Any UBI worth talking about needs to pay kids too. Maybe a lesser amount, $500/month maybe, under their parent’s control, sure (unless the child can demonstrate to a judge or bureaucrat that their parent will mismanage the money and the kid won’t). But kids are people and citizens too, and ignoring them is only going to cause problems. 99% of our current welfare system was originally justified by “what about the children”, so any replacement or significant adjustment of that system needs to address those children.
Rich people. Or above average earners, at least. Even though everyone gets $1000, some people will be net losers in the deal.
Only if they spend far more than they make. Remember, even though the UBI isn’t taxed, they’re still paying normal federal income and payroll taxes on $200k, maybe ~$44k if I’m adding that up right?
And he’s exempting “staples”. He specifically calls out food/clothing. I couldn’t find out if that includes rent, health insurance, or anything else.
So the Dopers now have an after-tax (income/payroll) income of $180k. They’d need to regularly spend $60k more than that on non-essentials for this to be neutral for them. Which seems technically possible but unlikely. Hell my take-home paycheck is already less than half of my gross income, and half of that goes to housing.
Yes, higher tax on high incomes; taxing dividends and capital gains; restoring estate taxes; and higher corporate income taxes are all better ways to raise revenue than a VAT. Close loopholes: Amazon’s corporate tax averaged over the last three years is negative. :eek:
In countries with a very high VAT, is there much gaming of the system? Treating restaurant food as non-taxable food, hotel bills as non-taxable rent, etc.?
I think entirely new taxes should be explored. It’s foolish not to start with a big carbon tax. (Any policy planner who doesn’t start with a carbon tax isn’t serious.) How about a 30% tax on advertising? 
30% of $250 billion yields $75 billion annually. And charge double for political advertising! 
A few well-chosen taxes like these examples might eliminate the need for a complicated across-the-board VAT.
Yeah, good luck with that. These are the folks who exempted campaign calls from the unsolicited robocalls ban.
I agree. When we have massive debt and a massive deficit, Democrats and Republicans can argue over whether we need higher taxes, less spending or both. We can disagree but at least we realize that each side is approaching the problem in good faith but we are just coming from different directions.
However, when someone is talking about giving a couple making $200k/yr an additional $24k/yr simply for existing, that seems like insanity to me. We are now increasing taxes and spending in order to help a married couple who is doing pretty well and does not need any assistance.
Then, if we then increase taxes on this couple to offset the benefit that they get, then that seems horribly inefficient, taking money out of their right pocket to put more in their left.
And even if we do that so that all but the poor are taking a net loss on the program, at the end of the day, all we are doing is disguising higher taxes on the rich and increased social spending on the poor.
So the UBI then becomes, not a new and novel idea, but traditional Democratic priorities. The cynic in me seems to believe that is the whole point of this exercise: to disguise and deceive people into supporting an idea that has not yet won at the ballot box.
I don’t think Yang is putting Medicaid and section 8 housing on the table.
“The benefits that individuals would need to give up are Supplemental Nutritional Assistance Program (SNAP), Temporary Assistance for Needed Families (TANF), Supplemental Security Income (SSI), and SNAP for Women, Infants, and Child Program (WIC).”
But this seems to be mostly to placate the folks who think that the poor have it too good. He mostly pays for it with:
“To cover the additional cost of the Freedom Dividend, Yang would raise revenue in five ways:
•A 10 percent VAT
•A tax on financial transactions
•Taxing capital gains and carried interest at ordinary income rates
•Remove the wage cap on the Social Security payroll tax
•A $40 per metric ton carbon tax”
I think the UBI is only for citizens. With UBI, means tested benefits will wither.
I am afraid an insufficient safety net would dissuade the best and brightest of the huddled masses from coming to our shores.
UBI does not displace Section 8 etc. Just food stamps and cash welfare.
There is nothing you can do about it. Medicare loses billions a year to fraud, and to some extent so does VISA, Citibank, amazon, facebook, etc.
They have soup kitchens. They won’t starve. Hunger will make them spend their money on food the next month. If they have kids and they put their kids through that, then we should take away their kids for a few months.
Which bureaucrats make 500K/year?
Cabinet secretaries make $210K
Many native american tribal governments in the US give an UBI to their tribal members (funding comes from tribe-owned businesses, not the US government). The dollar amount is based on each individual’s “blood purity” and much of the housing is owned by the tribe rather than the individual.
From what I’ve seen it’s much worse than our current welfare/public assistance system. A small town 30 minutes from my home looks similar to the poor areas in Tijuana, Mexico. Not everyone abuses it of course but those who do have even less incentive to try to improve their current situation.
So, in all honesty, this is simply a tax increase on the rich, but the effects are blunted by this “everyone gets $1k” sleight of hand on the back side? If a normal Dem proposal would be to tax the rich X% and give the poor $Y, then this proposal is to tax the rich X%+$Y, give them $Y, and give the poor $Y?
This “removing the cap on SS” is completely a non-starter. It would amount to approximately a 15% tax increase on high earners. We fight pitched battles over 3%. I am all for realistic discussions of future policy, but this is not one of them.
A 10% VAT would be devastating to the economy and competition with overseas corporations.
Taxing capital gains at wage rates would create disincentives. Why risk my own money and be taxed at the same rate as if I risk no money and work for a living? The reason why capital gains taxes are lower is to account for that risk.
This just seems like a Dem wish list for tax increases. Not a new thing.
Fair enough and you are right. But how many above $100k salaries are in every welfare distributing organization? Maybe instead of UBI we could consolidate all of the separate programs that provide to the poor and just call it the “Department of Welfare” (or whatever cutesy sounding name you want; we can compromise on that).
It seems inefficient to have several departments doing basically the same thing. Perhaps instead of UBI, we can have “Welfare Bucks” which can be used for food, housing, clothing, health care, WIC, and all of the other programs we have. Why can’t one individual evaluate eligibility for all of the needs of the poor instead of separate departments?
The post in that thread used a 2016 report when a 2018 report was available at the time, showing a larger number. It also doesn’t take into account the increase of VAT to luxury items.
btw, the $1T discrepancy claimed in that thread was just using the wrong population base to calculate the headline cost.
I’m really liking this article although obviously I disagree with some parts. There are some good graphics about how the wealth redistribution works. I looked up the author on twitter. His twitter shows him to be a Pete Buttigieg fan.
This is the desired outcome, the reduction of poverty including the reduction of child poverty and the redistribution of wealth from the top to the bottom. It makes sense that the non-citizens might be worse off since they’re not getting the UBI, but that’s an incentive for people to become citizens.
The part of the article I don’t completely agree with is the complete dismissal of economic growth. He notes that there are some economic offsets but then just notes that the projected growth is unlikely and then makes assumptions on that basis.
It doesn’t take into account some of Yang’s other policies that could for instance, bring the prison population down. and some other cost saving policies that could offset the cost. He only took into account taxes.
I haven’t seen any UBI studies where people decrease work hours except for moms who stay at home with their children and teens who stay in school longer. But even if they do, there is a study out of Japan that shows a decrease in work hours there that increased productivity.
There’s also reason to believe that UBI would increase productivity if more people started businesses as they have done in many UBI studies. According to Yang, people starting businesses is at a decades low.
Microsoft Japan’s four-day working week trial led to productivity improvements
Particularly with AI improvements, productivity could rise even with declines in labor hours. The Microsoft study wasn’t a case study for that, but the overall idea is that AI will be taking jobs but not reducing GDP at the same level.
From the graphs, it looks like the taxes don’t start to create a net negative until about $500K on average. Between your case and the average person making $500K, you can make a specific case for people not getting hit with more taxes. But I think the $200K level is pretty low. People in that range are likely living in a place with a high cost of living on the bottom end of the scale. If not, they’re fortunate.
Since you’ve been reading on Yang’s plan, there are more resources at https://freedom-dividend.com/ and Scott Santens is a font of knowledge on the subject and can be found here at the Basic Income subreddit Reddit - Dive into anything and on twitter https://twitter.com/scottsantens. He’s a huge Yang supporter, but he’s more pro-UBI.
One of the arguments against increasing taxes for income instead of consumption is that it disincentivizes work. A VAT disincentivizes consumption. The argument is that society should encourage work but not encourage over-consumption.
The reason for that is that people at the top levels don’t pay themselves salaries. Their money comes from stock primarily. Increasing the financial tax rate might get some of that. But taxing their businesses through a VAT and taxing their consumption would likely have a bigger effect.
I missed this in the last thread. There’s no way a 10% VAT that excludes housing, food, clothing, and healthcare can generate $800bn a year. CBO/JCT did a study where a 5% VAT on exactly the same “narrow base” would generate only $1.9tn over eight years. 1900 / 4 = 475; 475 < 800, and this is making the (faulty) assumption that you can just double the VAT without accounting for the effect that has on the economy; it also ignores the specific estimate for 2020 which would be only 130bn at 5%.
~Max
Thanks for the links. I need to read them still.
Basically everything Yang said about a VAT is bullshit. Not just those revenue projections. He presented it as a way to make big companies “pay their share” as if almost all the tax will not come down on the consumers.
The sociocultural implications of UBI concern me more than the economic. The US working class has developed a work ethic wherein accepting the drudgery of low skilled work is a moral virtue. Hard work is a source of identity. Yang is an entrepreneurial self-starter and he’s making the mistake assuming others are as well, and that people will spend their new found free time in fulfilling creative pursuits. I think that’s unlikely, and given the well known correlation between boredom and drug use, I think a good percentage of population will take up meth and alcohol consumption as “hobbies.” I’m not against UBI, but it will require a massive cultural shift, and leaving that out of the equation will likely cost us dearly.
Answering the second part first, I think you drastically mis-estimate the costs of simple redistribution programs. SocSec pays about 99% (or more?) of its outgo to recipients. A big cost in UBI would be distinguishing citizens from ineligible residents. (Green-card holders do NOT get UBI under the plan — is that correct? Is that a feature or a bug?)
As for “devastating to the economy and competition”:
Normally exports are exempted from VAT; and intermediate VATs on exports are refunded. (Alternatively IIUC trading-partner countries can collect each others’ VAT by treaty.)
Net prices would rise on average, so wages would also need to rise.
My objections to VAT are
(a) The book-keeping and red-tape get very complicated, especially since VATs vary for different goods. In the EU, untaxed goods and taxable goods where the VAT rate is 0% are handled quite differently! :smack:
(b) The tax may not be progressive. Europe functions with a high VAT because of many other ways in which taxes and regulations are progressive. But, as shown upthread, Yang’s plan doesn’t seem to achieve such progressivity.
Instead of a wide-scale VAT, I’d like to target specific types of spending: taxes on luxury goods; taxes on financial transactions; tax on advertising. Other easy-to-collect fees should be explored.
And gasoline (and carbon more generally). The French pay about $3 per gallon in gasoline tax. A carbon tax of that size in the U.S. would yield several hundreds of billions of dollars annually.
Other developed countries have shorter work weeks. (This can boost productivity!) They have longer vacations, a better “safety net” and the working class is generally … let’s face it … happier! Drug use can result from a hard job of drudgery. IIRC small-scale experiments in North America have shown that UBI is usually spent much better than you suggest.
… Though (here comes septimus’ broken record), your concerns help make the case for non-cash benefits: subsidized childcare, job training, community centers, better schools, etc.
I support all those non-cash benefits you list, and a 4-day work week is a no-brainer AFAIC. Microsoft Japan did that study, which you are likely aware of, that showed a 40% improvement in productivity with a reduced work week. It boggles the mind that our Paleolithic ancestors likely worked 4 hours a day (according to anthropologists), and 15k years later we’re working twice as long.