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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

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.
- dogma1138 6y ago
  You might be right on the effects of market distortion, but with the current markets we have which many of them aren’t free and the fact that UBI/NIT will be funded quite solely through income tax levied on the 50th-99th percentiles which earn enough to actually pay some taxes but not enough to effectively avoid them will make it unfeasible. We either have to completely change taxation and have wealth taxes and much higher corporate taxes as well as sufficient housing to ensure that most of UBI payouts don’t simply flow to a handful of landlords or find an alternative solution to UBI. This is also the issue I have with UBI experiments, running an experiment that finds people lives improve when you give them money isn’t particularly interesting since all of these are too small scale to measure inflationary effects at a minimum an experiment that gives say a 1000 people UBI needs to have another group of people from income percentiles that are expected to fund it that will be taxed at a level that would incorporate the costing of the proposed UBI stipend.

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.

dogma1138 6y ago
You might be right on the effects of market distortion, but with the current markets we have which many of them aren’t free and the fact that UBI/NIT will be funded quite solely through income tax levied on the 50th-99th percentiles which earn enough to actually pay some taxes but not enough to effectively avoid them will make it unfeasible. We either have to completely change taxation and have wealth taxes and much higher corporate taxes as well as sufficient housing to ensure that most of UBI payouts don’t simply flow to a handful of landlords or find an alternative solution to UBI. This is also the issue I have with UBI experiments, running an experiment that finds people lives improve when you give them money isn’t particularly interesting since all of these are too small scale to measure inflationary effects at a minimum an experiment that gives say a 1000 people UBI needs to have another group of people from income percentiles that are expected to fund it that will be taxed at a level that would incorporate the costing of the proposed UBI stipend.