Split UBI - Split From Breakdown In Civil Order

[ZiprHead]

Oh, bullshit. Most of the obscenely high income people got that way and maintain their obscene wealth by vastly underpaying their workers, by screwing over their suppliers and by owning enough politicians to ensure that laws and the tax code keep them rolling in more money than any one has any use for. Honestly, if Bezos and Musk lost 99.99% of their wealth, they would still be vastly more wealthy than almost all Americans.

I just saw this

Jeff Bezos Made Over $7.9 Million An Hour Every Hour In 2023 — In Under 13 Minutes, He Brought In The Equivalent Of What The Typical Person Earns In A Lifetime

Amazon.com Inc. Founder Jeff Bezos, a key figure in modern business, saw a massive increase in his net worth from $107 billion in early 2023 to $177 billion a year later, marking a $70 billion gain, according to Fortune. This equates to an increase of $191,780,822 per day or about $7,990,868 per...

finance.yahoo.com

Amazon.com Inc. Founder Jeff Bezos, a key figure in modern business, saw a massive increase in his net worth from $107 billion in early 2023 to $177 billion a year later, marking a $70 billion gain, according to Fortune. This equates to an increase of $191,780,822 per day or about $7,990,868 per hour.

 

[Emily Lake]

Ah, the "math" of an economist. In the real world 54% is a lot higher than 40%. And that 40% isn't buying a UBI system and it's buying major slacking off in defense spending. (Nothing east of France could hope to defend itself without NATO if the Russian bear came calling.)

Nothing east of Maine.

France has the bomb. And missiles. I don't think Russia would try to conquer them.

A discussion of the degree to which the rest of the world relies on military might in order to maintain their safety and security is well off topic for this discussion.

 

[Emily Lake]

Economics hadn't been a zero sum game

Do you realize that a fundamental premise of my objection to UBI is that it's not a zero sum game?

 

[ZiprHead]

it's definitionally a payment to all individuals

I don’t see it that way at all. It’s a guarantee of a universal basic income, not a free for all giveaway. Or is there another name for what I’m calling UBI?

If you don't see it the way it is defined and the way it has been proposed by its proponents, I don't know what to tell you.

Citations please.

And the Alaska Permanent Fund, called UBI all over the internet, is considered taxable income.

 

[bilby]

Jeff Bezos earned something like $7.9M/hr in 2023. Suppose he was taxed at a rate of only 50% of that money. Distributed equally among the entire population of the US in 2023, and EVERY SINGLE PERSON in the US could get $100K EXTRA.

Sure; But think of poor Mr Bezos, trying to struggle on with only $3.95M/hr. Have you no heart??



Seriously though, if I were forced to live on less than $4M/hr, I would just quit in disgust, move to Colorado, and establish a utopian paradise with libertarian economics and commodity money. And then where would you get your taxes from?

 

[bilby]

Economics hadn't been a zero sum game

Do you realize that a fundamental premise of my objection to UBI is that it's not a zero sum game?

Sure. That doesn't excuse Loren's assumption that it is, nor does it render his arguments supportive of your position.

We agree that economics is not zero sum; If you believe that this fact undermines my position, then you haven't understood my position.

Your failure to understand what I am arguing for isn't evidence that I am wrong.

 

[Toni]

People who are earning near SSI pre-retirement are not earning much money at all—and likely the work they are doing is unpleasant. Most people who have had to live that way are happy to give up that work and have more free time.

Agreed. UBI would take out a decent chunk of the labor pool.

But here I burst everyone’s bubble. Once you retire your life is most emphatically NOT nothing but leisure. Written as a retired person. And whatever you do takes at least twice as long as you anticipate which is at least three times longer than it did when you were in your 50’s.

How is this relevant?

Or: it would force businesses to pay decently in order to attract workers.

Or allow small businesses to employ people who would not have to try to live on starvation wages. Same thing with people who want careers in less financially remunerative industries—such as teaching, social work, etc. ( another solution would be for some city to decide to pay social workers and teachers and childcare workers and nursing home workers and those who provide needed support to the sick and dying or just injured or elderly.

It would provide subsistence for people while they are trying to launch a business, or write a novel or do art or care for a sick family member or small child or start or finish a degree or recover from an illness. It would help take some of the financial pressure off of parents of young children.

People do not exist to serve business. Business exists to serve people.

Once again, you are making the fundamental mistake of thinking money has value.

Yet again, no! Money represents value, it does not have value independent from what you can do with it. Fewer people working fewer hours = lower productivity = fewer things to buy with your money. The average standard of living has to drop.

Once again you think you disagree with what I wrote but don’t actually understand it and offer up a poorly reasoned rebuttals that is inaccurate in its purported facts and irrelevant.
I know what money is and is not. Apparently more clearly than you.

No one suggested fewer people working but if that’s your real concern you should be in a huge panic about all the boomers hitting their retirement and leaving the work force.

Fewer people working fewer hours does NOT mean reduced productivity, necessarily. It means fewer people working fewer hours. Nobody discussed fewer people working.

 

[bilby]

it's definitionally a payment to all individuals

I don’t see it that way at all. It’s a guarantee of a universal basic income, not a free for all giveaway. Or is there another name for what I’m calling UBI?

It can be either.

Economically, there's no difference between giving $X to everyone, and then taking an extra $X in tax from 90% of them; And giving $X to just the 10% of people who you weren't going to tax.

The details of the implementation are about efficiency.

If you already have a huge bureaucracy devoted to calculating each person's tax bill, then it's cheaper, easier, and more efficient to pay the UBI to everyone, and then have it clawed back by the existing taxation system, than it is to set up a second huge bureaucracy devoted to calculating who is entitled to the (no longer U)BI, and to ensuring that nobody who isn't entitled to it claims it, and/or that everybody who gets it declares it on their taxes.

"Pay it to everyone" is a cheap policy to enact; The only bureaucratic requirement is to make sure everyone gets it once, and only once; That is, that each claimant is a single unique individual.

Whether "everyone" means 'all citizens' or 'all adult citizens' is a detail that needs to be resolved in any specific policy, of course. But there are lots of details, and the assumptions being made here abkut those details are a large part of the reason why there's so little agreement on whether or not UBI is affordable - the actual answer is "it depends".

As I envisage it, a UBI looks like this:

Every citizen over the age of 18 gets paid a weekly sum of $X

All other government payments directly to citizens are scrapped.

The personal income tax system is made more progressive, and simplified by the removal of deductions of all kinds.

Ideally, the tax rate would be calculated using a smooth formulaic approach, rather than a bracketed, system (see here for examples of how this could work).

The tax formula would be set such that total tax revenue after the change would be equal to total tax revenue before the change, plus the total amount disbursed as UBI payments.

Tax would be paid on all income above the UBI (or simply on all income; In a smooth tax regime, these are functionally equivalent).

All minimum wage laws are scrapped. Employers can pay as little as their employees will take, or can employ people for nothing as volunteer workers, if anyone wants to work for nothing (eg "tips only" jobs).

In the implementation phase, employers are required to cut wages by $X per week across all employment sectors; Employee total income on week one of UBI should be equal to their total income the previous week, the difference being that now the employer only pays the amount above $X.

For employees whose incomes are below $X, the employer and employee would negotiate a new pay structure (which might be "tips only", or a small wage, or the elimination of the job altogether; or any other mutually acceptable arrangement).

Future wage and salary levels are purely a matter between employers and employees; Raises and/or pay cuts by mutual agreement. If employees are unhappy, they can quit; If employers are unhappy, they can fire.

 

[bilby]

It's possible the insurance companies are distorting the market

It's impossible that they are not.

 

[laughing dog]

The issue is whether a 40% tax bite will wreck the economy. The European experience suggests it won’t. I get you think taxes woukd have to doubled because of your biases but there is no logical reason that is required.

The US currently takes in 24% of GDP as taxes. That equates to about $5T of revenue. $15K per person of UBI also equates to about $5T of cost.

If you change the tax rate to accomplish 34% of GDP - the weighted average of OECD countries, that's put revenue at $7.1T, an increase of $2.1T.

29% of current revenue is spent on Social Security and on Economic Security Programs - Let's say we can completely eliminate those if we have UBI. That 29% equates to $1.45T. That means that $3.55T is spent on things that can't reasonably be eliminated.

So at 34% GDP tax rate, you've got $7.1T of revenue, $5T of UBI costs, and $3.55T of other costs, for a shortfall of 1.45T.

What rate do we need to actually cover the $8.55T of spend? By my math, that works out to a tax rate of about 41% of GDP.

Is it technically doable? Sure. You can do it. Is it reasonable and sustainable? That's a different question. That would make us the 8th highest taxes OECD country.

How are you going to make that happen? Are you going to put that all on the highest tax bracket? There's simply not enough of them, even if you increased that bracket to 90%. And that bracket is everyone with incomes of $690K and above. That's well, well below the level of the multi-billionaires that keep being addressed.

What's your plan for how to accomplish this? How much are you going to increase corporate taxes, and how are you going to keep them from skirting those taxes given the enormous loopholes that exist? How much is going to be plugged into personal income tax, which makes up the lion's share of revenue? How much impact will it have inflation - because it's going to definitely reduce the after-tax income that people have available to spend.

And all of that is assuming that employer's don't follow bilby's advice and drop everyone's wages to offset the UBI. And it's assuming no change in the labor market, everyone continues to work and nobody decides to stay home instead.

Yes, the devil is in the details. And the details are important for implementation but not for a general discussion. Because the details are the trees in the forest of “ will it necessarily ruin the economy”.

 

[bilby]

Ah, the "math" of an economist. In the real world 54% is a lot higher than 40%. And that 40% isn't buying a UBI system and it's buying major slacking off in defense spending. (Nothing east of France could hope to defend itself without NATO if the Russian bear came calling.)

Nothing east of Maine.

The planet is approximately spherical; EVERYTHING is east of Maine.

 

[bilby]

The US currently takes in 24% of GDP as taxes. That equates to about $5T of revenue. $15K per person of UBI also equates to about $5T of cost.

If you change the tax rate to accomplish 34% of GDP - the weighted average of OECD countries, that's put revenue at $7.1T, an increase of $2.1T.

Hey, remember when someone said:

Economics hadn't been a zero sum game

Do you realize that a fundamental premise of my objection to UBI is that it's not a zero sum game?

When you bring in more tax, and spend that tax in any way (whether on defence and healthcare, or as payments to individual citizens), doing so changes the GDP of the nation.

As you are aware that it's not a zero sum game, can I ask why you're using an example that assumes that it is?

 

[Elixir]

.

If it were NOT $15K*n, it wouldn't be UBI. It would be something else.

I am familiar with that version of duhmocracy. It’s called unbridled capitalism and if’s why we now have a level of discontented masses that is set to give rise to autocracy through politics of threats, intimidation and violence.

Even YOU make noises about improving the tax code. If republicans would fully fund the IRS instead of caving to their billionaire benefactors’ every whim, that might even be realistic. What do you propose, to pry those politicians SCOTUS Justices out of the iron grip of their “friends”?

IRL, this is just a philosophical debate that isn’t likely to move the needle whatsoever. I still don’t understand why the idea that it’s okay for some people to utilize so much more of our supposed public assets than others, yet insist that public cash must always be distributed evenly no matter what - unless it’s taxes.

 

[Elixir]

UNIVERSAL

… minus tax license snd dealer prep?
You have set yourself up a robust looking strawman Emily. 15k*n is an absurdity and no rational person is putting that forth as a reasonable “solution” to anything.

 

[Elixir]

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.

You start with “seriously”, then follow with a straw absurdity that nobody here is advocating.
Seriously?
Just laying claim to an acronym, but really, have the best of intentions?

 

[Tigers!]

In the implementation phase, employers are required to cut wages by $X per week across all employment sectors; Employee total income on week one of UBI should be equal to their total income the previous week, the difference being that now the employer only pays the amount above $X.

For employees whose incomes are below $X, the employer and employee would negotiate a new pay structure (which might be "tips only", or a small wage, or the elimination of the job altogether; or any other mutually acceptable arrangement).

Future wage and salary levels are purely a matter between employers and employees; Raises and/or pay cuts by mutual agreement. If employees are unhappy, they can quit; If employers are unhappy, they can fire.

Can't imagine the unions being impressed. They are effectively out of a job, or more accurately a function.
Since you are an Aussie you would know how wedded we are to Enterprise Agreements and workplace bargaining.

 

[Swammerdami]

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.

So you claim that confiscating ALL billionaire wealth in the world works out to $7000 (15,000 - 8000) per American? NOBODY proposes that, but it still might be a useful back-of-the-envelope way to assess how much "surplus wealth" there is.

But is Emily's arithmetic correct? Let's see . . .

The collective fortune of America's 748 billionaires topped $5 trillion in September 2023, a near record high, and up an astounding $2.2 trillion (77%) since enactment of the Trump-GOP tax law—a reckless handout so heavily slanted towards the rich that it undoubtedly contributed to billionaires' eye-popping wealth.

But Emily wrote "worth of all the billionaires in the world"

. . . Altogether, the planet's billionaires are now worth $12.2 trillion

12.2 trillion ÷ 332 million = $36,700
That's more than 5 times the figure Emily quoted.

And let's those with merely $900 million off scot-free. Spoiler alert: The 10,000 Americans who have more than $100 million but less than $1 billion have a collective net worth in the ballpark of $2 trillion. (And yet another 5.3 million Americans are millionaires and could chip in several trillion with only a smallish "haircut.")

I think Emily had better throw away the back of that envelope and start over.

The details of the implementation are about efficiency.
. . .
As I envisage it, a UBI looks like this:

Every citizen over the age of 18 gets paid a weekly sum of $X

All other government payments directly to citizens are scrapped.

People who were injured at work and are thus disabled and permanently unable to work even though they want to[,] receive government payments to compensate for the injury. But in your plan they get only the same $15,000 that happy high-paid workers get?

The personal income tax system is made more progressive, and simplified by the removal of deductions of all kinds.

Exemption for blindness removed? Deductions for charitable donations removed? Deductions for very high medical bills removed?

It is a myth that all, or even most, deductions are bad-idea "loopholes."

. . .
All minimum wage laws are scrapped. Employers can pay as little as their employees will take, or can employ people for nothing as volunteer workers, if anyone wants to work for nothing (eg "tips only" jobs).

OK. Call me a right-wing libertarian if you must, but I'm not happy with unnecessary restraints. IIUC some prosperous European countries have no government-mandated minimum wage.

In the implementation phase, employers are required to cut wages by $X per week across all employment sectors; Employee total income on week one of UBI should be equal to their total income the previous week, the difference being that now the employer only pays the amount above $X.

Whoa! I agreed to reduce restraints, not to impose new bad-idea restraints! And people with TWO jobs pose an obstacle to some of these ideas.

And BTW, do we even know that average wages would be reduced? People earning very low wages but now getting $15,000 extra would be likely to quit their job unless they got a raise.

When you bring in more tax, and spend that tax in any way (whether on defence and healthcare, or as payments to individual citizens), doing so changes the GDP of the nation.

It will change (whether up or down) due to 2nd-order effects. But as the 1st-order you're just taking money Peter would have spent and giving it to Paul to spend.


All this discussion of UBI and its implementation difficulties just confirms what I already knew: Best is to emphasize non-cash programs: Single-payer healthcare, subsidized childcare, subsidized housing, subsidized food. Any Infidels want to jump on that bandwagon?

 

[Elixir]

12.2 trillion ÷ 332 million = $36,700
That's more than 5 times the figure Emily quoted.

That’s pretty harsh Swammi. I don’t think we can fault Emily for being a little bit (5x) hyperbolic. She’s just trying to make a point, and was expressing her feelings with somewhat inaccurate (wildly wrong) math.

It is a myth that all, or even most, deductions are bad-idea "loopholes."

I suspect that most deductions are legitimate “good idea” loopholes, but most of the loophole dollars go to wealthy people gaming the system.

 

[Swammerdami]

I suspect that most deductions are legitimate “good idea” loopholes, but most of the loophole dollars go to wealthy people gaming the system.

That's especially true after the Trump "tax reforms." And recall that those code changes were specifically designed to increase the taxes of middle-class urban Democrats, but without adversely affecting rural Republicans.

 

[Elixir]

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?

15k is middle income?
Guess my perspective is really warped, b’cause that looks an awful lot like abject poverty to me. Maybe “middle-income prople” are already living in a cardboard box under an overpass, so maintaining their standard of living isn’t that heavy a lift?