Why a Universal Basic Income Will Not Solve Poverty

[Rasulis]

Well, there's the Mincome example, where it was tested, for instance.

But if you want some overly simplistic napkin math, consider if you added 10% tax to the current US brackets, and nothing more. The "middle wage" tax bracket of $37k-90k (roughly) is 25%. So let's make that 35%, with a $10,000 UBI payment coming in.

Let's go with an income of $90k, since that's the high point in that bracket.

You'd be paying $9,000 more, but getting $10,000 in UBI. Your net income is still $1000 higher, despite the tax increase. That's the part that people are overlooking, when they freak out about the tax load.

And if you compare the same effect to the $40k mark, they'd pay an extra $4,000, and get $10,000. So $6,000 more net income per year. MUCH better off.

Sure, this scales down as you get into higher incomes, but that is explicitly the point. The wealthy are making too significant a percentage of the benefit from everyone's productivity.

A couple making 90k, after deductions, would likely be in the 15% tax bracket, and paying an effective federal tax rate of 7.5% or lower. This is probably true of most middle/upper middle class households.

At the lower income level, UBI would go more toward basic necessities. So it will be a plus for them. Will UBI be a gain or a loss for middle/upper middle class households? Honestly, I am not sure. It will likely depend on what happened to the tax bracket.

In your example UBI comes with a 10% increase at the 25% tax bracket. What about the 15% tax bracket? A 10% increase also? How about the 28% and 33% brackets? Would the 10% increase apply to long-term capital gain? How about short-term capital gain? How about people older than 65? Do they have to pay the tax increase on their SS and the money that they draw from their retirement funds?

[Emjay18]

"wealth redistribution" as a concept i totally disagree with. I dont believe that one person should be able to benefit from another direct financial earnings. I dont like the current status quo with a vast swath being controlled by the super rich, but i dont think people should just be given free handouts "because" without (potentially) ever working a single day in their life. at that point, we are encouraging people to be sponges

You yourself are already doing exactly thus. "Direct financial earnings" includes taxes.

You don't think people should just be 'given free things' because you believe that the stuff you're talking about is actually free, and that you don't also use said stuff as well. You've likely driven over a bridge at some point in your life that was built before you were born -- so you're doing exactly what you claim to be against.


Not to mention, tax rates on the middle class have been historically low for decades now. While a good chunk of that $18 trillion debt comes from tax evasion and such, a good portion of that debt comes from having the majority of the middle class demand low taxes while retaining services provided by them. It also directly led to things like the Reagan coalition where said middle class voted in their own cyanide pills by electing the very people who have led us to today, where it has ironically trickled down to all current classes. You're part witness to a swath of people who are angry as shit that they are no longer getting stuff for free, and one cannot ignore that the current 1% was voted in on exactly what they sold.

[Rasulis]

You yourself are already doing exactly thus. "Direct financial earnings" includes taxes.

You don't think people should just be 'given free things' because you believe that the stuff you're talking about is actually free, and that you don't also use said stuff as well. You've likely driven over a bridge at some point in your life that was built before you were born -- so you're doing exactly what you claim to be against.


Not to mention, tax rates on the middle class have been historically low for decades now. While a good chunk of that $18 trillion debt comes from tax evasion and such, a good portion of that debt comes from having the majority of the middle class demand low taxes while retaining services provided by them. It also directly led to things like the Reagan coalition where said middle class voted in their own cyanide pills by electing the very people who have led us to today, where it has ironically trickled down to all current classes. You're part witness to a swath of people who are angry as shit that they are no longer getting stuff for free, and one cannot ignore that the current 1% was voted in on exactly what they sold.

I agree that tax rates for the middle class is low. However, keep in mind that we pay our own health insurance. This year I pay $1,340 per month for my wife and I. None of it tax deductible. We also have to save on our own for most of our retirement. Last year we put in $45k into our retirement accounts. At least those are tax deductible. While my children were growing up, my wife and I had separate college fund accounts for them. Those were not tax deductible. So our tax rate is low, but on the other hand, we are not getting a lot of services out of it either.

It is a choice. Low tax less services, or high tax more services. I am okay with either options. I am not okay with high tax and less services option.

[Manabomb]

This is true of the old system. Which is why we're proposing a new system.

And no, the wealthy wouldn't just "up and leave". They could already do so, if tax burden was an issue; the USA is not the country with the lowest tax burden around.



You're operating under the false premise that those people making that income deserve that income. That's a premise that has never been established, and given that it largely came at the expense of both their customers and their employees, in most cases, it's pretty solidly arguable that it isn't remotely true, in the first place. They've just managed to game the system to benefit themselves. They don't really have room to complain if the people game the system for everyone's benefit, not just the few at the top.

Particularly since you're not considering that the consumer class having more wealth with which to consume will boost the economy, which increases productivity, so those at the top still aren't being left behind. They're just more equitably sharing the benefits of that productivity with everyone who's contributed to it.

Ding ding ding, we have a winner. There's no way the rich wouldn't be left behind in a system that benefits everyone, including the rich. Taxing even just an extra 25% off their gross income every year is not going to hurt someone making more than a million dollars a year. Atleast, it won't hurt them more than it would benefit the hundreds of thousands that could benefit from the proper investment of that money.

[Tico]

Taxing the ultra-rich (1% of people owns 40% of total wealth) is the key for any source for UBI. Taking into consideration that using automation instead of people in the company process accumulates profit at these people's hands, this kind of taxing feels quite legit.

Furthermore, a properly constructed UBI system will not necessarily redistribute wealth upwards in an unhealthy way, but will still encourage some people to work (as an additional income besides salaries). Yes, it will lower the average will to work, but do we really need that much of employees in the future?

[Independent voter]

So if they got rid of social security, food stamps, medicare, veterans administration and gave everyone in the US a $1,000 a month no matter who they were as long as they are a citizen? Would that be worth it?

[Deleted]

ITT: People don't want free money, and they want the rich to stay rich. Keep the poor, poor.

smfh.

[cubby]

a check of $10,000 to each of 300 million Americans

There are significant problems with the financial analysis of this article. First, it's assuming 300 million americans - which would not be the case because, children. Second, it's assuming everyone would get the same check . . . or a check at all. Which would not be the case because at least some people would have jobs that pay them more than the UBI and therefore wouldn't get the UBI at all. Finally, it seems to ignore the other issues that come with UBI - universal healthcare being a major one.

I like the general idea of a UBI and with proper automation and fixing a number of other major issues in the US and abroad, it is our next major step as a society as a whole - but we're still decades off from this working out.

[Endus]

Second, it's assuming everyone would get the same check . . . or a check at all. Which would not be the case because at least some people would have jobs that pay them more than the UBI and therefore wouldn't get the UBI at all.

To be fair, some implementations of BI would involve a check to every adult, even those working high-end CEO jobs. But tax levels are increased to compensate for the increased spending. So you need to work out the income level at which it turns out to be a wash, in terms of tax vs basic income, and every honest analysis of that which I've seen puts it over $100k.

The rest of your points are more than fair, though.

[Ghostpanther]

So if they got rid of social security, food stamps, medicare, veterans administration and gave everyone in the US a $1,000 a month no matter who they were as long as they are a citizen? Would that be worth it?

Only if all food, housing, utilities and medical care is free.

[starlord]

i think it could work, with some alterations. on it's own, in the current situation, probably not.

also it depends.. are we trying to solve poverty or just even things out a bit? the goal is important...
addressing poverty requires more than just throwing money at people. people need their basic needs met before they can really start trying to climb up the social ladder.
better ways to address things would be, for example, small federally backed loans at a very low interest being available, and government owned housing (this is sort of there but it's not managed well imo). a lot of people trying to support themselves run into certain financial traps unique to the poor, such as payday loans etc. better childcare services could also go a long way to help single (or working) parents.
and probably most of all, addressing the drug problems in the country.

[cubby]

To be fair, some implementations of BI would involve a check to every adult, even those working high-end CEO jobs. But tax levels are increased to compensate for the increased spending. So you need to work out the income level at which it turns out to be a wash, in terms of tax vs basic income, and every honest analysis of that which I've seen puts it over $100k.

The rest of your points are more than fair, though.

Interesting point (and thank you). I haven't seen a lot of models that include everyone getting some kind of BI and then kicking it back in taxes or something similar. And to clarify, are you saying that the "wash" income is $100k?

[Endus]

Interesting point (and thank you). I haven't seen a lot of models that include everyone getting some kind of BI and then kicking it back in taxes or something similar. And to clarify, are you saying that the "wash" income is $100k?

Like the napkin math I included earlier; say you apply an across-the-board boost to tax brackets, so that the middle-class tax bracket in the USA goes from 25% to 35%. That's "more tax". But if you're getting $10,000 in UBI, no matter what your taxable income, then that tax bracket covers from about $37k to just over $90k. At $90k, your tax owed would increase by $9000/year, for that extra 10% (it would've been $22.5k before, and $31.5k after). But you're getting $10,000/year from the UBI, tax-free. So you're actually getting a net income that's $1,000 higher, despite paying more in tax. There's a specific income level where you'd be paying the same as your UBI, and then above that, you'd be taking home less net income, but like I said, that's typically over the $100k mark.

This is all ignoring that we'd almost certainly overhaul the entire tax system and brackets and all that as part of this process, just to demonstrate the point. In practice, this would end up being much more complex, but the basic spirit holds true; you can pay more in absolute tax while still netting more actual net income, with a UBI.

[Vash The Stampede]

Congress had a Discussing on this subject.

[kail]

With the current job market, cost of living, and tax rate, of course UBI won't work out well. UBI will only work when it's actually needed and when costs can start to seem more realistic (either by the natural market or by government regulations).

[Deleted]

With the current job market, cost of living, and tax rate, of course UBI won't work out well. UBI will only work when it's actually needed and when costs can start to seem more realistic (either by the natural market or by government regulations).

Prices of stuff would go down, cause sales including covering wages, and it would be cheaper/more effective to run robots, and then there's the reformation of taxation as well..

So, yeah, a UBI would work. If we wanted it to. Probbaly gonna happen. At some point.

[kail]

Prices of stuff would go down, cause sales including covering wages, and it would be cheaper/more effective to run robots, and then there's the reformation of taxation as well..

So, yeah, a UBI would work. If we wanted it to. Probbaly gonna happen. At some point.

I'm very much betting it will happen, just not with our current situation.

[Kokolums]

It's overly simplified. If I have twice as much money available, that does not mean I'm willing to pay twice as much for your product/service. I am going to expect more for that higher price. Same reason if I get a new job making twice as much money, you can't just double my rent and have me not react.

endus, you don't sound like you are familiar with the concept of price discovery. i suggest you read up on it. what would happen is landlords raise rents a little bit each year. some more aggressively than others. landlords would let the market decide where rents should be. if people get a big boost from a new UBI, price discovery will drive rents much higher as it searches for a new equilibrium. the test of the UBI would not be in year 1, but 10 years after implementation to determine where prices have gone. no one is saying rents would double overnite, but after 10 years of UBI there should be a large increase.

price controls are not really an option either since that will lead to shortages of good housing. price controls greatly disincentivize constructing new homes or even upkeep of current housing.

if it were as simple as giving everyone a free income forever, someone would have done it by now.

[Nazrark]

I think there is one reason why raising income tax isn't going to work very well is because it only affects people who earn income. Since there isn't a wealth tax itself. So the current system itself encourages people to hoard what they earn since it cannot be taxed.

But the UBI is basically there to help people out that need it. Those who are working 2-3 jobs in order to pay rent and put food on the table. The UBI basically covers the rent/food portion of it. But that person would still need a job if they want to do other things in life. They wouldn't have to work 2-3 jobs instead only work 1. That means with that person only working one job, you still need those other jobs they were working filled by other people. Freeing up job openings for people who need it.

In any system there will always be people who will never use it for what it's intended to do. They will spend their entire UBI on alcohol or other addictive substances and be homeless or a non-contributing member to society.

Looking at it from this way in Canada. If UBI is applied (we have provinces taking a serious look at it and are running small town experiments to see how it works), I can afford to go back to school. Since I can start cutting down on the amount of hours I work. It's just that I won't have to worry about having enough for rent. All I will have to do is worry about if I will have enough for car payments/insurance.

[Theodarzna]

Congress had a Discussing on this subject.

I think these panelists missed several key issues,

1) There is a frantic search for new big innovations, and they addressed that "low hanging fruit has been plucked," is it possible we have already reached peak innovation?

2) Declining Birth rates sort of raises the question of "what is the point?" of maintaining productivity and all this economic dynamism for less and less people and is the need for constant growth and dynamism DRIVING crippled birth rates?

3) Even if given a Mincome, UBI, ect, would not people be freed up to work any plausible job, even extremely low paying or few hours without the need to provide for a living? I mean if you know your basic needs are met and you just need pocket money so to speak, would not people simply take on task work, cottage industries, and craft jobs in their freed up time? I.E. Work would not necessarily disappear but the reasons for work would change.

4) While the addressed it sort of, the whole "They need to always be gaining new skills," only one of the panelists acknowledged the practical limitations of that and how this might not be a realistic long term goal for us. I mean how quickly can people gather skills? How easy is it to retrain if they expect Innovation to explode any minute now once more as it did a 100 years ago?