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Is that what UBI has become these days? That everyone is supposed to get some extra money on top of whatever they already have? ~20 years ago, when UBI was a p

Is that what UBI has become these days? That everyone is supposed to get some extra money on top of whatever they already have? ~20 years ago, when UBI was a popular idea in my country, it was understood as a technical fix to the welfare and tax systems. It was supposed to simplify the systems and make them easier to understand. It was supposed to fix the perverse incentives people with low wages face, such as the extremely high (often >80%) effective marginal tax rates. It was supposed to automatically give people the benefits they are entitled to, without having to deal with the punitive bureaucracy. It was supposed to help people who fall between the categories in the existing welfare system. And so on. And it was supposed to be funded by making it an accounting technicality, at least for the most part. Most basic welfare benefits, tax credits, and tax deductions would go away. Progressive taxation would go away. Standard deduction would either go away or become substantially smaller. And the highest income tax bracket would start at 0.

nout 8mo ago
The current UBI frame is nothing like what you said. And I think this is the issue with UBI - the incentives are not aligned for it to be stable and reasonable over time, but rather to get much worse and misused over time.
AnthonyMouse 8mo ago
That's exactly what it's supposed to be, but then opponents (or just people who are confused) will often characterize it as something else which is easier to find fault with.
Izkata 8mo ago
All of that sounds nice, but the current understanding is what fell out when people started questioning the specifics of how all of that would work.
elevatortrim 8mo ago
Everything you say is still the idea and I agree but where does the idea that progressive taxation would go away coming from? What does it have to do with UBI?
- AnthonyMouse 8mo ago
  A UBI is a method of achieving the same effect as progressive taxation without the complexity and perverse incentives of tracking everyone's income and applying different marginal rates. Suppose you have a tax system with progressive tax brackets and then a needs-based welfare system with benefits phase outs. It turns out, those two things (progressive rate structure and benefits phase outs) basically cancel each other out -- lower income people are supposed to pay lower marginal tax rates but if you're paying a 10% marginal tax rate and then have a 25% benefits phase out rate, that's the same as paying a 35% marginal tax rate. Worse, the benefits phase outs for different benefits often overlap, with the result that lower income people are often paying higher marginal tax rates than wealthy people, and there are some cases when their marginal rates even exceed 100% of marginal income. So you have two unnecessarily complicated systems that mostly exist to cancel each other out, and to the extent that they don't they're doing something you don't actually want (excessively high marginal rates on poor people). It's better to just get rid of both -- no phase outs is the "universal" part of the UBI, and then you combine that with a uniform marginal tax rate for everyone. You're basically getting rid of the progressive rate structure so you can lower the marginal tax rates on poor people to the ones being paid by rich people, and if that seems counterintuitive it's because the status quo is very stupid.
  - zozbot234 8mo ago
    It turns out that a theoretically optimal non-linear taxation schedule features a UBI plus varying marginal tax rates (i.e. continuous tax brackets) that start out quite high (but sub-100%) in the UBI-clawback range (to manage the UBI break-even point while still offering a high subsidy to the very lowest earners) become very low for low-to-middle income earners and rise gradually for middle- and high-income earners. That's quite redistributive in intent, but the tax brackets themselves are neither "progressive" nor "regressive". Nevertheless, middle- and high-income earners do face moderately progressive rates.
    - AnthonyMouse 8mo ago
      That seems like a lot of added complexity just to make sure the lower middle class gets screwed out of receiving the UBI.
readthenotes1 8mo ago
"Is that what UBI has become these days? That everyone is supposed to get some extra money on top of whatever they already have?" You do know that the I in UBI stands for Universal, don't you? What the people in your country were talking about is a Guaranteed Minimum Income. Related but different
6510 8mo ago
It could start out like that while we gradually dial down the other systems it is suppose to replace. > Progressive taxation would go away. There should be very aggressive progressive taxation. When you've absorbed a lot we should encourage you to stop hoarding and get a life. Maybe do a license for a fund for a specific purpose. Then you can continue playing the game but the fund may only be spend on [say] high speed rail. It seems fun to leave all the money in the companies and require them to explain to a committee what they are going to do with it. If apple says they are going to make phones the size of the fund begs to question why they are not already spending it on making phones?

nout 8mo ago

The current UBI frame is nothing like what you said. And I think this is the issue with UBI - the incentives are not aligned for it to be stable and reasonable over time, but rather to get much worse and misused over time.

AnthonyMouse 8mo ago

That's exactly what it's supposed to be, but then opponents (or just people who are confused) will often characterize it as something else which is easier to find fault with.

Izkata 8mo ago

All of that sounds nice, but the current understanding is what fell out when people started questioning the specifics of how all of that would work.

elevatortrim 8mo ago

Everything you say is still the idea and I agree but where does the idea that progressive taxation would go away coming from? What does it have to do with UBI?

AnthonyMouse 8mo ago
A UBI is a method of achieving the same effect as progressive taxation without the complexity and perverse incentives of tracking everyone's income and applying different marginal rates. Suppose you have a tax system with progressive tax brackets and then a needs-based welfare system with benefits phase outs. It turns out, those two things (progressive rate structure and benefits phase outs) basically cancel each other out -- lower income people are supposed to pay lower marginal tax rates but if you're paying a 10% marginal tax rate and then have a 25% benefits phase out rate, that's the same as paying a 35% marginal tax rate. Worse, the benefits phase outs for different benefits often overlap, with the result that lower income people are often paying higher marginal tax rates than wealthy people, and there are some cases when their marginal rates even exceed 100% of marginal income. So you have two unnecessarily complicated systems that mostly exist to cancel each other out, and to the extent that they don't they're doing something you don't actually want (excessively high marginal rates on poor people). It's better to just get rid of both -- no phase outs is the "universal" part of the UBI, and then you combine that with a uniform marginal tax rate for everyone. You're basically getting rid of the progressive rate structure so you can lower the marginal tax rates on poor people to the ones being paid by rich people, and if that seems counterintuitive it's because the status quo is very stupid.
- zozbot234 8mo ago
  It turns out that a theoretically optimal non-linear taxation schedule features a UBI plus varying marginal tax rates (i.e. continuous tax brackets) that start out quite high (but sub-100%) in the UBI-clawback range (to manage the UBI break-even point while still offering a high subsidy to the very lowest earners) become very low for low-to-middle income earners and rise gradually for middle- and high-income earners. That's quite redistributive in intent, but the tax brackets themselves are neither "progressive" nor "regressive". Nevertheless, middle- and high-income earners do face moderately progressive rates.
  - AnthonyMouse 8mo ago
    That seems like a lot of added complexity just to make sure the lower middle class gets screwed out of receiving the UBI.

readthenotes1 8mo ago

"Is that what UBI has become these days? That everyone is supposed to get some extra money on top of whatever they already have?" You do know that the I in UBI stands for Universal, don't you? What the people in your country were talking about is a Guaranteed Minimum Income. Related but different

6510 8mo ago

It could start out like that while we gradually dial down the other systems it is suppose to replace. > Progressive taxation would go away. There should be very aggressive progressive taxation. When you've absorbed a lot we should encourage you to stop hoarding and get a life. Maybe do a license for a fund for a specific purpose. Then you can continue playing the game but the fund may only be spend on [say] high speed rail. It seems fun to leave all the money in the companies and require them to explain to a committee what they are going to do with it. If apple says they are going to make phones the size of the fund begs to question why they are not already spending it on making phones?