I think it works best as a negative income tax. If you make no money, you get a refundable credit up to, say $25k/year. This would phase out as you earn income, so that once you're earning over $25k you're paying in and not getting the credit. This way people still have an incentive to work if they want more, but they won't starve if they earn less.
This way you're not giving a flat $25k to someone who's already earning $100k. But if that person loses their job, they'll still get enough to live on.
If the amount you receive is inversely proportional to how much you earn then this effectively creates a marginal tax on earnings, therefore creating a disincentive to seek further employment for fear of losing existing benefits.
This is one of the main problems UBI seeks to address by not being means tested like current benefits.
If instead of phasing out the earned credit for any earnings below $25k/year it was just withdrawn above that threshold (an effective marginal tax rate of 100% beteen $25k-$50k/year) then you would get clustering of incomes at just under $25k/year with no incomes between $25k-$50k/year. Potentially you could phase it out starting at $25k as arguably the incentive effects are less pronounced at higher incomes. Obviously this could not be considered universal however.
I think I get what you're saying, and that's the problem with the hard cutoffs we have for aid now. Wouldn't it be solved by just making it completely smooth up to 25k/year?
If you earn $0, you get $25k.
If you earn $10k, you get $15k
If you earn $24999, you get a $1 credit.
Anything $25k and up, you get 0 credits, with a progressive tax scheme to support the above.
I guess it's not "universal" per se, but the only means testing would be to figure out how much income you made, which the government already does in the course of collecting income taxes anyway.
Maybe it's not a full time job. Maybe it's something you're just really interested in doing, but isn't economically viable. Maybe it's a hobby or craft that you're able to somewhat monetize but not fully support yourself with, at least at first, but it can grow to fully support you if you're not scrambling to keep yourself alive for the first couple years.
Many people are not going to just sit around the house and play video games all day. People have a natural desire to do productive things.
How is that a 100% tax rate? If you earn 10k, you keep the entire 10k, plus get a 15k credit. That is a negative tax. The government is not taking any of your income, it's giving additional income.
If you do nothing, you get 25k. Until you find a job that pays more than 25k, any work you do puts zero additional dollars into your pocket. That is effectively a 100% tax rate. It means you have zero incentive to work unless you can make the jump from 0 to more than 25k.
No, it doesn't. That assumes that the only reason anyone would do a job is to get paid, which is true a priori. Plenty of people do volunteer work without getting paid for it. Perhaps a lot more would if they were on a 25k basic income. That doesn't change the fact that what you described above featured a 100% tax rate on all income below 25k.
Per a very worrisome concurrent to this 4 8 2017 thread about stroke survival and cost, how is a UBI in a land of 'buy more hamburger, buy more tobacco, buy more white bread, buy more audience-centric entertainments' ... maybe all using non-pedestrian means for the purchase [ vehicle, taxi, ...] not having a hidden cost to society in obesity/stroke/diabetes constant diet and exercise sub-par but par for that the neighbors are doing and up to and demand for friendliness, earlier stroke risk in a sizable number of the UBI while young but much more less healthy, not out of breath activities during ones day 2019 vs 1819, and the consequential thirty years after its onset not Pritikin or similar while young and in one's productive years, tearing asunder the capacity of society to deal with it in a traditionally within-ones-extended family medical care with once a week medical assitance, where the norm is now maybe or will be, confiscate, put in villa of warehoused stroke obese survival bedrooms, with TV, cake, etc, and overworked underpaid and maybe even deprived of retirement income for current health plan tax, nursing staff and the like?......
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For instance, I was once bullied into obesity and suffer a consequential decades later heart risk I only learned existed while passing a clean stress test, then learning a few weeks ago that per /r/medicine that small plaques are omnipresent for STEMI fatal consequences and all the while unbeknownst to
the bearer of same [ I ] and his doctor and the like, invisible on EKG and the stress test, and a dangerous onset in the young people of today, should they be inside during the many hours our forefathers were picking cotton, treading in the woods trapping wildlife, praying for their next meal without an electric kitchen, and at time suffering mini starvations in village and forest enclave and/or during winters and/or during times such as the Dust Bowl or Great Depression when bus rides, one's vehicle in front to go to/from appointment, ER, movie, restaurant,takeout, pizza aisle special coupon venue, grocery to excess with an electric car at the assist, etc, and other in-city in-town behind-gated-walls within-HOA within residential condo enclave with elevator not stairs, and on and on, and due to the 85% spending of what is spent by women head of household vs that 1810-ish no credit card for women yet, much less bank account nor vehicle, and the like, but a ring finger from which to ask allowance for the meal in the few hours the farm owner or ranch owner or
town storeowner with closures every Sat Sun as a matter of course, was home and had limited 'where is our next meal coming from' times of solace within each others' shared fears and prayers vs celebrations from remote 'what about the weather at the other side of the world, what we can do to help' hours of 'are you with, or against' polls needing hours of divisiveness, take sides, slander if one is into that cup of tea, and the like, parisan to well-fed plaque-while-we-talk or plaque-as-we-view stroke-risk-more-next-week-than-this-week, oops,that is 500K, as per YN on 4 8 2107, frightening the high pulse pressure wonderer and concerned person for the health of his literate and skilled former colleagues and present-day citizenry, beset by cost and ethics conundrums, but always at the ready to inquire of each other, and may I paraphrase what I heard while waiting for a wrist Xray after a spill,
female... it is 2pm, have you overeaten yet? yummy!
male... Yes I overate, but only once, So good!
female... and last saturday?
male... Yes, I had that plate at such and such restaurant, but it was only overeating because of the previous day's birthday party for ____________ relative, which was so yummy!
Which is not to be overly critical of the conversation, because I was once a part of a same group and overfed, but due to ignorance and naive utopian goal from being bullied that in hindsight was only extremely damaging to my own health, vs victimizng to others which one could take it as, since it encouraged overeating if one was observing my overeating, and was accompanied by my strange silences as one by birth-surgery isolation not very conversant, still, in conversation as I prefer to write to expound, as this, and
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well, whatever.
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tl;dr... UBI may impose a decades-later extreme uptrend in stroke among a not-small
subset of its recipients... costly to society and the families of those UBI gainers of income at the earliest years of its onset.
Something to put into the mix, if one is so inclined. [ text input box here not conducive to editing, and also out of time, dual-reason only of draft quality small treatise, I as newbie to YN may be excused. Thanks! IAMYD ]
As a concrete example, the original formulation was a 2 for 1 tax credit. Let's say taxes are 10% if BI is $1000 dollars, and you earn no money, you get $1000.
if you earn $500, ($50 in taxes), you get 2 for one credits, so that pulls $25 out of your 1000, you take home $500 for working, and $975 for BI.
if you earn $100000, $10000 in taxes, you get a 2 for one credit, so only $8000 in taxes.
BI makes it always better to earn some money.
People always seem to forget the tax credit side, and assume we're just writing everyone a check.
Actually, you (they) kinda do want to incentivise not working.
The idea is that, currently, "not working" is dis-incentivised to such a degree that it creates more problems than it solves. Consider:
- For currently unemployed people: are they lacking in motivation, or in ability?
- For people who legitimately cannot find employment: is it moral to expose them to policies aimed at punishing 'freeloaders'?
- Considering existing work-requirements even for basic assistance with food and housing: is it correct to say these operate from a model of human motivation where people stop trying as soon as they can afford the basic necessities of life?
- Do you stop trying as soon as you know you have enough food and a roof over your head for the foreseeable future?
- Do you know anybody who does that?
- If people are forced into jobs with the thread of starvation or homelessness, what are the trade-offs they are required to make? I. e. to what degree is this forcing short-termism, and hindering their ability to invest time into, for example, education?
- To what degree does the looming threat of starvation compromise the position of low-income workers in negotiations with employers?
- Consider some model citizen from the lower middle class that you can think of: maybe a factory worker from the midwest, or an accountant's clerk in Houston, whatever... They have been gainfully employed for all their (adult) life, and will be for the foreseeable future. Question: How much needless anxiety is that person possibly experiencing, because they are just some random economic events away from complete destitution?
- To what degree could society profit by mitigating some of the risks associated with attempting something new?
This way you're not giving a flat $25k to someone who's already earning $100k. But if that person loses their job, they'll still get enough to live on.