New Bill Would Give Nearly Every Californian $1,000/Month
newsweek.com
newsweek.com
The problem with any US government plan is the lack of sound policies.
After you start with policy goals, then you can look at UBI, high-density housing, service industry staffing in the Bay Area, infrastructure maintenance, etc. together.
Having said that, the most visible problems with UBI that should be addressed (in policy. see above.) are:
1) Would it further inflate rental prices?
2) Is voting for free money the fatal flaw in democracy that this unattributed quote says, "When the people find that they can vote themselves money, that will herald the end of the republic."
Modern Greece is an economic cripple from public sector benefits for example, as are all US cities. What happens when you expand that to the population at large?
3) In this proposal, what would be the effect on the industries taxed? Would people shop out of state? Would they avoid online merchants? etc.
The political issue is that any party that promotes UBI will be accused of pandering to their base by the other party. And it's an effective argument in the absence of, again, policy.
I would go so far as to say this. The most patriotic thing that Bay Area residents could do is to finance Yang or Sanders to create a PAC to design and promote logical government fiscal policy for 10-20 years, then become the third political party for elections.
*rural homelessness exists in the US too, I don't think it's as prevalent though
What do you mean by this statement in regards to US cities? the Cities in the US are generally our economic growth centers, and represent a substantial amount of economic vitality.
Comparing them to modern Greece is really bizarre.
VAT is such a PITA (I'm originally European, so I know a thing or two about it). Tons of additional paperwork, plenty of room for fraud and cheating (like https://en.wikipedia.org/wiki/Missing_trader_fraud ).
Just be honest about it, increase existing property taxes, which people already pay anyway and are naturally progressive and avoid creating complications.
Also, I would start with lower amounts, and see what actually happens.
And ... Why wouldn't every capable homeless person from all over US move to California if they would be paid to do it (and I can't imagine more forgiving weather for homelessness, anyway)?
As someone from a non-CA city overrun with homeless, what's the problem here?
I live in Tel Aviv, where property tax is paid by occupants, not by owners. On the upside, this allows the government to give tax breaks to protected classes (e.g. the elderly, so that they're not kicked out of the apartment they've lived in and owned for decades just because property tax became unaffordable) directly. On the other hand, the carrying cost for owning real estate in a highly desirable market that you rent out is practically zero, so most apartments are owned by people who inherited them and are uninterested in selling, because a) urban renewal plans will eventually give owners a big financial windfall when their older buildings are chosen to be replaced with subsidized new construction, and the replacement apartment they will receive in the future is worth far more, b) people have children, and there is a huge value to being able to provide your children with housing in a desirable market when they get older, so owners rent their properties out in the interim.
Ironically, property taxes paid by renters creates a landed class.
That's just the law of supply and demand. Renters pay the market rate. If an owner can't afford to rent at that market rate, then as you noted, they go out of the renting business. You'll find if you run the numbers on properties in SF, landlords are banking on property appreciation. The market rents don't pay the ownership costs, usually by a huge margin.
You just said "If the landlords can pass on 100% of the property tax, then the supply is way out of sync with the demand". For growing areas, why would any investor develop any land to increase housing supply to rent out if the property tax alone would cause them to lose money based on the money they could make renting out places?
Edit: I see where you might be confused - I'm talking about passing on 100% of the property tax. In an ideal scenario, landlords would have to cut into their profits to pay for the property tax that tenants wouldn't. But in California, we obviously don't want a market where buyers have lots of options, so apparently everyone is ok with landlords passing along 100% of the property tax cost to the tenants.
Welcome to California.
The coming decade is truly going to be a shitshow. Redistribution pressions will grow as wealth inequality increases, and pension crisis is getting closer and closer.
They wouldn't pay California VAT because they need not buy anything there.
The people most affected by a California VAT would be California residents who can't afford to shop elsewhere... ie. the poor.
Fortunately some necessities like food seem to be excluded from the VAT (at least in this iteration of the bill), but I'm still concerned that the poor will be unduly burdened by it, and not even get to benefit because they're probably already on Medi-Cal (California's Medicaid program) so they won't be eligible for the UBI unless they give up Medi-Cal.
Yes, lots of things. But taxes aren't one of them.
20% of adults are on Medicaid though, so if they're excluded it's $288 billion / year.
California's total current budget is around $210 billion. So taxes would more than double.
On average each adult's taxes would go up by the amount of the UBI. The specifics of who would bear more of a tax burden would depend on how it's taxed. Under this plan, taxing consumption and excluding Medicaid recipients would mean the tax burden would fall disproportionately on low income households.
This is the real fear that progressives have about UBI... that it's a replacement for government services. Converting government healthcare into an equivalent check will effectively take away healthcare from millions of people.
If so, sort of logical. Whether BI is right or logical is probably an another discussion.
(This was a quick calculation based on info from the internet, so I could be mistaken.)
BUT if you can buy medical insurance for less than $1000/month, then can you give up the Medicaid benefit and have the $1000 instead? If so, as long as medical insurance doesn't cost more than $985/month, you're better off with the higher tax and the $1000, than with the Medicaid benefit.
Edit: "FairTax plan", not a "fair tax plan", apparently people on HN are less immediately familiar with the term than I expected.
The good thing with a VAT is that it's very simple and hard to evade. Income taxes that are progressive on paper can become anything but with enough accountants massaging your accounts.
But with a VAT, everyone just pays it. And those accountants can do productive work that benefits society.
I don’t know if the California bill is actually based on the FairTax proposal, but it does have both components, even if it uses different names.
Hence my bafflement at it being pushed by a seemingly liberal-for-california state legislator.
You could do it through a tax credit however.
http://leginfo.legislature.ca.gov/faces/billCompareClient.xh...
That might be an argument if it were a UBI, but this is not a UBI, and it is just going to hit the poor in general the hardest.
> Rents on the low end are going to rise by $1000/month
Even if they would with an actual UBI (which is a whole different debate), they won't with this plan [0], which (bizarrely, as its author calls it a UBI) leaves out essentially the entirety of the poor plus the transitionally unemployed (that is, it leaves out anyone receiving benefits under Medi-Cal, CalWORKS, CalFresh, or, weirdly, Unemployment Insurance.)
Medi-Cal alone covers roughly the poorest 1/4 of Californians (10.8 million of 39.6 million in 2018.)
Unemployment Insurance is the weirdest exclusion, because it makes the bite of transitional unemployment deeper by $1,000/mo. Why anyone thinks that's even a remotely sane idea is beyond me. Funded with a VAT (which has essentially the same regressive characteristics as sales tax) this is basically the opposite of a UBI, its an upward redistribution from the poor and unemployed to the comfortable and employed.
The problem is not that it will drive low-end housing prices up, its that both the VAT and the not-all-universal Basic Income pieces will drive up prices on goods across the board (but not, except weakly indirectly, low-income housing.)
http://leginfo.legislature.ca.gov/faces/billTextClient.xhtml...
Only if it’s still in California
If loving to LCOL is beneficial why can’t they do that now?
Folks that use supply and demand principles to argue against UBI don't seem to understand themselves.
If everyone is given $1,000/mo, it does not necessarily follow that living costs will also increase by $1000/mo. For that to happen, the additional $1000/mo would need to actually increase everyone's demand for services, which is generally not the case. Having more money generally does not make you want something more, it just makes it easier to afford it. If more people can afford something and start purchasing it in greater numbers, then yes, the price will increase, but they are also getting something the thing of value in return.
Put another way, giving everyone $1000 will likely increase prices, but the increased prices will be less than $1000.
Generally, a company will charge the highest price they can get away with, irrespective of the cost it took to produce the good or service.
Prices only approach the cost of production when there is strong competition among industry players. Basic tactics like branding, consolidation, and lack of transparency in an industry help subvert competition.
That's not what those "everyday" people think. They think the company can increase the prices beyond the breaking point arbitrarily and always get away with it. That same logic is then used to prevent new competitors from entering because they charge above market rate during their first few years. For some reason they never think about what happens once the suppliers are begging for customers because there is too much competition.
This reminds me of Berlin where rent control is being proposed. For reference the average rent prices there are 7€/m² and rent control will limit it to 5€ per m² for buildings that are older than 50 years (not an exact number).
How do you expect to ever profitably build something for 5€/m²? It's impossible and therefore won't happen. New buildings will probably start at 10-12€/m² and go down once they are 20 years old.
The state did institute rent control.
Bet you could. And have enough left over for food.
I make about this much and feel this type of tax may actually help me spend better.
If they added additional exemptions for local and US goods this could be really neat.
FWIW, I had an interesting discussion where UBI is not a socialist construct but actually more born out of capitalism to keep the masses happy.
This is why many of the earliest supporters we’re libertarians like Friedman and Murray. Though they usually called it negative income tax, the output curves can be made the same.
Presumably the proof of residency and other eligibility requirements will take care of that, too the extent they are excluded (though, its worth noting, that undocumented immigrants as such are not excluded, though over 1/4 of California's residents, mainly the poor, are, and that will cover much of the undocumented population.)
E.g., Poor undocumented immigrants are eligible for (limited-scope) Medi-Cal, but as Medi-Cal beneficiaries would then be ineligible for this benefit.
I don't think that, I am undecided.
I mean, guessing that you're living in the USA, you right now are benefiting massively from a system of migrant labor [0] involving the flow of people across the USA-Mexico borders. (And also the USA-Canada border, although somehow I imagine that that bothers you less.)
It seems short-sighted to consider laborers as unfit for the job market just because they have a different country of origin, and it is almost common sense that one should pay taxes where one makes their income and pays their rent and groceries; it is at least economic sense and part of how most countries design their tax systems.
[0] https://en.wikipedia.org/wiki/Migrant_worker#United_States
I care and a lot of other americans do care.
But, of course, this bill isn't funded through tax increases on businesses or the wealthy. Its funded through a tax increase on non-essential goods and services.
Insane.
That and how much profit from other areas ends up in California vs profit from California ending up in other areas etc.
The cost of housing is insane. Prop 13 protects those that were able to buy a home when prices were cheaper, but it screws over the future generations.
Is this fair?
How about the state pays the remainder of housing costs, after a basic commitment amount is met?
Say, a person buys a house. He should be responsible for the first 20 years of payments, which is based on a percentage of his net earnings, like 35% to 40%.
If he stays there for 20 years, and completes the mortgage program, then the house is his. The government will pay the difference, and close out the loan. He will need to continue to pay the property tax to live there, but that’s now like a cheap rent.
The unit must be his primary residence. He cannot rent it out for 20 years. He can transfer it to an immediate offspring or spouse, like a child or wife, upon his death.
I chose 20 years, because this is a long enough time to make a commitment to a location, without being forced to work for 30 years to pay off the loan. And a 35-40% of net, so that he isn’t house poor.
So he can start the program when he is 25 years old, and by the time he is 45 years old, then the house/apartment/condo is his.
This now would tie the price of housing to the price of median pay, instead of some arbitrary market rate.
The short sighted thing that politicians fail to see with the housing crisis, is that it destroys the future fabric of American society. People get priced out of housing markets, and cannot raise a family, because everything is just too expensive.
We need a different way to look at things. The current method is flawed, and has outlived its usefulness.
What if they start a family and need a bigger place?
What if they get a different job and need to move?