The Indian government is set to endorse Universal Basic Income • Hacker News Board

Re: The Indian government is set to endorse Universal Basic Income

#161

Post by chiph » Thu, Jan 05, 2017, 2:14 PM UTC

dllthomas wrote: post #156

chiph wrote: post #60

Earlier quoted context omitted.

This is what I point out whenever BI is brought up as a possibility in the US. With 1/4 the population of India, higher GDP, and allowing for all the existing entitlement programs being retired, we can't afford it either. The math just doesn't work out. Edit: Some grossly simplified numbers. Assumptions: BI matches poverty level. Everyone gets BI (parents receive their children's payments until they reach majority).…

As a proponent of this kind of program, I totally agree that $20k is much higher than we could presently afford. The numbers look substantially more practical at 1/2 or 1/3 that, despite replacing less.

That's actually per family/household. So per-person it'd be a third of that, based on my assumptions.

Something that I haven't heard mentioned is whether BI payments are subject to income tax (like Social Security payments are). The numbers are low enough that the taxman won't take much. Going by the current IRS brackets, and assuming they had no other income (worst-case scenario), the per-person yearly payments of $6,666 would mean a 10% cut, leaving $6,000, or $500 a month. Which is a little more than what people spend at the supermarket.

Re: The Indian government is set to endorse Universal Basic Income

#162

Post by surfmike » Thu, Jan 05, 2017, 3:32 PM UTC

bryanlarsen wrote: post #94

surfmike wrote: post #84

Earlier quoted context omitted.

That is also no longer a Universal Basic Income.

The OP is suggesting that taxes on the employed go up by >= $20 at the same time that they receive a check for $20. No net benefit for the employed while they are employed, but the checks keep coming even if employment stops.

Ok, but that's still increasing marginal rates even if you ignore the unemployed. Consider the case where you have 100 people, one that earns $1/week, one that earns $2/week, etc. and the last person earns $100/week.

A $20/week UBI for all of them would cost $2000/week. You would need a flat tax of 39.6% on everyone to cover that. So everyone's marginal tax rate increases, with the associated deadweight losses.

tldr; you can't just hand wave and say a redistributional tax scheme is free since it all balances out across the population.

Re: The Indian government is set to endorse Universal Basic Income

#163

Post by jganetsk » Thu, Jan 05, 2017, 4:08 PM UTC

surfmike wrote: post #84

jganetsk wrote: post #79

Earlier quoted context omitted.

You can raise income taxes on the employed pay for UBI for the unemployed. Therefore, the cost would only be $20 * India's unemployed adult population, which is a lot less than 900 million.

That is also no longer a Universal Basic Income.

What, in your judgement, makes it not a UBI?

If basic income is X, some of the individuals receiving it will have a tax liability >= X. All legitimate UBI proposals I've ever heard share this property. It's either that, or the government finances the entire UBI with a budget deficit. And no one is seriously proposing that.

There's also minimum guaranteed income... which guarantees that Earned Income + Basic Income - Tax Liability >= Minimum Guaranteed Income, for all individuals. That's a stronger proposal. We should really aim for this.

But I don't think implementing UBI means that everyone is better off the next day. Some people's post-tax income will stay the same or go down.

Another question: do UBI and income tax go together? It would be interesting to see proposals that provide UBI but eliminate income tax, replacing it with some other kind of tax.

Re: The Indian government is set to endorse Universal Basic Income

#164

Post by jganetsk » Thu, Jan 05, 2017, 4:11 PM UTC

pkaye wrote: post #103

jganetsk wrote: post #79

Earlier quoted context omitted.

You can raise income taxes on the employed pay for UBI for the unemployed. Therefore, the cost would only be $20 * India's unemployed adult population, which is a lot less than 900 million.

How would you even define unemployed in a vast part of India? There is quite an bit of informal economy. I think >94% don't even file income taxes (either too low an income or don't declare.)

I don't need to define it though. India has non-zero tax revenue. It can raise that revenue somehow (to claim otherwise would be bold and would require evidence). And some individuals will have a tax liability greater than the level of basic income.

Re: The Indian government is set to endorse Universal Basic Income

#165

Post by jganetsk » Thu, Jan 05, 2017, 4:19 PM UTC

surfmike wrote: post #162

bryanlarsen wrote: post #94

Earlier quoted context omitted.

The OP is suggesting that taxes on the employed go up by >= $20 at the same time that they receive a check for $20. No net benefit for the employed while they are employed, but the checks keep coming even if employment stops.

Ok, but that's still increasing marginal rates even if you ignore the unemployed. Consider the case where you have 100 people, one that earns $1/week, one that earns $2/week, etc. and the last person earns $100/week. A $20/week UBI for all of them would cost $2000/week. You would need a flat tax of 39.6% on everyone to cover that. So everyone's marginal tax rate increases, with the associated deadweight losses. tldr;…

No one even came close to suggesting that a redistributional tax scheme is free.

But interestingly: basic income provides more benefits with as income inequality goes up. That is, if everyone in society already has the same level of income, there would be no way to finance basic income through income tax. You would collect the same amount of tax from every person and then give it right back to them. However, in your hypothetical distribution, that one person at the top is singlehandedly providing the basic income of 2% of the population. And we are using your proposed very fair taxation scheme of flat tax. And in reality, income distributions are far more skewed than your hypothetical distribution.

Re: The Indian government is set to endorse Universal Basic Income

#166

Post by dllthomas » Thu, Jan 05, 2017, 7:39 PM UTC

chiph wrote: post #161

dllthomas wrote: post #156

Earlier quoted context omitted.

As a proponent of this kind of program, I totally agree that $20k is much higher than we could presently afford. The numbers look substantially more practical at 1/2 or 1/3 that, despite replacing less.

That's actually per family/household. So per-person it'd be a third of that, based on my assumptions. Something that I haven't heard mentioned is whether BI payments are subject to income tax (like Social Security payments are). The numbers are low enough that the taxman won't take much. Going by the current IRS brackets, and assuming they had no other income (worst-case scenario), the per-person yearly payments of $…

> That's actually per family/household. So per-person it'd be a third of that, based on my assumptions.

Ah, I'll have to take a closer look at your numbers then.

Re: The Indian government is set to endorse Universal Basic Income

#167

Post by rad88 » Thu, Jan 05, 2017, 8:31 PM UTC

snrplfth wrote: post #76

danharaj wrote: post #43

Every time UBI is brought up, vague arguments about inflation come up. However, I've never seen anyone cite economic literature that actually quantifies such an effect. It's just a claim justified by an understanding of economics 101. However: there's a reason why a study of economics doesn't end at the 101 level. Economics 101 is a grossly simplified toy facsimile of the actual capitalist economy. There are professi…

Because claiming that UBI will cause inflation is not justified by an understanding of Economics 101. Most basic economic theory will state that inflation is basically a monetary phenomenon. (Now, if you use monetary expansion to pay for the UBI, as the occasional person has suggested, then Econ 101 would suggest inflation, but that's true for any expenditure funded that way.)

The economics suggest UBI is inflationary even if budgets are balanced. For several reasons -- the most 101 is that an increase in the real value of the welfare scheme decreases the labor supply, implying rising wages and therefore rising prices.

Re: The Indian government is set to endorse Universal Basic Income

#168

Post by snrplfth » Thu, Jan 05, 2017, 8:59 PM UTC

rad88 wrote: post #167

snrplfth wrote: post #76

Earlier quoted context omitted.

Because claiming that UBI will cause inflation is not justified by an understanding of Economics 101. Most basic economic theory will state that inflation is basically a monetary phenomenon. (Now, if you use monetary expansion to pay for the UBI, as the occasional person has suggested, then Econ 101 would suggest inflation, but that's true for any expenditure funded that way.)

The economics suggest UBI is inflationary even if budgets are balanced. For several reasons -- the most 101 is that an increase in the real value of the welfare scheme decreases the labor supply, implying rising wages and therefore rising prices.

Yes, an increase in real value of redistribution should raise the reservation wage and suggests increased wages for those people in the (somewhat smaller) labour force, but it will require higher taxes on those income-earners, reducing their real after-tax income. The money has to come from somewhere. I'm not saying that no prices for particular baskets of goods will go up, I'm just saying that general inflation will not occur if UBI is not funded through monetary expansion.

Re: The Indian government is set to endorse Universal Basic Income

#169

Post by surfmike » Thu, Jan 05, 2017, 9:54 PM UTC

jganetsk wrote: post #163

surfmike wrote: post #84

Earlier quoted context omitted.

That is also no longer a Universal Basic Income.

What, in your judgement, makes it not a UBI? If basic income is X, some of the individuals receiving it will have a tax liability >= X. All legitimate UBI proposals I've ever heard share this property. It's either that, or the government finances the entire UBI with a budget deficit. And no one is seriously proposing that. There's also minimum guaranteed income... which guarantees that Earned Income + Basic Income -…

I initially interpreted the parent to say that employed people don't receive UBI. If they do, it is in fact a UBI but then does not get around the cost issue (I comment about that on a sub thread).

Re: The Indian government is set to endorse Universal Basic Income

#170

Post by surfmike » Thu, Jan 05, 2017, 9:56 PM UTC

jganetsk wrote: post #165

surfmike wrote: post #162

Earlier quoted context omitted.

Ok, but that's still increasing marginal rates even if you ignore the unemployed. Consider the case where you have 100 people, one that earns $1/week, one that earns $2/week, etc. and the last person earns $100/week. A $20/week UBI for all of them would cost $2000/week. You would need a flat tax of 39.6% on everyone to cover that. So everyone's marginal tax rate increases, with the associated deadweight losses. tldr;…

No one even came close to suggesting that a redistributional tax scheme is free. But interestingly: basic income provides more benefits with as income inequality goes up. That is, if everyone in society already has the same level of income, there would be no way to finance basic income through income tax. You would collect the same amount of tax from every person and then give it right back to them. However, in your…

Great-grandparent comment implied the only cost you need to consider is for unemployed people i.e. that it's free for those who are employed . That's wrong.