11 ms·

I still have no understanding on how this sort of thing would be paid for. Presumably, it's via some form of income, consumption, and corporation taxes. However

• nkoren 13y ago
  Actually, one of the major effects of basic income is that it would decrease marginal income tax rates (although it would undoubtedly raise taxes overall). This is counter-intuitive, so let me explain. Marginal tax rates are the taxes that you pay on additional income. Eg., if I make (rounding numbers recklessly) £9k per year, I am taxed nothing. However every pound I make over £9k is taxed at 15% -- that's my marginal tax rate at the £10k income level -- then there is another step at £20k-something, etc. For the poor, however, effective marginal tax rate include not only escalations in progressive tax rates, but the withdrawal of social support. Eg., let's say I am unemployed and receiving £700/month worth of benefits. Then I get a job which pays me £800/month. The first £750 is tax free, and I'll have to pay £8 of income tax on the remaining £50, so my total take-home pay is £792. Fair enough, so far... Except now that I'm earning an income, all my benefits are withdrawn. This means that although I'm now doing £800 per month worth of work that I wasn't doing previously, at the end of the day I'm only receiving (£792 - £700 = ) £92 pounds of additional income. Hence my effective marginal tax rate on the extra income is a whopping 88.5%. I'd have to think very hard about whether I wanted to keep that job, or stay on benefits. In fact, this is a fairly generous example: many benefits programmes are structured in such a way that they impose an effective marginal tax rate of more than 100% upon people who increase their incomes -- in other words, you can end up with less money by getting a job than by staying on benefits. This is the mechanism which turns benefits programmes into poverty traps -- by de-incentivising people to work via astronomical marginal tax rates. Unfortunately, people have a very difficult time understanding this mechanism, and their intuitive reaction is often to "fix" benefits programs by increasing conditionalities and means-testing. The problem is that the more conditionalities and means-testing you impose, the more you increase the marginal tax rates for people trying to get out of poverty -- so such programmes are inevitably counter-productive. A Unconditional Basic Income, however, is never withdrawn. This means that it imposes no penalties for increasing your earnings -- meaning that it actually minimises the effective marginal tax rates. In fact a very fair basic income could be funded via a flat tax: tax every income at 50%, and then redistribute the earnings as a flat Universal Basic Income. Mean income earners, in this scenario, would pay exactly as much taxes as they receive back from the UBI -- so their tax rate would be zero. Non-income earners would earn 50% of the mean (which is roughly the level that Switzerland is proposing). Billionaires would see their income reduced by nearly 50%. However the marginal tax rate would be identical at every level of income. No matter what your standing in the economy, you would always receive the same UBI, and you would always pay the same rate of tax. It would seem almost fair.
  • angersock 13y ago
    I would be happy to give up half my income if I knew it was being used to support students trying to learn engineering or new technology, or help a small family through a rough time, or pay for some fresh grad to get a broken bone set--especially if I knew that that safety net existed for me as well. It's time to start embracing the fact that as a civilization we've come beyond the point where we're scrabbling like mad to shake loose the resources for existence, and instead we can now start actually trying to make people, everyone, safer and happier and more actualized.
    • unepipe 13y ago
      So why don't you give up half of your income to a family or group of students who are struggling? Do you feel more confident that a government entity would do a better job at picking a family or students? Or would you only want to do it if everyone at your income bracket was also doing it? Serious question, not trying to be a dick.
      • arjie 13y ago
        Presumably, he is interested in a solution to the class of problems, not to an individual instance of the problem. Giving up half your income in taxes in his method is a proposed solution to the class of problems. Giving up half your income when no one else is is a proposed solution to a single instance of the problem. And with universal basic income, recall that there is no 'picking' performed.
      • mjn 13y ago
        If there is no safety net, I can't really give away my money, because I'm worried about what will happen in the future if for some reason I'm unable to work. Or if my brother is unable to work, or if my parents have severe problems. If I pay taxes in a social market economy, on the other hand, I can be confident that I'm also covered, and so are they, like everyone else is. Therefore there is no need to hoard piles of money for yourself and family (modest savings are still prudent). And in any case, I don't think a handful of people donating to charity is a serious systemic solution to inequality and poverty. For one thing, it fails to give a guarantee of a safety net, which is what's needed to give people a believable backstop. For another thing, there's a bit of an adverse selection problem: people who get rich retroactively decide they have no need for the existence of a safety net, and don't want to pay for one, because poorer people are lazy/stupid/etc. I did move from California to Denmark, which is in a way putting my money towards what I'd like to see more of (due to visas/citizenship/etc. this is not equally easy for everyone). I now pay more taxes, and in return I am part of a more social-democratic system.
• eterps 13y ago
  Affordability of a basic income proposal is a function of the social/government services it replaces, any tax increases, and the less tangible positive effects on spending and tax receipts associated with wealth redistribution towards the poor, and any social savings as a result of less crime, or fewer incarcerable offenses. Specific, though informal, measurements were made by Pascal J. for Canada.[123] A 2004 taxable basic income benefit of $7800 per adult could be afforded without any tax increases by replacing welfare, unemployment, and core Old age services. (Canada has supplemental poverty old age programs and pension system). The number excludes any intangible benefits of tax revenue increases due to higher spending and lower personal savings, and any expenditure savings on criminal enforcement. http://en.wikipedia.org/wiki/Basic_income http://en.wikipedia.org/wiki/Basic_income
  • archgrove 13y ago
    But unless the welfare bill has an astronomical amount of waste (which I don't deny may be the case), surely this redistributes welfare from those who need it to those who don't? At the moment, for example, I receive no welfare payments. Thus my "share" of welfare is actually going to people who require it. In the basic income universe, suddenly I get a share of this money, which must come from those who currently get it, thus reducing their share. Moreover, this is ignoring all the inflationary pressures that a basic income would induce.
    • rbanffy 13y ago
      You also get rid of the administrative overhead required to ensure the people who need it gets it while the people who doesn't don't. That's a non-trivial expense.
    • msellout 13y ago
      Since money is of diminishing returns, you'll notice your share to the extent that it's useful to you. That's better than coming up with some arbitrary threshold. Whether or not it would cause inflation is unclear, because wages may decrease correspondingly.
    • scarmig 13y ago
• herge 13y ago
  I wonder how much money is wasted in the US in government bureaucracy between making sure people who claim social security benefits are due social security, that medicaid claimants are not medicare claimants, that food stamps physically go out to those in need, and that the foods stamps themselves are just spent on food, etc. Probably much more than checking how many people over 18 live in each address. Also, the whole economy benefits by simply giving out money that people can choose to spend as they wish, instead of in limited categories (like food stamps). Finally, people who work (legally) already pay taxes and are managed by the IRS, so taking this basic income back from them in taxes wouldn't be that much overhead.
  • jbattle 13y ago
    Medicare in particular is famous/notorious for low administrative overhead. Not sure how other social services perform
    • scarmig 13y ago
      Yes, but that comes from it being available to everyone (of a certain age), which is the same advantage a basic income has. Unfortunately Medicare runs headlong into the other point the comment above was making: Medicare forces you to spend a very large income grant on a very particular category of consumer good. And that effectively forces huge spending on healthcare when society would be better off if they could spend it on other things.
      • princess3000 13y ago
        Healthcare is not a consumer good and people would still need it regardless of whether or not it's paid for by Medicare.
        • Kluny 13y ago
          Suppose the money was spent on better nutrition, exercise, good heating/insulation for seniors, instead of on curative medical care after something goes wrong?
• msellout 13y ago
  One purpose of a lump sum distribution such as the monthly "basic income" is to counteract the regressive nature of consumption tax. For example, suppose we want to provide free mass transit. We then get terrible rush hour traffic and the system is overburdened. So we must charge for transit access. Even better would be charging more for rush hour than off-hours, more for long-distance, etc. But this is regressive! Relatively cheap for the wealthy for rare events, expensive for the poor who need it for everyday commuting. The solution is to provide a lump sum grant to all citizens equal to the amount a person would pay for everyday transit commuting. Thus the poor get "free" transit and the wealthy get a few bucks and the positive externalities of transit.
  • pdonis 13y ago
    The solution is to provide a lump sum grant to all citizens equal to the amount a person would pay for everyday transit commuting. How does this solve the rush hour problem?
    • DavidAdams 13y ago
      If you have congestion pricing, and the money is paid in cash, people who value the money more than the convenience will use the transit system earlier or later when it's less crowded, and pocket the difference.
      • pdonis 13y ago
        But then what amount is the lump sum grant based on? Is it based on the rush hour price with congestion pricing included? Then you've made the transit at rush hour look cheaper than it actually is, so you'll still have crowding even when the effect you describe is factored in. Or is the lump sum grant based on something like the average price per ticket over both rush and non-rush hours? Then you can solve the crowding problem (by averaging appropriately to adjust the apparent cost of rush-hour transit), but you haven't solved the equality problem, because poor people won't be subsidized enough to take the transit during rush hour.
• wmeredith 13y ago
  Regarding those free ham sandwiches... The US government currently pays farmers enormous sums to NOT grow food. (This is not a simple issue - global economics - I just think it's an interesting data point.)
  • axus 13y ago
    I was wondering, if the government shutdown continues, will they stop receiving those payments, and then overproduce food before going out of business?
  • coldcode 13y ago
    The department of Agriculture's share of the discretionary spending in the budget is on par with Homeland Security and the NSA. Paying Farmers has a year long latency so not likely to change anything.
• Zigurd 13y ago
  We are already buying tens of billions of dollars in "free ham sandwiches" in the form of Social Security Disability fraud every year. That's a LOT of ham sandwiches - similar in cost to running a war on the far side of the planet. Extreme poverty as a result of a post-labor economy also means very high public and private costs for police, prisons, and security.
  • levosmetalo 13y ago
    Wait a minute, are you complaining that too much money is spend on ham sandwiches? Your counterexample suggests that this money should be better spent on another war on the far side on the planet?
    • Zigurd 13y ago
      I'm saying that between existing welfare, existing SS fraud, and other transfer payment programs we are already spending enough that trading that for a mincome program might cost less than you think. On top of that, if the removal of disincentives to make incremental income above the mincome level are removed actually works, the net cost will be even smaller.
• thomaslangston 13y ago
  I see basic income being implemented by giving tax refunds divided over two week payments instead of as a single annual lump sum. Then we set an amount where you may get a larger refund than you actually paid in taxes.
• informatimago 13y ago
  The existing taxes, in most countries, nowadays, are a very significant part of the GNP. Check: http://en.wikipedia.org/wiki/List_of_countries_by_tax_revenue_as_percentage_of_GDP http://en.wikipedia.org/wiki/List_of_countries_by_tax_revenu... and this covers only the taxes from the central state, there are also local taxes, and social security. In France, that makes it over 67% from only 44% of national taxes. The point of such a citizen basic income, is that it would eliminate the need for plethoric armies of "civil servants", at all levels. Instead of paying them to bother and harass the public, we pay they to do nothing, and the money that was wasted on their useless activity (beside their salaries converted into citizen basic income), is used to pay this citizen basic income to the other citizen. http://www.technologyreview.com/view/519241/report-suggests-nearly-half-of-us-jobs-are-vulnerable-to-computerization/ http://www.technologyreview.com/view/519241/report-suggests-... In other words, YOU are already paying for it! As for the free ham sandwiches, what is required for that to work is: - material resources: the universe is big. Even the Earth is big! (but we need energy to dig deep down). - energetic resources: the sun is big too! And there's uranium, thorium, and perhaps soon hydrogen fusion. - to put this energy to work moving mater into a ham sandwich, what else is needed is information, the command and control systems, which any programmer will be delighted to implement, if you give him the chance to do it. Robots and 3D printers are already doing a lot of work, we just need to automatize more. Why aren't google cars already driving on the roads everywhere? Why are we still making buildings with man power, when the can be made in automatic factories or by big 3D printers?
  • userulluipeste 13y ago
    About free ham sandwiches, in USA actually the underlying industry is already heavy subsidized, thus - paid by pretty much everyone. The sandwich to be free (as available for free, not necessarily produced on negligible cost) is not dependent on technology here.
  • rayiner 13y ago
    That chart you linked is total tax revenue, not just central state tax revenue.
  • bluecalm 13y ago
• LaGrange 13y ago
  The cost wouldn't be that bad, the unemployment isn't that high, the taxes for upper incomes are high (as they should be), and the guaranteed income isn't really that high either. Unemployment is 3%, workforce is 4.9 million, the guaranteed wage was, afair, 2500CHF, that gives us 367 million francs, which is a bit over a promile of the state revenue (less than I expected, I'm suspicious of my calcylation). Which is, by the way, less than the surplus they have, and doesn't take into account already existing and complex social support schemes, of which at least some would be effectively obsoleted (social housing has an invaluable stabilizing effect, but food shouldn't really be a problem). But, (from my point of view unfortunately), this proposal has no chance of passing. Like many articles about what Swiss do, this forgets about the (awesome) nature of Swiss direct democracy, which sometimes ends up in voting on completely off-the-wall ideas (which sometimes even pass, but this won't be the case).
  • iSnow 13y ago
    I guess your numbers are wrong. Yes, unemployment is only 3% of 4.9m workforce, but Switzerland has 8.1m inhabitants. So a lot more than 150k (the number of unemployed) would receive more than now - housewives, slackers... Effectively, 8.1m * 2500 * 12 = 240b CHF would have to be redistributed every year. With the CHF at $0.9 that's roughly $218b - the Swiss GNP is $636b. Now I don't know how much of this is additional instead of replacing traditional unemployment benefits, disability welfare etc - but still it seems a lot.
• kgo 13y ago
  Switzerland has its own currency and its own central bank. It doesn't use the Euro. So the money doesn't need to 'paid for'. The government can just create the money and hand it out. Of course this might devalue the currency as a whole, but the central bank had to institute an exchange rate floor because Francs were becoming too expensive relative to the Euro. So they probably wouldn't even consider a minor devaluation a bad thing.
• wildwood 13y ago
  This is becoming my biggest concern about these Basic Income plans, too. Giving this amount of money to every person in Switzerland would total almost half of the country's GDP. Even if you exclude children and get the total amount down around 30% of GDP, you're still right around the total amount of money that the Swiss government takes in in a year. So to get this basic income with no new taxes, the Swiss government would have to abandon all its other obligations. Or, put another way, to fund this and still function at the same level, the Swiss government would have to double its tax income.
  • stretchwithme 13y ago
    I think the voters realize this and will likely reject this. The idea got 100,000 signatures on a petition and that's all that has happened so far.
  • randomknowledge 13y ago
    Remember that everyone above median income is going to end up paying what they receive right back to the government in taxes. Only half the adult population will actually see this money as a check and not just a tax break.
• digikata 13y ago
  Actually, I suspect we've had the capital and productive technology to build the "free ham sandwich" kind of existence for a while, a couple of decades, maybe longer? It's that our economic technology is derived from a system based in historic scarcity, and is run in a society of people with human frailties. Ultimately, it's currently too inefficient to put the right resources into the right hands such that the entire world is fed. I can't imagine an entirely different economic system that would be more efficient, but just as a thought experiment, suppose you were the supreme world dictator and other than the command logistics, you could somehow redistribute all the capital in the world anywhere and direct the work of everyone. Would you have the technology to feed, shelter, and clothe everyone in the world? How many busy hours would it really take?
  • chii 13y ago
    if i were the supreme dictator of the world, i would replace currency as a form of exchange, and use Joules as a form of exchange, and then mandate that all energy production be distributed equally to every single living human. E.g., lets assume 30 petawatthours of energy per year(approx 108 000 peta joules), divided by 6 billion people, is approx 18000000000 joules per year, or approx 50 million joules per day for each person. To pay for food, you "pay" the amount of joules it takes to fuel the robots that create your food. Ditto with any automatable production (clothing, houseing), and any land has a tax equivalent of the amount of solar energy extractable from the land. You could attempt to save your joule allocation, but i suspect it will become too difficult. You cannot borrow joules the way you can borrow money (that is, the "bank" cannot be a fractional reserve system). But you would be encouraged to invest your joule allocation into useful endeavours, such as scientific research, which is always made available to all to use. You can get richer by investing in improvements, and get richer by growing the size of the pie. There would be no way to get richer at the expense of making someone else's allocation lower.
    • digikata 13y ago
      Energy as currency is interesting, but still has problems where cheap energy such as oil and coal has side effects which do affect others. And are you constantly "rebaselining" the division of energy production or to you let the accumulation ride? If you let it ride, you'll have the same slow redistribution of a wealth gap between those who are capable/lucky enough to get a little bit of a headstart and continue to leverage it to more and more wealth. (or do you think you need some hybrid between the two, some something else entirely?)