5 ms·

> The entire welfare system should be vaporized and replaced with a tax credit for the poor (i.e. a UBI). Yep, call it a negative income tax if it goes down be

> The entire welfare system should be vaporized and replaced with a tax credit for the poor (i.e. a UBI). Yep, call it a negative income tax if it goes down better than UBI, but many other things would be better than the system we have now.

Aerroon 3y ago
The problem with UBI isn't so much the politics, it's the feasibility of the cost. $12k a year over 300 million people is 80% of the US government's tax revenue. A negative income tax might work out a lot better on the numbers, but it won't help the people that need it the most (the ones that can't get a job). But hey, maybe it can work. The US has a deficit spending of $1.7 trillion in 2023, $1.4 in 2022, $2.7 in 2021. That $1.7 would cover almost half of a $12k ubi. But how long could that last?
- advael 3y ago
  This is nonsensical for numerous reasons 1. The federal government doesn't have tax revenue. It issues a currency and then taxes go toward countering inflation. The notion that a currency-issuing government needs to "balance its budget" in its own currency is a political fiction. Also, policies that benefit people at the lower end of the income spectrum disproportionately actually move money around in the economy, which generally speaking is less inflationary than allowing it to accumulate in various silos like hedge funds 2. A "negative income tax" doesn't have to require employment. You can make zero dollars in income as a self-employed person, and the self-employed still track their income for taxation purposes 3. There are many unnecessary-to-malicious subsidies and inefficient welfare programs that could easily have their rationale subsumed by UBI, and doing so would save considerable cost that is mostly the overhead of all the means-testing personnel and in some cases (like SNAP) completely separate financial machinery necessary to maintain them Even setting all that aside, you could make considerably more "tax revenue" by funding the IRS or reversing some of the nakedly corrupt corporate tax breaks that have been created over the last several decades. There always seems to be more money to subsidize artificially lowering the price of certain goods, fund incredibly inefficient private government contractors to do things that once cost considerably less for the government to do itself, fund drug research only to then allow the resulting breakthroughs to be patented by a private firm and then gouge people for treatment, or buy ludicrously expensive weapons for militarized police forces, but propose anything that actually benefits people and suddenly everyone's worried about the costs. Not to put too fine a point on it, but all this "Well have you considered the cost?" handwringing people do when UBI comes up just drastically misunderstands how governments use money, while claiming to be "responsible" and "realistic"
  - eru 3y ago
    Your point (1) sounds like the same old 'modern monetary theory' that never amounted to anything. To quip, MMT is both novel and correct. It has both novel and correct parts (but no parts that are both). See eg https://www.econlib.org/library/Columns/y2021/SumnermodernmonetarytheoryPartI.html https://www.econlib.org/library/Columns/y2021/Sumnermodernmo...
  - gottorf 3y ago
    > you could make considerably more "tax revenue" by funding the IRS The US government expenditure as percentage of GDP is now over one-third, as opposed to the pre-WW1 long-term average in the single digits. Keep in mind that massive infrastructure projects like the Transcontinental Railroad were able to be built in those single-digit percent times, or that US educational spending per pupil has been going up year after year for decades yet student achievement flatlined, and of recent years been trending down. Clearly, more tax revenue is neither necessary nor sufficient for the public good. > reversing some of the nakedly corrupt corporate tax breaks No arguments from me there. > fund drug research only to then allow the resulting breakthroughs to be patented by a private firm and then gouge people for treatment Fundamental research and bringing a drug to market are markedly different areas that require very different skills and incentives. An organization that is good at one is not necessarily good at the other. And this isn't confined to drug research; an architect can draw up plans for a house, but a family cannot live in a plan. Foundations need to be poured, chalk lines snapped, lumber nailed together, and plumbing and wires laid, all in the context of a competitive marketplace.
    - advael 3y ago
      I attribute a lot of the higher expenditure and lower efficiency to the continued insistence that outsourcing to contractors, effectively picking winners in a "market" to give monopoly status, is a better way to provide government services. These firms have little if any accountability to the electorate, no incentive to set reasonable prices, get anything done efficiently, and in some cases don't even produce working services Similarly, bringing a drug to market with a patent is not a competitive marketplace, by design, and it consistently creates an outcome wherein people are charged exorbitant sums of money because of this non-competitive market. Doing a bunch of government-backed R&D and then getting a patent for it is the government picking a winner, not creating a market Basically, it seems like the government was and remains a lot more efficient when it directly builds the capacity to provide goods and services it determines to have an interest in providing, rather than try to do this through "the market" (again, this is almost never an actual market)
- AnthonyMouse 3y ago
  The cost is fiction because it's a tax credit. The money is on both sides of the ledger. If you're making $60,000/year and your pre-credit taxes go up by $12,000 and then you get a $12,000 tax credit, you have paid an additional zero dollars in taxes. If you don't make much money and the government used to pay you a net $10,000 in benefits and now you get a $12,000 UBI and pay $2000 in taxes, that hasn't actually cost any additional money, all it does is convert the needlessly inefficient constellation of benefits into cash. The "universal" part of a UBI is serving the same purpose as the progressive rate structure in the income tax, i.e. you want an effective rate curve which is higher for the rich than the poor. Which means that you don't need both. What you use instead is a flat tax rate which serves as the de facto "phase out" for the UBI. Except that because it's all in one place, there are no cliffs, and there are no poor people paying higher de facto marginal rates than rich people, and there are no mountains of paperwork to apply for benefits.
  - eru 3y ago
    > The cost is fiction because it's a tax credit. The money is on both sides of the ledger. If you're making $60,000/year and your pre-credit taxes go up by $12,000 and then you get a $12,000 tax credit, you have paid an additional zero dollars in taxes. Yes, but marginal rates are important, too.
    - Projectiboga 3y ago
      Most people miss that the 'money' will get spent. This should lead to an income multiplier. Then hopefully to a reallocation of resources moving bureaucrats from administrative work to something else.
      - eru 3y ago
        (Fiscal) income multipliers don't really exist (ie they are one) in an economy with a competent central bank that targets eg inflation or nominal GDP. If whatever fiscal policy you have makes overall nominal spending go up (or down), that would have an impact on inflation, so the central bank will remove money from circulation (or add money to circulation) to counteract. Thus neutralising any multiplier, you might naively expect. (Also keep in mind that when you don't tax some money, it also gets spend or invested etc.)

Aerroon 3y ago

The problem with UBI isn't so much the politics, it's the feasibility of the cost. $12k a year over 300 million people is 80% of the US government's tax revenue. A negative income tax might work out a lot better on the numbers, but it won't help the people that need it the most (the ones that can't get a job). But hey, maybe it can work. The US has a deficit spending of $1.7 trillion in 2023, $1.4 in 2022, $2.7 in 2021. That $1.7 would cover almost half of a $12k ubi. But how long could that last?

advael 3y ago
This is nonsensical for numerous reasons 1. The federal government doesn't have tax revenue. It issues a currency and then taxes go toward countering inflation. The notion that a currency-issuing government needs to "balance its budget" in its own currency is a political fiction. Also, policies that benefit people at the lower end of the income spectrum disproportionately actually move money around in the economy, which generally speaking is less inflationary than allowing it to accumulate in various silos like hedge funds 2. A "negative income tax" doesn't have to require employment. You can make zero dollars in income as a self-employed person, and the self-employed still track their income for taxation purposes 3. There are many unnecessary-to-malicious subsidies and inefficient welfare programs that could easily have their rationale subsumed by UBI, and doing so would save considerable cost that is mostly the overhead of all the means-testing personnel and in some cases (like SNAP) completely separate financial machinery necessary to maintain them Even setting all that aside, you could make considerably more "tax revenue" by funding the IRS or reversing some of the nakedly corrupt corporate tax breaks that have been created over the last several decades. There always seems to be more money to subsidize artificially lowering the price of certain goods, fund incredibly inefficient private government contractors to do things that once cost considerably less for the government to do itself, fund drug research only to then allow the resulting breakthroughs to be patented by a private firm and then gouge people for treatment, or buy ludicrously expensive weapons for militarized police forces, but propose anything that actually benefits people and suddenly everyone's worried about the costs. Not to put too fine a point on it, but all this "Well have you considered the cost?" handwringing people do when UBI comes up just drastically misunderstands how governments use money, while claiming to be "responsible" and "realistic"
- eru 3y ago
  Your point (1) sounds like the same old 'modern monetary theory' that never amounted to anything. To quip, MMT is both novel and correct. It has both novel and correct parts (but no parts that are both). See eg https://www.econlib.org/library/Columns/y2021/SumnermodernmonetarytheoryPartI.html https://www.econlib.org/library/Columns/y2021/Sumnermodernmo...
- gottorf 3y ago
  > you could make considerably more "tax revenue" by funding the IRS The US government expenditure as percentage of GDP is now over one-third, as opposed to the pre-WW1 long-term average in the single digits. Keep in mind that massive infrastructure projects like the Transcontinental Railroad were able to be built in those single-digit percent times, or that US educational spending per pupil has been going up year after year for decades yet student achievement flatlined, and of recent years been trending down. Clearly, more tax revenue is neither necessary nor sufficient for the public good. > reversing some of the nakedly corrupt corporate tax breaks No arguments from me there. > fund drug research only to then allow the resulting breakthroughs to be patented by a private firm and then gouge people for treatment Fundamental research and bringing a drug to market are markedly different areas that require very different skills and incentives. An organization that is good at one is not necessarily good at the other. And this isn't confined to drug research; an architect can draw up plans for a house, but a family cannot live in a plan. Foundations need to be poured, chalk lines snapped, lumber nailed together, and plumbing and wires laid, all in the context of a competitive marketplace.
  - advael 3y ago
    I attribute a lot of the higher expenditure and lower efficiency to the continued insistence that outsourcing to contractors, effectively picking winners in a "market" to give monopoly status, is a better way to provide government services. These firms have little if any accountability to the electorate, no incentive to set reasonable prices, get anything done efficiently, and in some cases don't even produce working services Similarly, bringing a drug to market with a patent is not a competitive marketplace, by design, and it consistently creates an outcome wherein people are charged exorbitant sums of money because of this non-competitive market. Doing a bunch of government-backed R&D and then getting a patent for it is the government picking a winner, not creating a market Basically, it seems like the government was and remains a lot more efficient when it directly builds the capacity to provide goods and services it determines to have an interest in providing, rather than try to do this through "the market" (again, this is almost never an actual market)
AnthonyMouse 3y ago
The cost is fiction because it's a tax credit. The money is on both sides of the ledger. If you're making $60,000/year and your pre-credit taxes go up by $12,000 and then you get a $12,000 tax credit, you have paid an additional zero dollars in taxes. If you don't make much money and the government used to pay you a net $10,000 in benefits and now you get a $12,000 UBI and pay $2000 in taxes, that hasn't actually cost any additional money, all it does is convert the needlessly inefficient constellation of benefits into cash. The "universal" part of a UBI is serving the same purpose as the progressive rate structure in the income tax, i.e. you want an effective rate curve which is higher for the rich than the poor. Which means that you don't need both. What you use instead is a flat tax rate which serves as the de facto "phase out" for the UBI. Except that because it's all in one place, there are no cliffs, and there are no poor people paying higher de facto marginal rates than rich people, and there are no mountains of paperwork to apply for benefits.
- eru 3y ago
  > The cost is fiction because it's a tax credit. The money is on both sides of the ledger. If you're making $60,000/year and your pre-credit taxes go up by $12,000 and then you get a $12,000 tax credit, you have paid an additional zero dollars in taxes. Yes, but marginal rates are important, too.
  - Projectiboga 3y ago
    Most people miss that the 'money' will get spent. This should lead to an income multiplier. Then hopefully to a reallocation of resources moving bureaucrats from administrative work to something else.
    - eru 3y ago
      (Fiscal) income multipliers don't really exist (ie they are one) in an economy with a competent central bank that targets eg inflation or nominal GDP. If whatever fiscal policy you have makes overall nominal spending go up (or down), that would have an impact on inflation, so the central bank will remove money from circulation (or add money to circulation) to counteract. Thus neutralising any multiplier, you might naively expect. (Also keep in mind that when you don't tax some money, it also gets spend or invested etc.)