, but COVID-19 saw me lose my job in March and my income dried up since then. When I report my income as of December 31st, 2020, I still made enough for the year that I won't receive benefits, despite not having an income. That means that I will be unsupported through 2021 and won't see the money until 2022, correct? If it were UBI and I were paid on January 1st 2020, it would be clawed back on December 31st as I still made enough money, but I would receive another payment on January 1st 2021 to get me through the year where I have no income. Isn't that the intent of UBI and not something afforded through negative income? You could pay out a UBI-like stipend and then claw it back on the same day (December 31st, 2020), but is it really UBI at that point? That sounds like the negative income tax.
A12-B 6y ago
> something minimum wage can’t do because of the labor shortage it creates It's important to read economic literature beyond old dead economists because many modern economists disagree with this, or think it doesn't paint a full picture of the situation. Noah Smith comes to mind.
- nodesocket 6y ago
  Or how about the big elephant in the room that nobody seems to be bring up; the effect on small businesses that can’t afford to pay employees $15 or $20/hr. So, instead of helping the poor, these policies raise unemployment and actually are a detriment to the overall health of the economy.
  - Robotbeat 6y ago
    You need to re-read the comment you’re replying to.
  - spamizbad 6y ago
    The past 25-30 years of research do not show this to be true. The link between the minimum wage and unemployment isn't really a thing. I recognize your position was the conventional wisdom in the 1990s but newer research and analysis (along with tons of states experimenting with minimum wage over the various decades) paint a clear picture that it helps not just low-income workers but can help firms too by boosting productivity. Sources: 1. https://www.nelp.org/wp-content/uploads/NELP-Data-Brief-Raise-Wages-Kill-Jobs-No-Correlation.pdf https://www.nelp.org/wp-content/uploads/NELP-Data-Brief-Rais... 2. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2705499 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2705499 3. https://americanprogress.org/wp-content/uploads/kf/minimumwage-layout8.pdf https://americanprogress.org/wp-content/uploads/kf/minimumwa... 4. https://www.piie.com/blogs/realtime-economic-issues-watch/higher-wages-low-income-workers-lead-higher-productivity?p=4700 https://www.piie.com/blogs/realtime-economic-issues-watch/hi...
    - nodesocket 6y ago
      Most certainly businesses as a response will be forced to raise prices and thus increase inflation and make everyday products more expensive. These studies are obviously politically and progressively motivated (coming from firms such as american progress) so we have to assume a large scale national increase of minimum wage as significant as this would have unintended negative consequences.
SmokyBourbon 6y ago
Andrew Yang: > I am a huge fan of a negative income tax, but I prefer a UBI for multiple reasons. It lowers the administrative burden because you don’t need to figure out how much I made last year. It removes any strange shenanigans in terms of trying to report a low income. It alleviates a payments timing issue — you’re not likely to get your negative income tax when you might need it. And politically, I think it’s more appealing to be able to say to everyone: You have intrinsic value. This is how much you get for being an American, [a] human being.
- Turing_Machine 6y ago
  I see no reason why a direct quote from Andrew Yang (probably the best-known proponent of UBI at the present time) should be flagged to death in this conversation. Vouched -- which doesn't indicate that I necessarily agree with him. I just hate people who are making a valid contribution to the conversation being mobbed down.
  - dang 6y ago
    It wasn't flagged to death and nobody mobbed anybody. The account that posted it was banned. Posts by banned accounts are killed by default. You're right that the parent was a good contribution and deserved to be unkilled. That's what vouching is for, and you made an excellent use of it. Banning on HN isn't punitive, it's preventative. When a banned account has changed its ways and has reliably been sticking to HN's rules for a while now, we're happy to unban it. If people see cases like that, they should email hn@ycombinator.com so we can look into it. That's a fine way to watch out for a fellow user. When a banned account hasn't been reliably sticking to HN's rules for long enough, or hasn't posted enough to decide that yet, it stays banned for obvious reasons. In that case their good posts can still be unkilled, just on a comment-by-comment basis. That's why we created vouching and it works well.
- slg 6y ago
  >And politically, I think it’s more appealing to be able to say to everyone: You have intrinsic value. The universality of UBI is key to its political viability. Just look at the number of people who are against forgiving college debt because they have already paid off college or are past the stage in their life in which they are personally concerned about college debt. Most people still view "fairness" as everyone being treated equally. So just give everyone an equal amount of money.
bhupy 6y ago
A negative income tax is mathematically equivalent to a UBI as long as we have progressive taxation.
MaxBarraclough 6y ago
> do so a lot more cost effectively than UBI since you wouldn’t be guaranteeing payments to people who don’t need them One of the arguments for UBI is that, as it makes no effort whatsoever to exclude anyone, it is enormously simpler than the alternatives, both in terms of people reasoning about their taxes and in terms of implementing it. Of course, it would be UBI + lots of other tax codes, but that's meant to be part of the point.
FrozenVoid 6y ago
A negative income tax is far more complex, here is an example of contemporary system. https://en.wikipedia.org/wiki/Earned_income_tax_credit https://en.wikipedia.org/wiki/Earned_income_tax_credit ``Millions of American families who are eligible for the EITC do not receive it, essentially leaving billions of dollars unclaimed. The IRS estimates that about 20 percent of eligible taxpayers do not claim $7.3 billion of Earned Income Tax Credit (EITC) each tax year.[43]``
- andrewflnr 6y ago
  The correct solution here is to make it automatic.
GizmoSwan 6y ago
So there is such a thing as low skill work that would be in high demand! That would mean there is a need to train people to have lower skills then! There is no guarantee that anybody with any type of skill set will be offered a job aligned with their skills depending on economic issues. Skill is a vague idea.
imtringued 6y ago
Honestly, just do a jobs guarantee. If there is a job that cannot pay more than $13 and the government says $15 is the minimum wage then just let the government employ that person and let it cover the missing $2. Your government funds will go much further.
dogma1138 6y ago
Negative income tax has the same problem as the insane creep in income tax allowance the UK has seen since 2010, it’s now double than it was a decade ago and it accounts essentially for the entire growth in the take home pay in the UK over the past decade. Negative income tax and yearly increases in tax allowances shift the burden on pay increases from the employer to the government and thus to the tax payer. In the UK employers had no incentive to increase pay when the government increases the tax free allowance year after year, and employees seeing that their take home increases don’t really care where it comes form especially in the lower income brackets. I personally don’t like UBI either because it’s essentially a transfer of wealth from the middle to the top. I would much rather see a universal basic services program that guarantees universal free at the point of use access to services such as housing, healthcare and education provided directly by a government body or non for profit enterprises.
- azey47 6y ago
  >I would much rather see a universal basic services program that guarantees universal free at the point of use access to services such as housing, healthcare and education provided directly by a government body or non for profit enterprises. I agree that creating such a program creates political incentives for increasing it over time in excess of inflation. That's a real cost that needs to be weighed against alternative approaches. But consider what happens when you make services "free at the point of use access". The price no longer serves the purpose of summarizing and transmitting information about the good or service. The consumer of the "free" good no longer gets any information about the scarcity or quality of the resource, and the provider no longer gets any information about the demand for their good and consequently how much to produce. Prices are the primary mechanism for coordinating decisions efficiently by summarizing actionable decision making information and economizing on expensive knowledge acquisition, interpretation, and communication costs. It should hardly be a surprise when demand and consumption of those goods and services with a zero price goes up, and supply and quality goes down. Now suddenly you need to grow large bureaucracies for rationing the resources which will inevitably miss the mark of serving disparate individual needs as efficiently as the price mechanism could in a free market. It's the classic recipe for degrading quality and creating shortages. I believe it's much more desirable for housing, healthcare, and education to be served by the market precisely because of how important they are to people. Putting cash into people's pockets directly has a much smaller distortive effect on market operations, and allows people to express their preferences in allowing them to vote with their dollars, as opposed to "free at point of service / consumption" goods and services. It's no accident that UBI was proposed by Friedrich Hayek, and the Negative Income Tax by Milton Friedman. You could hardly accuse either of being in favor of wealth transfers, but they both understood the profound negative consequences of distorting prices, which essentially is lying to economic decision makers about the costs and benefits of taking certain actions, resulting in inevitably less efficient allocation of scarce resources that could possibly have been used more productively elsewhere in the economy.
TrinaryWorksToo 6y ago
I'm in favor of instituting demurrage currency, which has the feature of being unable to hide money from taxes.
6510 6y ago
Negative income tax is toxic to automation.

by azey47 6y ago

guerrilla 6y ago

> would avoid any welfare trap created by existing welfare programs. How would it do that?

cylon13 6y ago
You're always incentivized to make marginally more money with the negative income tax because it gives you a monotonically increasing effective income vs job income curve, whereas some welfare systems end up with disincentives at various points of income where you'd make overall less by exiting the income level where you're receiving the aid (the same curve gets a negative slope or a downward jump).
- SV_BubbleTime 6y ago
  I hate to ask, but can you dumb this down? I still don’t really get it. Are you saying that if you have no job that 100% of your income is tax funded, but if you have even a shitty job that you still get more benefit than the job alone but this is sliding scale down to some unknown point which you no longer receive any benefit at all?
  - Turing_Machine 6y ago
    It's actually worse than that. There's often not any kind of sliding scale. Make $x and you get rental assistance, medical care for your kids, food aid, whatever. Make $x+1, and you get jack and shit. There's no reason for it to be that way, in a world with ubiquitous calculators and computers, but that's how it often is.
    - usrusr 6y ago
      This. If you go on and calculate an effective tax rate "after welfare benefits", that "+1" could easily appear being taxed at six-digit percentages. Wealth people sob dearly when they see only 50 cent from a dollar they earned, but every welfare system striving for need-based distribution ends up having income points where you can consider yourself lucky if you don't see a net negative for a dollar earned.
    - Spivak 6y ago
      The crucial bit is that there's a gap. Say financial assistance worth $12,000 is available for people who make <$20,000. * If you make $20,000 then your effective income is $32,000. * If you make $32,000 then your effective income is $32,000. * If you make $25,000 then you're effective income is $25,000. This creates a terrible incentive structure where you actually don't want to make more then $20,000 unless you're sure you can make more than $32,000. Well actually more because there's really no incentive to move up to $32,000 exactly. You have to make sure that when a person makes more money they are always better off for having done so. Having a hard cutoff for benefits doesn't work and neither does a back-off system that matches income (e.g. at $25,000 you get $7,000)
      - SV_BubbleTime 6y ago
        This makes sense, and I think it would be hard to argue against. For all the descriptions though, there is a key lack of how to easily describe it. It’s missing it’s catch phrase if you will.
  - cylon13 6y ago
    Imagine a graph where the x-axis is how much you make at your job, and the y-axis is how much spending money ends up in your bank account after the government gets involved by either giving you welfare money or taxing you. So without the government you just have y = x. At zero income you have zero money, which is not ideal, so we'll try to come up with a system to give the destitute money so they don't die of starvation. As a first crack at it, let's just give everyone who makes less than say $10k per year a bundle of aid that amounts to the fixed value of $1000 per month. This perhaps an improvement because we aren't ignoring the needs of the poor, but it creates a problem, which is what a welfare trap is. Imagine the graph for this situation. If you're making over $10k per year it's y = x, but if you're making less it's y = x + ($1000/month). So at x = ($1000/month) there's a sharp drop in take-home money. So people who would perhaps like to make a little more money are disincetivized from doing so because they would stop taking home that $1k per month and be exchanging it for a much smaller raise. The negative income tax proposal attempts to solve this first by just providing cash to poor people instead of various goods that are hard to measure, and then by ensuring that the curve we're talking about never has a negative slope or drop. For instance imagine if you make zero dollars, you're given $1000/month, but then for every additional dollar you make independently, you receive 25 cents less aid. You'll always want to make more independently in this situation even if you don't keep it all.
  - a1369209993 6y ago
    > I hate to ask, but can you dumb this down? Most actual examples are less blatant, but let's say our welfare system consists of a 12'000$ welfare for anyone who makes less than 12'000$ in income. If your job pays 11'000$, your take-home pay is 11+12 = 23'000$. If you do very well and get a 2000$ raise, your income is now 13'000$, so you don't get the welfare, and your take-home pay is now 13'000$, meaning you lost 23-13 = 10'000$ of effective income by getting a raise.
  - imtringued 6y ago
    I don't know about negative income taxes but UBI just gives you a flat amount no matter how much you earn or whether you are unemployed. It's always on top of your existing salary.
codemac 6y ago
Hypothetically they'd get rid of a lot of welfare programs and just institute a negative tax, which has a smooth curve upwards. More money always means you make more, just maybe not linearly. UBI can do this too - it's not clear to me what the practical differences between UBI and "negative income tax" are.
- kwhitefoot 6y ago
  The advantage of UBI is that everyone gets it. Of course the puritans who believe that someone is only worth what a job gives them object that only those earning should get paid so some people regard this as a disadvantage.
  - codemac 6y ago
    > The advantage of UBI is that everyone gets it. As opposed to a negative tax rate below some amount? Why would everyone not get that? I guess it just feels like there are two equations that can be made equal so easily: UBI_POLICY(income) = income + ubi_income - progressive_tax(income + ubi_constant) NIT_POLICY(income) = income - progressive_tax(income) + negative_tax(income) income + ubi_income - ubi_progressive_tax(income + ubi_constant) = income - nit_progressive_tax(income) + nit_negative_tax(income) ubi_income - ubi_progressive_tax(income + ubi_constant) = nit_negative_tax(income) - nit_progressive_tax(income) which seems a super easy thing to make equal. Is it the payments to folks that are different?
gcheong 6y ago
I would surmise they mean that by giving people cash you don’t have them dependent upon any programs that dole out benefits depending on various eligibility factors. For example right now if you need food support in the US you can apply for food stamps (SNAP) but the problem is that food stamps can only be used for food and so you create a dependency on that particular program with the person needing food support. But if you give them cash you then allow the person to decide for themselves what mix of things they spend that on according to their specific needs and can probably do away with most of the specific programs that only deal with a specific benefit that may not be in the right proportion to other benefits depending on need.

AnthonyMouse 6y ago

The only difference between a UBI and a negative income tax is framing. Suppose you have a negative income tax in the amount of $12,000 which phases out at a rate of 25% up to $48,000 in income, and a 5% marginal tax rate on people who make less than $48,000 and a 30% marginal tax rate on people who make more. Suppose you have a $12,000 UBI and a flat 30% tax rate. These are really the same thing. The advantage of the UBI is that you see more clearly what you're doing, so that if somebody suggests to e.g. have a steeper phase out, what it really corresponds to is having a higher marginal tax rate on lower income people than higher income people. Which is maybe not what you want.

randomdata 6y ago
Isn't the practical difference the past vs. the future? A negative income tax is based on already reported income, whereas UBI is clawed back once income is reported.
- AnthonyMouse 6y ago
  This is equivalent to whether the UBI is paid on the first day of the period or the last day of the period and is only a meaningful distinction in the first period of implementation.
  - randomdata 6y ago
    To wrap my head around this, let's assume the period is the calendar year. Let's assume that I made enough from January to March that I exceed a payout position under a negative income tax system, but COVID-19 saw me lose my job in March and my income dried up since then. When I report my income as of December 31st, 2020, I still made enough for the year that I won't receive benefits, despite not having an income. That means that I will be unsupported through 2021 and won't see the money until 2022, correct? If it were UBI and I were paid on January 1st 2020, it would be clawed back on December 31st as I still made enough money, but I would receive another payment on January 1st 2021 to get me through the year where I have no income. Isn't that the intent of UBI and not something afforded through negative income? You could pay out a UBI-like stipend and then claw it back on the same day (December 31st, 2020), but is it really UBI at that point? That sounds like the negative income tax.

A12-B 6y ago

> something minimum wage can’t do because of the labor shortage it creates It's important to read economic literature beyond old dead economists because many modern economists disagree with this, or think it doesn't paint a full picture of the situation. Noah Smith comes to mind.

nodesocket 6y ago
Or how about the big elephant in the room that nobody seems to be bring up; the effect on small businesses that can’t afford to pay employees $15 or $20/hr. So, instead of helping the poor, these policies raise unemployment and actually are a detriment to the overall health of the economy.
- Robotbeat 6y ago
  You need to re-read the comment you’re replying to.
- spamizbad 6y ago
  The past 25-30 years of research do not show this to be true. The link between the minimum wage and unemployment isn't really a thing. I recognize your position was the conventional wisdom in the 1990s but newer research and analysis (along with tons of states experimenting with minimum wage over the various decades) paint a clear picture that it helps not just low-income workers but can help firms too by boosting productivity. Sources: 1. https://www.nelp.org/wp-content/uploads/NELP-Data-Brief-Raise-Wages-Kill-Jobs-No-Correlation.pdf https://www.nelp.org/wp-content/uploads/NELP-Data-Brief-Rais... 2. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2705499 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2705499 3. https://americanprogress.org/wp-content/uploads/kf/minimumwage-layout8.pdf https://americanprogress.org/wp-content/uploads/kf/minimumwa... 4. https://www.piie.com/blogs/realtime-economic-issues-watch/higher-wages-low-income-workers-lead-higher-productivity?p=4700 https://www.piie.com/blogs/realtime-economic-issues-watch/hi...
  - nodesocket 6y ago
    Most certainly businesses as a response will be forced to raise prices and thus increase inflation and make everyday products more expensive. These studies are obviously politically and progressively motivated (coming from firms such as american progress) so we have to assume a large scale national increase of minimum wage as significant as this would have unintended negative consequences.

SmokyBourbon 6y ago

Andrew Yang: > I am a huge fan of a negative income tax, but I prefer a UBI for multiple reasons. It lowers the administrative burden because you don’t need to figure out how much I made last year. It removes any strange shenanigans in terms of trying to report a low income. It alleviates a payments timing issue — you’re not likely to get your negative income tax when you might need it. And politically, I think it’s more appealing to be able to say to everyone: You have intrinsic value. This is how much you get for being an American, [a] human being.

Turing_Machine 6y ago
I see no reason why a direct quote from Andrew Yang (probably the best-known proponent of UBI at the present time) should be flagged to death in this conversation. Vouched -- which doesn't indicate that I necessarily agree with him. I just hate people who are making a valid contribution to the conversation being mobbed down.
- dang 6y ago
  It wasn't flagged to death and nobody mobbed anybody. The account that posted it was banned. Posts by banned accounts are killed by default. You're right that the parent was a good contribution and deserved to be unkilled. That's what vouching is for, and you made an excellent use of it. Banning on HN isn't punitive, it's preventative. When a banned account has changed its ways and has reliably been sticking to HN's rules for a while now, we're happy to unban it. If people see cases like that, they should email hn@ycombinator.com so we can look into it. That's a fine way to watch out for a fellow user. When a banned account hasn't been reliably sticking to HN's rules for long enough, or hasn't posted enough to decide that yet, it stays banned for obvious reasons. In that case their good posts can still be unkilled, just on a comment-by-comment basis. That's why we created vouching and it works well.
slg 6y ago
>And politically, I think it’s more appealing to be able to say to everyone: You have intrinsic value. The universality of UBI is key to its political viability. Just look at the number of people who are against forgiving college debt because they have already paid off college or are past the stage in their life in which they are personally concerned about college debt. Most people still view "fairness" as everyone being treated equally. So just give everyone an equal amount of money.

bhupy 6y ago

A negative income tax is mathematically equivalent to a UBI as long as we have progressive taxation.

MaxBarraclough 6y ago

> do so a lot more cost effectively than UBI since you wouldn’t be guaranteeing payments to people who don’t need them One of the arguments for UBI is that, as it makes no effort whatsoever to exclude anyone, it is enormously simpler than the alternatives, both in terms of people reasoning about their taxes and in terms of implementing it. Of course, it would be UBI + lots of other tax codes, but that's meant to be part of the point.

FrozenVoid 6y ago

A negative income tax is far more complex, here is an example of contemporary system. https://en.wikipedia.org/wiki/Earned_income_tax_credit https://en.wikipedia.org/wiki/Earned_income_tax_credit ``Millions of American families who are eligible for the EITC do not receive it, essentially leaving billions of dollars unclaimed. The IRS estimates that about 20 percent of eligible taxpayers do not claim $7.3 billion of Earned Income Tax Credit (EITC) each tax year.[43]``

andrewflnr 6y ago
The correct solution here is to make it automatic.

GizmoSwan 6y ago

So there is such a thing as low skill work that would be in high demand! That would mean there is a need to train people to have lower skills then! There is no guarantee that anybody with any type of skill set will be offered a job aligned with their skills depending on economic issues. Skill is a vague idea.

imtringued 6y ago

Honestly, just do a jobs guarantee. If there is a job that cannot pay more than $13 and the government says $15 is the minimum wage then just let the government employ that person and let it cover the missing $2. Your government funds will go much further.

dogma1138 6y ago

Negative income tax has the same problem as the insane creep in income tax allowance the UK has seen since 2010, it’s now double than it was a decade ago and it accounts essentially for the entire growth in the take home pay in the UK over the past decade. Negative income tax and yearly increases in tax allowances shift the burden on pay increases from the employer to the government and thus to the tax payer. In the UK employers had no incentive to increase pay when the government increases the tax free allowance year after year, and employees seeing that their take home increases don’t really care where it comes form especially in the lower income brackets. I personally don’t like UBI either because it’s essentially a transfer of wealth from the middle to the top. I would much rather see a universal basic services program that guarantees universal free at the point of use access to services such as housing, healthcare and education provided directly by a government body or non for profit enterprises.

azey47 6y ago
>I would much rather see a universal basic services program that guarantees universal free at the point of use access to services such as housing, healthcare and education provided directly by a government body or non for profit enterprises. I agree that creating such a program creates political incentives for increasing it over time in excess of inflation. That's a real cost that needs to be weighed against alternative approaches. But consider what happens when you make services "free at the point of use access". The price no longer serves the purpose of summarizing and transmitting information about the good or service. The consumer of the "free" good no longer gets any information about the scarcity or quality of the resource, and the provider no longer gets any information about the demand for their good and consequently how much to produce. Prices are the primary mechanism for coordinating decisions efficiently by summarizing actionable decision making information and economizing on expensive knowledge acquisition, interpretation, and communication costs. It should hardly be a surprise when demand and consumption of those goods and services with a zero price goes up, and supply and quality goes down. Now suddenly you need to grow large bureaucracies for rationing the resources which will inevitably miss the mark of serving disparate individual needs as efficiently as the price mechanism could in a free market. It's the classic recipe for degrading quality and creating shortages. I believe it's much more desirable for housing, healthcare, and education to be served by the market precisely because of how important they are to people. Putting cash into people's pockets directly has a much smaller distortive effect on market operations, and allows people to express their preferences in allowing them to vote with their dollars, as opposed to "free at point of service / consumption" goods and services. It's no accident that UBI was proposed by Friedrich Hayek, and the Negative Income Tax by Milton Friedman. You could hardly accuse either of being in favor of wealth transfers, but they both understood the profound negative consequences of distorting prices, which essentially is lying to economic decision makers about the costs and benefits of taking certain actions, resulting in inevitably less efficient allocation of scarce resources that could possibly have been used more productively elsewhere in the economy.

TrinaryWorksToo 6y ago

I'm in favor of instituting demurrage currency, which has the feature of being unable to hide money from taxes.

6510 6y ago

Negative income tax is toxic to automation.