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Most of these objections (e.g. the reciprocity thing) seem absurdly made-up; you could just as easily make up something opposite. But a couple of points are sub
by gruseom 13y ago
Most of these objections (e.g. the reciprocity thing) seem absurdly made-up; you could just as easily make up something opposite. But a couple of points are substantive if not substantiated. For example:
But if you means-test it to control the cost, or try to tax most of the benefits back for people who aren’t low-income, you rapidly lose the efficiency gains and start creating some pretty powerful disincentives to work.
Why? I can see how "means-test" might imply bureaucracy and thus inefficiency, but what's wrong with using tax policy for this? It seems like an obvious way to ensure that people who don't need the money don't get it, and no more inefficient as everyone has to fill out their taxes anyway.
Come to think of it, isn't that so obvious that the debate ought to start there, rather than end there? Otherwise the objections start to seem rather straw-man.
- didgeoridoo 13y agoThat's not it. The issue is that "means testing" a basic income results in an effectively negative marginal tax rate for those below the means-testing line. The argument is that this is a strong disincentive to attempt to climb out of dependency.
- gruseom 13y agoOh, I see now. That at least makes some sense. But surely you could construct some formula to mitigate that effect, if not eliminate it? I fear that many arguments about incentive and disincentive are just morality tales anyway, based on beliefs about human nature. It's easy to imagine opposite stories. Maybe there will be a social incentive to work. Maybe there won't be enough jobs for everyone anyway. Maybe the disincentive to work will make wages go high enough that they become an incentive to work again. Maybe the disincentive to do menial jobs will free up incentive to do creative things, a net win for society. It's easy to make these things up, and everyone mostly does it based on whether they already like or dislike an idea. (I rather like this one. Megan Mcardle presumably doesn't.) But do we have a good way to decide between them?
- scarmig 13y agoIt creates a steep marginal tax rate. Imagine that there's a basic income of $12,000/year. It's means tested so that people making $36,000/year don't receive any funding. If you go with a simple flat implementation of this, it amounts to a 33% tax rate on the first $36,000 of income. And that's at best--if you go with something that causes basic income to phase out only between $24,000 and $36,000, you go from $24,000 regular + $12,000 basic income to $36,000 regular and $0 basic--a 100% marginal rate. You can make it phase out over larger and larger income ranges--say, make it phase out at a flat rate between $0 and $100k--but at that point you get very little of the cost benefits of means testing.