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Comment by dgoldstein0 | Hacker News Reader

> The US has 300M+ people, even $1000 a month to each person is utterly unrealistic in terms of our GDP.

Except that this isn't how UBI should be implemented. An easy way to do it is to change Federal income taxes. Make $0/year? your tax bill is -$12000. Make $10000? perhaps it's now -$10000. And at some point - probably $40000 or $50000, it's 0, and then after that you pay gradually increasing taxes, the way it currently works.

so in other words, you don't have to give this cash to all 300M people. T(Though you do need to account for the fact that having this option available will change people's life choices, if we're going to estimate the funding needed)

Probably we'd also need to raise taxes somewhere to fund it - increasing marginal tax rates for higher tax brackets, possibly coupled with some new tax brackets at the upper end, seems like a possible answer.

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It’s not universal unless everyone gets the same amount.

They do get given the same amount, they just get different amounts taken back depending on how much they earned.

That’s just a tax. Wouldn’t progressive taxation already take care of that? Do we need another tax just to make UBI work?

No, UBI plus current progressive taxes is basically identical to the negative income tax idea. You might want to adjust levels or whatever but that's not strictly necessary.

Some people, mostly people who don't like the idea of UBI seem to think you can't tax it back again and everyone needs to always get X extra every year on top of what they would have before. I'm not sure if they dislike UBI because they think that, or think that because they dislike UBI.

You just described a "negative income tax", which isn't the same thing as UBI.

> You just described a “negative income tax”, which isn’t the same thing as UBI.

A negative income tax is exactly the same thing as a UBI in a system that also has progressive income taxes.

See the post above about the niece who couldn't take a better paying job because then she wouldn't qualify for food stamps...

The niece couldn't take the better paying job due to a "cliff" - the abrupt loss of food stamps due to a tiny increase in income.

If it was gradual withdrawal rather than a cliff, she could afford to take the job.

The UK's Universal Credit is supposed to be gradual and therefore work out to everyone's benefit. But in practice it has few of the good qualities of either UBI or negative taxation. Universal Credit has plenty of nasty cliffs, complicated rules and cruel penalties that push unlucky people deeply into poverty, and it also has an extremely heavy administration cost - every employer must file everyone's individual employment taxes every few weeks online and face heavy fines for getting anything wrong or being a day late.

That's the other argument for UBI - get rid of the bureaucracy approving benefits.

The bureaucracy exists to limit welfare spending though. If you have a fixed budget it is more efficient to only give it to those who truly need it even if it is self defeating over the long term. That is simply how politics works.

> he bureaucracy exists to limit welfare spending though. If you have a fixed budget it is more efficient to only give it to those who truly need it even if it is self defeating over the long term.

If it is self-defeating, it is not more efficient. And we already have a bureaucracy whose functions include verifying income claims and adjusting net payments based on them in the income tax system, we don’t need a bunch of different bureaucracies doing that redundantly with slightly varied definitions and rules and paperwork that serve little practical purpose besides justifying additional bureaucracies and enforcing self-defeating funding cliffs.

You will still need the bureaucracy there to be monitoring for abuse. I'd argue it'd be larger since the scale is increased

With UBI, there is no means testing. So the main “abuse” possible is income tax evasion.

It is possible that there would be fraud around pretending to be a person when that person doesn’t exist, or continuing to collect benefits for someone who is dead.

But “are you a live person” is much harder to fake than “did you make sure you didn’t do these 6 illegible things that would make you ineligible”.

Huge income tax evasion and money laundering. On a massive scale like we don't have today. It would be harder to detect

If you're doing the negative income tax, yeah. If you do plain UBI, no, because it's an unconditional payment.

We're not talking about hiding money obtained via UBI

Then how will UBI encourage income tax evasion? You get it unconditionally so it won’t change anything…

Again, we're not talking about UBI money, we're talking about money earned after UBI. Without UBI, people who work in cash businesses have to report a certain amount of income to justify their living expenses. With UBI, there is nothing to justify, and it makes it much easier to operate your own cash-only side hustles tax-free as long as you live in a place you can afford solely using UBI.

> You will still need the bureaucracy there to be monitoring for abuse

When you eliminate means-testing in favor of income taxes and eliminste the myriad different definitions of income and assets for qualification for different programs and the opportunity it creates (and the incentive funding cliffs create) for specialized benefit fraud, there is no special “UBI abuse” to monitor for. You have to monitor for tax fraud, but we’ve got a bureaucracy doing that at society-wide scale anyway.

That's a cliff in the benefits and tax system. If you make a tiny bit more, you shouldn't get worse off.

UBI could be a solution but has its own drawbacks. Progressive taxation without cliffs is another possible solution.

That is, you pay higher taxes but only from the amount above some threshold. That way, only the derivative of the tax rate has cliffs.

That’s how progressive tax systems currently work (and always have worked).

> UBI could be a solution but has its own drawbacks. Progressive taxation without cliffs is another possible solution.

You mean with no public support? Because UBI is social support without cliffs, and typically paired with progressive taxation. So if you mean progressive taxation with social support and no cliffs, that's not an alternative to UBI so much as a long-winded description of UBI.

> That is, you pay higher taxes but only from the amount above some threshold. That way, only the derivative of the tax rate has cliffs.

That's (ignoring things like the injection of means-tested welfare into the tax system via EITC) progressive taxation and tax bracket marginal rates work normally. UBI is just adding public benefits in without introducing cliffs.

Functionally they're equivalent. In a UBI/negative-income-tax schenariom things like food stamps also shouldn't be cut off at a simple threshold, but instead factored in at your marginal rate. If your marginal rate is always your marginal rate, then it's always beneficial to take a higher-paying job.

The problem with means testing is that it effectively raises the marginal rate, often to astronomical percentages. For example, the withdrawal of a $1000 benefit because of an additional $1 that pushes you over a means testing threshold means your marginal tax rate on that dollar is 100,000%. Of course the rational thing to do is to not earn that dollar, or indeed any of the next $1250 that it would take to get you back to where you started (assuming a normal marginal rate of 20%).

In a UBI scenario food stamps shouldn't exist, i think? The idea is to replace most benefits with just the basic income and save money not tracking those benefits.

That's the idea. In practice you need to be careful as a failure mode of introducing UBI is it being used as an excuse to cut benefits without an adequate replacement.

For example, a reasonable stepping stone would be for people to get their food stamps by default, but then be able to "pay" some of the taxes on any income they earn using those food stamps. This means food stamps are being reduced gradually and at the marginal tax rate, so it's fairer than just falling off a cliff when you hit a threshold.

> In a UBI/negative-income-tax schenariom things like food stamps also shouldn't be cut off at a simple threshold, but instead factored in at your marginal rate.

In a mature UBI system [0], food stamps as use-restricted means-tested welfare wouldn't exist at all. (Food stamps in their original purpose as a system of agricultural subsidies might.) Their function would be rolled into the single benefit payment.

[0] transitional proposals often keep other means-tested programs during the transition, scaled back as UBI scales up.

You can't buy food now with a letter that says you're predicted to owe less tax next year.

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