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Old 03-22-2019, 01:25 PM
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Andrew Yang's UBI proposal


I've got a liberal brother-in-law that asked me to look into Yang's UBI proposal and tell him what I thought. What follows is (most of) the email I sent to him last night, but I suspect some of you may offer more interesting rebuttals than he will, so I'm posting it here for your critique, if you feel so inclined:

I looked into Andrew Yangís UBI plan. In short, I donít support it, but Iíd be delighted to hear your thoughts on any of the points below.

Hereís his basic outline:

Quote:
Every U.S. citizen over the age of 18 would receive $1,000 a month, regardless of income or employment status, free and clear. No jumping through hoops. Yes, this means you and everyone you know would receive a check for $1,000 a month every month starting in January 2021.
First off, I think heís got the date wrong there. Heís running for president now. The election isnít until November 2020. The winner wonít assume the office of president until January 20, 2021, at noon. His UBI plan would have to get through Congress (seems unlikely, but letís set that aside for the moment) and then need time to be set up. Thereís no realistic way people are getting checks ďstarting in January 2021Ē.

For arguments sake though, letís say he pulls off a miracle and it happens. The Census Bureau estimates there are 328.6 million people in America today. By July 1, 2020 the Census Bureau projects that to grow to 333 million. Thatíll be 74 million minors, 203 million adults age 18-64 and 56 million that are 65+. We might expect it to grow a bit more in the latter half of 2020, prior to the program kicking off in January 2021, but probably not by enough to significantly alter these figures. So in short he wants to send $1,000/month to 259 million people. That would be ~$3.1 Trillion in the year 2021, ignoring for a moment the 5 million or so 17-year-olds that will be turning 18 that year and start receiving their UBI.

To pay for this, Yang proposes four sources:

1. Current spending ($500-600 billion)
2. A VAT ($800 billion)
3. New revenue ($500-600 billion)
4. Savings ($100-200 billion)

I could probably make some criticisms about his assumptions and estimates here, but itís not really necessary. Even taking the higher end of his (rather generous) assumptions at face value, they only add up to $2.2 trillion. Basically, heís about a trillion dollars short of being able to pay for it. I donít think I need to say it, but thatís obviously a big problem.

Strangely (for me), thatís not even my primary concern with it. Here, Iíll let Yang give his argument first:

Quote:
Wonít people spend their money on dumb things like drugs and alcohol?

The data doesnít show this. In many of the studies where cash is given to the poor, there has been no increase in drug and alcohol use. In fact, many people use it to try and reduce their alcohol consumption or substance abuse. In Alaska, for example, people regularly put the petroleum dividend they receive from the state in accounts for their childrenís education. The idea that poor people will be irresponsible with their money and squander it seems to be a biased stereotype rather than a truth.

Decision-making has been shown to improve when people have greater economic security. Giving people resources will enable them to make better decisions to improve their situation. As Dutch philosopher Rutger Bregman puts it, ďPoverty is not a lack of character. Itís a lack of cash.Ē
Iím always skeptical of studies with an agenda, and the one he cites appears to have just that Ė Debunking the Stereotype of the Lazy Welfare Recipient: Evidence from Cash Transfer Programs. Regardless, Iím not really interested in what the majority do with it. Letís grant, for arguments sake, that most people will use their UBI money responsibly and it will be a great benefit to them and their families. Certainly I would think that you and I would fall into that category, but what about people who donít? What about the subset that will waste UBI money they should have saved for rent and groceries on heroin or methamphetamines? Right now, much of the US welfare system is set up to provide these people (and other, somewhat more responsible impoverished people) with primarily non-cash benefits. Thereís a good reason for that. If the federal government provides them food stamps and Section 8 housing assistance, they donít end up starving and on the street even if their addictions or decision-making are so bad that they blow every dime they have. But Yang is, AFAICT, proposing we get rid of all those non-cash benefit programs, at least eventually. And itís the people Iím most worried about here that will opt for the cash over their current non-cash benefits. Returning briefly to a discussion of funding, he says:

Quote:
We currently spend between $500 and $600 billion a year on welfare programs, food stamps, disability and the like. This reduces the cost of Universal Basic Income because people already receiving benefits would have a choice but would be ineligible to receive the full $1,000 in addition to current benefits.
I canít find an exact listing of which programs he plans to curtail / offer the $1000 opt-out for. Back in 2012, the Cato Institute published a report - The American Welfare State: How We Spend Nearly $1 Trillion a Year Fighting PovertyóAnd Fail. Itís altogether an interesting read, but the relevant bit for our discussion is that they found that the federal government spends ďmore than $668 billion on at least 126 different programs to fight poverty.Ē That would be plenty to cover the $500-600 billion he hopes to find through this category (there would, in fact, be a bit extra left over), but lets examine what the poor would be giving up for that $1,000/month. The $668B covered all sorts of essentials:
ē 33 housing programs
ē 21 food or food-purchasing assistance programs
ē 8 healthcare programs
ē 27 cash or general assistance programs
This means that the poor who opt for the cash will be expected to budget and make responsible-enough financial decisions to cover their housing, groceries, healthcare, and other needs. Granting that some (perhaps even many) will, what about those that donít? Are we going to step over them in the street when they get evicted from their apartments because they mis-managed their funds and couldnít pay rent? Are we going to turn away when theyíre digging through the trash to find food to eat because they didnít budget for groceries? What about when theyíre sick and canít afford to pay the doctor? Just tell them ďtough, we cancelled Medicaid and Section 8 and gave you this cash instead. Itís on you nowĒ? Iíve been accused of being a mean old conservative plenty of times, but that seems cold, even to me. So whatís more likely to happen? It seems most likely to me that Congress will be unwilling to cut spending to Section 8, or SNAP, or Medicaid and instead the UBI costs will get layered on top of our existing $500-600 billion welfare spending, increasing the national debt even more.

<<<< omitted because it wouldn't be of interest to non-members of the Church of Jesus Christ of Latter-Day Saints >>>>

There is a lot of wisdom in that (non-cash welfare programs). State and local government officials here in Utah have warned of the danger of giving direct cash contributions to the homeless repeatedly. Theyíre somewhat polite about it and try to use euphemisms, but the reality is that many of our most-impoverished residents simply will not manage the money appropriately:

Quote:
"A lot of times panhandling funds other things and I think we all know what that means," said Anderson.
"You might literally be killing the person your trying to help," said Lt. Governor Spencer Cox.
That's why the Lt. Governor, Salt Lake City Police Chief Mike Brown and others are stressing, in the season of giving to not give money to the homeless, at least not directly to them.
"That money that you hand out to that panhandler right then and there on the street, that might be the dosage that ends up killing the person," said Cox.
Source: ABC4.com

One final datapoint: Finland recently conducted a ďpilot programĒ for UBI. The results were not particularly positive.
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Old 03-22-2019, 01:39 PM
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Did you watch this video? I made a whole thread on him in the elections section.
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Old 03-22-2019, 01:49 PM
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I have not, but I will.
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Old 03-22-2019, 01:57 PM
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Re: Medicaid, last I checked a while ago, it cost $8,000 Ė $10,000 per month just for nursing home care. End-of-life care is afaik the bulk of health care expenses. I don't think anyone expects UBI to replace Medicaid in this regard; I don't think it is expected to cover cancer treatments or lung transplants either. That's always going to be a separate budget-busting issue.

Off the top of my head, what UBI could do on a macroeconomic sense is really worth examining beyond whether people are more or less inclined to work.
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Old 03-22-2019, 02:31 PM
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I always think of it along the lines of it being a Marshall plan for the American worker, helping them with economic dislocation.
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Old 03-22-2019, 02:39 PM
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I don't understand how $1000 a month would replace the 33 housing programs. It seems to me that housing alone would be more than $1000 a month.
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Old 03-22-2019, 03:11 PM
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I like the direction he's going in, but I don't agree with UBI. For one thing, we've already tried UBI to a lesser degree in the form of tax rebates, which provided some short-term economic stimulus, but like all stimuli, they eventually lose their bang. What I'd rather see instead is first, the gradual implementation of progressive taxation, with an emphasis on soaking the rich. And then I'd propose immediate investment in critical infrastructure, with an emphasis on rebuilding infrastructure and encouraging the remaking of industry so that it's green. I think some variation of the green new deal, with proper funding behind it, would be a much better long-term stimulus than a kick back.

But for those who are down on their luck and having a difficult time finding employment for whatever reason, I'd propose some form of minimum guaranteed income in a progressive, means-tested system. We could offer additional allowances for things like housing in expensive cities and vocational training. But the tax code is what has to be addressed first. I don't think we can have any of this - including medicare for all - until we radically change top marginal tax rates.

Last edited by asahi; 03-22-2019 at 03:12 PM.
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Old 03-22-2019, 03:12 PM
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Originally Posted by manson1972 View Post
I don't understand how $1000 a month would replace the 33 housing programs. It seems to me that housing alone would be more than $1000 a month.
It won't, and that's one of the criticisms. I don't think his math is right.
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Old 03-22-2019, 03:51 PM
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... I don't think we can have any of this - including medicare for all - until we radically change top marginal tax rates.
Not to derail my own thread, but what rate would you like to see, what threshold, and how much additional revenue do you expect it would bring in?
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Old 03-22-2019, 03:55 PM
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Can we discuss the velocity of money? How UBI would impact that on the lower levels of society?
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Old 03-22-2019, 04:05 PM
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Can we discuss the velocity of money? How UBI would impact that on the lower levels of society?
I assume that'll be a point in support of Yang's UBI proposal? If so, I'm interested in hearing about it.
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Old 03-22-2019, 04:45 PM
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Asher Elderman said it three years ago
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Old 03-22-2019, 06:51 PM
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Lots of aid programs are focused on families with children to support, so it seems odd that UBI is only going to adults.

I am very skeptical that UBI is a good idea.

People who don't actually need it are going to have an incentive to not go out and get a job. Sure, some of them will go find their true passion and start neat businesses now that they don't have to grind for rent money. But a lot of them will do what most people do on disability: television, videogames, and facebook. And all the while they will not be building their resume or skills by working.

The supposed savings we get from eliminating other programs seem questionable as well. Some of the people who rely on programs are getting an effective more-than-$1000/month benefit from those programs. What are they going to do?

Reducing the housing aid that a disabled mother of two gets so that young able-bodied people don't have to work the kinds of crappy jobs that lots of us work starting out doesn't seem like a good social policy.
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Old 03-22-2019, 07:08 PM
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People who don't actually need it are going to have an incentive to not go out and get a job.
How would someone not need it and NOT have a job?
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Old 03-22-2019, 07:14 PM
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How would someone not need it and NOT have a job?
Need in the sense of "can't get a job" or "can't get a job that pays well enough to support their dependents" not "need to make rent but doesn't want to work".

Our current social safety net at least attempts to cover the first two categories only. UBI explicitly doesn't care if you can't work or just don't feel like it.
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Old 03-22-2019, 07:18 PM
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Originally Posted by iamthewalrus(:3= View Post
Need in the sense of "can't get a job" or "can't get a job that pays well enough to support their dependents" not "need to make rent but doesn't want to work".

Our current social safety net at least attempts to cover the first two categories only. UBI explicitly doesn't care if you can't work or just don't feel like it.
Maybe, but how can someone live on $1000 a month?
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Old 03-22-2019, 07:23 PM
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My feeling is that a number is not appropriate. $1K might be ok for you in a place like Hannibal MO, but will probably not work in Denver, unless you have roommates. It would make more sense to provide housing and food directly, with a small stipend for some basics. That way, it would work all over the country in a balanced fashion. Other issues would have to be addressed, though.
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Old 03-22-2019, 09:04 PM
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Not to derail my own thread, but what rate would you like to see, what threshold, and how much additional revenue do you expect it would bring in?
Maybe somewhere between Paul Krugman (70 percent) and CATO Institute (30 percent).

https://www.nytimes.com/2019/01/05/o...icy-dance.html

https://www.cato.org/publications/co...rate-good-idea

The honest answer, HD, is that there's no easy answer to this. Economics isn't necessarily scientific; we have to operate on history, policies, results, successes, failures, and also an understanding of how our current times might be different from past times.

I agree that we need to raise marginal tax rates, but to do so just because FDR did it in 1932 isn't by itself justification. For instance, one difference between 2019 and 1932 is that most people back then didn't have their retirement savings tied up in investments. Today, a lot of our savings are invested, so soaking the rich could have an impact on the market, and thus, our savings. We can't ignore that reality.

But if we were to implement changes over time, which would allow markets to adjust, then this is likely to be more feasible. It might also give the treasury and other policy wonks opportunities to support other retirement savings and investment vehicles.

If I absolutely had to pick a number, HD, I'm thinking maybe we could agree to raise taxes gradually by 2 percent each year on the top marginal income earners so that by, say, 10 years from now most of the highest income earners are paying a little above 50%.

I wouldn't end there, though. We need to end corporate tax loopholes and have more inheritance taxes.
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Old 03-22-2019, 09:06 PM
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Can we discuss the velocity of money? How UBI would impact that on the lower levels of society?
It wouldn't do much unless you change the system so that the lowest levels benefit disproportionately to compensate for the disproportionate benefits that the other classes receive as a result of the market. In other words, if everyone gets the same benefit, it's just a dressed up 'mega stimulus'. It doesn't fundamentally shift the balance of power back toward the general population
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Old 03-22-2019, 10:26 PM
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I'm sure that everyone here thinks of me as a lefty, and I really am; and I'm very sympathetic to the idea of a UBI, but I can't get past the problems already mentioned in this thread. I'm just not convinced that it's feasible.

Along with the other problems that have been mentioned I'd be concerned about it causing inflation, which could chip away at the value of the monthly stipend. Cost of living raises could lead to more inflation leading to more cost of living raises leading to more inflation, etc.

I'm certainly not unsympathetic to payments to help the truly needy. I'm currently on disability myself (and not at all happy about it), but that's quite different from a monthly payment to everyone.

But I'm open to being convinced, because I do like the idea if it were somehow workable.
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Old 03-22-2019, 11:05 PM
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Offsetting universal basic income with existing welfare programs


Good evening,

HurricaneDitka's criticism of funding by consolidating welfare programs is valid, if optimistic.

Consider this: all of a sudden every living adult is worth at least $1,000.00 USD a month. Banks, insurers, retailers, schools, churches, sleazy accountants, etcetera will descend upon the American populace like locusts. Who needs a credit score if the government guarentees you can make a $1000 monthly payment until the day you die? All the suckers will move off Medicaid and food stamps only to be swindled out of their stipend.

And then there are the less savory elements of society: the identity theives, the drug dealers, the pimps, the gangs, the mafias, the homeowners' associations (that last one was a joke. Or was it?). These groups can be counted on to extort hundreds of the most despirate Americans.

Even putting that aside, once people start moving off federal programs, said federal programs lose their bargaining power. Take Medicaid for example - if there is suddenly an 80% drop in Medicaid patients, how many doctors would drop out of the program? How much more would drug manufacturers charge? Over time I see the welfare programs fading out.

Now we've covered the consolidated welfare programs which should account for maybe a fifth of the cost. You could say $200 of the $1000 is coming from existing programs. Or rather, Mr. Yang is only giving $800 instead of $1000. Even this analysis is flawed - only some people are currently on welfare whereas everybody would receive basic income. So there is a small re-distribution of wealth here, from the people currently on welfare to the people who aren't. If 10% of Americans are currently on welfare, you could say the other 90% of Americans are taking $180 from the pockets of an American on welfare. If 25% of Americans are currently on welfare, the other 75% of Americans are taking $150 from another American on welfare. I think this will leave a bitter taste in people's mouths.

Utlimately, using welfare as a source of funding for universal income is a misappropriation of funds at best and a terrible misfire at worst.

~Max
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Old 03-22-2019, 11:44 PM
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Universal basic income is welfare and welfare is bad


This is a more controversial stance and it is not one that I wholeheartedly agree with. But in the realm of politics I think especially on the conservative side there will be objections on the ground that universal basic income is akin to charity. Charity is bad for society if the recipient becomes dependent on the charity of others. Receiving charity or free rides is bad for character and causes lethargy, ineptitude, and poverty.

Again, this is not an argument I fully agree with and I think considering it here at length would be off topic. But this position has been a mainstay of conservative thought since the New Deal and is likely to complicate any new welfare program for the foreseeable future.

Add to this the possibility of fairly rich people saying on the evening news, "I really don't need another $1000 a month. I will be donating it to X".

Politically Mr. Yang's proposal should receive a lot of backlash.
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Old 03-22-2019, 11:51 PM
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Originally Posted by eschereal View Post
$1K might be ok for you in a place like Hannibal MO, but will probably not work in Denver, unless you have roommates. It would make more sense to provide housing and food directly, with a small stipend for some basics. That way, it would work all over the country in a balanced fashion. Other issues would have to be addressed, though.
Finally, someone who agrees with me! Attending to geographical differences is just one of several advantages that in-kind welfare has over cash. Provide government-funded or subsidized healthcare, housing, food, and childcare for starters. There could still be cash stipends, but probably much less than $1000. Note an effect like self-administered means-testing: prosperous people don't eat at soup kitchens even though they're allowed.

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Originally Posted by asahi View Post
... The honest answer, HD, is that there's no easy answer to this. Economics isn't necessarily scientific; we have to operate on history, policies, results, successes, failures, and also an understanding of how our current times might be different from past times.
... If I absolutely had to pick a number, HD, I'm thinking maybe we could agree to raise taxes gradually by 2 percent each year on the top marginal income earners so that by, say, 10 years from now most of the highest income earners are paying a little above 50%.
Raising the top tax rate, now very low, on capital gains and qualified dividends may be more important than raising the top rate on ordinary income.
Also, the EU is planning a financial transaction tax ranging between 0.01% and 0.1%. This is a good idea, even for reasons unrelated to raising revenue.
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Old 03-23-2019, 01:31 AM
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This is a more controversial stance and it is not one that I wholeheartedly agree with. But in the realm of politics I think especially on the conservative side there will be objections on the ground that universal basic income is akin to charity. Charity is bad for society if the recipient becomes dependent on the charity of others. Receiving charity or free rides is bad for character and causes lethargy, ineptitude, and poverty.
.
Simple fix: It's no longer the Freedom Dividend, it's the Freedom Tax Refund.

Last edited by CarnalK; 03-23-2019 at 01:35 AM.
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Old 03-23-2019, 02:28 AM
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as some one who lives on 1100 a month 1 you cant live anywhere unless you have room mates or family 2 eating becomes a bit hard even with the 150 a month the state of ca gives me


And forget utilities ....unless you have people living with you ..


I live in the cheapest part of la county and unless you live in a dump trailer or some sort of housing program it takes at least 2500 a month for one person not counting food


So they need to up the amount for any of those proposals to work

Last edited by nightshadea; 03-23-2019 at 02:33 AM.
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Old 03-23-2019, 02:35 AM
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edited post :as some one who lives on 1100 a month via dads retirement via ssa I can tell you you cant live anywhere unless you have room mates or family 2 eating becomes a bit hard even with the 150 a month the state of ca gives me


And forget utilities ....unless you have people living with you ..


I live in the cheapest part of la county and unless you live in a dump trailer or some sort of housing program it takes at least 2500 a month for one person not counting food


So they need to up the amount for any of those proposals to work
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Old 03-23-2019, 02:52 AM
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The Value-Added Tax


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Simple fix: It's no longer the Freedom Dividend, it's the Freedom Dividend Tax Refund.
Which brings me to my next point: the value-added tax. Probably more than any other aspect of Mr. Yang's proposal, I predict the value-added tax to be the worst component.

The value-added tax proposed is a flat 10% assessment on all goods and services. If a good is to be resold, then the seller may deduct any value-added tax already paid when they originally purchased the good. This tax system has enjoyed some success in other (European) nations as an alternative to the state-based sales tax system we use in the US.

But Mr. Yang's proposal doesn't seem to replace the sales tax with value-added tax. Indeed, he proposes a federal value-added tax to raise "$800 billion in new revanue." The federal government doesn't even have the authority to repeal state sales taxes, neither could I imagine for example, my state of Florida handing the feds $25 billion or 28% of the state's estimated budget[1].

Having ruled out the elimination of state sales tax, we are left with the unpleasant proposal of raising taxes by 10% across the board. From a business perspective this means your prices are going up 10% while foreign competitors might not.

Say what you will about the benefits of universal basic income, lots of businesses don't have the margins to absorb a 10% cut and will pass the costs along to consumers. Those that do have the margins probably don't face much competition and would pass along the costs anyways. In the absence of a large and expensive information campaign you could see a hit to consumer confidence. People won't understand why their rent, utilities, etc. jumped up 10%. If the people don't get their stipend as promised (see my previous comment) you could very well have mass riots.

Producers trying to skirt the tax will move offshore. Then you have the implementation risk where more wealthy Americans and companies, who are likely to have more international investments, will quickly turn bearish and quite likely make a mess of the global markets.

And all of this would need to somehow get through congress. I can't think of a single major group that would lobby for the proposal.

~Max

[1] Florida Revanue Estimating Conference. (2019). 2019 Florida Tax Handbook Including Fiscal Impact of Potential Changes (pp. 17-18). Retrieved from http://edr.state.fl.us/content/reven...ndbook2019.pdf

Last edited by Max S.; 03-23-2019 at 02:55 AM. Reason: Really, all businesses would pass costs to the consumer
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Old 03-23-2019, 04:43 PM
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I don't think you'd have to worry too much about producers skirting the law or out of country sellers getting an advantage. Producers will mostly just pass the cost along and you can enforce the tax on most foreign sales coming in to the country.

But when you combine the two proposals, you can see just how regressive his proposals are. To get the cash he's predicting from the VAT, it could not exempt/discount basic household items - one of the main ways other Western countries soften the blow. And his UBI isn't added onto exist government benefits. So the lowest of the low don't get any extra money but all their purchases go up by 10%.
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Old 03-23-2019, 05:30 PM
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Max S.
Say what you will about the benefits of universal basic income, lots of businesses don't have the margins to absorb a 10% cut and will pass the costs along to consumers. Those that do have the margins probably don't face much competition and would pass along the costs anyways. In the absence of a large and expensive information campaign you could see a hit to consumer confidence. People won't understand why their rent, utilities, etc. jumped up 10%. If the people don't get their stipend as promised (see my previous comment) you could very well have mass riots
.

So let's do a thought experiment.

I get 1000 yangbucks, my rent and utilities go up by 10% each, doing some quick maths, that's a total of around $46 dollars for me personally. I still have $954 left to spend on food and other basic necessities which wouldn't come out of my real wage that I earned at my job.

I feel like people consider this as a stipend for people to not work, where as it's very much a suppliment for helping people move or retrain themselves for other jobs and careers, combined with UHC, it can help people be more productive and contribute more to society.

Quote:
CarnalK
And his UBI isn't added onto exist government benefits. So the lowest of the low don't get any extra money but all their purchases go up by 10%.
That's predicated on whether the government benefits exceed the $1000, because if it isn't, it makes rational sense to go for the UBI.
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  #30  
Old 03-23-2019, 06:20 PM
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.

So let's do a thought experiment.

I get 1000 yangbucks, my rent and utilities go up by 10% each, doing some quick maths, that's a total of around $46 dollars for me personally. I still have $954 left to spend on food and other basic necessities which wouldn't come out of my real wage that I earned at my job.
So your rent and utilities are $460? Good deal. Why are you not adding in your food, entertainment and transportation costs? Thought experiments don't have to be quite so simplistic.

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Old 03-23-2019, 06:32 PM
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So your rent and utilities are $460? Good deal. Why are you not adding in your food, entertainment nd transportation? Thought experiments don't have to be quite so simplistic.
Neither do your assumptions about UBI, but you know, I live in hope.

Anyway, I'll humour you, so I'll chip in my food entertainment and transportation costs for good measure.

Food is around $200 a month, transportation, $100 and entertainment I'd say around $40 for internet, and $7 dollars for Netflix

So, the increase in total? $34.70

So outta $1000 my expenses to pay for it go up by a total $80. So I have really $920 spending power of which I did not have before, and this is even before I touch my wage in which I work for, because, and I keep having to stress this, UBI is not seen as something to live off, it's seen as a stop gap or a suppliment for your income so you're able to save, and not just survive.

Even if you increased the costs passed down to the consumer to upwards $500, it still leaves $500 in a citizens pocket where it wasn't before, and makes them an active participant in their local economy.
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  #32  
Old 03-23-2019, 07:14 PM
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What assumptions have I made about UBI?
  #33  
Old 03-23-2019, 11:43 PM
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So outta $1000 my expenses to pay for it go up by a total $80. So I have really $920 spending power of which I did not have before, and this is even before I touch my wage in which I work for, because, and I keep having to stress this, UBI is not seen as something to live off, it's seen as a stop gap or a suppliment for your income so you're able to save, and not just survive.

Even if you increased the costs passed down to the consumer to upwards $500, it still leaves $500 in a citizens pocket where it wasn't before, and makes them an active participant in their local economy.
I assume Ryan_Liam is not currently on any welfare programs. In this case, Ryan_Liam should not lose money at an individual level unless he spends more than $120,000 a year or has reason to think the 10% VAT will get him fired (eg: working for an exporter of goods).

Think about how this would work out for a poor person with end stage renal disease - your kidneys stop working and now you need say $300 worth of dialysis three times a week. You qualify for both Medicare and Medicaid so the government is paying about $3600 a month to keep you alive. You also had to switch to a part time job because you spend 15 hours a week in the hospital. Let's say you rake in $12/hr 25 hours a week, which would be about $1200 a month. $144 goes to taxes, leaving $1056. Let's also say you spend $845 a month in expenses: $460 for rent and utilities, $300 for food (your kidneys don't work so you need a careful diet), $40 for transportation, $40 for necessities, and $5 for a mobile plan. This gives you $211 in disposible income per month.

After Mr. Yang's plan is enacted you decide to keep the Medicare and Medicaid instead of taking the $1000/mo cash. The government is now paying $3960 a month to keep you alive. Your expenses are now $929 per month, up $84. This gives you a disposible income of $127 per month. You gain no benefit here, but you lose about 40% of your disposible income. Actually you lose 45.8% of your disposible income if we adjoust for 10% inflation.

While not every poor person has a disability, I have read[1][2][3] and personally met lots of people living paycheck to paycheck - income is close to expenses. Especially because of dependents, which could easily bring expenses right up to income. Kids aren't working or getting a stipend but the cost of feeding and housing them still goes up 10%.

My fear of rioting or market crashes does not come from people like you or even the people with ESRD. That threat comes from desparate people who were tricked or coerced out of their stipend and still see the +10% cost of living; also from people who were on welfare that took the cash instead and mismanaged their funds; also the people who stayed on welfare programs but the programs were weakened or shut down because of the exodus of people in the last category; finally from wealthy people who spend more than $120,000 a year who may turn bearish and cause ruckus in the markets.

It may be possible to implement Mr. Yang's program without any of the above problems growing into a crisis. But it would have to be really well thought out so as not to screw people over. There are so many nuances that I don't believe our government is up to the task, and thus I'm not convinced it's worth the risk.

~Max

[1] A HuffPost/YouGov poll in January showed 52% of 996 respondents consider themselves "living paycheck to paycheck". Although I don't know what methodology was used.
HuffPost/YouGov. (2019). HuffPost: Personal financial situation (p. 8). Retrieved from https://big.assets.huffingtonpost.co...7e5b8a42ed.pdf
[2] Over 78% of respondents in a national survey of 2,369 full-time employers and 3,462 full-time U.S. workers live paycheck to paycheck to make ends meet.
CareerBuilder. (2017). Living Paycheck to Paycheck is a Way of Life for Majority of U.S. Workers, According to New CareerBuilder Survey. Retrieved from http://press.careerbuilder.com/2017-...Builder-Survey
[3] A Fox News poll of 1,008 registered voters in January showed 20% of respondents could not miss any paychecks before they wouldn't be able to pay their bills.
Fox News. (2019). Fox News Poll document 1/23/19 (question 23). Retrieved from https://www.foxnews.com/politics/fox...cument-1-23-19
  #34  
Old 03-24-2019, 01:08 AM
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Consider this: all of a sudden every living adult is worth at least $1,000.00 USD a month. Banks, insurers, retailers, schools, churches, sleazy accountants, etcetera will descend upon the American populace like locusts. Who needs a credit score if the government guarentees you can make a $1000 monthly payment until the day you die? All the suckers will move off Medicaid and food stamps only to be swindled out of their stipend.
Yang's plan makes it illegal to borrow against or transfer the funds.

The rest of the illegality would happen anyway, with or without UBI.

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My fear of rioting or market crashes does not come from people like you or even the people with ESRD. That threat comes from desparate people who were tricked or coerced out of their stipend and still see the +10% cost of living; also from people who were on welfare that took the cash instead and mismanaged their funds; also the people who stayed on welfare programs but the programs were weakened or shut down because of the exodus of people in the last category; finally from wealthy people who spend more than $120,000 a year who may turn bearish and cause ruckus in the markets.
Is your fear increased or decreased if nothing is done?

In some respects, UBI at this point, is a reaction to the threat of market crashes or rioting. In a c-span interview, [toward the end in response to one of the questions] Yang noted that about half of his tech. friends were in agreement with a UBI. They see what's coming. Yang framed it as his friends being sympathetic to the problem, but I'm sure they're not unaware of the consequences if things get much worse.

People like Nick Hanauer, another rich investor in Amazon, has been sounding the alarm about potential riots for years. In this TEDTalk, titled Beware, fellow plutocrats, the pitchforks are coming | Nick Hanauer., Hanauer warns his plutocrat friends that if nothing is done, the populace will rise up against them. That was in 2014. From what I understand, it was banned off the TEDTalk platform for being too inflammatory before that time. At this point, it's mainstream. Hanauer says that if nothing is done about wealth inequality, there will be rioting in the streets, so his fellow plutocrats should take note.

Nick Hanauer now hosts a podcast called Pitchfork Economics where he talks about the problems and potential solutions to wealth inequality. In one of the first episodes, a historian was interviewed who said that every crisis of wealth inequality in the past led to violent riots. There were no exceptions. Hanauer's team expressed their hope that this time would be different.

Yang alludes to the difficulty in an industrial revolution which he labels the rapid change in automation, that violence was present in the past revolutions.

Hanauer has been pushing for $15/hr minimum wage very hard as one solution to wealth inequality. I haven't seen him push UBI or Yang, so I don't know his stance on that.

The population of people who might be burned by the UBI would still be less than the population of people who are now struggling and suffering. That would at least make the riots smaller. Unless there's a better solution out there, doing nothing won't solve the problem and might make the problem appreciably worse.
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Old 03-24-2019, 07:23 AM
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I assume Ryan_Liam is not currently on any welfare programs. In this case, Ryan_Liam should not lose money at an individual level unless he spends more than $120,000 a year or has reason to think the 10% VAT will get him fired (eg: working for an exporter of goods).

Think about how this would work out for a poor person with end stage renal disease - your kidneys stop working and now you need say $300 worth of dialysis three times a week. You qualify for both Medicare and Medicaid so the government is paying about $3600 a month to keep you alive. You also had to switch to a part time job because you spend 15 hours a week in the hospital. Let's say you rake in $12/hr 25 hours a week, which would be about $1200 a month. $144 goes to taxes, leaving $1056. Let's also say you spend $845 a month in expenses: $460 for rent and utilities, $300 for food (your kidneys don't work so you need a careful diet), $40 for transportation, $40 for necessities, and $5 for a mobile plan. This gives you $211 in disposible income per month.

After Mr. Yang's plan is enacted you decide to keep the Medicare and Medicaid instead of taking the $1000/mo cash. The government is now paying $3960 a month to keep you alive. Your expenses are now $929 per month, up $84. This gives you a disposible income of $127 per month. You gain no benefit here, but you lose about 40% of your disposible income. Actually you lose 45.8% of your disposible income if we adjoust for 10% inflation.
But you'd still get UBI and medical assistance (He supports UHC) And be able to work a part time job

So let's look at that and taking into consideration the increase on VAT;

$1000/mo cash + part time job $1056 = $2056 - expenses of $929 = $1127 disposable income


Quote:
While not every poor person has a disability, I have read[1][2][3] and personally met lots of people living paycheck to paycheck - income is close to expenses. Especially because of dependents, which could easily bring expenses right up to income. Kids aren't working or getting a stipend but the cost of feeding and housing them still goes up 10%.
Yes, which is why I said UBI is something which suppliments your income, rather than replacing it. Again, as I said before, even if prices for the general population went up by 10%, it still ensures the basics which were initially covered by my paycheck are now covered by UBI and it allows breathing room to either save money I've earned or earmark it for something else.

Quote:
My fear of rioting or market crashes does not come from people like you or even the people with ESRD. That threat comes from desparate people who were tricked or coerced out of their stipend and still see the +10% cost of living; also from people who were on welfare that took the cash instead and mismanaged their funds; also the people who stayed on welfare programs but the programs were weakened or shut down because of the exodus of people in the last category; finally from wealthy people who spend more than $120,000 a year who may turn bearish and cause ruckus in the markets.
Yup, so on that basis, the effects of which would be around 1% of recipients should dictate the other 99% who would benefit. That's not hyperbolic at all.

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It may be possible to implement Mr. Yang's program without any of the above problems growing into a crisis. But it would have to be really well thought out so as not to screw people over. There are so many nuances that I don't believe our government is up to the task, and thus I'm not convinced it's worth the risk.
Heard this all before, even for things like UHC and a living wage.
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  #36  
Old 03-24-2019, 07:53 AM
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Even if you increased the costs passed down to the consumer to upwards $500, it still leaves $500 in a citizens pocket where it wasn't before, and makes them an active participant in their local economy.
I've seen this a couple times at Reddit before, and I found the logic just stunning. I've been trying to figure out why someone would argue against this.

Some guy says that he was all excited about UBI until he found out that he might only get 75% of the $1,000. Assuming he was right, which I doubt, I still don't get it.

So if he only gets $7,500, he doesn't want it at all? So if it was $1,200 and he only got $1,000, he'd pass on that too?

I would get it if he had a fixed cost and was getting reimbursement for that. But then he would opt out. And I get it if people are on a fixed income for people opting out of UBI if they had prices rise on them. Yang has already noted that there might have to be adjustments for those people.

But for someone to pass on extra money because it has the possibility of not being the full amount?
  #37  
Old 03-24-2019, 08:13 AM
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Consider this: all of a sudden every living adult is worth at least $1,000.00 USD a month. Banks, insurers, retailers, schools, churches, sleazy accountants, etcetera will descend upon the American populace like locusts. Who needs a credit score if the government guarentees you can make a $1000 monthly payment until the day you die? All the suckers will move off Medicaid and food stamps only to be swindled out of their stipend.
Yang's plan makes it illegal to borrow against or transfer the funds.
I did not see anything about that on the webpage but it does make sense to protect the proposed income from creditors. I retract my statement about the government guaranteeing a $1000 monthly payment. However I don't think the political muster exists to protect universal basic income from child support or criminal restitution.

Nevertheless moneys are harder to block grant than a special purpose currency such as food stamps. A bank or creditor isn't taking that person's stipend, they are taking their primary income. Remember that Mr. Yang's proposed basic income is not enough to live on, so people will still be working for subsistence.

In my opinion the whole thing would be a wash except for the negative effects of funding the program. People mismanage or are tricked and coerced out of money now; people will mismanage or lose money in the future. And those people will see the cost of living go up 10% with no tangible benefit in return.

Also wealthy Americans who manage their finances well and spend over $120,000 a year will see about 10% inflation. A bearish outlook on US markets would benefit gold traders but I imagine a lot of investments will be pulled here and reinvested overseas, bad for the economy. So on an individual level, these people should be opposed to the plan. Of course, that calculus changes if we are to believe the US is about to collapse into anarchy because of inequality. But my intuition is that this is not the prevailing view.

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...
In some respects, UBI at this point, is a reaction to the threat of market crashes or rioting. In a c-span interview, [toward the end in response to one of the questions] Yang noted that about half of his tech. friends were in agreement with a UBI. They see what's coming. Yang framed it as his friends being sympathetic to the problem, but I'm sure they're not unaware of the consequences if things get much worse.

People like Nick Hanauer, another rich investor in Amazon, has been sounding the alarm about potential riots for years. In this TEDTalk, titled Beware, fellow plutocrats, the pitchforks are coming | Nick Hanauer., Hanauer warns his plutocrat friends that if nothing is done, the populace will rise up against them. That was in 2014. From what I understand, it was banned off the TEDTalk platform for being too inflammatory before that time. At this point, it's mainstream. Hanauer says that if nothing is done about wealth inequality, there will be rioting in the streets, so his fellow plutocrats should take note.
I will admit my ignorance, I have never heard of Andrew Yang or Nick Hanauer before this topic. I won't discount their arguments out of hand but neither do I give them a particular weight. By Mr. Hanauer's own admission he is only rich and powerful because he got lucky.

I don't live in the midwest or have a lot of exposure with truckers. I work in an industry where, in my experience, technology mandates create a lot of hassle and a lot of new jobs to handle that hassle (healthcare). I don't personally see a lot of unemployed people except for retirees and students. I'll admit these are real, urgent problems in this country and I am just lucky that I don't have to deal with them. People I see literally don't care or never heard of these problems. I don't mean to disparage the large retiree community I work with but most of them will be dead before any of these problems come to a head. My gauge of whether Mr. Yang's program is politically feasible is heavily skewed towards "no".

I remember reading an article with pictures of Jimmy Falon sleeping with a robot[1]; also a video from CGPGrey on the issue[2]. And while I respect CGPGrey's opinion in particular I don't believe Mr. Yang's proposal is good enough to solve the problem. I won't rule out all universal basic income schemes but I believe this one in particular is misguided and will do more harm than good. A transition to universal basic income, like any major change in the social order, can be either smooth or violent. And I believe Mr. Yang's program will exacerbate current problems in the short term so as to become violent; even if successfully implemented I don't believe it will actually solve the problem.

In his proposal the immediate problem Mr. Yang is trying to solve is rooted in extreme economic inequality. Giving everybody a universal basic income will not eliminate the root problem, it only treats the symptoms. I don't believe anyone is proposing universal basic income with ulterior motives, but the idea is consistent with a perfectly inequal society. In a perfectly inequal society one individual holds all of the wealth and everyone else has just enough to survive.

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Originally Posted by Heffalump and Roo View Post
Nick Hanauer now hosts a podcast called Pitchfork Economics where he talks about the problems and potential solutions to wealth inequality. In one of the first episodes, a historian was interviewed who said that every crisis of wealth inequality in the past led to violent riots. There were no exceptions. Hanauer's team expressed their hope that this time would be different.

Yang alludes to the difficulty in an industrial revolution which he labels the rapid change in automation, that violence was present in the past revolutions.
It may be true that every crisis of wealth inequality so far has led to violent riots. I can only point to a few examples where the disparity of wealth is decreased without war: the bubonic plague or the disappearance of the Mayans. The plague killed many workers so land (the primary expression of wealth) lost value while workers became more valuable. We don't really know what happened to the Mayans but presumably without a society people became more or less equals.

You've also got the Swedes who mobilized their whole economy towards the war effort just in case they got pulled in. Then after the war they didn't fight, Sweden didn't back down and redirected the money towards welfare. But obviously, World War II was violent and a critical factor in this transition. Similarily with Scandinavian countries except they actually fought in the war.

But I don't believe economic inequality on its own causes violence. I think the individuals commit acts of violence en masse only when it is necessary for survival. As you said, it is only a crisis of wealth inequality that leads to violence, not wealth inequality on its own. That's sort of begging the question, is it a crisis if there's no violence? I can point to many trivial examples of pure wealth inequality that don't lead to violence. I'm not out looting grocery stores because Jeff Bezos is extremely rich. I would be looting grocery stores because I'm starving to death and can't afford food.

~Max

[1] Wired. (2012). Better Than Human: Why Robots Will - And Must - Take Our Jobs. Retrieved from https://www.wired.com/2012/12/ff-rob...-take-our-jobs
[2] CGP Grey. (2014). Humans Need Not Apply. Retrieved from https://www.youtube.com/watch?v=7Pq-S557XQU
  #38  
Old 03-24-2019, 08:14 AM
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I assume Ryan_Liam is not currently on any welfare programs. ...
Assuming that Ryan_Liam does not currently receive any benefits that he would have to give up in order to get his new benefit may not be valid. "Welfare" is only a small part of what is covered under that "$500 and $600 billion a year on welfare programs, food stamps, disability and the like." that Yang figures in.

You don't get to that number without including not only TANF and disability, but Medicaid*, SNAP, CHIP, the EITC, SSI, Pell Grants ...

The vast majority of those in the lower half of income brackets would have to give up current benefits before they could get their UBI. Given that Ryan_Liam is currently living with a food budget of $6.67/day and a combined housing/utility budget of $460 (very low) he likely is one of those people, below the median per capita income of about $32K, even if he doesn't think of what he gets as "benefits" ...

Unless he an unusual member of the lower half his take-away will be less than the $12K and since he likely spends most of what he makes with a relatively smaller fraction getting invested the fraction of his income he will pay in new consumption taxes will be fairly high.

Yes below that level are those you illustrated - whose income after UBI stays the same because their current benefits are equal to or exceed the UBI amount. They just have that additional 10% VAT to pay with no extra resources to offset it. A fairly large portion of their benefits. So sad too bad.

But hey let's do another thought experiment. My two professionals household with kids all out of the house by the time this happens. We currently receive no benefits that we'd need to give up so our household gets a whole $24K. I do not believe that VAT applies to mortgages and real estate taxes on already owned homes ... and our other and biggest expense is paying for our kids' educations so they are not among those beginning careers with unmanageable debt (is the plan to charge VAT on education?) We do not otherwise in a typical year consume $240K worth of goods and services ... so we are netting out really well. The new consumption tax would be a small fraction of our income and most of the $24K of UBI we'd get would go to increasing our wealth (reducing how much of our savings and income we need to dip into to pay for kids' educations).

Interesting thing here ... so far the only people paying in more than they are getting out are the very poorest, and the example of a higher income bracket household is getting the most out relative to what they are putting in. My household gets a sweet deal (and I'll take it) while those currently barely getting by on current benefits get screwed (and they'll have no choice but to). In between YMMV but those in the lower half will be paying a larger share of their income into the program than will those of upper brackets (a regressive tax) and if they have any benefits to give up, as most of the lower half do, their distribution out will be less than the upper brackets. (Also regressive.)

Oh sure there are going to be some in the highest brackets who consume enough that a 10% consumption tax will exceed their households' UBI, but overall everyone (excepting the poor) is getting more out than they are putting in! How does that work? It works because even a broad based 10% VAT would not even be close enough to fund this. As the op pointed out even with unrealistic assumptions of increased revenues and savings because of the magic of UBI it comes way short. Math fail.


Double back to the premise ... the idea here is that there supposedly is an oncoming Robo-Apocolypse which will put those near the median income levels ($31K per capita) out of work. This UBI is supposed to cushion them while they ... become artists and playwrights and such now that the other jobs have gone ... but $12K in a context of a new 10% consumption tax is pretty damn poor ... and there is only so much money to be made on Etsy selling your handmade crafts. If the premise of the Robo-Apocolypse is correct then there is no job income the UBI is supplementing.


*His math fails even worse if he is not counting the "savings" from not paying for Medicaid benefits to those who take the UBI instead. And if he is spending that "savings" towards offsetting Medicare for All expenses then it is not available to offset the UBI cost.
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Old 03-24-2019, 09:16 AM
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The vast majority of those in the lower half of income brackets would have to give up current benefits before they could get their UBI. Given that Ryan_Liam is currently living with a food budget of $6.67/day and a combined housing/utility budget of $460 (very low) he likely is one of those people, below the median per capita income of about $32K, even if he doesn't think of what he gets as "benefits" ...
I don't see what your point is here, I'm not American, and I don't take any government benefits because I don't need them in my country, and I wouldn't be eligible for them anyway.

Quote:
Unless he an unusual member of the lower half his take-away will be less than the $12K and since he likely spends most of what he makes with a relatively smaller fraction getting invested the fraction of his income he will pay in new consumption taxes will be fairly high.
Fairly high is relative, a VAT of 10% in the US to the UK's 20% is fairly low, but it's also not the end of the world, and there is no VAT rate on some food in the UK like vegetables and fruit or meat and poultry, and again, the trade off is that I receive a better medical service than the US.

Quote:
Yes below that level are those you illustrated - whose income after UBI stays the same because their current benefits are equal to or exceed the UBI amount. They just have that additional 10% VAT to pay with no extra resources to offset it. A fairly large portion of their benefits. So sad too bad.
Right, because food stamps for an average family of three is around $376 a month is going to be comparable to a family of three receiving $1000 a month, even with an increase in cost of living

Quote:
But hey let's do another thought experiment. My two professionals household with kids all out of the house by the time this happens. We currently receive no benefits that we'd need to give up so our household gets a whole $24K. I do not believe that VAT applies to mortgages and real estate taxes on already owned homes ... and our other and biggest expense is paying for our kids' educations so they are not among those beginning careers with unmanageable debt (is the plan to charge VAT on education?) We do not otherwise in a typical year consume $240K worth of goods and services ... so we are netting out really well. The new consumption tax would be a small fraction of our income and most of the $24K of UBI we'd get would go to increasing our wealth (reducing how much of our savings and income we need to dip into to pay for kids' educations).
You wouldn't get VAT levied on mortgages, we don't here, or on education either.

Quote:
Interesting thing here ... so far the only people paying in more than they are getting out are the very poorest, and the example of a higher income bracket household is getting the most out relative to what they are putting in. My household gets a sweet deal (and I'll take it) while those currently barely getting by on current benefits get screwed (and they'll have no choice but to). In between YMMV but those in the lower half will be paying a larger share of their income into the program than will those of upper brackets (a regressive tax) and if they have any benefits to give up, as most of the lower half do, their distribution out will be less than the upper brackets. (Also regressive.)
This is wrong, and again, it goes back to my basic premise of even if the cost of living increased somewhat, and it is a somewhat as a 10% VAT increase is not the end of days, the poorest in society would receive an income boost they could use to spend in their local economy which they would not of received otherwise all things considered.

Quote:
Oh sure there are going to be some in the highest brackets who consume enough that a 10% consumption tax will exceed their households' UBI, but overall everyone (excepting the poor) is getting more out than they are putting in! How does that work? It works because even a broad based 10% VAT would not even be close enough to fund this. As the op pointed out even with unrealistic assumptions of increased revenues and savings because of the magic of UBI it comes way short. Math fail.
Who said it was solely VAT increases which would fund UBI? Because Yang certainly didn't say that.
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  #40  
Old 03-24-2019, 09:35 AM
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... Some guy says that he was all excited about UBI until he found out that he might only get 75% of the $1,000. Assuming he was right, which I doubt, I still don't get it.
You don't get it? Let's see. The guy gets $1000 of "free money" from the government. Then the government turns around and takes 25% of that back in taxes.

The angry cry will be "Keep your government hands off my Free Money!"

Welcome to post-rational America.
  #41  
Old 03-24-2019, 09:42 AM
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I'm not out looting grocery stores because Jeff Bezos is extremely rich. I would be looting grocery stores because I'm starving to death and can't afford food.
Thanks for sharing where you're coming from in these posts.

Just some stats as food for thought.

Back in 2016, Bernie Sanders would claim that the 20 richest people in the country have more wealth than the bottom half of the country combined. In his current speeches, that number is down to 3. Based on that article, that's partially due to the fact that the very bottom has negative net worth.

Bernie Sanders also mentions a statistic about Americans having less than $400 in savings. I couldn't find that one, but I found this one from 2017 based on a survey. 57% of American's have less than $1,000 in their savings accounts. That was an actual improvement over 2016 when it was 69%. 39% have no savings at all. It doesn't say that in this article, but many of those people live paycheck to paycheck.

Any one mishap could easily lead to the point where they can't afford food. Losing a job or even cutting hours due to automation could cause the tipping point. The possibility that it could happen to enough people at one time is what people are warning about.
  #42  
Old 03-24-2019, 09:46 AM
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But you'd still get UBI and medical assistance (He supports UHC) And be able to work a part time job ...
I was only considering the universal basic income on its own, not in association with universal health coverage. I would need specific details to make a conclusion about such a joint proposal. I have a suspicion such a program would undermine the savings from welfare programs that fund the basic income. But I admit ceteris paribus universal health coverage would nullify my example and much of my argument.

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While not every poor person has a disability, I have read[1][2][3] and personally met lots of people living paycheck to paycheck - income is close to expenses. Especially because of dependents, which could easily bring expenses right up to income. Kids aren't working or getting a stipend but the cost of feeding and housing them still goes up 10%.
Yes, which is why I said UBI is something which suppliments your income, rather than replacing it. Again, as I said before, even if prices for the general population went up by 10%, it still ensures the basics which were initially covered by my paycheck are now covered by UBI and it allows breathing room to either save money I've earned or earmark it for something else.

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My fear of rioting or market crashes does not come from people like you or even the people with ESRD. That threat comes from desparate people who were tricked or coerced out of their stipend and still see the +10% cost of living; also from people who were on welfare that took the cash instead and mismanaged their funds; also the people who stayed on welfare programs but the programs were weakened or shut down because of the exodus of people in the last category; finally from wealthy people who spend more than $120,000 a year who may turn bearish and cause ruckus in the markets.
Yup, so on that basis, the effects of which would be around 1% of recipients should dictate the other 99% who would benefit. That's not hyperbolic at all.
One thrust of my criticism in the quote you cited is that people who currently depend on current benefits would not receive the full $1000, or possibly any stipend at all. If you accept that most Americans in poverty depend somewhat on current benefits as defined by Mr. Yang, that somewhat reduces the utility of his program for those who ostensibly need it most - Americans in poverty. I don't know how much for certain but I would like to find out.

The other thrust was that poor people who don't have disabilities may not end up keeping their stipend for the same reason that keeps them poor in the first place. Too many kids, a debilitating non-qualifying medical condition (such as addiction), unfair discrimination, susceptibility to scams, heavy debt, extortion, or plain old bad luck. You can say "at least they keep their universal basic income" but most of the time people won't take away what you need to live on. If they do it leads to riots. Even mobsters avoid burn tactics if they can. The point is most people would have kept a basic amount anyways.

You could say the proposal is more for middle class Americans who stand to lose their jobs to automation. But the trade-off is a $1000 monthly stipend minus existing welfare programs you sign up for and a 10% increased cost of living versus falling under the poverty threshold and qualifying for existing welfare programs as they are now. I assert the first option is less attractive for some people, although I don't know how many my intuition is that it is a significant amount. I deal with a number of people on Medicare and/or Medicaid who regularly spend over $1000 in government funds per month. But my personal experiences are heavily, heavily biased and statistically unsound.

You seem confidant that it wouldn't be a significant problem, and I would be delighted if that's true. So I did a cursory search for real statistics: the census bureau in 2015 said 21.3 percent of the population participates in government means-tested asisstance programs but doesn't say how much assistance was actually given[1]. Combine this with a 2018 Department of Labor report based on 2014 numbers[2] and we should be able to make an estimate. I'll run the numbers later and post back here.

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It may be possible to implement Mr. Yang's program without any of the above problems growing into a crisis. But it would have to be really well thought out so as not to screw people over. There are so many nuances that I don't believe our government is up to the task, and thus I'm not convinced it's worth the risk.
Heard this all before, even for things like UHC and a living wage.
I apologize, I didn't mean for this to shut down debate. As you can see I'm quite willing to talk about the proposal on its merits, I'm just not hooked... yet.

[1] United States Census Bureau. (2015). 21.3% of US Participates in Government Assistance Programs Each Month. Retrieved from https://www.census.gov/newsroom/pres...5/cb15-97.html
[2] United States Department of Labor. (2018). Program participation and spending patterns of families receiving government means-tested assistance. Retrieved from https://www.bls.gov/opub/mlr/2018/ar...assistance.htm
  #43  
Old 03-24-2019, 09:54 AM
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I've seen this a couple times at Reddit before, and I found the logic just stunning. I've been trying to figure out why someone would argue against this.

Some guy says that he was all excited about UBI until he found out that he might only get 75% of the $1,000. Assuming he was right, which I doubt, I still don't get it.

But for someone to pass on extra money because it has the possibility of not being the full amount?
I think I agree with the redditor here. The idea is that I only get $750 of the $1000 because I am already on a welfare program (I am not, by the way). The rest of this money is effectively subsidizing $1000 stipends for people who are not on welfare programs. This seems like a misuse of money and, contrary to Mr. Yang's justification, adds to the stigma of well-off people accepting unnecessary money from the government.

Well it's really un-subsidizing since the welfare programs are a subsidy from the general populace to the needy already. I hope this makes sense.

~Max

Last edited by Max S.; 03-24-2019 at 09:55 AM. Reason: un-subsidizing
  #44  
Old 03-24-2019, 10:08 AM
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You don't get it? Let's see. The guy gets $1000 of "free money" from the government. Then the government turns around and takes 25% of that back in taxes.

The angry cry will be "Keep your government hands off my Free Money!"

Welcome to post-rational America.
Actually, UBI wouldn't be taxable. They're worried about the potential for inflation or a rise in prices due to the VAT that they're baking in to the equation to get the net amount. It's just a hypothetical number since in several studies of UBI, inflation went down, and many countries with a VAT don't experience rampant inflation.
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Old 03-24-2019, 10:34 AM
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Assuming that Ryan_Liam does not currently receive any benefits that he would have to give up in order to get his new benefit may not be valid. "Welfare" is only a small part of what is covered under that "$500 and $600 billion a year on welfare programs, food stamps, disability and the like." that Yang figures in.
You and I agree and in that sentence I meant "welfare programs" in the general sense. Although I'm not sure which programs Mr. Yang actually wants to include, in my example I had assumed it includes Medicaid and Medicare.

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I do not believe that VAT applies to mortgages and real estate taxes on already owned homes ...
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You wouldn't get VAT levied on mortgages, we don't here, or on education either.
It might affect your interest rate depending on your contract. If the mortgage interest is tied to eg: CPI and CPI jumps up from the 10% VAT and bearish market players, your rate would jump too. And then property taxes are obviously subject to revision by authorities. They probably wouldn't change the rate, rather they would increase their assessment of the home. You also have to consider whether that 10% VAT would directly affect the assesment of your home, eg: you live by a factory that exports and the factory shutters.

Likewise with education, the cost of books and other supplies would arguably go up 10% as manufacturers pass the costs on to consumers (the schools or students). Keep in mind this VAT is on top of the sales tax from states. I'm not terribly familiar with taxation in the UK, but imagine the Westminster gives the Scottish Parliament the power to levy a point-of-sale tax on top of the national VAT. The Scotts would have none of it, right?

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Interesting thing here ... so far the only people paying in more than they are getting out are the very poorest...
This is not quite true and you acknowledge so much, households that spend over $120,000 per year per adult would also lose more from the VAT than they would gain from the stipend. Mr. Yang's proposal works against people at both ends of the income distribution... but income distribution is not a normal curve, it's heavily skewed.

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Who said it was solely VAT increases which would fund UBI? Because Yang certainly didn't say that.
Ryan_Liam is right on this. By Mr. Yang's estimate, the VAT would cover about $800 billion of a $1.8 trillion program, just under $450 per $1,000.

~Max
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Old 03-24-2019, 10:37 AM
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I've seen this a couple times at Reddit before, and I found the logic just stunning. I've been trying to figure out why someone would argue against this.

Some guy says that he was all excited about UBI until he found out that he might only get 75% of the $1,000. Assuming he was right, which I doubt, I still don't get it.

So if he only gets $7,500, he doesn't want it at all? So if it was $1,200 and he only got $1,000, he'd pass on that too?

I would get it if he had a fixed cost and was getting reimbursement for that. But then he would opt out. And I get it if people are on a fixed income for people opting out of UBI if they had prices rise on them. Yang has already noted that there might have to be adjustments for those people.

But for someone to pass on extra money because it has the possibility of not being the full amount?
It's extra money, but so is a tax cut. Over time, the costs of extra money turn into inflation because everyone has extra money to spend, which in turn creates higher demand, which in turn raises prices. Other factors may offset monetary policy for a while, but over time, if everyone's getting the same marginal benefit, whether in the form of a tax break or minimum wage, the stimulus wears off.

It's better to concentrate stimulus in sectors of the economy where it's needed the most. This is also one reason why we'd better be damn careful about casually tossing around proposals or suggestions that a marginal boost in income for everyone can replace public assistance programs for people who desperately depend on them.

I agree with Yang that this type of welfare would be popular among economic conservatives for its simplicity, but without proper math to support it, it would be devastating to people it purports to help.
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Old 03-24-2019, 10:39 AM
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Ryan_Liam is right on this. By Mr. Yang's estimate, the VAT would cover about $800 billion of a $1.8 trillion program, just under $450 per $1,000.

~Max
I don't know if your math is right, but if it is, then funding would have to occur through massive spending cuts, which would be crippling to those who depend on assistance.
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Old 03-24-2019, 10:44 AM
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Even if you increased the costs passed down to the consumer to upwards $500, it still leaves $500 in a citizens pocket where it wasn't before, and makes them an active participant in their local economy.
What happens when everyone in the neighborhood has $500 to spend on rent and utilities? Rents would almost immediately go up, as would the price of gasoline and food. This wouldn't turn out the way you think. If we're leaving money in the pockets of citizens where it wasn't before, you'd want to increase their spending power, relative to everyone else's -- UBI doesn't do that. UBI keeps people right where they are. And if you're going to use UBI to claim that we can cut back on public assistance, then not only are we keeping the poor where they are, we're probably going to sink them further into poverty.
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Old 03-24-2019, 11:34 AM
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... Who said it was solely VAT increases which would fund UBI? Because Yang certainly didn't say that.
Yang's funding of UBI is from it: replacing spending on welfare programs, food stamps, disability and ... the like; assumed magical growth that UBI would cause; assumed magical savings caused by people not getting arrested or sick because of UBI; and VAT.

And even those don't close to add up to what it would cost. There are no other funding sources listed.

"Welfare" typically means TANF and it runs about $21B a year. All of disability is a bigger item at about $140B/yr. Food stamps (SNAP) are about $75B/yr. Yang's talking up saving on current spending on these benefits of $500 to 600B/y ... probably can't get there in any case but he can't be coming up with that number without including the money spent on Medicaid (the big item at $228B/yr and which doesn't disappear as spending if it is instead used as part of Medicare for All instead), CHIP, EITC, housing vouchers, school lunch programs, Pell grants, and others as part of "the like".

Benefits are not just the food stamps.

As far as VAT in other countries ... the U.K. does not have state and local sales taxes already in place, like the United Staes does. And the U.K. VAT while still a bit regressive in its impact is less so than Yang's VAT would have to be to even come close to raising as much as he suggests it would. The U.K. VAT is not very broad and excludes food for home consumption and such.

The CBO has previously looked at VAT, and a broad-based one, one that has none of those exclusions, of 5%, would raise an average of $300B/yr over 9 years of its implementation. Double it to get Yang's 10% and $600B is still less than $800B. A narrower VAT, more like the U.K.'s would be another $200B/yr short of the $800B he says it would raise (which itself is way short of what is needed).

Let's go with a VAT that has the sorts of exclusions the U.K. VAT does. It raises half as much as Yang says his VAT proposal would raise and depending on the state and locality it makes combined consumption taxes in the States on a par with the U.K.'s without delivering similar pro-social progressive benefits in return.

Yang claim's to know math, so he must know how these numbers add up. I understand there is a place for imaginary numbers in math but this is not the place. He is simply lying.

Last edited by DSeid; 03-24-2019 at 11:34 AM.
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Old 03-24-2019, 12:25 PM
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Max S.
One thrust of my criticism in the quote you cited is that people who currently depend on current benefits would not receive the full $1000, or possibly any stipend at all. If you accept that most Americans in poverty depend somewhat on current benefits as defined by Mr. Yang, that somewhat reduces the utility of his program for those who ostensibly need it most - Americans in poverty. I don't know how much for certain but I would like to find out.
No it doesn't because you're seeing it as a binary option, if I get UBI I must not get healthcare, whilst ignoring that some of the welfare programmes, of which I cited foodstamps, covers about $350 a month for a family of three, which is substantially lower than $1000 and that's even factoring in VAT rate hike.

Quote:
The other thrust was that poor people who don't have disabilities may not end up keeping their stipend for the same reason that keeps them poor in the first place. Too many kids, a debilitating non-qualifying medical condition (such as addiction), unfair discrimination, susceptibility to scams, heavy debt, extortion, or plain old bad luck. You can say "at least they keep their universal basic income" but most of the time people won't take away what you need to live on. If they do it leads to riots. Even mobsters avoid burn tactics if they can. The point is most people would have kept a basic amount anyways.
I'm hearing 'Poor people can't be trusted with their money, best we decide what they should spend it on'

Quote:
You could say the proposal is more for middle class Americans who stand to lose their jobs to automation. But the trade-off is a $1000 monthly stipend minus existing welfare programs you sign up for and a 10% increased cost of living versus falling under the poverty threshold and qualifying for existing welfare programs as they are now. I assert the first option is less attractive for some people, although I don't know how many my intuition is that it is a significant amount. I deal with a number of people on Medicare and/or Medicaid who regularly spend over $1000 in government funds per month. But my personal experiences are heavily, heavily biased and statistically unsound.
UBI doesn't negate you getting healthcare as it would be UHC. Again, as I've stressed for the third time in this thread, UBI isn't supposed to replace your income, it just ensures you have some capital if you have no job that you can use to either, survive or help you train for something else.

Quote:
You seem confidant that it wouldn't be a significant problem, and I would be delighted if that's true. So I did a cursory search for real statistics: the census bureau in 2015 said 21.3 percent of the population participates in government means-tested asisstance programs but doesn't say how much assistance was actually given[1]. Combine this with a 2018 Department of Labor report based on 2014 numbers[2] and we should be able to make an estimate. I'll run the numbers later and post back here.
And I bet that those same welfare programmes were subject to the same opposition UBI is now when implemented.

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asahi
What happens when everyone in the neighborhood has $500 to spend on rent and utilities? Rents would almost immediately go up, as would the price of gasoline and food.
I don't think they'd go up by a drastic amount you envision. Alot of rents are tied up in contractual obligations to their tenants, not to mention, you could argue this premise on any other welfare obligation and object to it for the very same reasoning. As for gasoline and food, yeah probably, but how much of that increase would be due to the increase in economic activity anyway, you seem to forget people would spend more if they have more money to spend.

Quote:
This wouldn't turn out the way you think. If we're leaving money in the pockets of citizens where it wasn't before, you'd want to increase their spending power, relative to everyone else's -- UBI doesn't do that. UBI keeps people right where they are. And if you're going to use UBI to claim that we can cut back on public assistance, then not only are we keeping the poor where they are, we're probably going to sink them further into poverty.
Nope, that's wrong. I don't see how UBI keeps people in their place at all, on the contrary, it provides an incentive to move state, move job, and look for opportunities elsewhere whereas before it wouldn't of happened because the upfront cost was too great.

UBI to a jobs guarantee is better because you're not tied to an employer for a specific welfare benefit, and in some instances it's better than current welfare because if you are employed, you don't have to worry about reaching a specific threshold where you're no longer eligible for it.
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