Comment by Retric
6 months ago
That’s the advantage to UBI.
A revenue neutral UBI check at some subsistence level and killing all other government assistance including lower tax brackets would in the short term significantly lower the standard of living for many low income Americans and boost others. However people would try and maximize their lifestyle and for most people that would be through working. Others would opt out and try and make being really poor work for them.
Essentially you remove central planning around poverty and as the government stops requiring rent stabilized apartments etc. Which in the short term pushes a lot of poor people out of major cities but simultaneously puts upward pressure on wages to retain those workers and pushes down rents via those suddenly available apartments. It doesn’t actually create or destroy wealth directly, you just get a more efficient allocation of resources.
There's a catch. If enough people opt for not working, the level of UBI may go below the level of survival for some time. This will push those who can work and don't want to tolerate it to go find work. But those who cannot work much, or at all, like disabled people, would be facing hunger, and would be unable to afford the special stuff they need to survive (like medicine or home aid). They might just die from that.
This returns us back to the problem of some guaranteed payments to those we don't want to let die, and maybe want to live not entirely miserably, and the administration thereof.
Another danger is the contraction of the economy: businesses close, unable to find workers, the level of UBI goes down, people's income (UBI + salary) also goes down, and they can afford fewer goods, more businesses close, etc. When people try to find work because UBI is not enough, there may be not enough vacancies, until the economy spins up again sufficiently. It's not unlike a business cycle, but the incentive for a contraction may be stronger.
As long as a fixed percentage of the economy is going to UBI there’s natural feedback loops. Fewer people work, UBI goes down and incentives to work increase. However, long term efficiency gains keep pushing up the standard of living for people on UBI which then makes not working more appealing. The specific numbers only matter in the short term if in 500 years 1% of the economy went to UBI people would likely be very well off by modern standards, but still be tempted to work for even more.
There’s a long way between uncomfortable and death here, entitlement spending is already over 10k/person/year and that’s excluding the impact of progressive taxation. Revenue neutral flat tax and a 20+k UBI isn’t unrealistic. A reasonable argument can be made for universal healthcare being part of UBI, but that’s a separate and quite nuanced discussion.
Not that I think there’s any chance of a UBI in the US, but it’s an interesting intellectual exercise.
We should still keep the progressive income tax. UBI can even be implemented as NIT
Adding a land tax too, now that would be, that would really, that would fix some things
Land tax would cause people to sell land. We need a wealth tax. Income tax is too easy to game.