I once calculated the tax implications of a basic income where everyone received a lump sum paid for by a flat income tax. A basic income at the current welfare rate seemed to be easily achievable. I seem to recall that a 20k basic income was at the upper limit of what would be achievable without an exorbitant income tax rate.
Many comments on the web are dismissive of a basic income because they simply multiply the per-person dollar figure by the total population and say that it is way too expensive. One needs to look at the current distribution of income, the existing level of welfare and subsidies, and the progressive income tax schedule to compute how much the basic income is likely to cost. The final pre-tax distribution of income will also change, but that is much more difficult to estimate.
This idea dates back to at least Thomas Paine's Agrarian Justice and is supported by many (at least 1/2 a dozen) nobel prize winning economists. A basic income is interesting to study and has many compelling features, but it is complicated enough that it is not possible to easily debate its overall merit via comments on hacker news.
I'd genuinely like to see your numbers because I've not seen a single napkin math calculation that makes is even remotely feasible. (for the United States)
One should also keep in mind that there are many other things that can be taxed besides income (which, IMO, should be taxed less). Things like rental real estate, inheritance, foreign real estate investments, ... all these would encourage people, especially young people, to work more and more efficiently, and as a consequence spend more, and discourage concentration of capital and growing inequality.
I think a "guaranteed minimum income" can be re-phrased as "Giving everyone, at no charge, the things they'll be dead without in a week (food, water, shelter), but it's up to you to buy them on the open market".
I've never understood why one has to pay for the bare essentials, while piles of other things, like health care, transportation, parks, police, fire, etc. are highly/wholly subsidized through general taxes.
We already provide health care at no charge in most nations with reasonable efficiency, leaving one less reason for people to put up with crummy employers and removing the bureaucracy of proving that you need something that you, well, need. I like the idea of extending that path.
Many would argue that the government is less efficient at providing various goods. Where I live in Australia, for instance, public schools and hospitals are generally regarded as being inferior to privately run ones. In such circumstances it is more efficient for the government to give poor/unemployed people money to purchase these things on the private market.
When the government has a monopoly on providing a service, they face no competition, which reduces their incentive to provide a quality service. Some services however, such as roads, are seen as natural monopolies, meaning even if privately owned they would still be a monopoly. In such cases people look more favourably upon government ownership as a government monopoly is seen as superior to a private monopoly.
If an "unconditional basic income" is ever to be successful, it should be tried first in a small, wealthy country, before being implemented in bigger countries. Good candidates might be Switzerland, Norway, Iceland and so on.
Big experiments have a tendency to fail catastrophically...
It's fairly interesting the way this idea, and similar ones, connect some of the more intelligent fringe people from both right and left ends of the spectrum.
Famously Friedman's answer to what would be better than minimum wage was a negative income tax bracket, and Nixon, of all people, almost implemented it.
How exactly would a negative tax bracket work? Taken literally, this would mean that up to a certain income level, the government would pay you an amount proportional to how much you make. Presumably what it actually means is that you would be paid inversely proportional to how much you make.
At first glance it seems to me that this would have one of the same problems as the current system, which a guaranteed basic income is intended to solve - a high effective marginal tax rate at low (or no) income levels. (Unless the payment actually is positively proportional to earnings, in which case it has the obvious problem that it provides less benefit to those who need it most.)
Either way, I'm not clear on how this would be superior to a fixed guaranteed income with adjustments to the current tax rates such that the middle class end up with approximately the same after-tax total income.
BI is a change of how money is redistributed in society – it would lead to some people becoming poorer and other people becoming equally richer.
I'm quite sceptical about BI because I haven't seen any analysis that would answer the question who exactly would get richer / poorer and how much. Unemployed people get money from the government in Canada – will they get more or less after implementation of BI? What about teachers, software developers, bus drivers, lawyers, etc?
AFAIK, the main claimed benefits of BI are:
– The system would be simpler and cheaper. True, but only negligably.
– It removes disincentives to work. I'm not convinced about this, you could argue the opposite is true actually.
Guaranteed Minimum Income and Basic Income are 2 different things (this article discusses GMI).
GMI means that you will get enough money to bring your income up to X (in this case $20k.)
BI means that every citizen gets Y dollars per year unconditionally.
GMI is only a net benefit if you make less than X. BI is more complicated because you have to decide at what income level should the BI be income neutral, i.e., how much do you have to make before the BI you're receiving and the extra income taxes you're paying are equal.
> I haven't seen any analysis that would answer the question who exactly would get richer / poorer and how much.
The reason you haven't heard this is because it's completely up to the implementation details.
If for example the government decided that for people making $50k a year the BI should be income neutral, then it would be a net benefit for all people under $50k and a net detriment for everyone over that.
>What about teachers, software developers, bus drivers, lawyers, etc?
In this hypothetical scenario some teachers, software developers, bus drivers, and lawyers would benefit, and some wouldn't.
>It removes disincentives to work. I'm not convinced about this, you could argue the opposite is true actually.
This is only true for BI, not GMI. GMI adds a huge disincentive to work for less than (or close to) whatever the guaranteed minimum is set at.
It depends on what type of BI is implemented. This is around current minimum wage rates, so it could easily mean doing away with basic disability, welfare, and the government pension.
I would say you're naive of the costs if you think the system change would only be negligibly beneficial. There's the distribution costs, the evaluation costs, then there's the investigators to make sure people aren't scamming the system. For every system. You've got disability, welfare, unemployment and pension investigators to make sure everyone is getting what they're supposed to and to make sure no ones scamming the system. You can't scam basic income.
It removes disincentives to work, in that without welfare systems there's no disadvantage to work, and there's no advantage to trying to scam the system.
It does also do the contrary. It incentivized people not to work, at least for shitty employers. You can't be an assholr to a minimum wage employee when they can leave and still afford rent and food.
It also provides income for people to start up businesses (this has been shown in BI trials currently ongoing in India), which when we have high unemployment rates amongst youths I can only see this as beneficial.
What's better for society, an 18 year old doing busy work making coffee for people too lazy to make their own or do you want them writing apps, starting lawn care companies, etc.
The New Zealand treasury actually did a preliminary impact paper on BI several years ago and it was noted that many of the people currently on welfare would likely end up with less money. (They use the term GMI, but it seems to be framed as a BI based on my general understanding of the concepts)
Australia already has basically this. It's called 'welfare', but anyone that doesn't have a job gets a touch over $1000AUD/mo (so just over $12kUSD/year) for life [1]. It doesn't matter if you've never had a job, or have, or whatever. They will encourage you to get a job, and you might have to work a little bit to get that money, but you'll get it.
If you've got a partner, or dependent(s), you'll get more. Likely if you're living on this, you also qualify for Rent Assistance, which means more money.
You also get paid like this while going to University.
Australia has been doing this for decades (my Goole-fu fails me for the exact number of years), and it appears to be perfectly financially viable.
Lots of countries have that and I don't think Australia implemented any of those measures first. I think what is being discussed here is guaranteed unconditional income, not the dole.
It certainly makes a lot of sense. Just consider the reduction in crime it could bring about. That alone is nearly enough to make it worth it.
However, 20k is a bit too high. You don't want to discourage people from working altogether. After considerable thought, I think the equivalent of a part-time job at minimum wage makes the most sense.
> You don't want to discourage people from working altogether.
20k is basically poverty, you are not going to remove any desires at that level.
> I think the equivalent of a part-time job at minimum wage makes the most sense.
The idea is to make sure that when all else fails, you can still cover the necessities of life, things like eating and a place to sleep. Part-time minimum wage doesn't come close to that.
"You don't want to discourage people from working altogether."
Employers needing employees will have to come up with something better than "come to work or starve" as an incentive. HNers should be familiar with a large number of methods.
So Canada would have to raise taxes by 170% to provide this basic income, and raise them again if they want to provide any of the services they do today. (National Defense, Healthcare, etc.)
Keep in mind if you gave everyone 20k/yr, a lot more money would be spent in the economy, and a lot more money would be coming into the government through taxes.
I continue to see this idea grow in merit. It definitely seems if the trend towards automation continues that governments around the world will have to start providing a minimum income level to all their citizens.
20k would be great, I could cover my rent and have a few hundred dollars a month left over. Thats not a lot, but its enough to assure I can continue to live an not have to worry about what would happen if my job vanished, or an emergency came up that prevented me or my girlfriend from working.
I think that's the beauty of the concept. At the end of the day, most people's lives won't change much. The welfare client will have roughly the same amount of wealth. The middle-class earner will have the same level of wealth.
The power comes from:
a) Removing the bureaucracy of having both a progressive tax system (you make more, you pay more) and a redundant means tested benefits system (you make more, you get less)
b) Having security of the basic needs of life, regardless of what happens.
[+] [-] ppereira|11 years ago|reply
Many comments on the web are dismissive of a basic income because they simply multiply the per-person dollar figure by the total population and say that it is way too expensive. One needs to look at the current distribution of income, the existing level of welfare and subsidies, and the progressive income tax schedule to compute how much the basic income is likely to cost. The final pre-tax distribution of income will also change, but that is much more difficult to estimate.
This idea dates back to at least Thomas Paine's Agrarian Justice and is supported by many (at least 1/2 a dozen) nobel prize winning economists. A basic income is interesting to study and has many compelling features, but it is complicated enough that it is not possible to easily debate its overall merit via comments on hacker news.
[+] [-] forrestthewoods|11 years ago|reply
[+] [-] tomp|11 years ago|reply
[+] [-] Scoundreller|11 years ago|reply
I've never understood why one has to pay for the bare essentials, while piles of other things, like health care, transportation, parks, police, fire, etc. are highly/wholly subsidized through general taxes.
We already provide health care at no charge in most nations with reasonable efficiency, leaving one less reason for people to put up with crummy employers and removing the bureaucracy of proving that you need something that you, well, need. I like the idea of extending that path.
[+] [-] logicchains|11 years ago|reply
When the government has a monopoly on providing a service, they face no competition, which reduces their incentive to provide a quality service. Some services however, such as roads, are seen as natural monopolies, meaning even if privately owned they would still be a monopoly. In such cases people look more favourably upon government ownership as a government monopoly is seen as superior to a private monopoly.
[+] [-] unknown|11 years ago|reply
[deleted]
[+] [-] bayesianhorse|11 years ago|reply
Big experiments have a tendency to fail catastrophically...
[+] [-] juliangamble|11 years ago|reply
[+] [-] throwwit|11 years ago|reply
[+] [-] grecy|11 years ago|reply
[+] [-] eru|11 years ago|reply
[+] [-] fidotron|11 years ago|reply
Famously Friedman's answer to what would be better than minimum wage was a negative income tax bracket, and Nixon, of all people, almost implemented it.
[+] [-] tempestn|11 years ago|reply
At first glance it seems to me that this would have one of the same problems as the current system, which a guaranteed basic income is intended to solve - a high effective marginal tax rate at low (or no) income levels. (Unless the payment actually is positively proportional to earnings, in which case it has the obvious problem that it provides less benefit to those who need it most.)
Either way, I'm not clear on how this would be superior to a fixed guaranteed income with adjustments to the current tax rates such that the middle class end up with approximately the same after-tax total income.
[+] [-] RivieraKid|11 years ago|reply
I'm quite sceptical about BI because I haven't seen any analysis that would answer the question who exactly would get richer / poorer and how much. Unemployed people get money from the government in Canada – will they get more or less after implementation of BI? What about teachers, software developers, bus drivers, lawyers, etc?
AFAIK, the main claimed benefits of BI are:
– The system would be simpler and cheaper. True, but only negligably.
– It removes disincentives to work. I'm not convinced about this, you could argue the opposite is true actually.
[+] [-] learc83|11 years ago|reply
GMI means that you will get enough money to bring your income up to X (in this case $20k.)
BI means that every citizen gets Y dollars per year unconditionally.
GMI is only a net benefit if you make less than X. BI is more complicated because you have to decide at what income level should the BI be income neutral, i.e., how much do you have to make before the BI you're receiving and the extra income taxes you're paying are equal.
> I haven't seen any analysis that would answer the question who exactly would get richer / poorer and how much.
The reason you haven't heard this is because it's completely up to the implementation details.
If for example the government decided that for people making $50k a year the BI should be income neutral, then it would be a net benefit for all people under $50k and a net detriment for everyone over that.
>What about teachers, software developers, bus drivers, lawyers, etc?
In this hypothetical scenario some teachers, software developers, bus drivers, and lawyers would benefit, and some wouldn't.
>It removes disincentives to work. I'm not convinced about this, you could argue the opposite is true actually.
This is only true for BI, not GMI. GMI adds a huge disincentive to work for less than (or close to) whatever the guaranteed minimum is set at.
[+] [-] electromagnetic|11 years ago|reply
I would say you're naive of the costs if you think the system change would only be negligibly beneficial. There's the distribution costs, the evaluation costs, then there's the investigators to make sure people aren't scamming the system. For every system. You've got disability, welfare, unemployment and pension investigators to make sure everyone is getting what they're supposed to and to make sure no ones scamming the system. You can't scam basic income.
It removes disincentives to work, in that without welfare systems there's no disadvantage to work, and there's no advantage to trying to scam the system.
It does also do the contrary. It incentivized people not to work, at least for shitty employers. You can't be an assholr to a minimum wage employee when they can leave and still afford rent and food.
It also provides income for people to start up businesses (this has been shown in BI trials currently ongoing in India), which when we have high unemployment rates amongst youths I can only see this as beneficial.
What's better for society, an 18 year old doing busy work making coffee for people too lazy to make their own or do you want them writing apps, starting lawn care companies, etc.
[+] [-] arg01|11 years ago|reply
http://igps.victoria.ac.nz/WelfareWorkingGroup/Downloads/Wor...
[+] [-] grecy|11 years ago|reply
If you've got a partner, or dependent(s), you'll get more. Likely if you're living on this, you also qualify for Rent Assistance, which means more money.
You also get paid like this while going to University.
Australia has been doing this for decades (my Goole-fu fails me for the exact number of years), and it appears to be perfectly financially viable.
Read more about Australia's policy at [2]
[1] http://www.humanservices.gov.au/customer/services/centrelink...
[2] http://en.wikipedia.org/wiki/Unemployment_benefits#Australia
[+] [-] rjtavares|11 years ago|reply
[+] [-] gnerd|11 years ago|reply
[+] [-] transfire|11 years ago|reply
However, 20k is a bit too high. You don't want to discourage people from working altogether. After considerable thought, I think the equivalent of a part-time job at minimum wage makes the most sense.
[+] [-] mhurron|11 years ago|reply
20k is basically poverty, you are not going to remove any desires at that level.
> I think the equivalent of a part-time job at minimum wage makes the most sense.
The idea is to make sure that when all else fails, you can still cover the necessities of life, things like eating and a place to sleep. Part-time minimum wage doesn't come close to that.
[+] [-] Scoundreller|11 years ago|reply
Employers needing employees will have to come up with something better than "come to work or starve" as an incentive. HNers should be familiar with a large number of methods.
[+] [-] Hilyin|11 years ago|reply
[+] [-] tomkin|11 years ago|reply
[+] [-] trothamel|11 years ago|reply
Canada has 34,880,000 people in it, so a CAD 20,000 basic income would cost CAD 697,600,000,000.
According to http://www.fin.gc.ca/afr-rfa/2013/report-rapport-eng.asp#a3, Canada's total government revenue (at the federal level) was CAD 256,600,000,000.
So Canada would have to raise taxes by 170% to provide this basic income, and raise them again if they want to provide any of the services they do today. (National Defense, Healthcare, etc.)
[+] [-] sb23|11 years ago|reply
[+] [-] ars|11 years ago|reply
If it's per person then 20K is WAY too much. A family with 3 kids making 100K per year?
If they actually did that watch the birth rate in Canada skyrocket.
[+] [-] Throwaway0812|11 years ago|reply
[+] [-] caruana|11 years ago|reply
[+] [-] derptacos|11 years ago|reply
[+] [-] thatusertwo|11 years ago|reply
[+] [-] Scoundreller|11 years ago|reply
The power comes from: a) Removing the bureaucracy of having both a progressive tax system (you make more, you pay more) and a redundant means tested benefits system (you make more, you get less) b) Having security of the basic needs of life, regardless of what happens.