Comment by 3pt14159 | Hacker News Reader

Comment by 3pt14159 | Hacker News Reader

Parent Full thread

The hard part is that UBI is extremely, extremely expensive. The variant I'm in favour of goes something like:

1. $12k / year to everyone

2. 50% flat tax (on non-UBI income)

3. Small federal land value tax on non-wilderness properties

4. Tax on non-resident property owners

5. UBI for citizens only (to mitigate people traveling here just to not work)

But try passing that ^ in any major democracy. You can't. The reason is that the winners of the current system (most seniors, top half of wage earners, the international elite) are the ones that either vote, or set political agendas. They like being able to hire [personal helpers, maids, warehouse workers] for $12 an hour.

For a true UBI we need to raise taxes and prices a lot and that will have downsides (at least in the short term) for probably 50 to 60% of the population. We will lose workers. Real output will fall. Taxes will have to go up and we will lose some people to other job markets.

So instead people nibble around the policy edges.

If the government takes half of what I make it would probably be time for a revolution. I make a good living, but having half of what I make support 3 other people that are not my family and just giving them cash. Like being on the afternoon of Wednesday and realizing that all the work I did in the week so far was taken away to give to someone else without my input is insane. And I give over 10 percent of what I earn to charity, but I decide what causes to support and who to help.

The nibbling around the policy is because they know what you proposed would mean they get tared and feathered so they just use it as an excuse to buy votes.

Hello from Scandinavia. No Revolutions in sight, government takes 70% (taking both tax and vat into account)

you can not take both income tax and VAT into account, because VAT is payed by the retailer really. That would count VAT twice.

The retailer gets to claim any VAT they pay back from the government. Individuals do pay 60-70% tax (if you include payroll), but it's better to look at the overall taxation rate which is ~50% of GDP.

I think most of EU countries your total tax burden is already 50% of what employer pays. Mostly we don't see that part and only talk about what employer has to pay that is less than 50%

But even some countries at certain brackets have the only income tax part over 50%.

So flat 50% of total tax burden would not be unheard of.

The government already takes about third-ish if you’re a wage worker in the US. Is there something special about 50% in return for, say, UBI (for you a 12k tax rebate), and guaranteed heath insurance that is unpalatable?

Like I get the pessimism of taxes just disappearing to the ether but this whole idea is predicated about everyone getting something of tangible value that equalizes around the median income.

Like I also make good money but that makes me care less rather than more about my tax burden. Like I’m comfortable enough that I don’t really care than I’m putting in more than I get out.

> everyone getting something of tangible value

Paying $40k in taxes in exchange for a UBI of $35k is not "getting something of tangible value"—it's losing $5k. Those with low income (and thus low taxes) get something from UBI. Those with higher income do not. At the margin one might consider the difference to be something like a premium for unemployment insurance, but that only goes so far.

> Like I also make good money but that makes me care less rather than more about my tax burden.

If you really don't care about how much money you take home, why don't you switch to a lower-paying (but less stressful/demanding) job? Those taxes you claim you don't really care about represent unnecessary work put in relative to what you have to show for it at the end of the day.

Right, I’m not disagreeing with you, that’s what I meant by “equalizes at median income.” I just mean that economics are felt directly unlike “I pay payroll taxes for… stuff… probably?”

> If you really don't care about how much money you take home, why don't you switch to a lower-paying (but less stressful/demanding) job?

Because I have a high-paying not very demanding low stress job. So on the theory that I could be making more in exchange for more stress I guess I already took your advice.

> Those taxes you claim you don't really care about represent unnecessary work

But that’s true of all taxes. I still make more money when I make more money. At that point we’re just arguing over the number. And I would kinda rather everyone have UBI and healthcare when it what it costs me is “a non-quality of life affecting amount” which is why progressive taxes work.

> Because I have a high-paying not very demanding low stress job.

In that case I suppose congratulations are in order for winning the lottery.

> I still make more money when I make more money. At that point we’re just arguing over the number.

The number is important because at some point it's no longer worth the extra effort. People can almost always get more money by working more or putting in more effort, and yet it's rare for anyone to dedicate their entire life exclusively to their work. Reducing the reward from work shifts that balance point, even if you're not technically "working for free".

> And I would kinda rather everyone have UBI and healthcare when it what it costs me is “a non-quality of life affecting amount” which is why progressive taxes work.

Since we're talking about taxes here it's less about what you're willing to pay and more about what you're willing to make everyone else pay. If it were just about the cost to you there would be no need to make it compulsory—the government will be happy to accept your donation.

At what annual income level? I'm not a tax expert, but that sounds like a couple times more than minimum wage.

Whereas 50% at all income levels is going to be very frustrating to someone earning $35k/year in addition to their UBI.

You have enough to support 6 people, but, because you donate enough to support 0.6 to a beneficiary of your choice, a revolution would be required if you only had enough to support 3? Where do you want the money for UBI come from, or do you just not want it full stop?

>have enough to support 6 people

Because he chooses to trade his time and effort for it.

Exactly. I can live on a pretty small amount of money where I am, and I'd be pretty uninspired about working any extra if 1) my basic living expenses were paid and 2) my extra income was taxed at 50%.

And if a lot of people felt like I did, society wouldn't be producing enough for me to actually live on the UBI, ...

Serious answer: I think a lot of people envision UBI coming directly from government printing ala stimulus checks - not taxation.

The fact that inflation benefits the haves more than the have nots is… ignored.

The problem with a high flat tax on the first dollar earned over UBI is that it creates stronger disincentives to work.

As to point 5, I would exclude citizens not living full time in the country and possibly include non-citizens who have qualified for permanent residency and have lived full time in the country for N years.

I agree with your latter point. Fully out of country[0] citizens and maybe permanent residents after a certain amount of time.

But not the high flat tax thing. For the income portion of my compensation, I pay around 50% and it's not bad. With a UBI and a flat tax we don't have to make exceptions for married couples or non-married couples. The marginal dollar is always taxed the same. And if you're making, say, $60k a year that would be $42k after the UBI so the effective tax rate is 30% which seems reasonable.

[0] There have been years where I was out of country for long enough to not have to pay taxes to Canada if I had been in one spot, but I'd moved around enough not to qualify to pay anywhere else so I was still paying taxes to Canada despite not being here for a while. Common enough digital nomad thing.

UBI can work if and only if you can curb monopoly private taxes (real estate rents, fees, tips). Otherwise any money handed out freely to people end up immediately eaten up by monopoly private taxes for having no competition to level prices down.

Case in point: give out $1000 dollars in UBI, expect rents increase by about that amount within the next 2 years as current leases expire.

To implement UBI you must first get of private taxes one by one, then reduce the public income and consumption taxes and then with much of the costs lifted up off the middle class you realize you have a society that is freed up of (feu)dal taxes again and doesn't need any welfare nor UBI anymore.

>Case in point: give out $1000 dollars in UBI, expect rents increase by about that amount within the next 2 years as current leases expire.

I see no evidence that this would be the case

If you raise taxes and prices a lot, UBI will become basically useless, because it's effects will be eaten up by inflation.

Hell, why wouldn't I increase rent to the UBI amount?

Of course that is what would happen. Of course prices are relative.

The idea of UBI without a massive increase in apartment/housing supply is frankly moronic. Even then though, it will all be captured. Being poor is still relative exactly like prices.

Ultimately, it will all pool upwards to the equity markets. All UBI will really end up being is a giant stimulus to the ultra rich.

I predict that a UBI system will evolve from direct cash payments to a voucher system in order to try and escape the inflation -> higher UBI -> higher taxes -> higher inflation spiral. At some point, a politician will realize that there just isn’t enough money going around and the “solution” will be to dole out resources directly.

Why constantly adjust the amount of money needed to buy essential items like say, toilet paper or menstrual products, when you can just print a voucher for said items?

Because unless the state starts producing menstrual products and toilet paper himself, including the supply chain to create and distributing that, there will be a price hike.

Me as a toilet paper manufacturer would happily raise my prices and lower the quality when I know the state HAS to buy a certain number of sales units from me.

The problem with UBI is a logical flaw. Only the people that do work actually end up paying taxes.

You can use UBI as a democratic allocation mechanism for landownership or resource rights where the UBI is the carrot and the taxes are the stick.

If UBI doesn't increase the money supply (aka it is paid for with taxing), it shouldn't increase inflation.

Wrong, money velocity and demand (both probably go up under this scheme) can increase inflation. So can shortages caused by a big demand spike.

Demand for food and housing doesn't go up with UBI, there are still the same number of people.

More desirable food (organic, grass fed, whatever) and more desirable housing will both have increased demand, especially short term. Also even if we hold food and housing constant, more money frees up what people formerly spent on food and housing to spend on other stuff so demand increases there.

America has very high marginal propensity to consume so most of this will be spent. An additional tax that redistributes primarily will also be spent much more because poor and middle class have higher MPC than rich.

And the opposite effect happens too: UBI makes it easier to move to cheaper areas and to take the time to make food from scratch rather than relying on quick take out.

Any changes will be very marginal. Fundamental demand isn't changing, it's just a redistribution of demand. Some prices will go up, some will go down, but neither will move much.

Unless of course UBI isn't fully costed. Then the money supply increases and we will likely see inflation.

Strictly speaking this isn't the case. If you define inflation with a set CPI basket, and your redistribution moves money to people whose purchasing is more correlated with that basket than the people you're taking the money from, inflation will increase.

Implementing social security in the first place took massive social upheaval. UBI as a thought experiment is never going to happen, it would take a massive political movement or economic apocalypse.

I think it's pretty likely that some country will actually try it. Most likely one of the oil-rich welfare states in the nordics. I doubt it lasts very long though especially after they start seeing an explosion of immigration. From my experience, the citizens of those north European countries don't like people that don't look like them.

As a general rule, people in aggregate don't like people that don't look like them. It's certainly not specific to northern Europe.

If they see an explosion of immigration, it’s because of the illegal immigrant labor market created by the massive spike in wages and massive decline in available labor.

The governments can’t keep people out but also can’t make the new people citizens else it would instantly bankrupt UBI.

This seems like the Achilles heel of UBI.

There are two option either immigrants are allowed to integrate with society at which point UBI should be close to cost neutral, or they aren’t allowed to integrate with society at which point immigrants don’t qualify for UBI.

I don't see anything about being "allowed to integrate with society" which would make it "cost neutral" for someone to immigrate to a country and begin drawing a UBI without any obligation to work for it. (Of course if one does have to work for it then it's not UBI; that's just a regular job.)

It’s not a question of what a single immigrant does, but what all immigrants do as a group. It might be that immigrants on net cost more in UBI than they contributed to the UBI program but such imbalance could just as easily go the other direction.

In the end working must provide incentives for natives to work for any UBI system to exist and those same incentives would apply to immigrants.

> working must provide incentives for natives to work for any UBI system to exist

Well, yes, and that's kind of an unsolved problem. The immigration issue doesn't help.

> It’s not a question of what a single immigrant does, but what all immigrants do as a group.

Agreed, but what kind of immigrants will a country with a UBI (available to immigrants) tend to attract, ones that want to work or ones that want to collect the UBI? The former group would be better served immigrating somewhere else with lower taxes and no UBI. Like-minded "natives" would most likely do the same, to some extent, though leaving one's birth country is not something undertaken lightly.

> ones that want to work or ones that want to collect the UBI?

It’s likely that a country with a UBI will have better paying low level jobs even adjusting for tax action than a country without. That’s going to attract people who want to work. A tiny country implementing UBI may be swamped by people seeking UBI, but I doubt the global pool of people willing to move just to be very poor in some country and are willing to stay that way is all that large.

Put another way, many countries have a functioning social safety net. But immigrants tend to be seeking a better life which is generally why they became immigrants in the first place. It’s a massive filter on people willing to step up to new challenges which is why immigrant populations tend to be more economically mobile than native populations.

> It’s likely that a country with a UBI will have better paying low level jobs even adjusting for tax action than a country without.

You think a UBI will increase total after-tax purchasing power for above-average earners (i.e. those paying more in taxes to support the UBI than they receive in UBI) compared to not having the UBI? I would be very interested to see how you came to that conclusion as it seems inherently contradictory.

> But immigrants tend to be seeking a better life which is generally why they became immigrants in the first place.

I'm not disagreeing with that at all. I'm just saying that I don't see countries with UBIs being very attractive to these kinds of immigrants. For the same amount of work they would be better off somewhere else where they can keep a larger share of the fruits of their labor rather than paying to support others who aren't as motivated.

> You think a UBI will increase total after-tax purchasing power for above-average earners (i.e. those paying more in taxes to support the UBI than they receive in UBI) compared to not having the UBI? I would be very interested to see how you came to that conclusion as it seems inherently contradictory.

Not will, can. Also, the comparison point is other countries not the same country before and after UBI.

UBI doesn’t exist in a vacuum, I doubt poor countries would set one up. A country could set one up specifically because the benefits in say reduced crime outweigh the tax burden. But the kind of country which is rich enough to make that choice is also the kind of country rich and stable enough to attract a highly skilled and motivated immigrants.

Or such a country could tightly control immigration, biasing it toward high incomes etc. In other words you can’t assume anything about such a system without knowing how and by whom it’s implemented.

A land value tax would be more useful if someone wants to play social upheaval poker. The Danes have an incredibly long history of land value taxation where every time special interests abolished it, things go to shit very quickly and they recovered very quickly once the tax was reinstated.

Passing a flat tax in a major democracy is difficult because it's a tax designed to be heavily regressive whilst sounding vaguely fair if you dont pay too much attention.

It's equally hard if not harder to pass a well run progressive tax (e.g. a land value tax).

Instead we get a hodgepodge of progressive and regressive combined to reflect the power struggle between oligarchy and democracy that makes up most western power centers.

Also we get mollified with political pipe dreams designed to be easy to murder in their sleep (e.g. UBI) to take the heat off more "dangerous to profit" policies like minimum wage hikes.

Reply on news.ycombinator.com