7 ms·

Naturally you have to "raise taxes" (in a nominal sense) at the same time you add a basic income, so that the added income is cancelled out for middle-class and

by davmre 13y ago

Naturally you have to "raise taxes" (in a nominal sense) at the same time you add a basic income, so that the added income is cancelled out for middle-class and wealthy people, and the net amount of redistribution stays more or less constant. It's still a big win, since you've taken all of the various benefits agencies and collapsed their roles into that of the IRS or equivalent tax agency, which has to exist anyway to fund other government functions.

yummyfajitas 13y ago
Back of the envelope calculation please - that will clarify your vague words and reveal many arithmetic errors (if such are present).
- msellout 13y ago
  "In 2013, the total Social Security expenditures were $1.3 trillion, 8.4% of the $16.3 trillion GNP (2013) and 37% of the Federal expenditures of $3.684 trillion" (Wikipedia). Medicare adds another half billion, rapidly increasing. We could get between $6k and $7k annually per citizen by swapping those plans for a basic income. If children don't count, we could bump that to maybe $10k. Obviously, this change would need to be taken gradually to not cause too much disruption. To hit that $20k number, we'd need to increase taxes. Increasing consumption taxes would be fair. Since the flat credits is very progressive, it's OK to pay for it with a regressive sales or value-added tax.
  - polarix 13y ago
    Why increase consumption taxes? Why add friction? Wouldn't it be better to tax the assets at rest -- real estate, property.
    - tempestn 13y ago
      Aren't income taxes a logical fit here? You would still have graduated tax brackets, so you wouldn't have an enormous cliff once you started earning, but all tax brackets could be increased such that the middle class end up about the same, and the poor are better off. With the added efficiencies described by the parent comment, this should even be possible without reducing net income to those in the higher brackets, but it might be desirable to do that to some extent as well for greater redistribution.
    - ArkyBeagle 13y ago
      It's arguably better to tax Ricardian rents - if you can.
  - yummyfajitas 13y ago
    To hit that $20k number, we'd need to increase taxes. I'm glad we are in agreement that a BI will cost a lot more than the current targeted welfare state. (Or alternately will require a drastic cut in benefits for the current crop of non-workers.)
    - BvS 13y ago
      It costs more on a nominal basis but if implemented right nobody will have less money in their pocket even after taxes. If you didn't earn any money before you will get what was spend on you before + the saved overhead (+ a lot of wasted time and hassle). If you made a lot of money before you will still get a free handout but you also have to pay higher taxes so in the end you should have about the same amount. Obviously it will not be exactly the same for everybody but that doesn't mean it will be less fair. Besides the saved overhead another major advantage of a bi would be to streamline incentive. Currently it can happen that if you start earning money you will lose a lot of benefits. This can lead to an implicit tax rate of > 50% for very poor people and therefore disincentives work.
      - yummyfajitas 13y ago
        Numbers, please. And see my other comments on the disincentive to work - in the pilot projects, BI was a massive work disincentive.
        netcan 13y ago
        Thanks for hammering this nail yummyfajitas. I'm completely open to the idea of basic incomes but it seems that if it is possible, it should be easy enough to demonstrate the basic outline. This isn't something that can be discussed without arithmetic. Excluding dynamic effects (more/fewer people will work), political necessities (program X must be excluded from the chopping block) is OK for a start. Picking and choosing countries is OK for a start. The first question I would like to see answered is how much it would cost to bring every net recipient's income up to par with the biggest recipients'. Presumably the basic income needs to be set somewhere near this line or we'll have a situation where many current recipients are worse off.
freefrancisco 13y ago
If it's really more efficient than the current system, it should be fundable from the existing entitlements. Just dismantle the programs, fire all the bureaucrats running them, and divert all these funds toward the basic income. If it requires another tax then it's not an alternative, it is an expansion of the welfare state.
- deleted 13y ago
  [deleted]
- richardjordan 13y ago
  No. It's not more net taxes. It's a change in the tax rate so the basic income is clawed back at the high end. Doesn't change tax out of pocket.
  - 31reasons 13y ago
    Its like applying plaster to an uneven wall. The dents gets filled with plaster but the bumps stays at the same level! Its much better than giving tax breaks since you need income to begin with.
    - chimeracoder 13y ago
      Two things: > Its much better than giving tax breaks since you need income to begin with. 1. There is a difference between refundable and non-refundable tax credits. A big misconception is that tax breaks only help those who already have income exceeding the size of the credit, which is not necessarily true. Second, > Its like applying plaster to an uneven wall. The dents gets filled with plaster but the bumps stays at the same level! In this analogy, where is the plaster coming from? It can't just come from nowhere[0]. [0] ("Just print more" isn't the answer, because that increasing the money supply doesn't actually "create" money (in the colloquial sense) - it's just a redistribution method that redistributes by changing the relative value of outstanding debt.)
      - 31reasons 13y ago

by davmre 13y ago

yummyfajitas 13y ago

Back of the envelope calculation please - that will clarify your vague words and reveal many arithmetic errors (if such are present).

msellout 13y ago
"In 2013, the total Social Security expenditures were $1.3 trillion, 8.4% of the $16.3 trillion GNP (2013) and 37% of the Federal expenditures of $3.684 trillion" (Wikipedia). Medicare adds another half billion, rapidly increasing. We could get between $6k and $7k annually per citizen by swapping those plans for a basic income. If children don't count, we could bump that to maybe $10k. Obviously, this change would need to be taken gradually to not cause too much disruption. To hit that $20k number, we'd need to increase taxes. Increasing consumption taxes would be fair. Since the flat credits is very progressive, it's OK to pay for it with a regressive sales or value-added tax.
- polarix 13y ago
  Why increase consumption taxes? Why add friction? Wouldn't it be better to tax the assets at rest -- real estate, property.
  - tempestn 13y ago
    Aren't income taxes a logical fit here? You would still have graduated tax brackets, so you wouldn't have an enormous cliff once you started earning, but all tax brackets could be increased such that the middle class end up about the same, and the poor are better off. With the added efficiencies described by the parent comment, this should even be possible without reducing net income to those in the higher brackets, but it might be desirable to do that to some extent as well for greater redistribution.
  - ArkyBeagle 13y ago
    It's arguably better to tax Ricardian rents - if you can.
- yummyfajitas 13y ago
  To hit that $20k number, we'd need to increase taxes. I'm glad we are in agreement that a BI will cost a lot more than the current targeted welfare state. (Or alternately will require a drastic cut in benefits for the current crop of non-workers.)
  - BvS 13y ago
    It costs more on a nominal basis but if implemented right nobody will have less money in their pocket even after taxes. If you didn't earn any money before you will get what was spend on you before + the saved overhead (+ a lot of wasted time and hassle). If you made a lot of money before you will still get a free handout but you also have to pay higher taxes so in the end you should have about the same amount. Obviously it will not be exactly the same for everybody but that doesn't mean it will be less fair. Besides the saved overhead another major advantage of a bi would be to streamline incentive. Currently it can happen that if you start earning money you will lose a lot of benefits. This can lead to an implicit tax rate of > 50% for very poor people and therefore disincentives work.
    - yummyfajitas 13y ago
      Numbers, please. And see my other comments on the disincentive to work - in the pilot projects, BI was a massive work disincentive.
      - netcan 13y ago
        Thanks for hammering this nail yummyfajitas. I'm completely open to the idea of basic incomes but it seems that if it is possible, it should be easy enough to demonstrate the basic outline. This isn't something that can be discussed without arithmetic. Excluding dynamic effects (more/fewer people will work), political necessities (program X must be excluded from the chopping block) is OK for a start. Picking and choosing countries is OK for a start. The first question I would like to see answered is how much it would cost to bring every net recipient's income up to par with the biggest recipients'. Presumably the basic income needs to be set somewhere near this line or we'll have a situation where many current recipients are worse off.

freefrancisco 13y ago

If it's really more efficient than the current system, it should be fundable from the existing entitlements. Just dismantle the programs, fire all the bureaucrats running them, and divert all these funds toward the basic income. If it requires another tax then it's not an alternative, it is an expansion of the welfare state.

deleted 13y ago
[deleted]
richardjordan 13y ago
No. It's not more net taxes. It's a change in the tax rate so the basic income is clawed back at the high end. Doesn't change tax out of pocket.
- 31reasons 13y ago
  Its like applying plaster to an uneven wall. The dents gets filled with plaster but the bumps stays at the same level! Its much better than giving tax breaks since you need income to begin with.
  - chimeracoder 13y ago
    Two things: > Its much better than giving tax breaks since you need income to begin with. 1. There is a difference between refundable and non-refundable tax credits. A big misconception is that tax breaks only help those who already have income exceeding the size of the credit, which is not necessarily true. Second, > Its like applying plaster to an uneven wall. The dents gets filled with plaster but the bumps stays at the same level! In this analogy, where is the plaster coming from? It can't just come from nowhere[0]. [0] ("Just print more" isn't the answer, because that increasing the money supply doesn't actually "create" money (in the colloquial sense) - it's just a redistribution method that redistributes by changing the relative value of outstanding debt.)
    - 31reasons 13y ago