6 ms·

You just described a "negative income tax", which isn't the same thing as UBI.

dragonwriter 5y ago
> You just described a “negative income tax”, which isn’t the same thing as UBI. A negative income tax is exactly the same thing as a UBI in a system that also has progressive income taxes.
- nottorp 5y ago
  See the post above about the niece who couldn't take a better paying job because then she wouldn't qualify for food stamps...
  - jlokier 5y ago
    The niece couldn't take the better paying job due to a "cliff" - the abrupt loss of food stamps due to a tiny increase in income. If it was gradual withdrawal rather than a cliff, she could afford to take the job. The UK's Universal Credit is supposed to be gradual and therefore work out to everyone's benefit. But in practice it has few of the good qualities of either UBI or negative taxation. Universal Credit has plenty of nasty cliffs, complicated rules and cruel penalties that push unlucky people deeply into poverty, and it also has an extremely heavy administration cost - every employer must file everyone's individual employment taxes every few weeks online and face heavy fines for getting anything wrong or being a day late.
    - nottorp 5y ago
      That's the other argument for UBI - get rid of the bureaucracy approving benefits.
      - imtringued 5y ago
        The bureaucracy exists to limit welfare spending though. If you have a fixed budget it is more efficient to only give it to those who truly need it even if it is self defeating over the long term. That is simply how politics works.
        dragonwriter 5y ago
        > he bureaucracy exists to limit welfare spending though. If you have a fixed budget it is more efficient to only give it to those who truly need it even if it is self defeating over the long term. If it is self-defeating, it is not more efficient. And we already have a bureaucracy whose functions include verifying income claims and adjusting net payments based on them in the income tax system, we don’t need a bunch of different bureaucracies doing that redundantly with slightly varied definitions and rules and paperwork that serve little practical purpose besides justifying additional bureaucracies and enforcing self-defeating funding cliffs.
      - dbsmith83 5y ago
        You will still need the bureaucracy there to be monitoring for abuse. I'd argue it'd be larger since the scale is increased
        mercutio2 5y ago
        With UBI, there is no means testing. So the main “abuse” possible is income tax evasion. It is possible that there would be fraud around pretending to be a person when that person doesn’t exist, or continuing to collect benefits for someone who is dead. But “are you a live person” is much harder to fake than “did you make sure you didn’t do these 6 illegible things that would make you ineligible”.
        deleted 5y ago
        [deleted]
        dbsmith83 5y ago
        Huge income tax evasion and money laundering. On a massive scale like we don't have today. It would be harder to detect
        nottorp 5y ago
        If you're doing the negative income tax, yeah. If you do plain UBI, no, because it's an unconditional payment.
        dbsmith83 5y ago
        We're not talking about hiding money obtained via UBI
        nottorp 5y ago
        Then how will UBI encourage income tax evasion? You get it unconditionally so it won’t change anything…
  - krab 5y ago
    That's a cliff in the benefits and tax system. If you make a tiny bit more, you shouldn't get worse off. UBI could be a solution but has its own drawbacks. Progressive taxation without cliffs is another possible solution. That is, you pay higher taxes but only from the amount above some threshold. That way, only the derivative of the tax rate has cliffs.
    - Armisael16 5y ago
      That’s how progressive tax systems currently work (and always have worked).
    - dragonwriter 5y ago
      > UBI could be a solution but has its own drawbacks. Progressive taxation without cliffs is another possible solution. You mean with no public support? Because UBI is social support without cliffs, and typically paired with progressive taxation. So if you mean progressive taxation with social support and no cliffs, that's not an alternative to UBI so much as a long-winded description of UBI. > That is, you pay higher taxes but only from the amount above some threshold. That way, only the derivative of the tax rate has cliffs. That's (ignoring things like the injection of means-tested welfare into the tax system via EITC) progressive taxation and tax bracket marginal rates work normally. UBI is just adding public benefits in without introducing cliffs.
  - efaref 5y ago
    Functionally they're equivalent. In a UBI/negative-income-tax schenariom things like food stamps also shouldn't be cut off at a simple threshold, but instead factored in at your marginal rate. If your marginal rate is always your marginal rate, then it's always beneficial to take a higher-paying job. The problem with means testing is that it effectively raises the marginal rate, often to astronomical percentages. For example, the withdrawal of a $1000 benefit because of an additional $1 that pushes you over a means testing threshold means your marginal tax rate on that dollar is 100,000%. Of course the rational thing to do is to not earn that dollar, or indeed any of the next $1250 that it would take to get you back to where you started (assuming a normal marginal rate of 20%).
    - nottorp 5y ago
      In a UBI scenario food stamps shouldn't exist, i think? The idea is to replace most benefits with just the basic income and save money not tracking those benefits.
      - efaref 5y ago
        That's the idea. In practice you need to be careful as a failure mode of introducing UBI is it being used as an excuse to cut benefits without an adequate replacement. For example, a reasonable stepping stone would be for people to get their food stamps by default, but then be able to "pay" some of the taxes on any income they earn using those food stamps. This means food stamps are being reduced gradually and at the marginal tax rate, so it's fairer than just falling off a cliff when you hit a threshold.
    - dragonwriter 5y ago
      > In a UBI/negative-income-tax schenariom things like food stamps also shouldn't be cut off at a simple threshold, but instead factored in at your marginal rate. In a mature UBI system [0], food stamps as use-restricted means-tested welfare wouldn't exist at all. (Food stamps in their original purpose as a system of agricultural subsidies might.) Their function would be rolled into the single benefit payment. [0] transitional proposals often keep other means-tested programs during the transition, scaled back as UBI scales up.
- jpindar 5y ago
  You can't buy food now with a letter that says you're predicted to owe less tax next year.

> You just described a “negative income tax”, which isn’t the same thing as UBI. A negative income tax is exactly the same thing as a UBI in a system that also has progressive income taxes.

nottorp 5y ago
See the post above about the niece who couldn't take a better paying job because then she wouldn't qualify for food stamps...
- jlokier 5y ago
  The niece couldn't take the better paying job due to a "cliff" - the abrupt loss of food stamps due to a tiny increase in income. If it was gradual withdrawal rather than a cliff, she could afford to take the job. The UK's Universal Credit is supposed to be gradual and therefore work out to everyone's benefit. But in practice it has few of the good qualities of either UBI or negative taxation. Universal Credit has plenty of nasty cliffs, complicated rules and cruel penalties that push unlucky people deeply into poverty, and it also has an extremely heavy administration cost - every employer must file everyone's individual employment taxes every few weeks online and face heavy fines for getting anything wrong or being a day late.
  - nottorp 5y ago
    That's the other argument for UBI - get rid of the bureaucracy approving benefits.
    - imtringued 5y ago
      The bureaucracy exists to limit welfare spending though. If you have a fixed budget it is more efficient to only give it to those who truly need it even if it is self defeating over the long term. That is simply how politics works.
      - dragonwriter 5y ago
        > he bureaucracy exists to limit welfare spending though. If you have a fixed budget it is more efficient to only give it to those who truly need it even if it is self defeating over the long term. If it is self-defeating, it is not more efficient. And we already have a bureaucracy whose functions include verifying income claims and adjusting net payments based on them in the income tax system, we don’t need a bunch of different bureaucracies doing that redundantly with slightly varied definitions and rules and paperwork that serve little practical purpose besides justifying additional bureaucracies and enforcing self-defeating funding cliffs.
    - dbsmith83 5y ago
      You will still need the bureaucracy there to be monitoring for abuse. I'd argue it'd be larger since the scale is increased
      - mercutio2 5y ago
        With UBI, there is no means testing. So the main “abuse” possible is income tax evasion. It is possible that there would be fraud around pretending to be a person when that person doesn’t exist, or continuing to collect benefits for someone who is dead. But “are you a live person” is much harder to fake than “did you make sure you didn’t do these 6 illegible things that would make you ineligible”.
        deleted 5y ago
        [deleted]
        dbsmith83 5y ago
        Huge income tax evasion and money laundering. On a massive scale like we don't have today. It would be harder to detect
        nottorp 5y ago
        If you're doing the negative income tax, yeah. If you do plain UBI, no, because it's an unconditional payment.
        dbsmith83 5y ago
        We're not talking about hiding money obtained via UBI
        nottorp 5y ago
        Then how will UBI encourage income tax evasion? You get it unconditionally so it won’t change anything…
- krab 5y ago
  That's a cliff in the benefits and tax system. If you make a tiny bit more, you shouldn't get worse off. UBI could be a solution but has its own drawbacks. Progressive taxation without cliffs is another possible solution. That is, you pay higher taxes but only from the amount above some threshold. That way, only the derivative of the tax rate has cliffs.
  - Armisael16 5y ago
    That’s how progressive tax systems currently work (and always have worked).
  - dragonwriter 5y ago
    > UBI could be a solution but has its own drawbacks. Progressive taxation without cliffs is another possible solution. You mean with no public support? Because UBI is social support without cliffs, and typically paired with progressive taxation. So if you mean progressive taxation with social support and no cliffs, that's not an alternative to UBI so much as a long-winded description of UBI. > That is, you pay higher taxes but only from the amount above some threshold. That way, only the derivative of the tax rate has cliffs. That's (ignoring things like the injection of means-tested welfare into the tax system via EITC) progressive taxation and tax bracket marginal rates work normally. UBI is just adding public benefits in without introducing cliffs.
- efaref 5y ago
  Functionally they're equivalent. In a UBI/negative-income-tax schenariom things like food stamps also shouldn't be cut off at a simple threshold, but instead factored in at your marginal rate. If your marginal rate is always your marginal rate, then it's always beneficial to take a higher-paying job. The problem with means testing is that it effectively raises the marginal rate, often to astronomical percentages. For example, the withdrawal of a $1000 benefit because of an additional $1 that pushes you over a means testing threshold means your marginal tax rate on that dollar is 100,000%. Of course the rational thing to do is to not earn that dollar, or indeed any of the next $1250 that it would take to get you back to where you started (assuming a normal marginal rate of 20%).
  - nottorp 5y ago
    In a UBI scenario food stamps shouldn't exist, i think? The idea is to replace most benefits with just the basic income and save money not tracking those benefits.
    - efaref 5y ago
      That's the idea. In practice you need to be careful as a failure mode of introducing UBI is it being used as an excuse to cut benefits without an adequate replacement. For example, a reasonable stepping stone would be for people to get their food stamps by default, but then be able to "pay" some of the taxes on any income they earn using those food stamps. This means food stamps are being reduced gradually and at the marginal tax rate, so it's fairer than just falling off a cliff when you hit a threshold.
  - dragonwriter 5y ago
    > In a UBI/negative-income-tax schenariom things like food stamps also shouldn't be cut off at a simple threshold, but instead factored in at your marginal rate. In a mature UBI system [0], food stamps as use-restricted means-tested welfare wouldn't exist at all. (Food stamps in their original purpose as a system of agricultural subsidies might.) Their function would be rolled into the single benefit payment. [0] transitional proposals often keep other means-tested programs during the transition, scaled back as UBI scales up.
jpindar 5y ago
You can't buy food now with a letter that says you're predicted to owe less tax next year.