7 ms·

There was a podcast or video about this exact same issue in... Sweden? Some anecdata from people receiving welfare, but couldn't start a job or a business becau

by ixwt 2y ago

There was a podcast or video about this exact same issue in... Sweden? Some anecdata from people receiving welfare, but couldn't start a job or a business because if they received any money, they get nothing from welfare and wouldn't be able to support themselves. This resulted in people that were trying to start a business not get paid for their work (I believe one of the anecdata was a photographer) because doing so would mean they couldn't support themselves. Personally, I'm a big fan of the "for every $2 you make, you get $1 less from UBI/Welfare" concept. This seems a very easy way to wean people off of welfare. That money is already tracked by the IRS (unless you're getting paid under the table).

Majromax 2y ago
> Personally, I'm a big fan of the "for every $2 you make, you get $1 less from UBI/Welfare" concept. This seems a very easy way to wean people off of welfare. That money is already tracked by the IRS (unless you're getting paid under the table). That's a more gradual phase-out, but it still is an effective marginal tax rate of 50%+ – a level that wealthy earners would complain about to no end. In light of this study, it seems to me that a cash-support system that wants to encourage work should have a starting region with a negative effective phase-out rate: "for every $1 you make up to $X, you get $0.25 more from UBI/Welfare." That would encourage labour-market attachment even if tenuous, and it would also have a side benefit of making the worker want to report the income, possibly uncovering under-the-table payment schemes.
- jewayne 2y ago
  > In light of this study, it seems to me that a cash-support system that wants to encourage work should have a starting region with a negative effective phase-out rate: "for every $1 you make up to $X, you get $0.25 more from UBI/Welfare." That would encourage labour-market attachment even if tenuous, and it would also have a side benefit of making the worker want to report the income, possibly uncovering under-the-table payment schemes. Nobody tell this guy about the Earned Income Tax Credit. Let him think he discovered it.
  - Majromax 2y ago
    > Nobody tell this guy about the Earned Income Tax Credit. Let him think he discovered it. I know about the EITC, but the ETIC net of benefit clawbacks still presents a high marginal rate. Then the EITC itself gets clawed back at its own threshold, imposing a small region of high marginal rates. (The EITC itself is also rather paltry for filers without children.) Additionally, the US tax system is ill-structured to really implement this. If you're trying to operate on the "under-the-table cash payments for day labour" margin, a system that depends on filing one's taxes to receive a refund later is not exactly hassle-free.
    - bombcar 2y ago
      The EITC isn't as complicated as the child tax credit; that one is not refundable so you end up trying to calculate a way to get enough tax to get it fully. Excel1040 is great for this - https://sites.google.com/view/incometaxspreadsheet/home https://sites.google.com/view/incometaxspreadsheet/home
- ixwt 2y ago
  > That's a more gradual phase-out, but it still is an effective marginal tax rate of 50%+ – a level that wealthy earners would complain about to no end. Yeah, my wording could have been better. The suggestion that I've seen for UBI is $12k/year (which is clearly not enough to live on in today's economy), with the $2:$1 reduction being only for the UBI, and then standard taxes starting after that. This system was actually proposed a looong time ago (like 1970s, I think). Just by giving everyone a massive tax credit to start with.
- AnthonyMouse 2y ago
  > a negative effective phase-out rate: "for every $1 you make up to $X, you get $0.25 more from UBI/Welfare." The main problem with this is that the tax system is set up to prevent you from under-reporting your income. Over-reporting it is essentially trivial, e.g. two people who are in the relevant income range exchange favors (do each others' laundry etc.), or claim to have, and then actually report the transactions as income and get the credit. But there's something else you can do here which is really neat. Stop using a complicated progressive rate structure, and instead eliminate the phase out entirely. Now instead of low income people having a nominal 0% tax rate but an effective 50% benefits phase out rate and high income people having a nominal 30% tax rate, you just use a flat 35% tax rate which implicitly has the benefits phase out built into the tax system. Which means you don't need any of this income reporting or annual tax returns or anything of the kind, the employer/seller just withholds the fixed tax rate and you're done, and everybody unconditionally gets the UBI to provide the effect of a progressive rate structure.
  - pineaux 2y ago
    Doesn't a flat tax rate lower the income that a state has?
    - speed_spread 2y ago
      Yeah, and it makes it even easier for the rich to become richer, which is why they're the ones advocating for it.
      - BytesAndGears 2y ago
        You could keep it flat up to a high threshold, like top ~5% of salary, then transition to marginal tax
        AnthonyMouse 2y ago
        You don't need it, it's already built in. The flat tax rate needed to serve as the implicit benefits phase out is already in the range as what you'd use in the high tax brackets in a progressive tax system with separate benefits phase outs. If you want it to be more progressive you raise the flat tax rate and use the money to increase the UBI. If you want a less progressive system with lower taxes you do the opposite. Making it needlessly more complicated gains you nothing and costs you efficiency.
jewayne 2y ago
> Personally, I'm a big fan of the "for every $2 you make, you get $1 less from UBI/Welfare" That's..that's not UBI, at all. UBI is universal. If there are any means tests whatsoever, that's not UBI.
- briHass 2y ago
  UBI would never be truly 'universal'. If someone takes money from me and then gives some of it back, I don't consider that a free gift. The only way the numbers would ever balance would be for most income earners to end up being taxed >100% of their UBI payment.
  - karmajunkie 2y ago
    or for the ridiculously wealthy to be taxed at a very high rate. which is why they reject the notion of UBI so fervently.
    - Kamq 2y ago
      The numbers don't line up for that. The sum total of the wealth of all the billionaires in the US in 2021 was ~$4.1 Trillion [0]. That's about the same as the government budget in a normal year pre-pandemic, or about 2/3 of the government budget post-pandemic. Assuming a $1000/month and a population of ~350 million, you're looking at $4.2 Trillion per year. You could almost fund it for the first year by taxing all of the wealth of the billionaires at 100%. But what are you going to do the second year? That's total wealth, not yearly income. [0] https://www.forbes.com/sites/tommybeer/2021/01/26/report-american-billionaires-have-added-more-than-1-trillion-in-wealth-during-pandemic/ https://www.forbes.com/sites/tommybeer/2021/01/26/report-ame...
      - karmajunkie 2y ago
        just curious, but why is there always an implicit assumption in this debate that we only tax the wealth of billionaires? is the money of a half billionaire somehow less green than a full billionaire?
TeaBrain 2y ago
>Personally, I'm a big fan of the "for every $2 you make, you get $1 less from UBI/Welfare" concept. This idea is called a negative income tax.
- whimsicalism 2y ago
  you're not describing a negative income tax
  - TeaBrain 2y ago
    I wasn't describing anything. A negative income tax is approximately what the guy I replied to was describing. It obviously wasn't a perfect description, but I didn't think my label of the description in his comment would be taken so literally. If you'd care to describe why you believe this isn't an approximation of the outcome of a negative income tax, then feel free to explain.
    - shkkmo 2y ago
      A negative income tax increases your total benefits as you earn more (up to a point), the system that was being described is one where total benefits are decreased as you earn more.
      - TeaBrain 2y ago
        Benefits do not increase with income in a negative income tax system. I'm not sure where you got that idea from. The point of a negative income tax system is to allow total income, from the combination of work and benefits, to increase as work income increases, preventing the incentive to not work due to benefits exceeding or only matching potential work income due to a hard income cutoff for qualifying for a non-dynamic amount of benefits. In this way, as work income increases in a negative income tax system, the benefits will incrementally decrease, until the individual meets the level where they become a net payer, not receiver, but those that are net payers will not have a total income less than any of those that are net receivers. In the system that was described it would take two units of income to decrease one unit of benefits, allowing total income to increase with an increase in levels of work income, while not having a hard cutoff for benefits. This is an approximation of what would occur in a negative income tax system and it would not result in a net decrease in earnings considering it takes twice the earnings units to lower one unit of benefits.
maeil 2y ago
> Personally, I'm a big fan of the "for every $2 you make, you get $1 less from UBI/Welfare" concept. This seems a very easy way to wean people off of welfare. That money is already tracked by the IRS (unless you're getting paid under the table). Just subsidize the minimum wage. It's dead simple. Raise the minimum wage by $x but have that extra $x be paid from taxes, not the employer. Big businesses will scream "But inflation! But wage-price spiral!". Their screams are to be ignored.
- iamthirsty 2y ago
  I'd like to see any reasonable math behind this idea.
  - maeil 2y ago
    Depends on what you're comparing it to. This thread is about unconditional cash. Giving everyone $1000 a month, unconditionally, is clearly many times more expensive than subsidizing the minimum wage by $1 an hour - it's rather difficult to work 1000 hours when a month has ~730 hours! The "investment" (assuming that's what you mean by the math) can be as high or as low as any other proposal, there's nothing special about it. You can adjust the $/hr that you subsidize and the size of the group that is eligible to fit the proposed investment.

by ixwt 2y ago

Majromax 2y ago

> Personally, I'm a big fan of the "for every $2 you make, you get $1 less from UBI/Welfare" concept. This seems a very easy way to wean people off of welfare. That money is already tracked by the IRS (unless you're getting paid under the table). That's a more gradual phase-out, but it still is an effective marginal tax rate of 50%+ – a level that wealthy earners would complain about to no end. In light of this study, it seems to me that a cash-support system that wants to encourage work should have a starting region with a negative effective phase-out rate: "for every $1 you make up to $X, you get $0.25 more from UBI/Welfare." That would encourage labour-market attachment even if tenuous, and it would also have a side benefit of making the worker want to report the income, possibly uncovering under-the-table payment schemes.

jewayne 2y ago
> In light of this study, it seems to me that a cash-support system that wants to encourage work should have a starting region with a negative effective phase-out rate: "for every $1 you make up to $X, you get $0.25 more from UBI/Welfare." That would encourage labour-market attachment even if tenuous, and it would also have a side benefit of making the worker want to report the income, possibly uncovering under-the-table payment schemes. Nobody tell this guy about the Earned Income Tax Credit. Let him think he discovered it.
- Majromax 2y ago
  > Nobody tell this guy about the Earned Income Tax Credit. Let him think he discovered it. I know about the EITC, but the ETIC net of benefit clawbacks still presents a high marginal rate. Then the EITC itself gets clawed back at its own threshold, imposing a small region of high marginal rates. (The EITC itself is also rather paltry for filers without children.) Additionally, the US tax system is ill-structured to really implement this. If you're trying to operate on the "under-the-table cash payments for day labour" margin, a system that depends on filing one's taxes to receive a refund later is not exactly hassle-free.
  - bombcar 2y ago
    The EITC isn't as complicated as the child tax credit; that one is not refundable so you end up trying to calculate a way to get enough tax to get it fully. Excel1040 is great for this - https://sites.google.com/view/incometaxspreadsheet/home https://sites.google.com/view/incometaxspreadsheet/home
ixwt 2y ago
> That's a more gradual phase-out, but it still is an effective marginal tax rate of 50%+ – a level that wealthy earners would complain about to no end. Yeah, my wording could have been better. The suggestion that I've seen for UBI is $12k/year (which is clearly not enough to live on in today's economy), with the $2:$1 reduction being only for the UBI, and then standard taxes starting after that. This system was actually proposed a looong time ago (like 1970s, I think). Just by giving everyone a massive tax credit to start with.
AnthonyMouse 2y ago
> a negative effective phase-out rate: "for every $1 you make up to $X, you get $0.25 more from UBI/Welfare." The main problem with this is that the tax system is set up to prevent you from under-reporting your income. Over-reporting it is essentially trivial, e.g. two people who are in the relevant income range exchange favors (do each others' laundry etc.), or claim to have, and then actually report the transactions as income and get the credit. But there's something else you can do here which is really neat. Stop using a complicated progressive rate structure, and instead eliminate the phase out entirely. Now instead of low income people having a nominal 0% tax rate but an effective 50% benefits phase out rate and high income people having a nominal 30% tax rate, you just use a flat 35% tax rate which implicitly has the benefits phase out built into the tax system. Which means you don't need any of this income reporting or annual tax returns or anything of the kind, the employer/seller just withholds the fixed tax rate and you're done, and everybody unconditionally gets the UBI to provide the effect of a progressive rate structure.
- pineaux 2y ago
  Doesn't a flat tax rate lower the income that a state has?
  - speed_spread 2y ago
    Yeah, and it makes it even easier for the rich to become richer, which is why they're the ones advocating for it.
    - BytesAndGears 2y ago
      You could keep it flat up to a high threshold, like top ~5% of salary, then transition to marginal tax
      - AnthonyMouse 2y ago
        You don't need it, it's already built in. The flat tax rate needed to serve as the implicit benefits phase out is already in the range as what you'd use in the high tax brackets in a progressive tax system with separate benefits phase outs. If you want it to be more progressive you raise the flat tax rate and use the money to increase the UBI. If you want a less progressive system with lower taxes you do the opposite. Making it needlessly more complicated gains you nothing and costs you efficiency.

jewayne 2y ago

> Personally, I'm a big fan of the "for every $2 you make, you get $1 less from UBI/Welfare" That's..that's not UBI, at all. UBI is universal. If there are any means tests whatsoever, that's not UBI.

briHass 2y ago
UBI would never be truly 'universal'. If someone takes money from me and then gives some of it back, I don't consider that a free gift. The only way the numbers would ever balance would be for most income earners to end up being taxed >100% of their UBI payment.
- karmajunkie 2y ago
  or for the ridiculously wealthy to be taxed at a very high rate. which is why they reject the notion of UBI so fervently.
  - Kamq 2y ago
    The numbers don't line up for that. The sum total of the wealth of all the billionaires in the US in 2021 was ~$4.1 Trillion [0]. That's about the same as the government budget in a normal year pre-pandemic, or about 2/3 of the government budget post-pandemic. Assuming a $1000/month and a population of ~350 million, you're looking at $4.2 Trillion per year. You could almost fund it for the first year by taxing all of the wealth of the billionaires at 100%. But what are you going to do the second year? That's total wealth, not yearly income. [0] https://www.forbes.com/sites/tommybeer/2021/01/26/report-american-billionaires-have-added-more-than-1-trillion-in-wealth-during-pandemic/ https://www.forbes.com/sites/tommybeer/2021/01/26/report-ame...
    - karmajunkie 2y ago
      just curious, but why is there always an implicit assumption in this debate that we only tax the wealth of billionaires? is the money of a half billionaire somehow less green than a full billionaire?

TeaBrain 2y ago

>Personally, I'm a big fan of the "for every $2 you make, you get $1 less from UBI/Welfare" concept. This idea is called a negative income tax.

whimsicalism 2y ago
you're not describing a negative income tax
- TeaBrain 2y ago
  I wasn't describing anything. A negative income tax is approximately what the guy I replied to was describing. It obviously wasn't a perfect description, but I didn't think my label of the description in his comment would be taken so literally. If you'd care to describe why you believe this isn't an approximation of the outcome of a negative income tax, then feel free to explain.
  - shkkmo 2y ago
    A negative income tax increases your total benefits as you earn more (up to a point), the system that was being described is one where total benefits are decreased as you earn more.
    - TeaBrain 2y ago
      Benefits do not increase with income in a negative income tax system. I'm not sure where you got that idea from. The point of a negative income tax system is to allow total income, from the combination of work and benefits, to increase as work income increases, preventing the incentive to not work due to benefits exceeding or only matching potential work income due to a hard income cutoff for qualifying for a non-dynamic amount of benefits. In this way, as work income increases in a negative income tax system, the benefits will incrementally decrease, until the individual meets the level where they become a net payer, not receiver, but those that are net payers will not have a total income less than any of those that are net receivers. In the system that was described it would take two units of income to decrease one unit of benefits, allowing total income to increase with an increase in levels of work income, while not having a hard cutoff for benefits. This is an approximation of what would occur in a negative income tax system and it would not result in a net decrease in earnings considering it takes twice the earnings units to lower one unit of benefits.

maeil 2y ago

> Personally, I'm a big fan of the "for every $2 you make, you get $1 less from UBI/Welfare" concept. This seems a very easy way to wean people off of welfare. That money is already tracked by the IRS (unless you're getting paid under the table). Just subsidize the minimum wage. It's dead simple. Raise the minimum wage by $x but have that extra $x be paid from taxes, not the employer. Big businesses will scream "But inflation! But wage-price spiral!". Their screams are to be ignored.

iamthirsty 2y ago
I'd like to see any reasonable math behind this idea.
- maeil 2y ago
  Depends on what you're comparing it to. This thread is about unconditional cash. Giving everyone $1000 a month, unconditionally, is clearly many times more expensive than subsidizing the minimum wage by $1 an hour - it's rather difficult to work 1000 hours when a month has ~730 hours! The "investment" (assuming that's what you mean by the math) can be as high or as low as any other proposal, there's nothing special about it. You can adjust the $/hr that you subsidize and the size of the group that is eligible to fit the proposed investment.