California Legislature Proposes a Universal Basic Income Program | Hacker News Reader

California Legislature Proposes a Universal Basic Income Program

leginfo.legislature.ca.gov

56 pointsceohockey60136 comments

It's a $1000 payment funded by a 10% VAT (tax) on everything but food, clothing, medicine, and education. So unless you spend more than $10k per month on things that aren't food, clothing, education, or medicine; you come out ahead.

My first thought: can this possibly be solvent? There are apx. 32 million adults in California. Are there $32 billion spent per month in-state on things that aren't those common categories?

Then I realized that this includes business purchases. Everything sold in California would become 10% more expensive. There'd be a huge incentive to buy from out-of-state, and a huge disincentive for out-of-state purchasers to buy from California merchants.

I also wonder what it does to the population/demographics over time. If you're poor in another state, there are 12,000 new reasons per adult per year to move to California.

Including B2B purchases, could the current California economy absorb $32 billion per month in additional taxes? Even if it could, this would pervert the economics of the state so badly it's hard to know what the effects would be over time.

Wouldn't this just leverage the existing sales tax system? Now that local sales taxes are collected nationwide, it would be much harder to avoid.

Value-added tax means it's baked into the purchase price.

Buy a $5.50 cup of coffee? You get charged $5.98 (after the existing 8.75% sales tax) and the merchant gets $5 (because 10% of the advertised price is VAT).

It doesn't matter if it's solvent or not. Once it's implemented and people are dependent on it, it has to work going forward, and people will pass whatever laws necessary to ensure that it doesn't fail.

It is possible to run out of other peoples' money.

Not according to this website: https://www.usdebtclock.org/

I haven't done the math on this particular case, but I believe it is incorrect to say a UBI program will simply cost number-of-people multiplied by dollar-amount. Income tax would likely go up, too, so top earners will likely "give back" that dollar amount they received in UBI when they pay their taxes.

Did you read the bill? It says right in there that it's funded by a 10% VAT.

I can't tell if you're hypothesizing about future taxes or just didn't read the bill.

A big thing not really detailed, but briefly mentioned here, is presumably a lot of social services like CalFresh and CalWORKS would presumably be scrapped in exchange. Instead of having a bunch of different support systems for poor people with all of the administrative overhead that comes with it, you'd just issue people money, and get a lot of it back in taxes.

Note that Amazon has to charge state sales tax these days too, as do many other online retailers. So "buying out of state" is going to be pretty hard. People's eBay or Craigslist game might get interesting though with the new margins.

As much as California is one of the few states that might be progressive enough to attempt this, it'd be far better if a less populated (and smaller) state attempted UBI first. If Montana torches it's economy, it's probably a lot easier to reassemble than California's.

I'm skeptical of that. Scrapping those programs means scrapping the jobs of the state employees that run them. I don't think the state politicans want responsibility for that.

Well, presumably as many people as you needed to administrate this program could be taken from the old programs you'd scrap. But worst case, any state employee jobs you lost are still getting $1,000 a month.

I think the California State Employees Association would have something to say about their members’ total comp decreased from ~six figures to 12k/year.

The ones making that much money would certainly be able to find other jobs making similar amounts, elsewhere; and it would be good that they had this safety net, hopefully with medicare for all too.

I doubt the average lifetime bureaucrat can find such employment. Regardless, I don’t think the union will let the state ever put them in the position to need to try.

I have a feeling Montana would be less keen to torch its economy than we are to have them be our petri dish.

One nice thing about California's economy is that it's robust. There's probably enough economic activity that this wouldn't totally fuck us, but the ramifications are surely much stronger than the legislator who threw this together has considered.

I'm in neither state, so either petri dish is informative to me. :)

"The bill would authorize the department to adopt regulations to implement the program" makes it kinda sound a bit like a Brexit vote, in that the bill is really only meant to get everyone to vote to agree to do it, and then the precise details of how you'd actually implement it would be attended to later.

I would say don't presume that. Presume instead that this program will not supplant other programs and it will not be universal.

UBI is a popular idea, but the way you see it isn't the popular version of it, at least in California. I only know this because I had the same misconception.

It's not very clear to me how ""buying out of state" is going to be pretty hard."

I suppose by this you mean that the Californian is going to pay a higher price for out-of-state purchases compared to if they were based outside of California?

Why don't they just pay people to leave so they don't have to build any housing?

They’d rather create an inhospitable environment for people and businesses that will cause a net out migration

CA already has net out migration. Which, IMHO, is a good thing until it is too large.

Still positive population growth, though.

>My first thought: can this possibly be solvent? There are apx. 32 million adults in California. Are there $32 billion spent per month in-state on things that aren't those common categories?

I'd be curious to see a way of doing this that didn't depend on the arbitrary "X dollars per month" stipulation and was instead just "we're putting in this tax, whatever we pull in each month will be evenly split among the citizens". If nothing else, it would allow us to get our feet wet with UBI without people worrying about it not being financially feasible.

And instead of a general VAT, which impacts all trade negatively. Make it a carbon tax, a consumption that actually needs to be more expensive.

I think it's $320 billion spent per month.

($320 billion x 10% vat = $32 billion revenue / 32 million people = $1000 per person per month)

That just over $3.8 trillion per year of California spending that needs to be taxed at 10%.

California's GDP is $2.75 trillion, or $229 billion monthly.

Giving each adult $1k costs $32 billion a month.

Assuming none of GDP is attributable to the exclusions, the program seems mostly possible, at a cursory glance. Not fully funded, but reasonably close to fully funded.

The state currently spends $220 billion a year. This program would be a substantial increase to the state's expenditures, more than doubling them.

Yes, the California economy could absorb an additional $32B in additional taxes if that money is then just re-routed back into consumers' pockets via a UBI.

So the overall tax impact isn't my concern.

My concern is why do this at all if just routes money through the state treasury then back into consumers' pockets?

Unless, the UBI is highly distributive,taking money from the well-to-do and giving it to the poor.

But...if it's highly re-distribute then that will incentivize the rich to leave the state and incentivize the poor to come, over time that's not sustainable.

Having said all this, I still 100% support the idea behind a UBI, I just don't think we're ready to implement on a national level much less a state level.

> Unless, the UBI is highly distributive,taking money from the well-to-do and giving it to the poor.

s/highly distributive,taking money from the well-to-do and giving it to the poor/Forced wealth redistribution

Yes, correct, forced wealth redistribution. Similar to tax dollars going to defense contractors, teachers, farmers, the elderly and medicare. The federal government is in the business of forced wealth distribution.

taxation is the backbone of most if not all governments, no argument there and most rational people would agree, but the foaming in the mouth "blame the wealthy for all the ills facing the world and go for their bone marrow" is what I'm totally against YMMMV. At some point you run out of the billionaires and guess who is next in line to get strip mined in the form of additional taxes? the middle class and finally the poor.

> Then I realized that this includes business purchases.

That's not how VAT works in any country I'm aware of. As a freelancer I don't pay VAT for any expenses. Practically, companies often pay VAT and collect it from their customers for the government. But if they pay more then they collect they get a refund.

I am sometimes glad that Californians are around as a polity. They try the things the rest of us think are loony, but are motivated by strong ethical underpinnings.

Sometimes they fail badly and serve as a warning to the rest of us that 'here be dragons' and other times they unexpectedly succeed and the rest of us can learn that, in certain circumstances, living up to your beliefs with the collective wallet can work out positively, net-net.

> Sometimes they fail badly and serve as a warning to the rest of us that 'here be dragons'

You know, if you'd consider listening, ordinary economists could have also served as that warning in many cases — like, for instance, in the case of AB5 and its impact on freelance journalists... or the impact of not-building-housing on the housing crisis...

Just because a bill is submitted doesn't mean it's not immediately dead on arrival. Some bills are submitted just so a politician can say "I submitted the bill, but it was <other party> that killed it".

There is only one party in CA

Not all Democrats within California Democratic party sit at the exact same point on the political spectrum. Some are more neoliberal & centrist, and others are more socialist Democrat. By submitting this bill, it could signal the expectation that centrist democrats need to move further left.

Given CA is mostly a one-party state, it's more about intraparty influence over the party's platform, than it is about blaming the "other" party.

- you’ve just described one of the fundamental US strengths. And it is not just CA - other states try different policies all the time. And the most successful ones are adapted by others. What we should do better as a country is propagating good ones and killing the bad ones faster

I don't understand your line of thinking. You consider taking money against the will of someone who worked for what they have, in order to give it to others, a "strong ethical underpinning"? That sounds like theft or robbery by proxy, like the reverse of Robin Hood; the King taking from the peasants in order to give it to the court subjects. That does not strike me as ethical at all, unless you are talking about a voluntary program where, e.g., you get to sign up to have, e.g., 2% extra tax take out that is then used to pay for things like UBI.

Is that what you are talking about, a voluntary thing? I am all for a new form of government of voluntary "a la carte" democracy, where, e.g., if you want "free" healthcare, you can sign up to be taxed for it, or if you want "free" education, you can sign up to be taxed for that, or if you want to "help" the homeless (which I do) you can sign up to be taxed in order to "help" that too. By all means, you want to fund the CA UBI, you should demand to sign up for that, maybe through your employer or when you file your tax return every year.

Anything but voluntary payment of taxes for anything outside of the core functions of government is actually the opposite of strong ethical underpinnings; it's objectively immensely immoral and unethical, no different than other forms of theft and slavery.

Can you give an example of a success story from the recent 5 years? I'm not talking about the Harvey Milk days of California.

Maybe it's too early to say it's a success story, but how about that College Promise program giving new students 2 years tuition-free at community colleges? It's a far cry from when the UCs were tuition-free, but it's something.

It’s a stretch to characterize the state politics as having strong ethics, CA is a corrupt place.

This is the Brandeisian concept of "laboratories of democracy" - a facet of federalism.

Won't the money from this ultimately go towards landowners in the form of increased land rents?

We could get around that by pairing UBI with a land value tax but the nightmare that is Prop 13 makes that impossible.

Only to the extent that money from anything goes towards landowners in the form of increased land rents. There are other basic necessities and also some luxuries that the beneficiaries of this progressive redistribution would likely buy with the extra income.

But those other things can increase supply if people start demanding more. The amount of land is fixed.

Homeless people will spend a lot of it on booze and drugs instead.

Maybe then it's a good idea to can both of those.

How about doing something to address the housing crisis first so all of this money doesn't just end up in landlords pockets? Land value tax maybe?

Rather than adding another 10% tax on goods, you mean?

Perhaps something to gradually adjust property taxes such that people with multi-million dollar houses aren’t paying taxes as though it’s a multi- thousand dollar house?

If only there were some kind of proposition that could be phased out over time to accomplish that... perhaps a proposition with an unlucky number. Like 13...

This is the problem with the proposition system - it often encourages residents to enact policies in their personal best interests that screw over a huge number of people down the road.

You know, it would be much more palatable, and much more likely to pass, if instead of phasing out prop 13 entirely, we carved out an exemption for people who only owned one property which was a single-family dwelling. Prop 13 is an important protection for a lot of people on fixed incomes who are also very vulnerable to being displaced from their housing in this high growth state. Kicking seniors out of the homes they’ve spent most of their life in isn’t a very ethical thing to do.

What's the percentage of people using it because they're poor, vs using it because it's cheap?

At what point do the needs of society overrule the housing needs of the individual?

The elderly person will end up a serious multi-millionaire by the end of this in most cases.

You'd be carving out an exemption for ~55% of homes. See [1] and [2]. I don't think that really solves the problem, either, because you're still punishing people who want to move to California and disincentivizing new home construction. It would be better than what we have today, though.

[1] https://www.infoplease.com/us/california/housing-statistics-...

[2] https://journal.firsttuesday.us/californias-rate-of-homeowne...

>You’d be carving out an exception for ~55% of homes.

I don’t think so. Your stats [1] are just for percent of all dwellings, many of those homes are owned by large corporations that then lease them out. If you limited it owning a single home, I think it would be significantly less, more like a 25% exemption by volume(probably less by value) this is backed up by [2] which says home ownership is around 56%. I’m fairly sure more individuals/families than you’d think own more than one home in the state.

They've tried that. It turns out there's a lot of money to be made by restricting housing growth, as lowered supply drives up property values.

Money to be made by people who are already homeowners rather than the government.

I'm surprised the tech industry hasn't lobbied more for pro-growth, or wielded enough influence to relax zoning restrictions. The Bay Area is slowly losing its stronghold to cheaper cities as it becomes unviable as a place for technologists to start families, etc. The state of California will lose its tax base as high-paying jobs move to other cities out-of-state. There's a lot of losers with housing policy left as it is.

It's eating itself. The thing that makes Bay Area property so valuable (many prominent companies co-located) is going to end without more housing.

the problem is the tech industry is run by tech execs with high priced Bay Area property. They have no incentive to be pro growth as long as cities like Austin, Seattle accept their “satellite offices” with open arms.

Oh, yes. Housing is too expensive! Instead of building more housing to compete with it, let's just raise taxes on it! That is unimpeachable and will definitely not result in the housing being more expensive, not at all.

I suggest you read up on LVT.

https://en.wikipedia.org/wiki/Land_value_tax

https://www.economist.com/briefing/2018/08/09/the-time-may-b...

https://www.strongtowns.org/landvaluetax

Note that a land value tax implies a tax on ground rent, not on improvements: http://www.landvaluetax.org/what-is-lvt/

That said, most areas have overly draconian zoning and regulatory costs (driven in no small part by existing homeowners wanting to protect/inflate their own investment); it's a complex issue, and Ricardian rent-seeking is only one factor.

Housing development is famously undertaken when developers can sell to landlords who wish to make a profit on the improvements only; all parties involved would be quite willing to spend millions of dollars and to lose money, if it's a loss on the underlying land.

This UBI excludes people who are: "California residents who are 18 years of age or older and receiving benefits under the Medi-Cal program, the County Medical Services Program, the CalFresh program, the CalWORKs program, or Unemployment Insurance shall not be eligible to receive a universal basic income under the CalUBI Program."

Medi-Cal is state medical for poor families in California, so a lot of people who this would help would be excluded from getting the benefit. This bill seems like just creating another bureaucracy that moves money around without improving things much.

This creates the perverse incentive to forgo health coverage, putting a burden on the healthcare system when an uninsured person has an emergency.

Then, when providers can't collect on the medical debt, they'll sell it to debt collectors and write off the difference at tax time, which the proposed VAT will have to make up for.

My gut tells me a 10% VAT won't be enough. It's excluding medicine and housing and food. What else do people spend a lot of money on? Cars? Will that really bring in enough for tens of billions per month?

services is the key, that means every business will be contributing. allowing clothing and food to escape helps those high up the income ladder immensely. I will be curious if it excuses elective medical treatments and supplements.

consider how empty section 2 is this is just a trial balloon

VAT includes B2B purchases. Presumably that means that 10% of every Facebook/Google/Netflix ad impression ends up going toward funding this program, as well as 10% of the profit of every iPhone. That's a lot of billions.

Hmm. It's also pretty hard to imagine that. You're saying that we ask the big tech companies to pay tens of billions per month in taxes?

18992.1(b) excludes UBI for anyone "receiving benefits under the Medi-Cal program, the County Medical Services Program, the CalFresh program, the CalWORKs program, or Unemployment Insurance" so if you are currently receiving any form of welfare, f you, otherwise here's your free money? Seems like a really strange approach for something that is trying to improve economic security. Does anyone know what the reasoning here is?

The most resilient case for UBI (by that I mean that it blunts more criticism) is that cash transfers are cheaper to administer and arguably more effective than welfare programs. I thought it was odd that this wasn't proposed to entirely replace those programs with a simple to administer system (no verification of income, no verification that you're looking for work, etc) that still "delivers" the benefits already received by people covered by existing programs. This proposal definitely seems framed poorly...

If you look at the individual market for health insurance, premiums, deductibles and co-pays will exceed the total UBI benefit. Medicaid sets group rates that it will pay, so it is more efficient at reducing costs. I can't imagine that using UBI benefits to pay for health insurance on the individual market would be more effective than such a program.

I think the proposal is by far weakest in tying it at all to healthcare. Maybe UBI could be used to improve our health insurance headaches, but I was speaking specifically about things like unemployment benefits, CalFresh, etc. Things that are already just cash transfers but require an (arguably) bloated and too expensive bureaucracy to administer.

Isn't this a core tenet of all UBI proposals - it's an alternative to other aid programs, not a supplement to it. That's the only way it can possibly be economical.

So either they kill off medi-cal, calfresh, and calworks, or they keep them around but disallow any "double-dipping". It seems like they've chosen the politically safer option of not killing the competing aid programs completely.

> Isn't this a core tenet of all UBI proposals - it's an alternative to other aid programs, not a supplement to it.

It's a core tenet to some UBI proposals. I'm aware of proposals that are supplemental to, and not replacements of, other benefits.

I can imagine this incentivizing semi-rural living. Cheap house, low COL, steady income.

Indeed. I regularly burn around $1k/mo when living simply in a cabin on my rural California property, with property taxes under $500/yr.

There's a lot of rural California. The combination of modern tech enabling comfortable and connected off-grid living and UBI opens up pretty much all of it for residence, as long as there's a grocery store accessible.

It'd be a great business opportunity, to provide resources for turn-key homesteading. (It'd probably work best at the level of small communes, rather than individuals.)

Depending on the area, that’s not something to encourage. There are a lot of people living in places where humans really shouldn’t be living due to the fire risk

Low is positioning this as a response to "job losses" associated with automation.

https://a28.asmdc.org/press-releases/20200221-expand-economi...

This makes no sense to me. $12K/yr is a nice supplement to low incomes. But let's say I'm a trucker making $60K/yr and I lose my job. Making 20% of my previous income is definitely nice, but it's not exactly moving the needle that dramatically.

If you're primarily concerned about job losses due to automation, why not radically increase unemployment benefits and make vocational education for adults tuition free (and maybe even offer a cost of living stipend for unemployed adults who retrain)? This approach is a LOT less expensive and far more targeted.

I fully support a UBI as a form of income security, but as a corrective for technological unemployment it just seems like a really blunt, and ultimately not terribly effective instrument.

VAT is a regressive approach to implement something like this.

Allegedly, "food, clothing, medicine, and education" costs are excluded. To what extent those exemptions don't matter in practice (the grocery store pays more for printer ink and passes the cost along to you) is debatable.

Personally, I'd rather start with a revenue-neutral Pigovian tax+dividend [0] on environmental externalities like carbon and disposable plastic, which set a price of unsustainable behaviors while also functioning as a progressive tax for the vast majority of people.

[0] https://en.wikipedia.org/wiki/Pigovian_tax

> Allegedly, "food, clothing, medicine, and education" costs are excluded. To what extent those exemptions don't matter in practice (the grocery store pays more for printer ink and passes the cost along to you) is debatable.

It still places an excessive burden on those the UBI proposal is supposed to benefit. Necessities like utilities, phones, fuel and transportation, etc will become more costly for those who are already struggling to pay for them.

I could get behind a Pigovian tax, along with a land value tax or equity tax.

> Pigovian tax, along with a land value tax or equity tax.

While I'm not opposed to VAT a priori, 100% agreed that those options are vastly superior.

I am first to admit that I don't follow CA legislature that closely. How likely is it to pass? If I remember correctly Ds have control over both chambers?

I take it is really fresh news since I can't find a reference to governor addressing the bill yet.

I feel this would be better if they didn't include the exact amount you would get each month. There are energy policies that impose a tax on your energy bill each month. At the end of the month the total pot collected is distributed evenly to the consumers. Large energy consumers get back less than they paid in tax and frugal energy users get extra money. There is no chance of the bankrupting the government because the total amount paid out is equal to whatever was collected.

My fear is that once this gets rolled into production, every other politicians campaign is going to be “increase the basic income” until we are all basically living off the top .01%

Social competitiveness should keep most people chasing money.

Doesn’t the top .01% already live off the rest of us?

In a highly networked world, Metcalfe's Law [0] trends most services towards winner-take-all. Living off the 0.01% may be our least-worst alternative to neo-feudalism.

One under-discussed aspect of UBI is that it might render minimum wage unnecessary; people could end up working for luxuries rather than subsistence. And of course, there are other non-monetary incentives to work (intrinsic rewards, passion projects, prestige/reputation).

Still, the issue you raise is significant. The thing that bugs me about UBI as proposed, is that there isn't a clear Schelling focus, or organic emergent self-balancing process, for deciding how much it should be. I'm a fan of Yang, but the "$1000/mo" target is ultimately arbitrary, because it's a nice round number, and large enough to have a significant impact in people's lives.

But why not $750 or $1250? Why shouldn't it index to regional cost of living and/or GDP? What metric do we use to decide when/if it should update? I don't think that's a reason not to do it, and I suspect any amount of UBI will result in better outcomes than spending the same money on bloated federal bureaucracies; but it feels very zero-sum / tug-of-war to just pick a nice-sounding number, and then have to fight over raising or lowering it every election cycle.

[0] https://en.wikipedia.org/wiki/Metcalfe%27s_law

Here's the catch:

"(b) California residents who are 18 years of age or older and receiving benefits under the Medi-Cal program, the County Medical Services Program, the CalFresh program, the CalWORKs program, or Unemployment Insurance shall not be eligible to receive a universal basic income under the CalUBI Program."

So I don't really see what the point is. If you're targeting technological unemployment why make it so that people who have unemployment insurance are ineligible?

A 10% VAT added on top of our ~%10% sales tax?

The $1,000 is going to be spent entirely on taxes!

The range and domain of taxes being piled on CA residents has reached an unimaginable scales. I know many people and companies who have left the State for precisely this reason. Atlas Shrugged.

I don't believe sales tax or income tax rates have changed substantially in the 20 years I've lived in CA.

Perhaps 1 percentage point increase in sales tax in that time. The top income tax rate for "normal" folks has been, I believe, 9.3%, although there was an additional 1% tax on incomes over $1M added sometimes in the past few years.

A quick search didn't turn up much in the way of useful historical charts, but it sounds like your post is more politics-based than economics-based. I'd welcome better data, I might well be wrong here.

IIRC the top income tax rate is 13.3%. I think sales tax is 9% but not sure how much that varies between locales.

Ah yes, this might be the change I was thinking of, in 2013:

pre-2013: 9.3% marginal rate from $49k to $500k, then to 10.3% over $500k.

post-2013: additional 1 percentage point at the $250-300k, another 1 percentage 300k-1m, and then a 3rd additional 1 percentage point over $1m.

So the top rate is 13.3% up from 10.3%; with a tiered increase in the 9.3% rate to 10.3 and 11.3% depending on income.

http://www.newhallstudios.com/images-lib/CA-taxes/California...

Oh interesting, didn't realize it had been bumped like that in 2013.

I’m still my phone, hard to type a detailed response to your fair question. Was this a political post on my part? Well, taxes and politics are too intertwined. I don’t think even I can make that distinction.

Taxes in CA have been getting out of hand for a long time. For example, we (LA County) now have a new tax on every square foot of a property that does not allow rain to hit soil. For home owners it’s hundreds of dollars per year. For businesses, thousands to tens of thousands. You pay for your home, driveway, entrance path, patio cover, concrete patio, pool, carport, garage, barn, etc. Home Depot pays for their entire building and parking lot. Just insane.

Let’s take another one: I’ve been paying taxes on every gallon of gasoline for road maintenance for over thirty years. Our roads are an absolute disgrace. They slapped on yet more taxes recently to “fix” them. So, they tax everyone for decades, don’t do their jobs, hand out ridiculous pensions and benefits and then ask for more money.

This is insane. Political? Well, if it isn’t it means over thirty years of absolute incompetence and possibly even criminal behavior on the part of various agencies. And the solution to both is political.

So, yeah, I think you are right, it is.

> The $1,000 is going to be spent entirely on taxes!

That's how UBI work. Only poor people pay less than they receive.

In theory, theory and practice are the same. In practice, they are not.

What people have to understand is that these programs are self-defeating and incredibly destructive in the long term. They establish a base-level cost structure that is inescapable --short of some kind of a revolutionary movement.

Faced with that, businesses and capital get the hell out as soon as they can. They do this because it is FAR easier to move your operations to another State or outsource all you can to China than to fight for decades against an ideology that has effectively pitted the unthinking public (while convincing them they actually think) against the very foundations of how it is we can live as we do: Entrepreneurship, risk taking, commerce and, yes, capitalism, even if imperfect.

Just look at what China has been able to accomplish in just 50 years. They did not do that through central planning and UBI. They are far from perfect, but they got the capitalism part mostly right, and it shows.

Give each resident $1,000 per per month. Paid for by a 10% value added tax.

I can image a possible situation where this ends up taking money from poor people and giving it to rich people. Unlikely, but possible. That wouldn't be good.

Yes, but as a general rule, universal social welfare programs (medicare, social security, etc.) are much more robust and not subject to cost-cutting than means-tested ones (medicaid, welfare, food stamps, etc.)

Seems like a Digital Tax like they are proposing in the EU would be something that could supplement this on top of general VAT. Would like to see more of this flushed out in principle, similar to what Yang was proposing.

Kudos to California reps for attempting to make this happen, this is a good example of using states' rights to address local desires.

Unfortunately coastal ideas are defined a priori to be everyone's best interest, so experiments on them can only return one type of data. When this creates massive unintended perverse incentives, proponents will blame its failure on lack of scale and insist that it be federally imposed on the other states that want nothing to do with it.

Haha, it couldn't possibly be due to the fact that the microcosm is riddled with snags. This is just moving the inequality gap vertically without shrinking it at all.

i wonder how they came to a nice round number of 1000 a month... why not 1100 or 900

i’d love to see the rationale for that

That would be fine with me. It would definitely be a net gain in my case. However, how will they document/track monthly expenditures? Will I have to submit a verified expense report? Will the state collect data on every purchase by every citizen? What about cash?

Native Americans have this exact thing and free medical and free housing. They are now fully dependant on the governent.

While I was a proponent of UBI several months ago, I have found some irreconcilable flaws and would urge everyone to consider Progressive Guaranteed Income, a basic income for people below a certain "climb-out bound."

Reasons: +UBI Robs from the rich to give to the poor... and give back to the rich a little bit. "Billionaires will die without UBI." It's simply not good nor true to the intent of BI to give money to people who already have plenty. "But means testing will cost so much!" Actually means testing if you earn less than C.O.B is not very expensive, and giving UBI to everyone is very very expensive. Something like 6-12x more expensive. (PGI with C.O.B. of 24k would cost $800B annually, UBI would cost 3.6T)

+aside from giving to the rich for no good reason, UBI causes an increase in commodity prices anytime the fund is issued. This is like having a highway turn at 340* and being very incensed when people crash because they are going too fast. There is no way to avoid a spike in commodity prices when giving UBI out and especially when you give it out to everyone, why? because everyone getting more money devalues money (for a brief while). See: Supply of Money (M0, M1, M2...) and the Kuwait attempt at UBI from 2011. They blamed their ministers of commerce for the crashes on the 340* turn, of course.

+ Value Added Tax is not good to fund B.I. of any kind because it's likely that this "luxury tax" will hit a lot of the recipients of the B.I. The Roosevelt Institute did a study on a potential UBI to "grow the economy / gdp by 12% annually" which is cool to consider, but one of the key assumptions is that a funding method like a VAT would not hit the households getting UBI. Plus, their study does not do UBI, just B.I. of different tiers. If the VAT hits the consumers who get the B.I. then it's taking with the left hand what was just given with the right.

+ In short: Don't give back to the rich. Don't make a VAT that taxes the poor inadvertently (B2B vat is the only vat we could support then it seems). UBI would cause commodity spikes during currency issuance and that's unavoidable, but the amount of issuance is proportional to spikes so: Only give B.I. to people below a Climb-Out-Bound. Give them ( C-Earnings )/ 2 to incentivize their working out of poverty.

Example: Climb-out Bound 24,000. You earn 12k, the government gives you 24-12 = 6k, and now you're at 18k. The closer you climb out of poverty, the less you get, but you cannot get more than 12k, and if you work you'll make more than someone not working. Make sense?

Because what people fail to remember is the Federal reserve act of 1913 and its FEDERAL mandate that employment be kept at a running maximum (keep them ponies movin' raw hide). +Progressive Guaranteed Income does not violate the 1913 Federal Reserve Act, but actually works with it.

> Progressive Guaranteed Income

Doesn't progressive income tax make UBI progressive?

But yes we should fund this with a LVT not VAT.

VAT is a highly efficient tax, very hard to game. But it's regressive. If you couple it with an UBI, you can fix the regressivity, and keep all the good parts.

It's a way to make VAT good, not a way to make UBI good.

Right on. What does "regressive" mean in this context?

Poor people pay a higher share of their income than rich people.

Ah, yes that is 100% true and likely to be true of any VAT implementation that hits consumer goods. If a VAT could hit B2B transactions only, it could be possible to "tax the tech companies"

The beauty of a VAT is that there is nobody determining the difference between consumers and business, it's just transactions all the way down, with later ones verifying the earlier ones.

If you start adding rules, it will stop working.

Progressive Income Tax on UBI != Progressive Guaranteed Income.

For one, think about China back in the day when people all gave blood to the same vat, and then some contaminated blood caused some otherwise healthy people to get ungood diseases. Why collect first + distribute when there is cost in collection and cost in distribution? Just because I can move the fridge around my house all day does not mean it will not tire me out for other tasks. Same deal, money dries up in converting between "types" so it's not smart to Collect + Progressively Tax.

Minimize motion, that's how you close the inequality gap, not by adding more oxygen-exposed piping that can be funneled, embezzled, exploited, and ridiculed.

Compare: PGI means only some people get a monthly check for Basic Income, and its based on how much you earned (this year, last year) and you can future-withdraw from what you would get next year, take too much and you owe it. It's even smaller than the social security office and would actually close the inequality gap. If you consider the most naive argument: the absolute amount of paper is minimized, that might be a simpler way to approach how collect+distribute techniques lose a lot of velocity to friction. Trying UBI with Progressive Tax is also not the same because one is multiplication and one is linear addition. $1000 to someone wealthy is not going to move the needle, but for someone at the bottom of the barrel it will move the needle a great deal, maybe even multiple indicators will move for them at that point. Thus, money is not linearly equal, its value depends largely on how much you have already.

Ok I'll bite. Why are these flaws irreconcilable to the point you no longer support UBI?

Let's take your main beef about giving money back to the rich. Why is that a problem? If we're giving everyone, say, $2k/month then it's naturally a scaled % of each person's income/wealth. For a poor person it's a lot. For a 0.1% person it's basically nothing. Additionally, there are very few rich people, so the amount going to rich people vs. everyone else is miniscule. Adding rules and overhead to manage this invites loopholes without actually solving any real problems.

I agree VAT is not the best and a wealth tax would be superior from a not-taxing-poor-people perspective. However, VAT is relatively easy to implement while something like a wealth tax is more difficult.

Mainly because economic velocity of money is higher and the inertia greater for money given to people who have none. If you give a rich person another $12k it will go into a bank or some conceptual entity like a stock or share and will not actually help some human being directly which is the main point of guaranteed income.

The main criticism is that giving everyone money costs a lot more and will also cause an undue spike in commodity prices. The more rich people you give some of the BI to, the higher the spike in commodity prices, and therefore the needing people are hurt again. It's the same reason we do not give billionaires food stamps, because the cost is subsidized by the populous indirectly through tax collection. It's not magic, UBI will not somehow be immune to the way currency has worked for thousands of years, and an increase in supply of money will only hurt those who have little, so that needs to be minimized.

Right, but my point is how much more will it cost? If we're concerned about giving the 1% UBI, then it will, by definition, only cost 1% more. I personally don't think that's a problem. Also, if you want to means test it and only give it to poor people it's by definition no longer UBI, it's just welfare.

Do you have any economic analysis you can point to that show commodity prices will inflate significantly under UBI for more than a short period of time? This is a criticism I see often from opponents of UBI, but I've yet to see an actual economic proof for it. In the real world prices generally tend to converge over time based on margins rather than on what people are willing to pay. It's not clear that UBI would immediately increase cost of production for commodities, so basic competition in markets suggests that prices would largely stay the same. This, of course, doesn't hold true for things like housing and healthcare that exist outside normal economic markets.

It's also worth noting that there's a good chance UBI would act to reduce the hours worked by a significant number of people such that their total income remains the same as before. For example, if your target income is $50k and you're having to work two jobs today to make that much, the result of UBI for you would most likely be that you quit one of your jobs, still make $50k total, and use the extra time to have a better life. I don't put much stock in the idea that everyone who receives UBI will immediately turn around and use it as additional discretionary income rather than changing other behaviors that have knock-on economic effects.

Fun thought experiment: I have 100 apples created in my orchard yearly but this year I decided to create # fake apples from sugar to help "UBI" the village and I wanted to see the effects.

There are 4 people out of 40 below the 3 apples/year mark and I served them in a PGI (progressive guaranteed income way). The inflation was 9 apples this year which means we minted 109 apples and had a 9% spike in commodity prices when we issue the UBI.

At Turnson's orchard, they also have 40 people, 4 below the 3 Apples/year mark, but they decided to give everybody a guaranteed income of 3 apples. They call it "UBI" and claim it will work wonders. Let's see: Turnson creates 120 new apples to cover the UBI on top of the 100 apples his orchard actually produces. The inflation is 2.4x so people who had 200 apples got another 3 apples, and ended up with the equivalent value of 84.5 apples. People who had 0 apples also got 3 and ended up with a grand equivalent buying power during commodity spikes of 1.25 apples.

At Turnson's orchard with UBI, the poorest of the poor ended up with 1.25 apples, and everybody else's currency devalued substantially.

At our orchard, with PGI, we were able to give apples to the poorest and neediest without destroying our currency's value or buying power. Inflation 9% during issuance of currency (See Kuwait in 2011 doing their UBI thing - tis one googles deep.) At Turnson's in this example, inflation is 2.4x during currency issuance and is supposed to even-out to some midpoint between 1.0 and 2.4x. 1.09 to 1.0 has the midline of 1.045 so there is more longterm inflation no matter what. How much depends on how important you think it is to devalue currency by giving some to everyone at the same time.

(Additionally, without an incentive to work, stay employed, or provide value to society, why would people not just accept their cheques and bail? Nobody in blind support of UBI seems to think there are freeloaders or slackers in the world)

Being condescending doesn't help you win arguments, it just makes you look like an asshole. Rather than actually answer my question with data or a study you instead decided to use a high-school level "thought experiment" to try and explain economics. Not cool. I understand economics quite well. I know how inflation works and how money supplies work. I didn't ask for explanations of those things.

At this point, I seriously doubt you've even tried to see what the actual impacts of UBI would be before you decided it was a bad thing and decided to favor welfare. If you favor welfare because you think people should have to work, that's fine and it's an opinion I can respect. But please don't try and use garbage arguments to convince people your opinion is right. If you care to read some actual data, take a look at [1], in which a UBI equivalent in Mexico caused less than 1% inflation. As for your Kuwait example, I don't think you actually followed the long-term impact, in which inflation for non-food items was a non-issue after the initial spike [2] and continued to be a non-issue in the following year [3]. From the link:

"With a great deal of public spending coming on-stream, and the effects of the substantial “Amiri” grant of KD1000 ($3605) awarded to every Kuwaiti, inflationary pressure is a concern. However, inflation dropped to an 11-month low of 4.6% in July, the last month for which figures were available, and the rate is expected to average 4.7% for full-year 2011, according to international press reports using figures from Kuwait’s Central Statistics Office.

Food price inflation, at 9.7%, was worryingly high, but is likely to abate over the remainder of the year as international prices fall. Increases in housing costs – the biggest single component of Kuwait’s consumer price index (CPI) – are also cooling off, as much-needed new supply becomes available."

[1] https://www.povertyactionlab.org/sites/default/files/publica...

[2] https://oxfordbusinessgroup.com/news/kuwait-keeping

[3] http://www.marcopolis.net/economy-of-kuwait-in-2012-growth-d...

Thought experiments are useful for people not versed in Economics -- Einstein's Relativity writings are pretty much just thought experiments.

Kuwait dished out the grant for only a year, right? That's different than adding new money to the supply every year.

Thanks for providing data, I'm always interested in taking a look. Everything I have read so far further supports my claims in my original post.

For one, the example in Mexico only gives the fund to a small portion of the population, which is consistent with PGI, and inconsistent with UBI. "PGI is welfare" is an oversimplification in my opinion, that's like saying this beet and poppyseed salad is food, yes it's true, but the nuance and most of the useful information is lost.

So again, the number of people being given the B.I. and the cyclicality of the grant have not been inspected thoroughly, but if problems emerge in isolation like the ones described, why would they not be exacerbated at scale. Most people think some sort of multiplier effect will cause advances across all disciplines, but putting fuel in every car whether empty or full is not the most efficient way to get the whole fleet going.

Do I think people should be working rather than getting BI? Not exactly -- my personal view is that automation will likely wipeout many jobs and humans will have to be more and more creative for employment. Do I think rich people who have factories and make money off of robot labor should also get UBI? No. Giving to the haves creates all these inflationary, distributionary issues effectively shooting UBI in its foot. At one point it was unclear, now it is obvious. I think that's how science works.

Kuwait is small and a 10% spike in food prices is probably a big deal, don't you agree? UBI for one year or a short term or a tiny population is not actual cyclically persistent-full population UBI. The leap between "I can whittle a chess piece out of wood" and "let's play all the grandmasters blindfolded" is quite a leap.

How often is your mind changed by a study?

That has the disadvantage of imposing an effective 50% marginal tax on people below the cutoff.

Explain your reasoning. No GPI is given to people above the cutoff. Thus minimizing cost while closing the inequality gap.

Earn 0: get 12k GPI Earn 10k: get 4k GPI Earn 20k: get 2k GPI Earn 30k: get 0 GPI

(for the example of a 24k cut-off bound)

I mean that if your paycheck is $10k you'll bring home $15k with this subsidy. But if you get a new job and double your salary to $20k you won't get a subsidy so you're entire income will be $20k. You got a nominal 10k raise but only take home 5k more, hence an effective 50% tax rate through this. If there's an actual income tax you have to pay that gets added to this and if there exist other benefits for poor people like Medicare then you might conceivably be worse off with the $20k paycheck than with the $10k paycheck.

Mathematically, a $10k Progressive Guaranteed Income like you describe plus a 50% tax on income over $20k is exactly the same as a $10k UBI plus a 50% flat tax.

If your paycheck is $10k you will get $(24k-10k)/2 = $7k. If you "double your salary to $20k" the difference is now $(24k-20k)/2 = $2k. "So you get a $10k raise and take home only $5k more" -- yes that's exactly right. You are suggesting this is a negative externality but I disagree, the subsidy is not a static guarantee, it is a guarantee of help. The whole goal is to close the inequality gap. Therefore, one will get less Guaranteed Income the closer one is to Climb-Out-Bound. That's the whole goal. If this is misguided compared to giving everyone including all the lazy asses and the hardworkers a flat equal rate, let me know.

The equation is pretty straightforward and there is a pretty graph here. https://pbs.twimg.com/media/EQTCmq0UwAAM7Ku?format=png

Choose a Climb-Out Bound and adjust the amounts accordingly.

Your concern about UBI giving money to the very rich doesn't make sense. They'll be given $12k, but they're paying, let's say, $500k in taxes. And if taxes need to be raised to cover this, then they'll be paying much more than $12k more to do it. Meanwhile, a poor person would be given $12k, and they're paying $0 in taxes.

Same reason it's nonsense to complain about including rich people in free healthcare, college, etc.

When you try to means test things, you end up needing much more administrative machinery, and you end up with weird discontinuities where it can be better not to work so you don't get cutoff from benefits and end up worse off overall.

You are sincerely suggesting that means testing for 42% of the population is more costly than tracking if 100% of citizens got their UBI yet. The machinery costs the same per person whether it is dispatching a 1000 dollar check or 12000 dollar check, so fewer participants is better in optimization on that accord.

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