5 ms·

UBI or progressive negative tax should solve this problem, no? (The idea is that a job always gets you more money than the base)

by spion 6y ago

lostcolony 6y ago
Yeah. It's super easy to fix, if people wanted to fix it. Even with welfare, you just make it so every after tax dollar earned reduces the welfare check by 50 cents. Tada, incentive to work, and only when you're making double what welfare pays out do you stop receiving assistance. People may still 'take advantage' of it, by choosing not to work (if we got rid of all the systems requiring proof they're trying to find a job and etc), but honestly if the promise of making more no matter what they do, or how few hours they work, doesn't motivate them, I'm really not concerned about that loss of labor in the labor pool.
- mgbennet 6y ago
  I don't know if the drop off of assistance can really work that well. Say UBI is 10000 fun-bucks. A person gets a crappy job that pays 5000 fun-bucks. Their total income is now 5000+(10000-5000*.5)=12500. By getting a job and working, they've only improved their situation by 2500. Any dollar they earn above the UBI is taxed at 50%, until they've "made it" to double UBI. This amounts to taxing the poor instead of the rich, and is likely to not incentivize work as much you might like. Most proposals for UBI I've seen are truly universal, meaning that rich and poor alike are entitled to it.
  - leetcrew 6y ago
    > This amounts to taxing the poor instead of the rich not really, when you consider who must be paying for the original 10000 fun bucks. the person in your example is still achieving an effectively negative tax rate. > and is likely to not incentivize work as much you might like. this much I agree with. the 50% falloff is probably much too steep.
  - thomastjeffery 6y ago
    When someone has enough to meet their basic needs, $2,500 can go a long way. Over the last year, Americans have gotten about that much in "stimulus", but many of us had to spend it all on rent and other bills.
  - kbelder 6y ago
    It also breaks down when there are multiple overlapping programs, as there are now. Maybe each program drops $0.25 for every dollar earned... but if you are on four or more means-tested programs, that's completely removed the benefit. Similar are the many programs that have cutoff at, say, 150% poverty level. Individually not a big deal, but when you lose a multitude of different benefits going from 25k to 35k income, it can be a perverse incentive.
  - lostcolony 6y ago
    Yep. UBI -is- meant to be universal, and I'd be for it. I'm just saying, even without a UBI, the existing system could be made to work. 50% is just a number thrown out there; it can be reduced, it can be non-linear. The point is that as long as there is no cliff, no point where if you make $1 extra by working you net -lose- money, we avoid the existing issue. As to whether there is enough utility at any given total income to warrant the extra work...that's a 'problem' we have now, and always will have. Presented with the opportunity, do I want to turn my time into money? That's entirely dependent on how much I value each of those things. There's actually a reason I chose 50%, beyond it just being a nice round number. See, if the federal minimum wage was upped to $15 at the same time as changing welfare like this, we'd be able to institute the fall off while making the benefit of working those hours feel like the same amount of buying power as working now. Only difference is, essentially, that everyone making less than 2x welfare/etc benefits, would see a larger increase even than that.
- Aerroon 6y ago
  How is it a super easy fix? It seems extremely unaffordable. Forget incentive to work. The US had a tax revenue of $3.5 trillion with a population of a 330 million. You shut down the entire government and spend it on UBI. That's $883 per person per month. But it's worse than that. Wealth doesn't appear out of thin air. Money might, but money only matters insofar as what you can spend it on. If only 300 million apples are produced then no amount of moving money around will allow everyone (330m) to get an apple. You're not poor when your dollar wealth or income is low, you're poor when you can't get the stuff you need or want. If you want to have a UBI without sending prices of everyday goods soaring then you need cheap production of those goods in quantities that will satisfy your population. The only realistic way of doing this in the modern world is automation. The cost of production for a lot of (most?) goods comes down to how much it costs all of the human labor that's combined to produce it. Eg in the case of apples somebody has to select which apple trees to grow, acquire land, invest in it, maintain them, pick the apples, sort them, find a buyer, transport them etc. All of these require some human labor and therefore have some significant cost. The more of this you can automate the lower the costs of these apples. Whether UBI works will ultimately come down to the efficiency of production (or alternatively, shifting the poverty to another country that does the cheap production for you, but this can't last). You need to be able to satisfy the needs of the population with the labor of the part of the population that are net tax contributors.
  - leetcrew 6y ago
    you're arguing a tangent to GP's point, which could be rephrased as "assuming we're already willing to spend $x on welfare, we can structure the payments in a way that effective income increases monotonically as the recipients earn higher wages for work". you can fix welfare cliffs without spending any more/less money.

UBI or progressive negative tax should solve this problem, no? (The idea is that a job always gets you more money than the base)

by spion 6y ago

UBI or progressive negative tax should solve this problem, no? (The idea is that a job always gets you more money than the base)

lostcolony 6y ago

Yeah. It's super easy to fix, if people wanted to fix it. Even with welfare, you just make it so every after tax dollar earned reduces the welfare check by 50 cents. Tada, incentive to work, and only when you're making double what welfare pays out do you stop receiving assistance. People may still 'take advantage' of it, by choosing not to work (if we got rid of all the systems requiring proof they're trying to find a job and etc), but honestly if the promise of making more no matter what they do, or how few hours they work, doesn't motivate them, I'm really not concerned about that loss of labor in the labor pool.

mgbennet 6y ago
I don't know if the drop off of assistance can really work that well. Say UBI is 10000 fun-bucks. A person gets a crappy job that pays 5000 fun-bucks. Their total income is now 5000+(10000-5000*.5)=12500. By getting a job and working, they've only improved their situation by 2500. Any dollar they earn above the UBI is taxed at 50%, until they've "made it" to double UBI. This amounts to taxing the poor instead of the rich, and is likely to not incentivize work as much you might like. Most proposals for UBI I've seen are truly universal, meaning that rich and poor alike are entitled to it.
- leetcrew 6y ago
  > This amounts to taxing the poor instead of the rich not really, when you consider who must be paying for the original 10000 fun bucks. the person in your example is still achieving an effectively negative tax rate. > and is likely to not incentivize work as much you might like. this much I agree with. the 50% falloff is probably much too steep.
- thomastjeffery 6y ago
  When someone has enough to meet their basic needs, $2,500 can go a long way. Over the last year, Americans have gotten about that much in "stimulus", but many of us had to spend it all on rent and other bills.
- kbelder 6y ago
  It also breaks down when there are multiple overlapping programs, as there are now. Maybe each program drops $0.25 for every dollar earned... but if you are on four or more means-tested programs, that's completely removed the benefit. Similar are the many programs that have cutoff at, say, 150% poverty level. Individually not a big deal, but when you lose a multitude of different benefits going from 25k to 35k income, it can be a perverse incentive.
- lostcolony 6y ago
  Yep. UBI -is- meant to be universal, and I'd be for it. I'm just saying, even without a UBI, the existing system could be made to work. 50% is just a number thrown out there; it can be reduced, it can be non-linear. The point is that as long as there is no cliff, no point where if you make $1 extra by working you net -lose- money, we avoid the existing issue. As to whether there is enough utility at any given total income to warrant the extra work...that's a 'problem' we have now, and always will have. Presented with the opportunity, do I want to turn my time into money? That's entirely dependent on how much I value each of those things. There's actually a reason I chose 50%, beyond it just being a nice round number. See, if the federal minimum wage was upped to $15 at the same time as changing welfare like this, we'd be able to institute the fall off while making the benefit of working those hours feel like the same amount of buying power as working now. Only difference is, essentially, that everyone making less than 2x welfare/etc benefits, would see a larger increase even than that.
Aerroon 6y ago
How is it a super easy fix? It seems extremely unaffordable. Forget incentive to work. The US had a tax revenue of $3.5 trillion with a population of a 330 million. You shut down the entire government and spend it on UBI. That's $883 per person per month. But it's worse than that. Wealth doesn't appear out of thin air. Money might, but money only matters insofar as what you can spend it on. If only 300 million apples are produced then no amount of moving money around will allow everyone (330m) to get an apple. You're not poor when your dollar wealth or income is low, you're poor when you can't get the stuff you need or want. If you want to have a UBI without sending prices of everyday goods soaring then you need cheap production of those goods in quantities that will satisfy your population. The only realistic way of doing this in the modern world is automation. The cost of production for a lot of (most?) goods comes down to how much it costs all of the human labor that's combined to produce it. Eg in the case of apples somebody has to select which apple trees to grow, acquire land, invest in it, maintain them, pick the apples, sort them, find a buyer, transport them etc. All of these require some human labor and therefore have some significant cost. The more of this you can automate the lower the costs of these apples. Whether UBI works will ultimately come down to the efficiency of production (or alternatively, shifting the poverty to another country that does the cheap production for you, but this can't last). You need to be able to satisfy the needs of the population with the labor of the part of the population that are net tax contributors.
- leetcrew 6y ago
  you're arguing a tangent to GP's point, which could be rephrased as "assuming we're already willing to spend $x on welfare, we can structure the payments in a way that effective income increases monotonically as the recipients earn higher wages for work". you can fix welfare cliffs without spending any more/less money.