5 ms·

a) Crunch the numbers, find out how much you need. If you don't have exact, precise numbers and a precise plan on how to get to that number, the idea is worth n

a) Crunch the numbers, find out how much you need. If you don't have exact, precise numbers and a precise plan on how to get to that number, the idea is worth nothing since you don't even have a starting point to analyze viability. People who have run the numbers tend to realize how inviable it is. Those who don't, also think you can just endlessly print money or just tax people more until you get to the happy number. Which leads to b) b) Observe the real world, see what happens when you "just increase tax rate". You'll find that very often when you increase taxes you actually end up collecting less, as more people decide to illegally dodge taxes or simply close up shop. Given a country's economic output, laws, culture and a thousand other factors, there's a hidden function that determines the maximum tax rate you can employ where anything more than that is counter-productive with both short-term and long-term results, the latter often including reputational damage that can be nigh impossible to repair, soft-capping your economy far below what it could've been. See: Laffer Curve, and the shining example that is Argentina.

lazide 6y ago
Definitely have seen and experienced the same thing - but hey, if we succeed in banning cash, no one can dodge taxes? It also removes a huge relief valve for large segments of the population to survive that can’t meet the bar demanded of the ‘normal’ workers.
AnthonyMouse 6y ago
> Crunch the numbers, find out how much you need. If you don't have exact, precise numbers and a precise plan on how to get to that number, the idea is worth nothing since you don't even have a starting point to analyze viability. Mean personal income in the US is ~$54,000: https://fred.stlouisfed.org/series/MAPAINUSA646N https://fred.stlouisfed.org/series/MAPAINUSA646N For a $12,000 UBI that would yield a flat tax rate of ~22%. In real life it's more complicated than that, but not so much more complicated that the number is going to be off by an order of magnitude. It's completely viable. People are already paying nominal rates that high. > Observe the real world, see what happens when you "just increase tax rate". You'll find that very often when you increase taxes you actually end up collecting less, as more people decide to illegally dodge taxes or simply close up shop. The primary causes of this are that higher taxes give people less money to spend which hurts the economy and that higher marginal rates deter working. A UBI is a transfer payment, so on net nobody has any less money to spend and in practice people with less money would have slightly more and those people are more likely to spend it. So this factor goes in favor of economic growth. Meanwhile half the point of the UBI is to get rid of the crazy marginal rate cliffs created by means-tested benefits programs. The status quo deters work more than a UBI would, e.g. you lose unemployment if you take a job. Terrible incentives that would go away.
- sokoloff 6y ago
  Higher marginal rates also reduce marginal outsourcing of labor. At a 40% combined federal and state rate, in order to pay a tradesperson $150 to come do some minor repair task at my house, I have to go out and earn an extra $250 to get that repair job done as compared to doing it myself. Make the combined marginal rate 60% and now I have to go earn $375 in order to have $150 extra to pay for the labor for that repair. For the equivalent of $375 in wages for a service call, there's a lot of things I'll bother to learn how to tackle myself.
  - AnthonyMouse 6y ago
    Again, a UBI will in many cases reduce marginal rates, because no more means testing. Right now if you want to hire a maid to clean your house, you have to overcome the loss of government benefits to them from taking on more work hours. Meanwhile at the top the difference would be less than an increase from 40% to 60% because the UBI is replacing all of these other programs which would no longer have to be funded, or could be made strict alternatives to the UBI which would make the UBI less expensive.
    - sokoloff 6y ago
      People whose marginal tax rates would be reduced by the implementation of a UBI are probably not hiring maids either before or after the implementation of UBI.
      - AnthonyMouse 6y ago
        It's not the employer, it's the maid. To get the maid to show up, you have to cause their bank balance to increase by at least $10, after taxes. If the government is taking 80% of what you pay them away in food, housing and education assistance, you have to pay $50 to get them their $10. Get their real marginal rate down to 40% and you can pay $20 while they enjoy a surplus of $2.
  - 6gvONxR4sf7o 6y ago
    Marginal rates are weird because you can compare your marginal rate against every decision, but at that point, you aren't comparing every dollar earned to every dollar spend, so effective rates seem to be more useful (marginal would be useful if I was considering working more, I think). Anyways, as someone with a high effective tax rate, I'm totally fine only keeping 60% (or keeping 40% if we added another 20), if in return we all got UBI.
enragedcacti 6y ago
Perusing the Wikipedia page for the Laffer Curve (https://en.wikipedia.org/wiki/Laffer_curve https://en.wikipedia.org/wiki/Laffer_curve), it seems that most studies find we could double our current tax rates and still be on the left of the peak (65%-70%). Given that our current federal revenue is appr. $3.5 trillion, it seems we could afford Yang's $2.8 trillion in UBI without issue. Source for UBI total cost: https://freedom-dividend.com/ https://freedom-dividend.com/ note: I ignored his ~$0.9 trillion in predicted savings/economic growth but that would lessen the bill even more.
trianglesphere 6y ago
You can ballpark these numbers just fine. 500/mo UBI for 350 Million recipients is $2.1T per year. US GDP prior the pandemic was ~20T. Expenditures were about 4.4 trillion, revenue was 3.5 trillion (2019 numbers). 500/mo or 1k/mo UBI does require raising taxes and consolidating programs (a polite way of saying cutting). At 500/mo you'd raise the total tax rate (as of GDP), but it'd not be an unreasonable raise (as compared to 2k/mo UBI for all citizens which would need taxes at 40% of US GDP).
colinmhayes 6y ago
We are no where close to reaching the top of the Laffer curve, and we never have been. It is a non issue for economists.
bhupy 6y ago
I can try to give you a theoretical tax breakdown using real numbers. In 2018, the household income quintiles were as follows (https://www.taxpolicycenter.org/statistics/household-income-quintiles https://www.taxpolicycenter.org/statistics/household-income-...) Lowest quintile mean: $13,775 Second quintile mean: $37,923 Third quintile mean: $63,572 Fourth quintile mean: $101,570 Highest quintile mean: $233,895 There were about 159M employed persons in the US in the most recent high (https://tradingeconomics.com/united-states/employed-persons https://tradingeconomics.com/united-states/employed-persons), about 50% of the US population. We want our UBI to cover everybody. To make this simple, because quintiles comprise an equally populated group of people, let's imagine that instead of there being ~32M people per quintile, that our nation has 10 people, where 5 people don't work, and each of the remaining 5 falls into one of the quintiles. If we wanted to define a UBI of $18,000 per person, we need to somehow come up with $18,000 * 10 == $180,000 to distribute to everyone equally. If we fund this progressively, each individual would have to pay: Unemployed #1: 0 (statistically, a child) Unemployed #2: 0 (statistically, a child) Unemployed #3: 0 (statistically, a retiree) Unemployed #4: 0 (statistically, a retiree) Unemployed #5: 0 (statistically, a disabled person or stay-at-home caretaker) Lowest: $8,000 Second: $12,000 Third: $21,000 Fourth: $36,000 Highest: $103,000 Total revenue: $180,000 Then consider that everyone here is receiving back 18,000 under the UBI. The highest quintile earner’s net take-home is, thus 233,895-103,000+18,000 == $148,895, which effectively renders their effective tax rate approx 36%. If you run this breakdown across all quintiles: Unemployed #1-5: $0 - $0 + 18,000 == $18,000 Lowest: $13,775 - $8,000 + $18,000 == $23,775 (effective tax -73%) Second: $37,923 - $12,000 + $18,000 == $43,923 (effective tax -16%) Third: $63,572 - $21,000 + $18,000 == $60,572 (effective tax 6%) Fourth: $101,570 - $36,000 + $18,000 == $83,570 (effective tax 18%) Highest: $233,895 - $103,000 + $18,000 == $148,895 (effective tax 36%) You'll notice that the top 2 pay a tax rate that’s comparable to today’s. We wouldn't necessarily need to increase everyone's taxes by the above amount, because there's some wiggle room in the Federal budget. Examples: we can probably eliminate Social Security (which would just be replaced by the UBI), EITC/CTC (basically already a BI), and food stamps (ditto). Medicare, which is an in-kind benefit, can either be eliminated, or it can continue to exist but be paid for by the UBI. Ditto Medicaid. Also notice that because the lowest quintile still ends up with more than the unemployed person after their taxes, there isn’t a disincentive to work. This math also assumes that we're giving people $1,500 per month, and also assumes that children will receive the same amount as adults — a UBI may only pay $1,000 per month to adults, and $500 per month to children, in which case the effective tax rates would be lower. This math also assumes there is 0 VAT. This math also ignores payroll taxes, which account for 35% of the current Federal revenue. We can play with different levels of progressivity and generosity, but the idea is the same. We can scale up from single-person quintiles to million-person quintiles, but the percentages don't change.
mensetmanusman 6y ago
We get China to buy our bonds forever :)
- dlp211 6y ago
  China owns about $1.1 Trillion in US debt compared to the $28 Trillion in total debt. Most debt, ~85%, remains owned by Americans. Also, China has been trying to unwind their US position over time, but it is a difficult task because they have to do something with the US dollars that they get due to the trade imbalance.

lazide 6y ago

Definitely have seen and experienced the same thing - but hey, if we succeed in banning cash, no one can dodge taxes? It also removes a huge relief valve for large segments of the population to survive that can’t meet the bar demanded of the ‘normal’ workers.

AnthonyMouse 6y ago

> Crunch the numbers, find out how much you need. If you don't have exact, precise numbers and a precise plan on how to get to that number, the idea is worth nothing since you don't even have a starting point to analyze viability. Mean personal income in the US is ~$54,000: https://fred.stlouisfed.org/series/MAPAINUSA646N https://fred.stlouisfed.org/series/MAPAINUSA646N For a $12,000 UBI that would yield a flat tax rate of ~22%. In real life it's more complicated than that, but not so much more complicated that the number is going to be off by an order of magnitude. It's completely viable. People are already paying nominal rates that high. > Observe the real world, see what happens when you "just increase tax rate". You'll find that very often when you increase taxes you actually end up collecting less, as more people decide to illegally dodge taxes or simply close up shop. The primary causes of this are that higher taxes give people less money to spend which hurts the economy and that higher marginal rates deter working. A UBI is a transfer payment, so on net nobody has any less money to spend and in practice people with less money would have slightly more and those people are more likely to spend it. So this factor goes in favor of economic growth. Meanwhile half the point of the UBI is to get rid of the crazy marginal rate cliffs created by means-tested benefits programs. The status quo deters work more than a UBI would, e.g. you lose unemployment if you take a job. Terrible incentives that would go away.

sokoloff 6y ago
Higher marginal rates also reduce marginal outsourcing of labor. At a 40% combined federal and state rate, in order to pay a tradesperson $150 to come do some minor repair task at my house, I have to go out and earn an extra $250 to get that repair job done as compared to doing it myself. Make the combined marginal rate 60% and now I have to go earn $375 in order to have $150 extra to pay for the labor for that repair. For the equivalent of $375 in wages for a service call, there's a lot of things I'll bother to learn how to tackle myself.
- AnthonyMouse 6y ago
  Again, a UBI will in many cases reduce marginal rates, because no more means testing. Right now if you want to hire a maid to clean your house, you have to overcome the loss of government benefits to them from taking on more work hours. Meanwhile at the top the difference would be less than an increase from 40% to 60% because the UBI is replacing all of these other programs which would no longer have to be funded, or could be made strict alternatives to the UBI which would make the UBI less expensive.
  - sokoloff 6y ago
    People whose marginal tax rates would be reduced by the implementation of a UBI are probably not hiring maids either before or after the implementation of UBI.
    - AnthonyMouse 6y ago
      It's not the employer, it's the maid. To get the maid to show up, you have to cause their bank balance to increase by at least $10, after taxes. If the government is taking 80% of what you pay them away in food, housing and education assistance, you have to pay $50 to get them their $10. Get their real marginal rate down to 40% and you can pay $20 while they enjoy a surplus of $2.
- 6gvONxR4sf7o 6y ago
  Marginal rates are weird because you can compare your marginal rate against every decision, but at that point, you aren't comparing every dollar earned to every dollar spend, so effective rates seem to be more useful (marginal would be useful if I was considering working more, I think). Anyways, as someone with a high effective tax rate, I'm totally fine only keeping 60% (or keeping 40% if we added another 20), if in return we all got UBI.

enragedcacti 6y ago

Perusing the Wikipedia page for the Laffer Curve (https://en.wikipedia.org/wiki/Laffer_curve https://en.wikipedia.org/wiki/Laffer_curve), it seems that most studies find we could double our current tax rates and still be on the left of the peak (65%-70%). Given that our current federal revenue is appr. $3.5 trillion, it seems we could afford Yang's $2.8 trillion in UBI without issue. Source for UBI total cost: https://freedom-dividend.com/ https://freedom-dividend.com/ note: I ignored his ~$0.9 trillion in predicted savings/economic growth but that would lessen the bill even more.

trianglesphere 6y ago

You can ballpark these numbers just fine. 500/mo UBI for 350 Million recipients is $2.1T per year. US GDP prior the pandemic was ~20T. Expenditures were about 4.4 trillion, revenue was 3.5 trillion (2019 numbers). 500/mo or 1k/mo UBI does require raising taxes and consolidating programs (a polite way of saying cutting). At 500/mo you'd raise the total tax rate (as of GDP), but it'd not be an unreasonable raise (as compared to 2k/mo UBI for all citizens which would need taxes at 40% of US GDP).

colinmhayes 6y ago

We are no where close to reaching the top of the Laffer curve, and we never have been. It is a non issue for economists.

bhupy 6y ago

I can try to give you a theoretical tax breakdown using real numbers. In 2018, the household income quintiles were as follows (https://www.taxpolicycenter.org/statistics/household-income-quintiles https://www.taxpolicycenter.org/statistics/household-income-...) Lowest quintile mean: $13,775 Second quintile mean: $37,923 Third quintile mean: $63,572 Fourth quintile mean: $101,570 Highest quintile mean: $233,895 There were about 159M employed persons in the US in the most recent high (https://tradingeconomics.com/united-states/employed-persons https://tradingeconomics.com/united-states/employed-persons), about 50% of the US population. We want our UBI to cover everybody. To make this simple, because quintiles comprise an equally populated group of people, let's imagine that instead of there being ~32M people per quintile, that our nation has 10 people, where 5 people don't work, and each of the remaining 5 falls into one of the quintiles. If we wanted to define a UBI of $18,000 per person, we need to somehow come up with $18,000 * 10 == $180,000 to distribute to everyone equally. If we fund this progressively, each individual would have to pay: Unemployed #1: 0 (statistically, a child) Unemployed #2: 0 (statistically, a child) Unemployed #3: 0 (statistically, a retiree) Unemployed #4: 0 (statistically, a retiree) Unemployed #5: 0 (statistically, a disabled person or stay-at-home caretaker) Lowest: $8,000 Second: $12,000 Third: $21,000 Fourth: $36,000 Highest: $103,000 Total revenue: $180,000 Then consider that everyone here is receiving back 18,000 under the UBI. The highest quintile earner’s net take-home is, thus 233,895-103,000+18,000 == $148,895, which effectively renders their effective tax rate approx 36%. If you run this breakdown across all quintiles: Unemployed #1-5: $0 - $0 + 18,000 == $18,000 Lowest: $13,775 - $8,000 + $18,000 == $23,775 (effective tax -73%) Second: $37,923 - $12,000 + $18,000 == $43,923 (effective tax -16%) Third: $63,572 - $21,000 + $18,000 == $60,572 (effective tax 6%) Fourth: $101,570 - $36,000 + $18,000 == $83,570 (effective tax 18%) Highest: $233,895 - $103,000 + $18,000 == $148,895 (effective tax 36%) You'll notice that the top 2 pay a tax rate that’s comparable to today’s. We wouldn't necessarily need to increase everyone's taxes by the above amount, because there's some wiggle room in the Federal budget. Examples: we can probably eliminate Social Security (which would just be replaced by the UBI), EITC/CTC (basically already a BI), and food stamps (ditto). Medicare, which is an in-kind benefit, can either be eliminated, or it can continue to exist but be paid for by the UBI. Ditto Medicaid. Also notice that because the lowest quintile still ends up with more than the unemployed person after their taxes, there isn’t a disincentive to work. This math also assumes that we're giving people $1,500 per month, and also assumes that children will receive the same amount as adults — a UBI may only pay $1,000 per month to adults, and $500 per month to children, in which case the effective tax rates would be lower. This math also assumes there is 0 VAT. This math also ignores payroll taxes, which account for 35% of the current Federal revenue. We can play with different levels of progressivity and generosity, but the idea is the same. We can scale up from single-person quintiles to million-person quintiles, but the percentages don't change.

mensetmanusman 6y ago

We get China to buy our bonds forever :)

dlp211 6y ago
China owns about $1.1 Trillion in US debt compared to the $28 Trillion in total debt. Most debt, ~85%, remains owned by Americans. Also, China has been trying to unwind their US position over time, but it is a difficult task because they have to do something with the US dollars that they get due to the trade imbalance.