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I get the "This removes marginal disincentives to work" argument, but who pays for this? 30K per family in payments requires 30K per family in taxes. Lets say

I get the "This removes marginal disincentives to work" argument, but who pays for this? 30K per family in payments requires 30K per family in taxes. Lets say the US has 100mm families. 30K per family is $3 trillion. What do we stop doing to find that kind of money?

rbanffy 13y ago
How much money are you spending to make sure current programs are not misused? By making it universal, you get away with much less administrative overhead than you previously could.
- mathattack 13y ago
  Conceptually I like it for that, and other reasons. But what programs do you toss out? Education? Health Care? Food stamps? Subsidized Housing? Each of these has vast constituencies.
  - tehwalrus 13y ago
    The article notes that this policy would be huge for the libertarian right - no need to give people any free stuff other than the standard income, and just let markets provide every other public service.
    - beat 13y ago
      GMI is a dividing line on the libertarian right. Most still hate it, because they're basically anarchists who hate any form of government spending. But there's a minority who really like it for its simplicity and fairness, and the positive impact on personal liberty.
      - tehwalrus 13y ago
        They sound like the Mutualists, of whom I know one (he's in the same political party as me, hilariously.) As far as I can tell, Mutualists = Market anarchists who believe local judges (who aren't officially given any power) and embarrassment will keep everyone behaving ethically - no need for formal laws or governments. It seems a very very deep misunderstanding of the role of weak-tie trust in economics to me.
d4nt 13y ago
You shutdown all the targeted benefit programs that try and give money to people based on certain criteria. Things like unemployment benefit, state pensions, food vouchers, tax breaks for people on low incomes, tax breaks on goods and services that are deemed "essential" like childrens clothes. What you end up with is a much simpler system. Everyone gets enough to survive, if you decide to earn extra you pay standard rate tax on it all.
msellout 13y ago
This could replace some very expensive programs, such as Social Security and Medicare/Medicaid.
- millstone 13y ago
  Some Googling shows that Medicare spending per enrollee is around $10k per year, and average Social Security benefits are around $15k. So a guaranteed basic income, paid to each adult and that maintains current benefits for seniors, would cost around $5.8 trillion.
scarmig 13y ago
I did a rough calculation for the USA, and you get somewhere between $6k-$10k merely from ending the welfare programs it's replacing. And that ignores all the additional economic activity that'd come from the efficiencies realized by implementing a basic income. At least for the USA, I would never support $30k/year (can't speak knowledgeably about Switzerland).
netfire 13y ago
It seems like a system like this would be designed to replace Social Security, Medicare, Disability, Food stamps, WIC and other benefits paid to those who are poor, disabled or not working (which would be well over a trillion dollars -- see http://www.usaspending.gov/explore http://www.usaspending.gov/explore). I'd imagine you'd also remove the standard deductible and other deductions and exemptions for taxes and possibly move to a flat tax bracket that wouldn't discourage people from earning more money or working in general. The question is, how much more money would that bring in, if any? Also, if you just give people money, will they really spend it on basic necessities or spend it unwisely? Seems like it would work better if the money were given as housing, food, and healthcare insurance vouchers that could only be used for those purposes. It will be interesting to see if/how this works out Switzerland.
- twoodfin 13y ago
  I'd love it if we had a functioning individual market for health care, so that such a system could replace Medicaid/Medicare, but the jury's still out on that. Fingers crossed that ACA exchanges actually work out without requiring massive subsidies.
- axus 13y ago
  vouchers aren't fungible and then you need to pay for the whole system of authenticating/converting them. I don't have a problem with people spending unwisely; they will starve to death and stop collecting payments, right?
  - greedo 13y ago
    But you know that the groups that are continually pushing for expanded minimum wages, and other benefits would never let this happen. They'd find some paternalistic way of controlling the money, providing housing etc. And we have the last fifty years of The Great Society to show how well that works in fighting poverty.
- userulluipeste 13y ago
  "Seems like it would work better if the money were given as housing, food, and healthcare insurance vouchers that could only be used for those purposes." I was asking myself the same at first. The thing is, all those would limit choices, the effect of which would be an object of hate. In addition, in USSR people were directed (or at most offered a choice of a few options) to planned working places where they should live and work, which was in fact just the way they were given many of the other things. As expected, that only spawned an underground markets (for products, services, and even for perspectives) on which were traded choices that weren't freely available. I think therefore that it's better to let everything on the table for the benefit of all. About the quantity of money, maybe it would be best if this "citizen allowance" to be not a fixed sum, but calculated from how much the state can afford to give. Say it is 50% of the entire budget split on the number of citizens. More money gathered in budget - more per allowance, and if the allowance is getting smaller - the more people are encouraged to get involved as taxpayers. It would be a fair circle and a strong argument for everyone to either shut up or get involved.
gtCameron 13y ago
To put some actual numbers to it from a quick Google search Number of US Households from 2010 census - 114,800,000 Times $30k per household - $3.4 trillion Total US Federal Government Revenue 2010 - $2.163 trillion Total US Federal Government Spending 2010 - $3.456 trillion
- DavidAdams 13y ago
  Keep in mind that it would be taxable, so most people would pay a portion of it back in taxes.
twoodfin 13y ago
(Just for the sake of argument, and of course, in the odd event the U.S. went for a plan like this, you'd assume a long transition period so as not to screw people's ability to plan.) The first trillion is "easy", insofar as it's revenue/spending that you could eventually redirect: ~$600B in existing Social Security taxes/spending. ~$400B in non-healthcare-related welfare spending, like food stamps and unemployment benefits. You could maybe squeeze out another couple hundred billion from reducing aid to states and other programs made redundant by the new payments. But the next nearly two trillion is really hard. Eliminating the entire defense budget wouldn't get you even a trillion. Doing the equivalent of lifting the Social Security tax cap and adding a marginal 12% to high-earner income would only net you another $125B. If you were serious, you'd need to either double income taxes, most of which would come from the middle class, or impose a VAT or sales tax around 20% that would raise the equivalent (which would hit the middle class and the poor). Taxing the rich alone won't do, unless you really believe that ~70% marginal rates would actually raise twice the revenue of ~35% marginal rates. And all of this assumes you can do this without tanking the economy and thus tax revenue. Anyway, I'm actually hoping Switzerland goes through with it, since it will be interesting to see what happens. I'm all for unconditional cash payments as the main form of welfare, though I think something like the EITC on steroids would work better to ensure people who can work productively do.
- scarmig 13y ago
  The USA is significantly cheaper than Switzerland, though, so you don't need nearly the same amount here as Switzerland. I have a hard time figuring out what the ideal grant amount is, but I'd want $15k as an absolute maximum, and more likely something like $10k-$12k. And like you mention, getting to there from here is pretty trivial if you think redirecting SS and Medicare funding is an option.
  - pdonis 13y ago
    getting to there from here is pretty trivial if you think redirecting SS and Medicare funding is an option That's a pretty big if.
  - chc 13y ago
rayiner 13y ago
$3 trillion is 20% of GDP. Medicare/medicaid alone is $1.6 trillion. Housing, unemployment assistance, and food stamps is probably a few hundred billion more. At the state level you have subsidized housing, etc, for hundreds of billions more.

rbanffy 13y ago

How much money are you spending to make sure current programs are not misused? By making it universal, you get away with much less administrative overhead than you previously could.

mathattack 13y ago
Conceptually I like it for that, and other reasons. But what programs do you toss out? Education? Health Care? Food stamps? Subsidized Housing? Each of these has vast constituencies.
- tehwalrus 13y ago
  The article notes that this policy would be huge for the libertarian right - no need to give people any free stuff other than the standard income, and just let markets provide every other public service.
  - beat 13y ago
    GMI is a dividing line on the libertarian right. Most still hate it, because they're basically anarchists who hate any form of government spending. But there's a minority who really like it for its simplicity and fairness, and the positive impact on personal liberty.
    - tehwalrus 13y ago
      They sound like the Mutualists, of whom I know one (he's in the same political party as me, hilariously.) As far as I can tell, Mutualists = Market anarchists who believe local judges (who aren't officially given any power) and embarrassment will keep everyone behaving ethically - no need for formal laws or governments. It seems a very very deep misunderstanding of the role of weak-tie trust in economics to me.

d4nt 13y ago

You shutdown all the targeted benefit programs that try and give money to people based on certain criteria. Things like unemployment benefit, state pensions, food vouchers, tax breaks for people on low incomes, tax breaks on goods and services that are deemed "essential" like childrens clothes. What you end up with is a much simpler system. Everyone gets enough to survive, if you decide to earn extra you pay standard rate tax on it all.

msellout 13y ago

This could replace some very expensive programs, such as Social Security and Medicare/Medicaid.

millstone 13y ago
Some Googling shows that Medicare spending per enrollee is around $10k per year, and average Social Security benefits are around $15k. So a guaranteed basic income, paid to each adult and that maintains current benefits for seniors, would cost around $5.8 trillion.

scarmig 13y ago

I did a rough calculation for the USA, and you get somewhere between $6k-$10k merely from ending the welfare programs it's replacing. And that ignores all the additional economic activity that'd come from the efficiencies realized by implementing a basic income. At least for the USA, I would never support $30k/year (can't speak knowledgeably about Switzerland).

netfire 13y ago

It seems like a system like this would be designed to replace Social Security, Medicare, Disability, Food stamps, WIC and other benefits paid to those who are poor, disabled or not working (which would be well over a trillion dollars -- see http://www.usaspending.gov/explore http://www.usaspending.gov/explore). I'd imagine you'd also remove the standard deductible and other deductions and exemptions for taxes and possibly move to a flat tax bracket that wouldn't discourage people from earning more money or working in general. The question is, how much more money would that bring in, if any? Also, if you just give people money, will they really spend it on basic necessities or spend it unwisely? Seems like it would work better if the money were given as housing, food, and healthcare insurance vouchers that could only be used for those purposes. It will be interesting to see if/how this works out Switzerland.

twoodfin 13y ago
I'd love it if we had a functioning individual market for health care, so that such a system could replace Medicaid/Medicare, but the jury's still out on that. Fingers crossed that ACA exchanges actually work out without requiring massive subsidies.
axus 13y ago
vouchers aren't fungible and then you need to pay for the whole system of authenticating/converting them. I don't have a problem with people spending unwisely; they will starve to death and stop collecting payments, right?
- greedo 13y ago
  But you know that the groups that are continually pushing for expanded minimum wages, and other benefits would never let this happen. They'd find some paternalistic way of controlling the money, providing housing etc. And we have the last fifty years of The Great Society to show how well that works in fighting poverty.
userulluipeste 13y ago
"Seems like it would work better if the money were given as housing, food, and healthcare insurance vouchers that could only be used for those purposes." I was asking myself the same at first. The thing is, all those would limit choices, the effect of which would be an object of hate. In addition, in USSR people were directed (or at most offered a choice of a few options) to planned working places where they should live and work, which was in fact just the way they were given many of the other things. As expected, that only spawned an underground markets (for products, services, and even for perspectives) on which were traded choices that weren't freely available. I think therefore that it's better to let everything on the table for the benefit of all. About the quantity of money, maybe it would be best if this "citizen allowance" to be not a fixed sum, but calculated from how much the state can afford to give. Say it is 50% of the entire budget split on the number of citizens. More money gathered in budget - more per allowance, and if the allowance is getting smaller - the more people are encouraged to get involved as taxpayers. It would be a fair circle and a strong argument for everyone to either shut up or get involved.

gtCameron 13y ago

To put some actual numbers to it from a quick Google search Number of US Households from 2010 census - 114,800,000 Times $30k per household - $3.4 trillion Total US Federal Government Revenue 2010 - $2.163 trillion Total US Federal Government Spending 2010 - $3.456 trillion

DavidAdams 13y ago
Keep in mind that it would be taxable, so most people would pay a portion of it back in taxes.

twoodfin 13y ago

(Just for the sake of argument, and of course, in the odd event the U.S. went for a plan like this, you'd assume a long transition period so as not to screw people's ability to plan.) The first trillion is "easy", insofar as it's revenue/spending that you could eventually redirect: ~$600B in existing Social Security taxes/spending. ~$400B in non-healthcare-related welfare spending, like food stamps and unemployment benefits. You could maybe squeeze out another couple hundred billion from reducing aid to states and other programs made redundant by the new payments. But the next nearly two trillion is really hard. Eliminating the entire defense budget wouldn't get you even a trillion. Doing the equivalent of lifting the Social Security tax cap and adding a marginal 12% to high-earner income would only net you another $125B. If you were serious, you'd need to either double income taxes, most of which would come from the middle class, or impose a VAT or sales tax around 20% that would raise the equivalent (which would hit the middle class and the poor). Taxing the rich alone won't do, unless you really believe that ~70% marginal rates would actually raise twice the revenue of ~35% marginal rates. And all of this assumes you can do this without tanking the economy and thus tax revenue. Anyway, I'm actually hoping Switzerland goes through with it, since it will be interesting to see what happens. I'm all for unconditional cash payments as the main form of welfare, though I think something like the EITC on steroids would work better to ensure people who can work productively do.

scarmig 13y ago
The USA is significantly cheaper than Switzerland, though, so you don't need nearly the same amount here as Switzerland. I have a hard time figuring out what the ideal grant amount is, but I'd want $15k as an absolute maximum, and more likely something like $10k-$12k. And like you mention, getting to there from here is pretty trivial if you think redirecting SS and Medicare funding is an option.
- pdonis 13y ago
  getting to there from here is pretty trivial if you think redirecting SS and Medicare funding is an option That's a pretty big if.
- chc 13y ago

rayiner 13y ago

$3 trillion is 20% of GDP. Medicare/medicaid alone is $1.6 trillion. Housing, unemployment assistance, and food stamps is probably a few hundred billion more. At the state level you have subsidized housing, etc, for hundreds of billions more.