Hacker News Reader

Comment by kyledrake | Hacker News Reader

"Altman, who favors UBI, said in exchange for a floor, he’d like to see no ceiling on earnings, as some, like presidential hopeful Vermont Sen. Bernie Sanders, have suggested. And like Friedman, Altman suggested tying the amount of the basic income to a fixed percentage of GDP. “Right now, because people are rightly angry that there's no floor, and that most people have no real chance to be super successful, we sort of say billionaires are inherently evil,” he said. “I think it would be great to say, we as a society will allow trillionaires in exchange for a floor for everyone.”"

The problem with having a handful of people be billionaires and trillionaires is that money is power, and with that amount of money you have nearly unlimited power and influence over everyone and everything. A system that will concentrate that much power will be inherently evil, it will and does serve the needs of that few over the needs of the many.

UBI just doesn't solve that, and it especially doesn't solve that when it's being funded by a highly regressive VAT tax that none of these ultra wealthy people will ever pay as Yang is proposing.

Honestly, this whole Yang project just strikes me as a weird 10x play by wealthy bay area VC types to get out of paying more progressive income taxes by attempting to bamboozle voters into a regressive tax based UBI they will shoulder the burdon on, so we will forget about major structural problems like wealth concentration.

Regardless, no, I don't think trillionaires should exist and I'm pretty confused why anybody thinks that is going to work out well for them, competition, or democracy.

View on HN

> UBI just doesn't solve that

Doesn't it though? You create a floor, so that anyone with a miserable job can say "screw you" and quit and go start their own business without having to worry about how they're going to make rent before the new business starts making money, and you get a lot more competition. More smaller companies instead of fewer bigger companies. And the big companies would have to pay more to get some people to not do that, so you get less inequality.

How isn't that solving the problem?

Seriously there is NO WAY in the world an UBI will cover the rent - even the rent alone - in any place where it makes sense starting a business.

I would imagine an UBI will be mostly used by people to exclude themselves from active workforce to "retire" in low-cost destinations. Because that will be the only thing it will really allow doing.

Say you impose a super huge 30% income tax (anything above that will cause a revolt in the middle classes, and mass exodus in upper classes), that will only give an equivalent of a minimum wage to everyone (ok 20% above national minimum wage but some states have it higher)... how far does that get you?

Internet makes possible lots of businesses where one does not need to be based in a particular location to be successful.

But it is already a fantasy for >99% of those trying. Competition is too tough and most people are absolutely unprepared and can't be prepared - it means competition with mega corporation and the insane amounts of data and brains they have to optimize themselves. Will be even more of a fantasy if new tens of millions will join.

There are plenty of places in the US with rents in the $100s and you could start a business whether that business is a hotdog stand or a software business.

Could you name them, please? Rents in boring Ohio cities for example, are still $650 for a 1 bedroom unit.

I think they meant "in the hundreds" not "between $100 and $200". Rent for less than $1000.

Yes exactly, thanks.

How are you accounting for the increased economic velocity of a sustained cash injection across the entire country?

But there will be less injection that now right, in case UBI is implemented? No "new" money will appear (unless you suggest printing more and more trillions). This is the same money taken away as taxes. Except now it goes to those in need, instead it will go to everyone: now almost all of that money is consumed and so is indeed a "cash injection", instead the portion of the money - that goes to those already doing OK - will be saved.

Providing a "cash injection" doesn't require the UBI. It only requires taxing the rich. But the rich - yes, they mostly CAN actually leave the country to escape taxation, and operate from elsewhere, they can move their assets - increasingly virtual such as intellectual properly - onto offshore entities too... So there's really no option of taxing the rich.

> No "new" money will appear...

... except that part where $1,000 per month per person in the US comes out to about $4 trillion, which is 100% of all taxes collected.

There is no universe in which this much money can be given to every citizen in the US without creating new money.

The pretty obvious solution would be for more nominal taxes to be collected. It would also replace a very large fraction of existing government spending. Or you might have a one-time election between receiving the UBI and receiving social security, and a lot of people in or near retirement would choose social security and then not have to be provided with a UBI, and everyone else wouldn't have to be provided with social security.

Doing the accounting in a naive way is also misleading with a UBI, because it's effectively a tax credit. If you paid $15,000 in taxes and received a $12,000 UBI, you're really in the same situation as if you paid $3000 in taxes and had no UBI. The fact that you're nominally paying $12,000 more in taxes doesn't actually affect you because you get all that back.

It is closer to $3 trillion because children wouldn't receive the UBI as far as I know. Still a big number for sure.

You completely dodged the question.

I'll rephrase in case I've been unclear.

How, or have, you considered that if everyone gets an extra $1k/mo that a huge swath of Americans will just spend it every month? When they spend that money it does not disappear. Some goes to taxes and gets redistributed there. Some gets taken by the service providers (grocery stores, gas stations, cable/cell companies, etc) some gets vacuumed up into the murky world of private equity, some flows into the black market, etc, etc, etc. That money keeps flowing and keeps generating tax revenue. This is economic velocity.

The question I have is how have you examined this effect and found it to be unlikely to spur an increase in quality of life for tens of millions of Americans?

> Seriously there is NO WAY in the world an UBI will cover the rent - even the rent alone - in any place where it makes sense starting a business.

Wrong. UBI financed by monopoly taxes makes rents go rock bottom. High uncompeted markup prices - Rents - are by definition caused by some kind of monopoly situation, because they are not competed away. You need to tax monopolies and not call it tax but a 'privilege fee' and reinvest the money into infrastructure or resistribute as dividends - which is UBI basically.

There is NO WAY anything like UBI would ever work without curbing monopoly pricing because any money raised by income tax, VAT or any other means freely given to people will end up rising up rents and monopoly prices even higher.

> You need to tax monopolies and not call it tax but a 'privilege fee'

Probably better to just get rid of the monopolies, e.g. by relaxing zoning restrictions on density so that housing supply can respond to demand.

But you need to destroy democracy in order to be able to do that? Isn't that a too high price to pay? Also it will mean leaving tens of millions of largely elderly or at least 55+ people, bankrupt and destitute, and having to deal with the problem of feeding like 50M+ elderly people, instead of the same amount of young people who now can't afford rents? Is that REALLY worth the trouble? See it's not some imaginary "world jewry" or someone like that who owns all the apartments, it's the same ordinary American people, just older ones. Why forcibly taking money from one large demographic to another - from one who can't really change things for themselves much anymore to those who can - by destroying democracy in the process - is supposed to change anything at all for the better? And how is it even basically 'fair'?

To me it feels both politically impossible, morally unjustifiable, and socially bullshit. "Get too many people very angry for no benefit at all".

No need for melodrama. People often sell a big house and buy a small house when they retire and then use the difference to live on, but reducing housing scarcity makes both costs go down. Which means the reduction in the difference (surplus) is less than the total reduction in the price of the housing, and is a net benefit to the country overall. Meanwhile housing costs have knock on effects for all other costs, so they go down too. Having lower costs is a major benefit for people on a fixed income.

Reducing housing costs helps the indigent elderly at least as much as it does the average person. Who it hurts is the affluent elderly who own a big mansion and would get whacked harder than usual by a reduction in its value, but I'm not sure why I'm supposed to have a lot of sympathy for rich people trying to profit from artificial scarcity.

> Seriously there is NO WAY in the world an UBI will cover the rent - even the rent alone - in any place where it makes sense starting a business.

You can get a one bedroom in Austin for less than $800/month, to say nothing of arrangements that involve roommates or shared facilities or couples who would then have a second UBI.

> I would imagine an UBI will be mostly used by people to exclude themselves from active workforce to "retire" in low-cost destinations. Because that will be the only thing it will really allow doing.

You're forgetting the possibility for supplemental income. Combine the UBI with a part time job and you could live just outside of New York City and spend the other half of your time on the business for as long as it takes until it makes enough for you to quit the part time job.

There is also a whole lot of work that really doesn't care about location at all. You can do software development in Kansas if you want to, as well as anything else that involves selling your product over the internet.

> Say you impose a super huge 30% income tax (anything above that will cause a revolt in the middle classes, and mass exodus in upper classes)

The marginal rate isn't what causes revolts, it's the effective rate. Middle class people don't care about paying $12,000 in tax if they also get a $12,000 UBI. Upper middle class people aren't going to revolt over a difference between the two of an amount similar to what they pay already for the existing welfare system we would no longer need.

And the whole point of using VAT is that billionaires and international corporations can't avoid it.

> You can get a one bedroom in Austin for less than $800/month

... because there is currently no program in Austin whereby residents each get $1,000 of free money month.

True, if only people in Austin got a $1000 UBI then many people would want to move there for the UBI and rents there would go up by supply and demand.

But if everybody in the country gets the same UBI then people are going to move from where to where exactly?

If the answer is from places with higher housing costs to places with lower housing costs, I think you're going to find that there's more than enough empty space in the middle of nowhere to satisfy all of that demand without significant rent increases.

You’ve misunderstood. I’m not suggesting that the rent would go up because of the increased demand for a living in Austin. I am suggesting that the rent would go up because everybody has at least $1,000 per month of free money, on top of whatever income they earned.

By what mechanism does that cause the rent to go up?

The entire reason people are setting up shop in Austin is that it's so much less expensive than San Francisco. If landlords in Austin tried to raise rents then people would go to Kansas City or Buffalo or Louisville.

Some of the landlords would figure out that it's more profitable to have tenants at lower rents than higher rents and no tenants.

Perhaps the reason is not obvious because of the scale, so lets exaggerate the numbers to make it more obvious:

If everyone in the US was given $1 million per month, do you think that rent in Austin would go up in absolute terms?

If yes, by what mechanism can you imagine this effect is caused?

If no, I don’t know what to say.

The reason it goes up if you give everyone $1M/month is that $1M/month of money for everyone in the country doesn't actually exist. That's ~$330T/month. You couldn't collect that amount in taxes because nobody has it to collect it from; or if you did then nobody would actually be getting $1M/month since they'd just all be paying ~$1M/month in taxes to fund it.

The implied way to do it is, of course, by printing the money. Which would indeed cause inflation in not just rents but everything. But how does that apply to the real case when the money doesn't come from printing it?

> If landlords in Austin tried to raise rents then people would go to Kansas City or Buffalo or Louisville.

In the real world, most people can't just relocate their life on a whim, and the majority of citizens are more-or-less locked into a specific area for long periods of time, for a whole bunch of reasons. (Employer, Spouse, Children, Extended Family, Networks, etc)

It's not impossible to relocate or anything. But most people can't do so, and the few who can usually can't do so easily. It's not like window shopping for cars or clothes, these markets are effectively soft-Monopolies.

If landlords in Austin raised rents, most people would just have to eat it, unless it got to dystopian levels that forced them to relocate.

They still can't, because they're not even local monopolies.

There are a thousand local landlords. If they all decided to double rents, maybe only 5% of the local population would move out, but then 5% of the landlords would have empty properties. They're individually better off to get someone in there at a lower rent than have an empty unit, so they advertise a lower rent and take one of the tenants from a landlord across the street. Now that landlord has the empty unit and they do the same thing.

Which means Kansas City is competition for Austin even if 95% of the people there would never actually move. (Assuming cities where the job market, amenities and so on are similar.)

Also, when rents are higher, there is incentive to build new housing to capture the profits.

Rents only get high when they're not just eager to arbitrarily raise rents but somehow colluding to constrain supply, which is hard for thousands of landlords to do except through zoning. But that's completely independent from how much money the local people have. There are cities that have the same median income and higher rents because the local government imposes housing supply constraints.

Rent prices are still governed by supply and demand (modulo some rent control), not by how much money the tenants have.

Supply and demand happens on both sides of the equation; when it supply increases on the money side, we call it inflation.

> Rent prices are still governed by supply and demand

This is not accurate. Rent prices have little to do with supply and demand, and are primarily driven by how much money tenants have (or more accurately, how much tenants can be bled for before they give up and leave).

This is why rent rises even when supply is greater than demand, and why rents rise even in places where demand is falling dramatically.

Rent prices have everything to do with supply and demand. One of the reasons they're so high in San Francisco is that it's surrounded on three sides by water, which restricts outward supply expansion. And then zoning restricts upward supply expansion. You have much the same issue in Manhattan, which is an island.

How else do you explain housing costs being lower in Austin (available land, less restrictive zoning) than New York City despite Austin having a higher median income?

how much tenants can be bled for before they give up and leave

That's demand.

You're making the mistake of assuming that rents are dependent purely on renters' ability to pay them. Whereas the fact of the matter is that the market is driven largely by housing supply and demand, as it always has been. A $1,000 monthly check is unlikely to move the numbers much.

The only way that works is if UBI is both guaranteed and super high. Like "everyone gets a guaranteed $50k/yr" super high. The UBI Yang and folks are talking about is so low that it doesn't offer any of those benefits.

$1k/month worth of UBI wouldn't even cover average rent for a single person in any of the ~20 most populated cities in the US.

$1k/month doesn't quite even cover the cost of child daycare for a single child, in most of the US.

$1k/month of UBI is barely even ~50% of the current minimum wage in much of the US (a minimum wage that currently is so low, that it doesn't even cover bare-minimum cost of living either). The UBI is so low, it doesn't even give people the freedom to leave the lowest-paying legal job a typical person could have.

Making it guaranteed is implied. Making it huge is completely unnecessary and counterproductive.

$1k/month doesn't cover average rent in the most populated cities because the most populated cities have the highest rents and its purpose is not to make you average, it's to provide a floor. Supplying enough for the lowest rent in the lowest cost of living place is sufficient for that, and if you want more you can go get a job or find some other way to make money -- which the UBI continues to supplement, so it doesn't even have to pay very much.

It's not supposed to make it so you can live a happy life for a hundred years without ever working. It's just supposed to take starving and freezing to death off the table, and give you a lot more runway when you're trying to start a new business.

> It (UBI @ $1k/month) is just supposed to take starving and freezing to death off the table

My point is that $1k/month does not do this. Hell, minimum wage is approximately 1.5x to 2x greater than UBI (depending on the area), and even it does not quite take "starving and freezing to death" off the table.

"Working Homelessness" is a thing - https://www.npr.org/2018/09/30/652572292/working-while-homel... and https://newrepublic.com/article/154618/new-american-homeless...

Working homelessness is a thing in California because of outrageous housing costs. The problem there isn't insufficient wages, it's insufficient local housing.

You can live a spartan life on $12,000/year in many places in the midwest and not die of poverty.

> The problem there isn't insufficient wages

Yes it is.

> it's insufficient local housing

Insufficient housing given wages and insufficient wages given housing costs are the exact same thing. If you have one you, ipso facto, have the other.

California has insufficient low-end wages (and poverty support programs) given the prices (not just for housing, though that's a particularly significant aspect of the issue) created by the wealth of California's high-end workers and capitalists.

> Insufficient housing given wages and insufficient wages given housing costs are the exact same thing. If you have one you, ipso facto, have the other.

They're not. If you need housing for two million people and you have housing for one million, and you refuse to build any more housing, you don't have enough housing. It doesn't matter how much money people have because whoever has the most would just bid up housing prices so they can have it and there would be people left at the bottom without it.

Whereas if you had enough housing for twice as many people as actually live there then housing would be very inexpensive and even people not making very much money would be able to afford it, because getting a unit wouldn't require outbidding someone with a lot more money than you.

> If you need housing for two million people and you have housing for one million, and you refuse to build any more housing, you don't have enough housing.

California has several times as many unoccupied housing units as homeless people. California doesn't have a hard shortage of housing units, certain people that need housing in California have insufficient material means to convince the people that own existing unoccupied housing units to rent or sell to them.

Measuring by occupancy rate isn't accounting for landlords withholding units from the market in the expectation that they'll find a tenant/buyer willing to pay more for them later, which is an allocation of supply the same as if someone was living there, and is caused by overall supply constraints creating the expectation of continued high rents.

It also fails on the other end because there are many alternatives to local housing other than homelessness, like selecting less local housing with an unreasonably long commute or living in units designed for fewer occupants in violation of the fire code. You essentially have unaccounted for over-occupancy. People having more money doesn't solve any of those problems without more housing for the money to buy, and interferes with solving homelessness as well because higher wages in general could cause people in those situations to move to existing unoccupied units before the existing homeless do.

> You can live a spartan life on $12,000/year in many places in the midwest and not die of poverty.

I live in the Midwest, and this is simply not an accurate description of Midwest finances. These people who live on $12k/yr are either already asset rich (i.e., own their own house/car/etc) or are having their friends/family/roommates or the state pick up some of their living expenses, in one way or another. If they don't, they are literally dying of poverty.

According to the US Census Bureau, a $12k/yr income would put you below the poverty line, even for a single adult with no children living in the Midwest (Michigan).

> According to the US Census Bureau, a $12k/yr income would put you below the poverty line

The federal poverty line for the lower 48 states is $12,490. Is your objection only that you want to make the UBI $12,500 instead of $12,000?

Notice that you could also make up the other $500 by working a minimum wage job for less than two weeks out of the year.

> You create a floor, so that anyone with a miserable job can say "screw you" and quit and go start their own business without having to worry about how they're going to make rent before the new business starts making money, and you get a lot more competition.

No, what you get is more and more people who will say „srew you, why should I go and do stuff when I get money for doing f* all”. The people here on HN and those millionaires / billionaires are an outlier. An average shop clerk, security warden will not go and start their own business after saying „screw you”.

I agree with you that VAT by itself is regressive, but coupled with UBI it is not even close.

Relative to their wealth, Rich people, effectively, do not even pay income tax. The bulk of income tax is paid by the middle class. Does that seem fair to you?

I agree with you that money is power, but you are not going to stop the existence of Billionaires and Trillionaires. That would need to be a coordinated global effort.

> Relative to their wealth, Rich people, effectively, do not even pay income tax.

Can you explain this, as this doesn’t appear to be backed up by IRS stats on effective rates & total revenue.

Relative in the sense that it’s inconsequential relative to capital gains taxes. The very rich don’t make incomes. Nexos for example earns $88k a year in income.

Nexos should be Bezos. Stupid autocorrect.

Wealth is not taxed. If you have a large amount of wealth, you don't need income, and it's likely that — if you do have income — your income represents a very small percentage of your net worth growth over time. Most of it is capital gains, which:

1. Are taxed at a much lower rate, and,

2. Are only taxed when the gains are "realized," e.g. when you sell at a profit.

As a result, if you have a large amount of wealth, your net worth can increase dramatically while being untaxed (if you don't sell) or taxed very low (if you sell some percentage of the gains — and only the sold percentage gets taxed, the rest doesn't). Depending on your investment strategy you can also play games with taxes, e.g. when rebalancing your portfolio, try to mostly sell your shares that have lost value, so that you put a loss on the books rather than a gain and are thus untaxed (or even get tax credits).

That's why Warren Buffett talks about paying less in taxes than his secretary.

It does't make sense to take wealth though.

The only way wealth can increase (in a usuable liquid form at least) is through income, which is already taxed.

If I eat beans and rice for 10 years to help save for a awesome retirement, I should be able to save that money.

I agree that wealth taxes seem difficult to enforce at the least. However, income is not the only way wealth increases: as I mentioned, the primary way wealth increases for the very wealthy is capital gains via investment, which are taxed at a lower rate, and are only taxed on "realization," aka sale (your net worth can increase by a billion dollars, but if you only sell $100k of it, you're taxed on the $100k).

Taxing upon realization also makes sense to me, but the very low long-term capital gains tax makes less sense to me. If you made a million dollars, I don't care if you made it via investment or by working for someone — you should support society in the same degree.

Yes, capital gains are taxed as income (as soon as there is something you can actually pay taxes with).

That they are taxed at a reduced rate is true but doesn't invalidate the fact they are still income.

No, they're not taxed as income. They're taxed as capital gains. There's a set of taxes called "income taxes," and the rules are the same for anything classified as income. Long-term capital gains are not classified as income. Even short-term capital gains are not classified as income, although they're taxed at the same rate as income.

And regardless of semantics, the original point still stands: relative to their wealth, Rich people, effectively, don't even pay income tax. This is trivially true: if your liquid net worth increases by $1 billion dollars, and you made that money via income, you would be taxed (depending on state) up to nearly 50% of those gains. If you made it via capital gains, you would be taxed at zero. Since very rich people make most of their money via capital gains, what little net worth increases they make via "income" pale in comparison to the gains from capital investments. Thus, they pay effectively no income tax relative to their wealth, which is large. If they make 1.2 billion dollars in liquid net worth, and only 0.2 billion is classified as income, they're paying an effective tax rate of about 12% in CA instead of 49.3% (what they would pay in CA if their gains were categorized as income). If only 0.1 billion was income, they're paying 6%. If they "only" made 50 million dollars of income that year, and the rest was classified as long-term cap gains, they're paying 3% tax.

For the record — I'm not saying we should tax unrealized capital gains! This is a very complex subject and changing the tax code in that way could have far-reaching, potentially very negative side effects on the US economy; for example: we wouldn't tax unrealized illiquid asset gains, right? That would be unfair: if it's illiquid, you may literally be unable to pay the taxes on your supposed gains. But that encourages mass migration of high-net-worth individuals' assets into illiquid assets like real estate (since by and large they don't need immediate access to the capital), and out of liquid assets like company stocks, which would drive up housing costs and reduce available capital for US companies. Not only that — it prioritizes illiquid assets over liquid ones, which is good for rich people who can park money on illiquid assets and don't need to spend it short-term, but bad for everyone else who actually may need to spend their money. Not exactly the outcome we want! In general tax is super hard and rich people will pay very smart people to game the tax code for them.

But capital gains being only up to 18% compared to income at up to 37% at the federal level (with similar breakdowns by state) seems pretty off.

> No, they're not taxed as income. They're taxed as capital gains.

Capital gains are a subset of income, taxed via income tax at, in some cases (mostly, “long-term” gains) preferential rates.

> There's a set of taxes called "income taxes,"

Capital gains are part of those taxes.

> and the rules are the same for anything classified as income

No, they aren't. There are all kinds of special cases with income. Capital gains are one: they are income, included in AGI (adjusted gross income) which effects eligibility for various tax credits and deductions, but in certain, but not all, cases taxed at lower rate than ordinary income, as low as zero percent for the portion of long-term gains within the tax bracket qualified for 12% rate on ordinary income.

Most of the extreme wealth generated in our society is not generated via income. Most of it is generated through property (land, stocks, insurance products, etc). Yang actually addresses this fact. The elite of the world are so effectively globalized now that they are not subject to the tax code of one country. The US is, frankly, not strong enough to take down billionaires single handely.

Water down intellectual property rights, strengthen labor rights, tax land appropriately and a lot of billionaires would just disappear of their own accord.

> Relative to their wealth, Rich people, effectively, do not even pay income tax. The bulk of income tax is paid by the middle class. Does that seem fair to you?

Where are you getting this information? From what I can find, the top 20% of Americans pay 87% of income taxes: https://www.wsj.com/articles/top-20-of-americans-will-pay-87...

That’s not what I’m saying. I’m saying that their effective tax, as a percentage of their wealth is, much lower than everyone else. Progressives think that a progressive income tax is progressive, because they view taxation through the lens of income, but the primary source of most wealth (not most peoples’ wealth, but most wealth) is derived from property.

Why stop at 20%? Map peoples’ wealth on a normal curve and then look at which parts of the curve pay the bulk of income tax. Saying the top 20% of income earners pay 87% of income taxes says very little, actually, about who, exactly is paying the bulk of income tax relative to wealth. I mean probably most people on hacker news are in the top 20% income earners in the US for crying out loud. Are most of us wealthy? Not relative to how much wealth is out there.

> I’m saying that their effective tax, as a percentage of their wealth is, much lower than everyone else.

Income tax is collected as a percentage of people's income, I'm not sure why you're referencing wealth here. And judging tax as a percentage of wealth is not a very sound approach:

* You have someone that makes $50,000 and has lived frugally and saved up $500,000 over the span of decades.

* You have someone that makes $250,000 a year and spends nearly all of their money as they earn it, and so only has $50,000 saved.

The former will pay $4,342 in federal income taxes (filing as single) and thus pay under 1% of their wealth in income taxes. The latter will pay $58,424 in federal income tax and thus pay over 100% of their wealth in income taxes. Am I to understand that this situation is unfair because the former is paying a smaller percentage of their wealth as compared to the latter, and that the former should be paying more than the latter?

Judging taxes as a function of people's wealth is not a sound approach because people's wealth has much more to do with their financial decisions than their income. Why should frugal people who save more be taxed more heavily than someone who makes as much (or even more) but spends their money?

This portion of your comment seems to indicate a fundamental misunderstanding of income vs. assets:

> ...they view taxation through the lens of income, but the primary source of most wealth (not most peoples’ wealth, but most wealth) is derived from property.

Property (in other words, the assets people own minus their debt) is wealth. Talking about how the source of wealth is derived from property is nonsensical - wealth and property are two words for the same thing: net assets.

Income is the delta of people's wealth. If you have an annual income of $X then your wealth is increasing by at most $X each year. Gains from increased value of assets (capital gains) are another source of wealth. These are taxed, too, but at the time that the assets are sold rather than immediately. Inheritance is another source of wealth and that is taxed as well.

Income is taxed because income, not property, is the source of people's wealth. It's valid to think of "income" as short for "incoming property".

UBI gives incredible power to the laborer, who has leverage against unfair working conditions, and by default is past the "Safety" level of Maslow's Hierarchy of Needs, allowing them to develop healthy relationships and goals.

https://en.wikipedia.org/wiki/Maslow%27s_hierarchy_of_needs

Sure, and that's why we need a mechanism to redistribute that wealth... like a UBI.

> a highly regressive VAT tax that none of these ultra wealthy people will ever pay.

Yang proposes to exempt basic goods from the VAT, but more importantly, the central appeal of a VAT is that tax evasion is made more difficult!

A VAT naturally creates an audit trail of both parties in every transaction where value is added. If one party is incentivized to report, for example via a tax credit for the end consumer, then everyone else in the chain of crediting is incentivized to do so also.

If you're using a regressive VAT tax to pay for UBI you are not redistributing wealth, you are disproportionately taxing the poor to distribute to themselves (https://www.quora.com/Why-is-value-added-tax-regressive) much of which will be lost as the prices of goods increases to match equilibrium. Amazon won't "pay the tax" it will pass the tax along in the form of higher consumer prices.

If the primary concern is tax evasion, there are many ways to improve this while still maintaining progressive taxation.

And I'm sorry, but even if this would work, I'm still not going to be sold on the idea that the world should be lorded over by a few trillionaires from California.

> If you're using a regressive VAT tax to pay for UBI you are not redistributing wealth, you are disproportionately taxing the poor to distribute to themselves (https://www.quora.com/Why-is-value-added-tax-regressive) much of which will be lost as the prices of goods increases to match equilibrium. Amazon won't "pay the tax" it will pass the tax along in the form of higher consumer prices.

A flat value added tax is regressive, but a VAT itself is not inherently regressive. Imagine if we have a VAT on yachts and nothing else, does that disproportionately affect the rich or the poor?

That's why Yang is proposing to exempt basic goods and raise the rate on some luxury items.

Even under a flat 10% VAT paired with the UBI, you would only be worse off if you spend $120,000 yearly on items with a 100% pass through (the IMF's estimates on the average pass through under a VAT are much lower than this).

> If the primary concern is tax evasion, there are many ways to improve this while still maintaining progressive taxation.

You are going to need to specify a better alternative then. Again, a VAT has inherent properties that make it highly auditable and therefore easier to administer. A wealth tax, in comparison, is much more subject to misreporting because it relies on asset valuation.

> And I'm sorry, but even if this would work, I'm still not going to be sold on the idea that the world should be lorded over by a few trillionaires from California.

Do you want wealth redistribution or not?

Yang wants to give individuals legal ownership of their own data and control over how it is used, so I'm not so sure that most of those California billionaires are all that fond of him anyway.

For sake of argument, could this inadvertently make it more difficult for middle class people to pursue goals outside of basic survival?

It seems to me that many otherwise "normal" middle class people have one area, their hobby, where they own luxury products. That might be a sports car, a horse, a sailboat, ski trips, etc. Might a VAT tax on luxury goods make those products out of reach for the middle class?

While I can understand taxing a billionaire who buys luxury products in every area of their life, it doesn't strike me as unreasonable for someone to have one area that they choose to focus their resources.

Taxing transactions other than capital purchases isn't going to make much of a dent in inequality. The reason we have such inequality is from capital income and appreciation. Taxing ordinary income or outgoings won't help much.

Ok, fortunately Yang also wants to increase capital gains taxes to the same rate as income taxes.

https://www.yang2020.com/policies/capital-gain-carried-inter...

It would make more people move to tax havens.

>Imagine if we have a VAT on yachts and nothing else, does that disproportionately affect the rich or the poor?

Nobody? They'll buy yachts abroad.

Yup. Plus talking about 'VAT on yachts' is nonsensical in the context of funding a basic income anyway. There are a lot of economically inactive people to fund and not many yachts being purchased; wealthy dynasties tend to consume only tiny fractions of the economic rents they can extract from the economy each year. Choosing a consumption tax as a means of funding a UBI ensures that the bulk of the net contribution towards funding it will be paid by the large numbers of people who spend most of their incomes on consumption - i.e the middle classes.

VAT is usually much higher in the world. 10% ish would put the US in the lower quartile. So not worth dodging the VAT and then to transport over still

Living in a VAT Post-Soviet country, I am not sure if that argument about "hitting harder the poor" is true, if VAT system is not specially aligned against the poor, which was the case in my country earlier times of Post-Soviet transition, but has changed recently.

The thing about VAT is that it is multilateral, and applies to many types of business-to-business transactions as well to business-to-consumer, so all the suppliers in the chain pay their share, not only the consumer.

And, given by pure numbers, the value provided by VAT paid by business is pretty significant. In some implementations (such as my country one), business share of VAT can not be less than final consumer's VAT, because consumer has paid VAT only once, while any producing business, was paying VAT for any transaction by any supplier.

The argument about aligning VAT against the poor, is that, given corrupt government being in power, some business can easily avoid paying VAT, or pay only small percentage of it.

This was (and, to some extent, still is) the case in my country (Ukraine), due to existence of so-called "VAT Refunds" scheme, which allowed many oligarchs to concentrate big amounts of value during 90s-00s. The scheme is easy as using non-market practices such as paying less VAT than their competitors, and being not punished then due to law loopholes passed by cronies in the state legislation.

The new governments, after 2014 Maidan revolution, being pressured by country's civil community, and also the international community, have started to remove many types of "VAT Refunds" scheme loopholes. That's why many oligarchs already went bust, and many are going to, just because their enterprises are now required to pay their share of VAT, and can not survive competition in changed reality.

So in reality, implementing proper VAT system requires powerful government, and also VAT does not survive lobbyism and cronyism.

I really appreciate those points.

> So in reality, implementing proper VAT system requires powerful government, and also VAT does not survive lobbyism and cronyism.

This kind of kills the VAT being feasible here in the US. We have crazy amounts of lobbying and legal loopholes and while the US gvt is powerful, that's somewhat antithetical to the founding ideals of that.

> If you're using a regressive VAT tax to pay for UBI you are not redistributing wealth

Sure you are. Joe Teach pays $5000/year in VAT and gets a $10,000/year UBI, $5000/year is being transferred to him. Carlton Moneypenny pays $50,000/year in VAT and gets a $10,000/year UBI, $40,000/year is being transferred away from him.

> much of which will be lost as the prices of goods increases to match equilibrium

But then you would collect more VAT at the same rate, which would fund a larger UBI. By the time that reaches steady state it's a wash.

On top of that, VAT is great for people who are in debt (i.e. the poor), because no more income tax means they can pay down their existing debt with money they would have otherwise lost to income tax.

> Amazon won't "pay the tax" it will pass the tax along in the form of higher consumer prices.

The party who pays more of the tax is the party whose alternatives have gotten worse instead of better. For an individual, saving has just gotten more attractive relative to spending, so Amazon will have to keep the price of that stupid knickknack lower in order to get people to still buy it instead of banking the money and collecting interest on it to spend next year.

Meanwhile it's now the case that the tax applies to Amazon and not just their smaller, less international competitors, so Amazon would start losing business to them if they don't keep prices low by eating more of the tax.

> If the primary concern is tax evasion, there are many ways to improve this while still maintaining progressive taxation.

Not really. The primary problem is that shifting profits to other jurisdictions with lower taxes is easy to do and hard to prevent, and then there are no "profits" in the jurisdiction with the progressive tax, which turns the "progressive" tax into a massively regressive tax since the richest pay nothing.

The best way to fix it is to make everyone pay the same rate (so the rich can't avoid it) and then make it progressive by giving everyone a fixed refund (UBI), which gives you the effective rate curve a progressive income tax is supposed to have except that international corporations can't avoid it by declaring profits in Ireland.

It’s funny that we think preventing billionaires is easier than campaign finance reform.

> "UBI just doesn't solve that..."

It might not solve is but it's certainly a ding in the arc of the current status quo.

The problem with no floor is it creates fear. Lots of it. When you fear losing your job and/or your home your view of the world gets very narrow. Your options limited. Availability of opportunity and resources cause you to make bad decisions (e.g., blaming minority X or Y for your fate).

It's true UBI will not solve the power imbalance. But it can be a step in the direction of undermining the status quo.

“A system that will concentrate that much power will be inherently evil”

It’s always puzzling to me when people equate wealth with evil. Why the unnecessary moralizing? Just say “concentrated wealth in the hands of the few has the potential to cause systemic societal harm”

No need to paint it as a battle of good vs evil, it severely diminishes the substance of your point.

Actually a lot of them do very bad things with their money that are very harmful to society, whether it's Bill Gates fraternizing with a convicted child sex trafficker, Peter Thiel platforming for racist demagogue Trump, Vinod Khosla spending unlimited amounts of money to carve out private access to beaches, or running for president and sinking a record setting amount of money on his campaign like Michael Bloomberg is doing. None of these clowns deserve to be billionaires and nothing bad will happen to them or us if a small chunk of their money is used to pay for things like single payer healthcare.

But my point is that no tiny handful of people should be allowed to have that kind of power, whether they're evil or not.

TIL supporting the 2016 Republican presidential candidate was evil.

No, platforming for a racist demagogue that causes pain and suffering to millions of people so you can maybe win some Palantir contracts isn't evil at all, I'm not sure where you got that impression. It's just really solid moral judgement, I'm glad he has billions of dollars to push towards positive agendas like that, it's so good for our society to have children in cages at the border so you can win a chess game against other government defense contractors. Inspiring stuff.

Thiel's political views are long standing and have been no secret.

Perhaps there were other motives, but his views lined up best with Trump.

> None of these clowns deserve to be billionaires and nothing bad will happen to them or us if a small chunk of their money is used to pay for things like single payer healthcare.

A rather large chunk of billionaire's money is used to pay for a huge portion of the government (directly). Not to mention the amount of extra wealth in the world that (some of them) have created, which also turns into tax revenue.

this is very inflammatory and false. The VAT is not highly regressive. Money is power but poverty stricken people literally have zero money. How are gov't "programs" going to help? democrats love "programs" because it just gives them something to show off. it hardly solves any real problems.

I doubt you've lived through any sort of poverty or have felt like the walls were closing in on your life, but people live that everyday. For those that have been through it, it hardly feels like a "weird 10x play"

It is not inflammatory or false. VAT taxes are regressive consumption-based taxes, and poorer people disproportionately bear the costs compared to the wealthy. It's very well established among economists https://www.quora.com/Why-is-value-added-tax-regressive

> I doubt you've lived through any sort of poverty or have felt like the walls were closing in on your life, but people live that everyday. For those that have been through it, it hardly feels like a "weird 10x play"

The poor and working class of this country clearly have a candidate they stand by, and it's Bernie Sanders, who is about to set a record for the largest number of small dollar contributions in US history. You won't find them at $5600 a plate dinners at Sam Altman's mansion in California. To their great credit, the working poor in this country seem much more interested in an agenda that proposes real change to systemic inequality and poverty, rather than just pouring some regressively funded UBI candy coating over the existing broken system and expecting it to not get much, much worse.

on the presupposition that the VAT is flat across all goods. look at Yang's plan. this is not the case. https://www.yang2020.com/what-is-freedom-dividend-faq/

VAT is a tax on goods and services. Wealth inequality comes from people owning future streams of income, not stuff; rentiers, in other words. To the degree that VAT decreases wealth inequality, it's only by harming the net present value of those future income streams. It would be better to have a more equitable distribution of ownership without harming wealth production.

Sharing the gains in some manner is the right goal, no question. The question is what approach will be most effective. Bernie’s corporate accountability plan is thus the perhaps more direct set of proposals instead of something like the FJG and climate plan. Oddly enough, the CAP is not talked about much yet and there’s already dozens of holes in it. Maybe in 1975 it would work but corporations have moved far beyond what Bernie’s plan could accomplish. Admittedly better than nothing but the administrative overhead of this should be pushed with a massive overhaul of our federal regulatory agencies including improving the career paths of those in federal service.

Yang’s got the dynamic of federal bureaucrats down correctly. It’s the same ones I went through and why I left federal service a decade ago. Bernie’s commitment to service is incredibly inspiring but relying upon other people to be more like Bernie is not a plan, nor is relying upon more executives to be like Yang is not a plan either.

I’m not an either/or kind of person and see Bernie and Yang working together on legislation as a real, material step forward.

how exactly is a ubi not solving rampant poverty? Maybe someone's implementation is flawed but to make an extraordinary claim like UBI can't solve poverty will require extraordinary proof.

Likewise, how is ubi regressive? What would a progressive solution to poverty be?

If the introduction of UBI is coupled with the dismantling of existing social safety net it is effectively the privatization of public welfare, and will result in all the related pitfalls.

It feels like you just strung together dinne fancy words and didn't provide any reasoning.

It boggles to imagine which of those words you found fancy

Yang’s website says the plan will rely on poor people electing not to get other social safety net benefits. People will end up without healthcare and without food if there are not programs in place to address those problems specifically.

> found fancy

I was giving you the benefit

> without healthcare and without food

What? I've never heard him say this and seens like something he wouldn't say given his stance on wellbeing. Also, you can use UBI for food.

The only thing I've heard is people on welfare programs would be able to choose between continuing those or stopping them and switching to UBI. Nothing about healthcare and with these the people get to choose themselves.

From Yang’s campaign website: “Current welfare and social program beneficiaries would be given a choice between their current benefits or $1,000 cash unconditionally – most would prefer cash with no restriction.”

The point of public healthcare and food programs, among the other programs he’s talking about not having, is that even if you run out of money you can still buy food because the food stamps are reserved for doing so.

I know you all like to imagine everyone is rational like you, but what will you do when someone has spent everything and cannot feed themselves? Or has spent everything because of an emergency and their healthcare coverage lapses and they are ill?

Has anyone actually studied what people do in these scenarios or are you just assuming that people will willingly starve themselves to death en masse at a rate greater than the current just because they get $1k in pity money a month?

Give me a break.

Please don't be a jerk in HN comments, and please don't make unsubstantive negative posts.

https://news.ycombinator.com/newsguidelines.html

In a survey done by a social worker of n somewhere around 80 nearly all people on public assistance programs preferred the cash instead of public assistance.

Arbitrarily set and legislated into oblivion means testing thresholds and the administrative overhead of checking in constantly plus the shame of assistance appears to be a serious problem. Similar happens with EITC which most people eligible for do not claim.

See also how awful state-run TANF has been in Mississippi. UBI nationwide could be thought of as taking back control of programs from states that have dismantled the nets already.

This is a tough issue that has a lot of dimensions of discussion that won’t be covered respectfully in an HN thread exactly for the gravity of the problem

I agree that the overhead burden is insanely expensive. There's also the cruel, soul destroying experiences on both sides to account for. The staff, paranoid, treating everyone as a leech until proven not. The downtrodden, forced to prove their innocence while drowning in the bad hand life dealt them.

Another effect to consider is where do all the staff go to get new jobs? Many will find the private sector exceptionally difficult to integrate into after decades in public benefits work.

Money can be clawed back by increases to living expenses (eg. rent increases, food cost inflation).

Creating systems which lower the costs of living (eg. public transit, below market public housing) benefit low income persons and aren't as easily erodible.

> The problem with having a handful of people be billionaires and trillionaires is that money is power, and with that amount of money you have nearly unlimited power and influence over everyone and everything. A system that will concentrate that much power will be inherently evil, it will and does serve the needs of that few over the needs of the many.

It is kind of right but essentially wrong. In any society with the size of more than hundreds of people, it always has a power structure, and always has a small number of people concentrate power way more than others. It is not a problem with super rich people. Even in all the Communist countries (Soviet Union, Mao's China, etc.) where everyone is super poor and there is no millionaire, power structure and concentration of power still exists and is way more cruel than in a market-driven society.

Of course UBI doesn't solve this, because there is no way to solve this. Even if you nuke the modern world to stone age, power structure and concentration of power will 100% appear again and keep growing when you have a team, a tribe, a city, a nation.

Completely agree. I would rather have hierarchies determined by free-market forces rather than a state-organized system. Corporate monopolies should be deterred by the state, but trying to cap individual success via something like a wealth tax would cause problems for the whole market.

All you're really saying with your post is you'd rather live in an oligarchy (free market players) than a democracy (the state). The free market is in no way fairer or less corrupt than elections, but it is more single-mindedly incentivised by the profit motive. I fail to see the inherent moral victory.

Many people add on the mistake of thinking they will belong to the class of enlightened despots. You haven't said enough for me to tell if you're one of those.

Wouldnt that same argument apply to people fighting for democracy in the age of monarchy? Why try to get rid of the king when he will just be replaced by a president? Dont even bother.

Obviously power structures and concentration of power always exist in some form, but that doesn't mean we should never try to rein it in on occassion.

No. They are not the same. How is it worthless to replace the king with a president? I don't understand your logic.

You cannot achieve that by replacing an almighty king with an almighty government dictating who gets what (which is a prerequisite of UBI).

Doesn't a UBI get rid of actually prevent a government from dictating who gets what?

With current social support programs the government does get to choose who gets what. But with a UBI, every adult would get the same amount, effectively removing the government's ability to choose who gets benefits.

Maybe I'm just misunderstanding what you are saying, I don't know.

> money is power

Money isn’t power. Power is power. If Putin became bankrupt tonight, he’d still be one of the most powerful people on earth tomorrow morning. Power is the capacity to have others do what you want, including handing you their money when you need it. Case in point: how many million-dollar lottery winners ended up having any nontrivial influence on their community or state? Nearly 0.

Holding all else equal, of course it is the case that giving someone more money increases their ability to something done in the political plane. But it seems to be an article of faith in many people that money can be very simply translated into unlimited amounts of political power in a way that is I think not supported by the evidence.

Which is why Steve Forbes won the presidency in 2000 and Bloomberg or Steyer will take it this year and hold their inaugural ball at the Amazon campus in LIC. :)

As you say, money helps. But there limits to what money can do.

Nitzan and Bichler argue quite convincingly that capital is power - money isn't necessarily power, but money-capital absolutely is.

No amount of capital (economic power) will save you from the power of the state to take it from you, should that idea arise in the minds of those who define the state policy.

Lobbiests + campaign finances

In the world of international trade, only a stupid nation would do that. Systemic fear among the capital-holding class is usually unrelated to the fear of the state. Nevertheless, Nitzan and Bichler argue the ways in which capital uses its political arms to influence policy. One particularly obvious example is the strengthening of IP law, another is the military industry.

Political power and capital are intertwined, but neither is above the other in a direct hierarchical relationship, because both can hold a gun to each other's head. So long as the state keeps the right to property, and it almost always will, capital has nothing to fear.

>A system that will concentrate that much power will be inherently evil, it will and does serve the needs of that few over the needs of the many.

This defines pretty much every social system we ever had, unless you propose some sort of decentralized utopia, you need to trust power in the hands of a few. Money is just a vehicle of this particular system.

Decentralized industrialism is the crux of a large swathe of left libertarian ideology, such as anarchosyndicalism.

Reply on news.ycombinator.com