Universal Basic Income: An argument for wealth redistribution

Great Debates
21

You can’t “live well”, that’s the point you can barely survive. Its enough to ensure you have the absolute basics, and nothing more. Of course if you go out and get a job on top of it, then you can live fairly well.

The current system favors all those properties. If you play the system, wrangle every last welfare/dollar by hook or by crook, while doing sweet FA, you will do ok. If you honestly try and get a job you’ll be punished at every turn (losing benefits and getting caught up in bureaucratic hell). In this system the opposite is true, those who actually try to help themselves will benefit most, those who don’t will not starve but they won’t do so well either.

22

But this isn’t the same. The difference it makes to someone on $100,000 or $200,000 is not all that great. Even the amount “free money” being given out doesn’t change all that much (1.3 trillion versus 1.1 trillion) and as the OP mentioned there would be no need for minimum wage, so it could well be a wash.

23
  1. The bottom 50% pay taxes. In some ways we already have a flat tax.

Due to 30 years of Reaganomics, taxes on the wealthy have been deeply cut and taxes on the working class, poor and middle class have gone up dramatically. As a result nearly everyone pays roughly the same % of income in various taxes, about 25-35%. Doesn’t matter if you make 2 million or $20,000 you pay about the same as a % of income in taxes.
2. The psychology of conservatism, from what I know of it, is an overactive fear response. A response to this is black and white thinking and blaming the victim. Life makes much more sense and feels safer is bad things happen to bad people, and good things happen to good people. Understanding that bad things happen to good people (cancer) and that good things happen to bad people (Kim Jong Il is a multi-billionaire) is frightening since it creates an external locus of control.

So authoritarian conservatives convince themselves if something bad happens, it must be your fault. Poverty? Due to laziness and bad decisions. It can’t be structural prejudice, or due to illness (the mentally ill are highly overrepresented among the poor), or anything else. It must be due to a character flaw that the individual can control but chooses not to.

My point is that your philosophy is an attempt to make the world far simpler and easier to control than it really is. And I find it about as influential as people who believe in religious superstitions for the same reason.

24

No. The OP’s plan is redistribution - every dollar given out is balanced by a dollar being taken by some taxpayer. So the net purchasing power of the country should remain the same.

But there is the issue of spending patterns. Presumedly people with a $10,000 annual income will not spend their $5,000 check the same way somebody with a $500,000 annual income would have spent it if he hadn’t been taxed. I wonder what the effect would be of having a couple of trillion dollars of spending money moved from the top of the ladder to its bottom.

25

Nonsense. Your own cite shows the tax burden rising from 19% for the lowest quintile to 32% for the top 1%. Other studies using a broader measure of income (“Income measures must be sufficiently broad to capture all forms of market-based income throughout the economy but must also account for the heavy reliance of low-income households on government transfer payments.”) find much steeper progressivism (page 48, pdf) rising from 13.0% in the lowest quintile to 34.5% in the highest.

26

During the 80s, the economy actually got better. In fact poor people did better, but here is why it seems incorrect. The poorest got better, the middle class moved up too, but the rich got VERY and I mean VERY rich.

Here’s an example on a scale of 1 to 10

In the 70s

Poor = 1
Working Class = 4
Middle Class = 5
Upper Class = 9
Rich Class = 10

In the 80s

Poor = 2
Working =5
Middle =6
Upper class = 12
Rich = 30

You see the difference betwen middle and rich was great but within reason. So the rich got very wealthy and the gap grew wider. But poor people were better off. They just seemed worse off because the rich were now so much richer.

The head of a company would likely make twice what the upper management made. Now the head of a company may make millions more than the upper management. Upper management may make hundreds of thousands more than middle management, who make twice what line or punched workers make.

The so called “trickle down theory” did work, wealth did trickle down, but that’s all it was, was a trickle. If you were poor and could only afford, food, rent, and clothes, maybe all you got extra was the ablitiy to get cable TV. That’s an imrovement but not much of one.

27

There are many, many reasons for poverty, in addition to those you list. Some people aren’t very smart. Some have had crappy education. Some have unanticipated unemployment or huge medical expenses. Some can’t keep up with a changing economy. Some are affected by natural disasters. Some are robbed. Some are elderly and outlived their investments.

Not that I support the OP; it’s morally and economically reprehensible.

28

How is it nonsense?

Those making $978,000 a year paid 32.8% of their income in taxes under Bush. Those making $34,000 a year paid 27% of income in taxes under Bush. That is pretty much a flat tax.

Since 1980, taxes on the well off have been cut dramatically. Dividend taxes, federal income taxes, capital gains taxes.

At the same time taxes on the working class, poor and middle class have gone up. Social security taxes, medicare taxes, sales taxes, sin taxes (alcohol and cigarettes), fuel taxes.

The result is a system that is pretty much a flat tax. Hopefully with a democratic majority it’ll change and become more progressive.

29

I have long advocated for a basic income as half of a radical simplification of the taxation and benefits regime. In my version of the proposal, the basic income (popular with the left) would be mirrored by a flat tax (popular with the right).

Everyone would receive the basic income (B). Everyone would be subject to an income tax (r) on all of their income (I)where income is as defined as money that comes in (salary, dividends, capital gains, profits, inheritance, gambling, whatever).

There would be no other taxes (no sales tax, no property taxes, no payroll tax - and no deductions or credits) nor benefits (no child credits, no food stamps, no pensions, no unemployment benefit, no medicaid).

The tax code would be simplified to:

T = rI - B

There is something in this for everyone:

For libertarians, it drastically reduces the role of government and their ability to meddle with incentives.

For progressives, it drastically ameliorates poverty.

For conservatives, it eliminates disincentives for high income people.

(Not quite everyone - it will suck for Intuit, for the armies of people employed by the IRS and for the armies of tax advisors who do battle with them.)
To avoid hijacking more than I already have, I’ll restrict my comments to the basic income side of the ledger.
The biggest benefit is that it encourages people at the margins of poverty to find work. As others have said, the current system penalizes people on welfare who want to get off welfare. With Basic Income, any additional income you earn is gravy. Assuming, as I do, that most poor people would like to escape from poverty, basic income gives them the leg up that they need to become self-sufficient (welfare does not do that).

A common reaction, when I describe the proposal, is that the Basic Income would give money to people who have done nothing to deserve it. There are certainly truly lazy, worthless individuals who would take advantage of such a system but I expect that they are a fairly insignificant proportion.

Giving money to people who do not deserve it is certainly inefficient - but possibly less inefficient than all the alternatives. On the other hand, many classically lazy people will realize that, OK, they can get by on 12K a year or whatever, but life is so much more pleasant if you earn a little extra. They’ll learn the habit of working - a lesson denied to them by the perverse incentives of the welfare system. Suddenly, they’ll have an incentive to work.

There are some problems with basic income that I have not been able to resolve: what about disabled people who can’t work? Do they get extra money? What about the incompetents who fritter away their income? Do we intervene to make sure they can still get food if they fritter away their money on drugs?

Other problems are more straightforward:

Q. Should a married couple get two helpings of basic income or something less?
A. The People can decide depending on whether they think government should favour or penalize marriage. (my preference: government should be neutral on marriage)

Q. Should children get the full amount?
A. The People can decide to pro-rata the amount (or not) depending on whether they want to reward child-bearing.

The same kinds of concerns apply to illegal (or otherwise) immigrants and to prisoners. Although, withholding the basic income could be an effective punishment (and cheaper than prison).

Some non-obvious advantages: it eliminates the need for a minimum wage which would create employment at the low end. It would eliminate whole branches of the government dedicated to administering welfare.

In short, I think the idea of basic income is sound and coupling it with a flat tax makes it more palatable politically.

30

I don’t quite view it that way.

Think of man in his natural state, thousands of years ago. We were hunter gatherers back then (and a small number still are in the present age). We didn’t have any notion of “property.” People could gather food and construct shelters wherever they wanted.

But in this modern age, a person without property is not generally free to hunt and gather as he pleases. Not without getting into trouble with someone who holds title to the land and has the legal power to force you off his property. So in order to survive, he’s forced to sell his labor to someone who does have property, thus he is a wage slave.

So what do we do to rectify the situation? Abolishing property isn’t all that practical, but taxing land and natural resources to compensate the entire community for allowing people the privilege of owning land and natural resources makes a lot of sense to me.

I recently stumbled on the writings of Henry George who advocated replacing all existing
taxes with a Land Tax.

31

If they come begging for additional help, or they run afoul of the law for substance abuse issues there WILL be strings attached. They’ll have to enter into rehab to kick their habit. Threatening to cut off the basic income for failure to comply may be just as good an incentive for many people as threatening jail time.

It could also help to send out the payments frequently. Let’s say, once a week, instead of once a month or once a quarter, to discourage profligate spending.

32

This takes me back. One of the very first topics I can remember from back when I joined the SDMB in 1999 was very similar. Matt_MCL was arguing that the government should provide every citizen with the absolute minimum in food and shelter. Perhaps it’s not the same as simply giving each citizen a little cash but I think the idea is the same.

As was pointed out earlier there are some oil producing countries that cut checks to large segments of their population. Good luck finding an Arab in Dubai to pump your gas. They’re going be in a lot of trouble when the oil revenue dries up, their foreign workers leave for green pastures, and you’ve suddenly got a population whose standards of living drop dramatically.

Odesio

33

Yes, it is, because the “failures” aren’t the ones that have to pay for the idea. If you’re successful and you’re paying 3 dollars out to get 1 dollar back, that’s no different to paying 2 dollars out and getting nothing back.

This is absolute nonsense. As long as women are actually involved in productive work they will not drive prices up, because they are only gaining that financial advantage by creating wealth.

34

Yes, I agree they are creating wealth but that is independent of the “financial advantage” I’m talking about. The extra purchasing power in the marketplace (provided by the additional spouses income) becomes less of an impact as more people participate in that behavior.

Wealth creation and relative purchasing power of all consumers are 2 different things.

35

Cite? This runs counter to figures I have seen elsewhere. Are you including the 2008 stock market fall-off?

36

Not for certain things, most particularly owner-occupied housing. If you have a household income of x, you are willing/able to pay y % of x for housing, and given that the amount of land is more or less fixed, the price of housing gets bid up when there are more two income households. Especially when people have some kind of extreme preference for single family homes, and are very resistant to higher density housing.

37

No, he is making an inaccurate use of the term “redistribution”. Cutting taxes is not redistribution since it is allowing people to keep what they earn.

Much of the more foolish economic theorizing is based on the idea that the government owns everything, and that nobody earns anything. Only in this sense can one speak of a tax cut as “redistribution”.

Regards,
Shodan

38

This assumes that the amount of money out there has no effect on cost of living, which is not the case. Prices are determined by the ratio of dollars to goods. This is the reason it would make no sense for the government to just print off a bunch of money and give every the amount of money they have now in an attempt to make every twice as rich.

A more accurate figure is not the total amount of money but checking the percentages that each group has. Using your figures (and assuming that each group is an equal quintile):

Total 70s money: 29

Poor = 1 (3.4%)
Working Class = 4 (13.8%)
Middle Class = 5 (17.2%)
Upper Class = 9 (31%)
Rich Class = 10 (34.5%)

Total 80s money: 55

Poor = 2 (3.6%)
Working = 5 (9.1%)
Middle = 6 (10.1%)
Upper class = 12 (21.9%)
Rich = 30 (54.5%)

So the poor got a very small gain; the working, middle, and upper classes all lost significantly; and the rich gained a lot.

39

I’ve always wanted something like this to work. But I can’t get past the inflation problem.

I don’t care about the freeloaders–I don’t think there will be many of them, since the plan should be designed to make Basic Income level living very unattractive. If someone insists on living only on Basic Income, I think that’s a bullet society can bite, in view of the benefits of the plan.

But what about inflation? Wouldn’t this just drive prices up, causing BI to have to go up, driving prices up more, and so on? This has been mentioned in this thread, but not really addressed. Does anyone know of any considerations addressing this worry?

I’m guessing price controls on certain basic goods wouldn’t work–that would cause supplies of these basic goods to go down, wouldn’t it?

40

Except that this did not actually happen. People had more and more valuable and useful goods.