Kayla wrote: ↑Mon Jun 24, 2019 9:14 pm
so why not take the complexity and administrative overhead out - give everyone a certain minimum - at or even above (we are saving money on admin costs after all) current minimal social payments - and people who earn more will end up paying the minimum income payments they get back in taxes - i think one term i heard is 'negative income tax'
There's several problems there.
That isn't a negative income tax. In the US you have a program called EITC (Earned Income Tax Credits), most countries in the developed world have such a thing. The idea being that somebody who has a family to support on a very low income gets greater than 100% income tax refund. This helps people escape poverty traps where the costs of getting a job, and thus paying your own rent and then paying for child care etc makes it impossible for some to get off benefits.
Lefties hate this because they think it subsidies exploitative low wage firms. Righties hate it because they don't like the government spending money at all, and some object to t as corporate welfare too. They are all wrong, this stuff has been studied in many locations and the results are very clear. Negative income taxes are by far the best means of poverty reduction - especially child poverty - available in the rich world. They have a very positive modifier effect, in that every $1 spent by the state returns greater than $1 of measurable benefit. That's the good shit for a state policy, very few have such obvious positive returns. UBI is predicated on throwing that program away and spreading that cash mostly among the non poor, which is what makes it dangerous.
It's not terribly hard to do some back of a napkin estimates for how much money will be available to the program. The tax take for the USA is a rather pathetic 27% of GDP. Roughly speaking GDP is more or less the total pay received by all the people in a country (it doesn't work as precisely as it should, but it's the number we have available). Collectively you can roughly say that the average American has a tax incidence of 27%. So from your median wage of $62,000 the government has roughly $16.5K to spend.
UBI is predicated on replacing all entitlements spending. That's all your Medicare, Social Security, food stamps, the VA and so forth. Call it roughly 2 thirds of government spend, and you get very roughly 10 grand per person, per annum. Enough to make a big difference for those who don't earn a great deal. Probably ok in fact for those people losing their EITC and food stamps.
The money you get can be a little higher if a number of distorting tax breaks such as rebates for company health plans are culled as well - pushing up the state share of income automatically puts more in the pot for distribution. But it goes down again because all those war vets that depend on the VA will die if that program as scrapped and all they get is 10 K, and all those oldsters who lose their social security and their health cover .. they will die as well. Once social security is excluded, that redistribution pot will get a lot smaller.
And how the Hell you think you can run that sort of scheme, get dependent on it, and have trillion dollar budget deficits before you even start... well that's just not an option at all. I'll leave you to form your own opinion of the economic concept of moral hazard, but it's going to kick you in da nutz if you start out that way.
But don't fret, there are three obvious ways to save UBI.
1. Increase your taxes a lot, until the program delivers enough cash that people with no income and health problems don't die. If the tax take raises to 50%, the UBI becomes more like 40% of median income, that might be enough for the elderly and unwell to get by as long as you keep Obamacare. If you get to 100% taxes, everybody therefore has exactly equal incomes - well done, Lenin tried that trick and never made it work.
2. Exempt all the federal programs that people depend on to live or already spent their entire workign lives contributing towards, and just redistribute much less money. Your UBI will fall to about 3 or 4K at most, but you will return quite a lot of children to avoidable poverty at that price.
3. Just wait. At some point in the future, 10% of rich world median income will become plenty for a completely excellent life, making it possible to offer a meaningful UBI without paying French levels of tax.... Higher Ed, houses and Healthcare need to become cheaper for that to happen. But that will happen when AI algorithms become better at spotting cancers and so on. Other things need to get cheaper too, but most of them already are, it's those other three that are the issue. Either way, the point of replacing human work with robot labor is to make the product cheaper. So when the robots really do take over all those jobs, UBI isn't the panic reaction to that, it is the obvious way to take advantage of it*.
* Ok, that is a lie, UBI is just the trendiest option, it's actually still a bit stupid really. The three day working week is much more obvious,
as Keynes noted in 1930.