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Comment by Aurornis | Hacker News Reader

> As far as I know, basic income means that everybody receives a fixed income, rich or poor.

People frame it like that, but in practice it would be offset by increased taxes for most.

For example, everyone gets $20,000 per year as "universal" basic income. However, your taxes go up $20,000 per year or more because you weren't in the lowest tax bracket. We have to pay for the UBI somehow.

UBI of a substantial amount would be incredibly expensive. Expensive to the point that the taxes would have to dip all the way down into the middle class to make it work. So for the average person, that UBI would come in and then go right back out as taxes.

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What's a scenario in which adding $20K to my income results in more than $20K in additional taxes? The highest marginal tax rate in the U.S. for 2023 is 37%, and it kicks in after about $578K for a single filer. So increasing my income by $20K increases my tax bill by at most 37% of $20K.

It is not the tax on the UBI that is referred here. It is whatever tax will be neccessary to finance it. You can't reason about this by looking at the current rax system, since it would most likely need to change.

We can't give everyone $20K without raising taxes.

The money has to come from somewhere. Taxes would go up to pay for it.

You can't have both UBI and the current tax rates.

Realistically you may be correct - however, it is within the realms of possibility that enabling poor people to take part in the economy will drive value creation, and that this increase to the tax base could fund UBI.

Stock buy-backs don't create any value, or, if they do, it is obscure to me. You may get a one-time bump in capital gains tax, but it's nothing to build an economy on.

A million new dishwashers, though - that's taxable profit and increased emploment. Could UBI drive a virtuous cycle in which everyone gets richer? It certainly looks from here like inequality fundamentally shrinks the pie, even if it works out nicely for some eaters.

Enabling poor people to take part in the economy will increase some value creation. But most governments already do that in some form or another.

A very fair question, but the possibility of such happenings could probably not be used for the initial funding stream

Agreed; it's a ridiculously optimistic projection and should not be the basis for advocacy.

A UBI based on an income tax is not feasible due to the feedback cycle it would engender. As the UBI goes up the % of people who would make the same or greater incomes by quitting and taking UBI would go up. Raising UBI would be extremely popular politically and would go up quickly. This would either drive inflation out of control or erode the income tax base over time until it no longer could support the UBI. Either way it dooms the economy.

> As the UBI goes up the % of people who would make the same or greater incomes by quitting and taking UBI would go up.

That’s not how UBI works. It’s not tied to quitting one’s job. Anyone working earns income from salary/wages in addition to their UBI. Unlike many existing entitlements, there is never a financial incentive to work less.

That's not what I was saying. I was saying that as UBI goes up in $$$ that more people will hit the point where they can live nicely on just the UBI, where they extra income from working is just not worth it due to the increasing taxes minimizing it's reward factor.

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