Split UBI - Split From Breakdown In Civil Order

[Emily Lake]

The solution is to give people enough money to eat (and ideally to be clothed and housed) with no strings attached. A universal basic income. Paid for by a highly progressive taxation system.

Of course, this idea is hugely unpopular. But its unpopularity isn't rational. Wealthy people are happy to spend FAR more on security (whether by taxpayer funded police, or private spending on security guards, alarms, walls, gates, etc.,) than it would cost them in taxes to make most of the expensive and unsightly problems go away.

I don't think you've done the math on this.

Maybe the wealthy would be able to foot that bill for a year... and then what? Where's the rest of the money going to come from? And what are you going to do when middle-income people start looking at their ever increasing tax bill and realize that they could stop working and maintain the same standard of living?

Seriously, if every single cent collected in income taxes in the US were distributed equally to every citizen... we'd each get a but under $8,000. If we seized every bit of the net worth of all the billionaires in the world and added that to the income taxes, we'd bring that up to about $15,000 per person. Which, by the way, is right at poverty level.

 

[bilby]

And what are you going to do when middle-income people start looking at their ever increasing tax bill and realize that they could stop working and maintain the same standard of living?

Same thing I currently do - say "Enjoy your retirement!".

Seriously, a vast number of people are currently unproductive. Particularly children and retirees (many of whom aren't particularly old, just wealthy enough to live as rentiers).

Most people in the workforce don't want to stop working, nor do they want to live a bare minimum existence with only their basic needs covered.

People will still work, and still want to work. But they won't be forced to do horrible work for no more than survival wages.

Nobody could "stop working and maintain the same standard of living"; If you stop working, your income would immediately fall to the basic. The only change is that the basic wouldn't be zero.

 

[bilby]

Seriously, if every single cent collected in income taxes in the US were distributed equally to every citizen... we'd each get a but under $8,000.

You are right!!

If only I had thought of that, and proposed much higher taxation as a solution.

The US has stupidly low taxes, and the poor provision of basic social services, and absence of first-world protections against unemployment, illness, or injury reflects this.

Total tax revenue in Australia in 2022 was about AU$26,000 per capita.

 

[Tigers!]

Many in Australia would ask "What do we get for that AU$26,00 per capita".

Is that figure the total for state, commonwealth or just commonwealth?

 

[bilby]

Many in Australia would ask "What do we get for that AU$26,00 per capita".

Is that figure the total for state, commonwealth or just commonwealth?

That's the whole lot. The vast majority is raised by the Commonwealth, as the only taxer of income, the only taxer of sales (GST), and the only taxer of excise duties.

It's the financial year 2021-22 data from ABS on revenue across all levels of government (so it would also include local and shire council rates and levies); Divided by the ABS Australian population estimate for 2022.

Most of that revenue goes to either healthcare or social security; Most social security spending goes to aged pensions, disability pensions, and other health and age related benefits.

Basically, we spend around half of our entire Commonwealth budget on people who are too old or too sick to look after themselves; As an Australian who proposes to live forever (or die in the attempt), I don't think that this is a bad thing at all.

After those two biggies, the bulk of the other half goes to education and defence, and to "general revenue assistance" - money given by the Commonwealth to the states and territories to be spent however the state or territory governments decide.

You can find more detail than any sane person could ever want at:

https://www.aph.gov.au/About_Parlia...tReview202021/AustralianGovernmentExpenditure

 

[Jimmy Higgins]

Many in Australia would ask "What do we get for that AU$26,00 per capita".

And an on-looker would say "look at the available information online to find out".

 

[Jimmy Higgins]

The solution is to give people enough money to eat (and ideally to be clothed and housed) with no strings attached. A universal basic income. Paid for by a highly progressive taxation system.

Of course, this idea is hugely unpopular. But its unpopularity isn't rational. Wealthy people are happy to spend FAR more on security (whether by taxpayer funded police, or private spending on security guards, alarms, walls, gates, etc.,) than it would cost them in taxes to make most of the expensive and unsightly problems go away.

I don't think you've done the math on this.

Maybe the wealthy would be able to foot that bill for a year... and then what? Where's the rest of the money going to come from? And what are you going to do when middle-income people start looking at their ever increasing tax bill and realize that they could stop working and maintain the same standard of living?

A basic income isn't a great standard of living... rather it is a minimal level of living that comes with dignity.

This idea that people would stop working to live on a bare income instead of having nicer cars or vacation to nice places, go out to eat... is just silly. Same reason why people don't commit crimes to live in luxury in prison.

Seriously, if every single cent collected in income taxes in the US were distributed equally to every citizen... we'd each get a but under $8,000.

A lot of taxes are paid outside of income taxes. I tire of the "income taxes" argument, when I pay a great deal in FICA too, and then I need to pay higher city taxes because Columbus believes in austerity and starving Cities.

 

[Emily Lake]

Seriously, if every single cent collected in income taxes in the US were distributed equally to every citizen... we'd each get a but under $8,000.

You are right!!

If only I had thought of that, and proposed much higher taxation as a solution.

Go do the math. Go figure out how much would need to be collected in taxes in order to fund the level of UBI that you think makes sense. Then tinker with the tax brackets and figure out how high a tax you need in order to get to the total amount required. I've gone through this, and you can't do it on just the highest incomes. You end up at like a 95% tax rate for income over $200K or something - I don't remember exactly, I just remember that if you only changed the highest bracket, it was completely absurd and a non-starter. To get to the total amount that would be needed, you have to increase ALL of the tax brackets, and not my immaterial amounts.

Then do the second step - calculate what the effective take-home income AFTER taxes would be in those brackets. And start really, really thinking about human nature. If you can stay home and do nothing at all and get $30K... or you can work 40 hours a week for a nominal salary of $60K but you only take home $20K, then is that marginal $20k really worth the time investment? Make a decision about what portion of people in the lower brackets will opt out of work. You say "enjoy your retirement"... so you already acknowledge that there are going to be people - who you've deemed unproductive - who stop working because of UBI.

Now here's the most important part: Do the same thing for year 2... only now you have fewer people. Assume 0% inflation, for simplicity sake. You should notice that you have to change your tax rates again in order to collect the same total amount of taxes - you're now trying to squeeze the same amount of juice out of fewer oranges after all. Which also means that the marginal take-home income shrinks... which means that more people will decide that working isn't worth it.

That means that in year 3, you have even fewer people in your tax pool, and you have to increase the tax rates again in order to get enough money to pay out UBI... which means even more people will opt out of working.

When I ran through this exercise several years ago, I think I made it to like 6 or 7 years before the entire thing falls down. It's not sustainable.

The US has stupidly low taxes, and the poor provision of basic social services, and absence of first-world protections against unemployment, illness, or injury reflects this.

Total tax revenue in Australia in 2022 was about AU$26,000 per capita.

How much does it cost to run the government in AU?

If anyone who is currently making $26K could get the exact same amount for no effort on their part... how many people would stop working? How do you plan to replace the taxes they previously contributed?

 

[bilby]

I've gone through this, and you can't do it on just the highest incomes. You end up at like a 95% tax rate for income over $200K or something

The UK had income tax rates around 90% on the top bracket throughout the 1950s and 60s, which were considered boom times, and fondly remembered in the 1970s, when the top rate fell to the 70s percent, and the economy nose-dived.

What you consider absurd and what could actually work (and has in fact worked in the past) are at odds.

In an environment with a universal basic income, high tax rates on additional income are perfectly reasonable, as (by definition) that income isn't essential in order to live, and is entirely available for luxuries.

 

[bilby]

When I ran through this exercise several years ago, I think I made it to like 6 or 7 years before the entire thing falls down. It's not sustainable.

Given that you factored in zero economic growth, and that you made the rookie error of disregarding the UBI when calculating the income of workers, it's not surprising that you got unsustainable results.

If you can stay home and do nothing at all and get $30K... or you can work 40 hours a week for a nominal salary of $60K but you only take home $20K plus your $30K basic, for a grand total of $50K, then is that marginal $20k really worth the time investment?

Yes it is. Once you remember what the "U" stands for in UBI.

Essentially, for it not to be workable, your country would need to not be producing enough stuff to meet everyone's basic needs, right now. Once it passes that threshold, it's just a question of how the total productivity is divided up.

Right now, on a worldwide basis, more people suffer ill health due to eating too much than suffer due to not getting enough to eat.

That fact alone suggests that a UBI would be perfectly sustainable on a global level.

As long as people aren't stopping work to live on that oh-so-generous basic income that just provides food, clothing, and a roof over their heads, and nothing else.

Would you quit your job if you got a $30K/year income regardless? I doubt it. I certainly wouldn't. But you expect lots of other people to choose differently - why?

 

[Emily Lake]

When I ran through this exercise several years ago, I think I made it to like 6 or 7 years before the entire thing falls down. It's not sustainable.

Given that you factored in zero economic growth, and that you made the rookie error of disregarding the UBI when calculating the income of workers, it's not surprising that you got unsustainable results.

Are you telling me that you plan to tax the UBI that is being paid to citizens via taxes?

I notice that you aren't actually doing the math, you're not actually looking at the real impacts of your plan.

Look, As a concept, UBI is fantastic. It sounds wonderful. I'd love to have it, I really would. But it's not feasible, and it's not sustainable. That's where it breaks down.

If you can actually convince me - with actual real numbers and plausible assumptions regarding the financial impact and the behavior of normal human beings (as opposed to the idealized notional ones who will work 40 hours a week for a negligible marginal income) - I'll change my tune and campaign alongside you. But you have to be able to actually deliver a competent and comprehensive analysis that demonstrates the long term sustainability of the program without using irrational assumptions.

If you can stay home and do nothing at all and get $30K... or you can work 40 hours a week for a nominal salary of $60K but you only take home $20K plus your $30K basic, for a grand total of $50K, then is that marginal $20k really worth the time investment?

Yes it is. Once you remember what the "U" stands for in UBI.

I know what it stands for. Someone saying "oh it's universal!!!!" as if that makes it magically sustainable is about as useful as "one size fits all" pants.

Essentially, for it not to be workable, your country would need to not be producing enough stuff to meet everyone's basic needs, right now. Once it passes that threshold, it's just a question of how the total productivity is divided up.

For year one, sure. For UBI to work for more than one year, you have to assume that everyone will continue to produce at the same level they did when they weren't getting free money for having been born.

That's the problem, bilby. It works great in year 1. Maybe even in year 2 and 3. But it's an exponential problem - when people start leaving the workforce, the tax rate has to rise to capture enough funds to pay the next year's UBI. And that forces more people to leave the workforce... and it progresses at an accelerating rate. That's where the arguments in favor of UBI fall down - the proponents don't look further out than a year or two at most. They definitely aren't looking at the compounding impact of some people opting to leave the workforce. And they're definitely not looking at how that workforce flight reduces the marginal take-home income of the remaining people.

Right now, on a worldwide basis, more people suffer ill health due to eating too much than suffer due to not getting enough to eat.

That fact alone suggests that a UBI would be perfectly sustainable on a global level.

As long as people aren't stopping work to live on that oh-so-generous basic income that just provides food, clothing, and a roof over their heads, and nothing else.

Would you quit your job if you got a $30K/year income regardless? I doubt it. I certainly wouldn't. But you expect lots of other people to choose differently - why?

This year, no. If 50% of my income is taken as taxes, but I get $30K of it back, I'm still doing great. But my sister and her boyfriend would - $30K is more than they each make right now, there'd be no reason at all for them to work. They'd actually come out ahead, since they're not excluded from taxes. They'd end up with a higher effective income than they currently get. The same is true for... about a third of the people in the US. So let's assume that 50% of those are kids or retirees who aren't being taxes anyway... and you still end up with about 15% of the US workforce being better off not working at all than they are now.

Well sure, you might say... but wouldn't they want to continue working and get $35K instead of $30K? You're assuming that the desire to have a slightly better standard of living is more influential than the desire to not work at all and have 100% leisure time.

So a chunk of people are going to stop working. And that means that in year 2, it's not 50% of my income, but 55% of my income that is taken as taxes. Then it's 60%, then 70%, then 80%. My standard of living reduces with every tax increase, because my effective income gets smaller and smaller. At some point, you're asking me if I would be willing to work at my same job - which has a high degree of responsibility, accountability, and effort involved - so I can have $10K of after-tax salary plus $30K of free money? Nah. I wouldn't. At that point... probably a lot sooner than that... I can quit my job, move to the middle of nowhere and get a goat or two, take up painting, and long walks, and not have to do anything at all.

The vast majority of people would.

The only way to make UBI feasible, is to make it so low an income level that it's NOT livable. And really, at that point you're better off providing needs-based income assistance which would provide a higher overall standard of living for less cost to the government - and hence less cost to the citizens overall.

 

[Loren Pechtel]

The US has stupidly low taxes, and the poor provision of basic social services, and absence of first-world protections against unemployment, illness, or injury reflects this.

Total tax revenue in Australia in 2022 was about AU$26,000 per capita.

How much does it cost to run the government in AU?

If anyone who is currently making $26K could get the exact same amount for no effort on their part... how many people would stop working? How do you plan to replace the taxes they previously contributed?

Remember, they're a UHC country--that includes their healthcare spending.

 

[laughing dog]

Look, As a concept, UBI is fantastic. It sounds wonderful. I'd love to have it, I really would. But it's not feasible, and it's not sustainable. That's where it breaks down.

Whether or not an UBI is feasible or sustainable is an empirical question. Your argument that it is neither feasible nor sustainable is based on your assumptions about human behavior. Your assumptions are no more reasonable than bilby’s .

Yes, some would stop working under an UBI that bilby envisions. It would allow those who do not work as much ad they wish because of other responsibilities to work to work more.

 

[Loren Pechtel]

That's the problem, bilby. It works great in year 1. Maybe even in year 2 and 3. But it's an exponential problem - when people start leaving the workforce, the tax rate has to rise to capture enough funds to pay the next year's UBI. And that forces more people to leave the workforce... and it progresses at an accelerating rate. That's where the arguments in favor of UBI fall down - the proponents don't look further out than a year or two at most. They definitely aren't looking at the compounding impact of some people opting to leave the workforce. And they're definitely not looking at how that workforce flight reduces the marginal take-home income of the remaining people.

And what happens if it breaks down and you have a bunch of workers with no job skills?

The only way to make UBI feasible, is to make it so low an income level that it's NOT livable. And really, at that point you're better off providing needs-based income assistance which would provide a higher overall standard of living for less cost to the government - and hence less cost to the citizens overall.

If it were to be done put it at welfare-level support. However, there's a major trap potential and thus if the economy reached the point it was sensible I think it should be in the form of subsidized jobs rather than not working. We are already seeing issues in Europe with worker protections that aren't compatible with macroeconomic reality.

 

[ZiprHead]

Look, As a concept, UBI is fantastic. It sounds wonderful. I'd love to have it, I really would. But it's not feasible, and it's not sustainable. That's where it breaks down.

Whether or not an UBI is feasible or sustainable is an empirical question. Your argument that it is neither feasible nor sustainable is based on your assumptions about human behavior. Your assumptions are no more reasonable than bilby’s .

Yes, some would stop working under an UBI that bilby envisions. It would allow those who do not work as much ad they wish because of other responsibilities to work to work more.

And allow entrepreneurs the chance to start their own businesses.

 

[bilby]

Are you telling me that you plan to tax the UBI that is being paid to citizens via taxes?

No, I'm telling you that income above the UBI is, by definition, disposable luxury income, and that nobody will be driven to penury by its being taxed heavily.

 

[bilby]

you have to assume that everyone will continue to produce at the same level they did when they weren't getting free money for having been born.

We observe that people who could afford to retire to a subsistence level lifestyle mostly choose not to do so. People like luxuries, and are prepared to work for them.

Your assumption that they would not work doesn't match what we observe peopke doing, and I sincerely doubt that it matches your own position - if someone offered you a subsistence level income for life, if you quit work tomorrow, would you quit?

Likely if you have a modest pension fund, and have been in the workforce for a while, somebody effectively IS offering you that option. Are you likely to take it?

If not, why do you imagine many others would?

 

[bilby]

You're assuming that the desire to have a slightly better standard of living is more influential than the desire to not work at all and have 100% leisure time.

That's not an assumption, it's an observation.

The minority of people who don't behave that way mostly already don't work anyway. Or if they do, they're marginally productive at best.

The lazy people would drop out of the workforce, for sure. But we wouldn't notice their absence - indeed, productivity might even go up in that scenario.

 

[Emily Lake]

Look, As a concept, UBI is fantastic. It sounds wonderful. I'd love to have it, I really would. But it's not feasible, and it's not sustainable. That's where it breaks down.

Whether or not an UBI is feasible or sustainable is an empirical question. Your argument that it is neither feasible nor sustainable is based on your assumptions about human behavior. Your assumptions are no more reasonable than bilby’s .

Yes, some would stop working under an UBI that bilby envisions. It would allow those who do not work as much ad they wish because of other responsibilities to work to work more.

I challenge the bolded.

I will concede that it's theoretically possible that the number of people who stop working would be so incredibly small that it would have an immaterial effect. But I find that idea to be implausible. I also find your supposition - that when those few people stopped working, others would happily work more - to be strained.

About a third of the people in the US have an unadjusted gross income of $30K or less. If UBI is set at $30K... why would those people continue to work? At a minimum, why would they continue to work full time? They probably don't have jobs they love, so why would they continue to do something they dislike when they can have the same standard of living and have complete leisure? By the same token... when some of those people quit their jobs, why do you think that other people working those same low income jobs would be happy to work more hours, especially when their after-tax pay is lower than it was pre-UBI?

What mechanism of human behavior do you think is at play here, and do you think there are enough of those sorts of people to offset the loss of workers - and thus the loss of taxes?

Like I said - show me the math. Do the work, and do it for a 10 year span, at least. Show your assumptions about what portion of people at the cusp decide to stop working, and what the impact of that is on the tax rates. Prove to me that it works using actual assumptions and math, and I'll change my position.

Like I said, it's not the concept that I oppose. It's a very nice, very happy, very compassionate idea. I *like* the idea. But the last time I went through modeling for it, it wasn't sustainable using reasonable assumptions. If you can prove to me that it is sustainable in a reasonable fashion, that would be awesome.

 

[Emily Lake]

Are you telling me that you plan to tax the UBI that is being paid to citizens via taxes?

No, I'm telling you that income above the UBI is, by definition, disposable luxury income, and that nobody will be driven to penury by its being taxed heavily.

If the UBI is sufficient that any income more than that is disposable and can be taxed at exorbitant rates... your schema is going to collapse even faster.

There would be no good reason for anyone to toil away for extremely low pay, when they can have enough to live comfortably by doing nothing more than being born.