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You are earning $4000/month after taxes and begin to receive $1000/month. What do you do? Some fraction of people will reduce their workload so their earnings

You are earning $4000/month after taxes and begin to receive $1000/month. What do you do? Some fraction of people will reduce their workload so their earnings are $3000/month, bringing their total income back to $4000. Some fraction of people will not reduce their workload at all and inflate their lifestyle to depend on $5000/month. The overwhelming majority of people will choose the latter; we already know this, it's one of the chief complaints about a materialist, consumerist oriented society. When people get a raise, they overwhelmingly spend it. It's why most people can't save a $1000 emergency fund. If you are earning $2000 per month and suddenly your income increases by 50% you feel like a baller, you are going to start eating better, ordering take out a little bit, replace that cracked phone, add a little more data to your cell phone plan, turn that thermostat up a little, whatever.

jeffbee 5y ago
In the U.S. that would be a very good outcome. 15% of American households experience food insecurity. We absolutely want these people to spend it, not save it. Even stimulus checks that were small and arrived irregularly had a huge impact on hunger in America. $1000/mo on the regular would be revolutionary.
- burlesona 5y ago
  Maybe, but I think the fact that they could be planned for / assumed would mean the benefit would have a high risk of quickly disappearing into inflation and rent-seeking. In the case of rent in particular, there would be no reason for any landlord to take less than $UBI if there was a guaranteed monthly payment from the government. Unexpected or unpredictable cash influx almost always makes things better because people know they can’t “count on it” and they use it for savings or to fix problems they had been unable to fix, rather than “live off it.” To put that differently: what most people really need is margin to handle the unexpected problems in life. But living below your means to create margin is hard, even for high-income people! Doubly hard when you are low income. So unexpected cash is more beneficial than expected cash, precisely because it is unexpected and therefore inherently “margin.”
augustuspolius 5y ago
Why not to increase federal minimum wage instead to, say, $30/h? If you were making $4000 - you are good already. If you were making $1000 - you get an increase.
- 91dylwyn 5y ago
  This seems much more sensible than extra money to those already comfortably off.
bryanlarsen 5y ago
That's a great example, but you need to use smaller numbers. If UBI is put into place, the only thing somebody making $4K/mo after taxes is going to do is complain about his increased taxes. In a balanced UBI, the UBI is paid for with taxes. So if you make the average income, you get $X from UBI and your taxes go up by $X. If you make more than average, like your example, then you pay out more than you receive in UBI. Because average income is considerably higher than median income, most people benefit from UBI.
- feoren 5y ago
  There are other taxes than income taxes. My idealistic view of UBI is a way to share the increasing benefit of automation. So if a factory owner fires all his employees and replaces them with robots, his increased profits are rather heavily taxed and go to UBI. I am aware of how logistically difficult it would be to have a fair "automation tax" though. But the point is: income tax is not the only tax, and probably not even the best tax, to fund UBI.
  - bryanlarsen 5y ago
    There are no other taxes capable of pulling in trillions of dollars annually. So it'll have to be at least partially on income tax. (I hate saying trillions of taxes when talking about UBI. Since most of the effect of the increased taxes is just a clawback, on net the tax is only in the hundreds of billions). Morally, there's also a good case for taxing income for UBI -- it's a fair claw back for those that don't need UBI. But there's a solid base to your argument -- we definitely should be increasing other taxes and decreasing income taxes in general.

jeffbee 5y ago

In the U.S. that would be a very good outcome. 15% of American households experience food insecurity. We absolutely want these people to spend it, not save it. Even stimulus checks that were small and arrived irregularly had a huge impact on hunger in America. $1000/mo on the regular would be revolutionary.

burlesona 5y ago
Maybe, but I think the fact that they could be planned for / assumed would mean the benefit would have a high risk of quickly disappearing into inflation and rent-seeking. In the case of rent in particular, there would be no reason for any landlord to take less than $UBI if there was a guaranteed monthly payment from the government. Unexpected or unpredictable cash influx almost always makes things better because people know they can’t “count on it” and they use it for savings or to fix problems they had been unable to fix, rather than “live off it.” To put that differently: what most people really need is margin to handle the unexpected problems in life. But living below your means to create margin is hard, even for high-income people! Doubly hard when you are low income. So unexpected cash is more beneficial than expected cash, precisely because it is unexpected and therefore inherently “margin.”

augustuspolius 5y ago

Why not to increase federal minimum wage instead to, say, $30/h? If you were making $4000 - you are good already. If you were making $1000 - you get an increase.

91dylwyn 5y ago
This seems much more sensible than extra money to those already comfortably off.

bryanlarsen 5y ago

That's a great example, but you need to use smaller numbers. If UBI is put into place, the only thing somebody making $4K/mo after taxes is going to do is complain about his increased taxes. In a balanced UBI, the UBI is paid for with taxes. So if you make the average income, you get $X from UBI and your taxes go up by $X. If you make more than average, like your example, then you pay out more than you receive in UBI. Because average income is considerably higher than median income, most people benefit from UBI.

feoren 5y ago
There are other taxes than income taxes. My idealistic view of UBI is a way to share the increasing benefit of automation. So if a factory owner fires all his employees and replaces them with robots, his increased profits are rather heavily taxed and go to UBI. I am aware of how logistically difficult it would be to have a fair "automation tax" though. But the point is: income tax is not the only tax, and probably not even the best tax, to fund UBI.
- bryanlarsen 5y ago
  There are no other taxes capable of pulling in trillions of dollars annually. So it'll have to be at least partially on income tax. (I hate saying trillions of taxes when talking about UBI. Since most of the effect of the increased taxes is just a clawback, on net the tax is only in the hundreds of billions). Morally, there's also a good case for taxing income for UBI -- it's a fair claw back for those that don't need UBI. But there's a solid base to your argument -- we definitely should be increasing other taxes and decreasing income taxes in general.