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Comment by liquidise | Hacker News Reader

> You could tax the wealthy heavily

At what % do we draw the line on taxing the wealthy? 35% 40% 50%? These numbers would be outraging to any other section of the populace.

> dismiss all arguments regarding a basic income harming poor people in the form of "inflation"

Scare quotes on inflation? Lower and middle classes feel inflation the most when it affects the costs of basic needs: bread, milk, etc. Those are the very items a basic income intend to give ubiquitous access to. Practically by definition a basic income would raise the prices of those items.

> and took on more debt, hoping this can pay for itself

This is the critical assumption here. There is an ongoing debate whether or not college degrees can even pay for themselves in many areas of study. This is a heavy handed gamble, and one i would be unwilling to risk our fiscal futures on.

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> Lower and middle classes feel inflation the most when it affects the costs of basic needs: bread, milk, etc.

Suppose there is a sudden massive increase in demand for basic staples after implementing basic income, isn't that an indicator that our current system + safety net is seriously inadequate? And that people were going hungry?

Really, I think there would be a small increase in demand sized to the backfill of the gap between basic income coverage and our current safety net. Maybe it would give us more leverage to remove some agricultural subsidies.

Depends whether the increase is in price or in quantity. If you give a lot of money to people to buy food, one possibility is that they will buy more food. Another possibility is that they will spend more money to purchase the same amount of food.

We saw this in the housing market. Between 2002-2007, a huge amount of cash went into the housing market in the form of housing subsidies, government-backed loans, interest-only mortgages, tax deductions, and other incentives to encourage an "ownership society". The result was that the home ownership rate increased from 63% to 65%, but the average price of a home basically doubled. And then it all came crashing down when the mortgage bubble popped and people couldn't afford the payments on these inflated prices.

Post-WWII (and through 1964), the top marginal income tax rate in the United States was 91%

http://en.wikipedia.org/wiki/Income_tax_in_the_United_States...

While [i hope] no one is suggesting a tax rate of 90+ %, i have to imagine that anything even close to that will result in widespread shipping of jobs and management overseas. Once a few companies do that, how much revenue loss would the states encounter. Substantial, i would think.

I really like this work: http://www.epi.org/publication/raising-income-taxes/

It basically suggests that: a)top tax rates have historically had virtually no significant effects on overall economic growth

b)we are well below the optimal tax rate for maximizing revenues

The authors of the paper on which this summary article is based on go on to suggest an optimal top effective rate of 68.7% as the revenue maximizing point (basically the optimal trade-off between revenue and dampening effects and/or evasion)

I find this work pretty convincing...

I fail to see why. Perhaps you could detail the jobs that would be shipped overseas as a result of this, particularly those that haven't been already?

Further, I don't really see how a high top income tax bracket would affect much. It doesn't look to me like it affects businesses (its not a corporate tax) - only the pay of people at the top of the chain. Are those people going to revoke their citizenship and move elsewhere to avoid the taxes?

It is important to make a distinction between shipping manual labor overseas vs cash stores. Apple came under fire for holding most of their finances overseas, and their argument was one of taxes.

The higher the tax rates go, the more fortune 500's will move their cash to places where it is not being taxed as heavily.

> At what % do we draw the line on taxing the wealthy? 35% 40% 50%? These numbers would be outraging to any other section of the populace.

I'd prefer if we didn't at all TBH, but something that would pass would most likely only be modest.

> Scare quotes on inflation?

More like skepticism. The FED wants inflation[1]. I may not agree with them but I'm not the central planner with a printing press. I doubt we would see prices go higher, as some people would quit the workforce and live poorly living exclusively through MI. Some would stop working full-time (myself included) and figure out the best way to work less for the same amount of money. And most would simply use the money to combat their debt they've collected over the last 15+ years. It helps everyone, including the markets, due to velocity. I'd love to compete against a company who would dare raise prices. Press Releases condemning them, highlighting my lower prices, etc, etc.

> This is a heavy handed gamble, and one i would be unwilling to risk our fiscal futures on.

Well how about we test it before dismissing it[2]?

[1]: http://www.bloomberg.com/news/2013-11-12/fed-s-lockhart-want... [2]: http://en.wikipedia.org/wiki/Mincome

>These numbers would be outraging to any other section of the populace.

These numbers are normal in Nordic social democracies.

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