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India floats the idea of a universal basic income

economist.com

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Re: India floats the idea of a universal basic income

#191

Post by gizmo »

ozy wrote: post #151

My vote goes to redistribution of wealth, by means of a progressive tax that starts negative. It is the human thing to do. But it also aligns with economics and politics. Redistribution: because more money at the bottom, means a larger overall market, and I think a more stable economy. Progressive tax: any paying work will always improve your situation. (So people stay motivated to work.) Taxing wealth creation (and…

The negative income tax is not a progressive idea. It was originally proposed by Milton Friedman as a way to dismantle the social safety net and get rid of the minimum wage, food stamps, social programs, pensions, and all those other programs previous generations have fought and died for. What do people get in exchange? Well, a bunch of money, but nowhere near enough to buy all the services they just lost from the free market.

A single mother with 2 children needs more money to make ends meet than a single student in their 20s. Subsidies take that into account, the negative income tax does not. People with a physical or mental handicap need assistance. The negative income tax has abolished the programs that help you, so good luck. Pensions? Same. If you've not invested wisely during your working years you'll have to eat dogfood when you're old, because social security is gone.

The problem with the negative income tax is that there's no way to make the math work, because you can't raise the minimum amount every citizen gets high enough so that every citizen can live a dignified life with that amount of money. Not even when you tax the highest earners at 90% does the math work. The special aid programs we have today exist for a reason: they specifically help vulnerable groups in society, who would otherwise be in desperate straits.

Make no mistake: the proponents of the negative income tax want to shrink the government to the size where it can be drowned in a bath tub. It's a far right idea that, if executed, would have horrific consequences for the poor. I urge people on the left of the political spectrum to stop and do some napkin math on how the negative income tax would end up redistributing wealth.

Re: India floats the idea of a universal basic income

#192

Post by Chathamization »

aninhumer wrote: post #187
ropeladder wrote: post #175

Earlier quoted context omitted.

"...and likely implementation." It's true that you can make UBIs and NITs equivalent, but I think it's important to emphasize the implementation part: they are very unlikely to be implemented the same way. This is because, for them to be equivalent, you need the drop-off rate as incomes increase for an NIT to be equal to the increase in taxes on income earners below 2x the UBI level. In other words, an NIT is likely…

Yeah. And additionally, how people get access to the money may also be different. With UBI, most likely people register once and then receive the income without incident indefinitely, and only need to work out taxation if they're employed. Whereas NIT likely requires people to continually submit tax returns stating their lack of income (which is potentially more stigmatising).

> Whereas NIT likely requires people to continually submit tax returns stating their lack of income (which is potentially more stigmatising).

It also means a lot of people simply won't get the benefits. In the U.S., a lot of people who are eligible for welfare programs never take advantage of them because of the administrative hurtles (to take one example, "Only about 1 in 6 people who are eligible for child care subsidies actually get it"[1]). I'm starting to think more and more that this is by design.

Even if you're one of the people that gets the benefits you're eligible for, it's still a burden (imagine having to do your taxes several times a year), and you are subject to the whims of policy makers that want to beat up on you for political credits. So you had some states requiring that welfare recipients get drug testing. If you had a similar requirement for Social Security, people would be livid and through the politicians out on the street. But when this kind of stuff is done to the poor, a lot of people have the attitude that the impoverished deserve to be treated badly.

[1] www.npr.org/2016/08/21/490822086/the-financial-trials-of-child-care-for-working-families

Re: India floats the idea of a universal basic income

#193

Post by ozy »

aembleton wrote: post #168
ozy wrote: post #151

My vote goes to redistribution of wealth, by means of a progressive tax that starts negative. It is the human thing to do. But it also aligns with economics and politics. Redistribution: because more money at the bottom, means a larger overall market, and I think a more stable economy. Progressive tax: any paying work will always improve your situation. (So people stay motivated to work.) Taxing wealth creation (and…

A negative tax subsidises employers so that they don't have to pay so much. If everyone got the money whether they worked or not then the low wage employer would need to improve the incentive to go and work for them. It would also reduce the amount of administrative work required.

A NIT or UBI are basically equivalent. But is easier to see why we give to those who are lesser off. E.g. why give UBI to a millionaire?

One of the points is to give power back to those who on the labor market are almost powerless. Both forms would do that. What would the impact be? Likely price for labor goes up.

Describing only one of the options as a subsidy is not likely correct.

Re: India floats the idea of a universal basic income

#194

Post by [deleted] »

gizmo wrote: post #191
ozy wrote: post #151

My vote goes to redistribution of wealth, by means of a progressive tax that starts negative. It is the human thing to do. But it also aligns with economics and politics. Redistribution: because more money at the bottom, means a larger overall market, and I think a more stable economy. Progressive tax: any paying work will always improve your situation. (So people stay motivated to work.) Taxing wealth creation (and…

The negative income tax is not a progressive idea. It was originally proposed by Milton Friedman as a way to dismantle the social safety net and get rid of the minimum wage, food stamps, social programs, pensions, and all those other programs previous generations have fought and died for. What do people get in exchange? Well, a bunch of money, but nowhere near enough to buy all the services they just lost from the fr…

[deleted]

Re: India floats the idea of a universal basic income

#195

Post by [deleted] »

aninhumer wrote: post #187
ropeladder wrote: post #175

Earlier quoted context omitted.

"...and likely implementation." It's true that you can make UBIs and NITs equivalent, but I think it's important to emphasize the implementation part: they are very unlikely to be implemented the same way. This is because, for them to be equivalent, you need the drop-off rate as incomes increase for an NIT to be equal to the increase in taxes on income earners below 2x the UBI level. In other words, an NIT is likely…

Yeah. And additionally, how people get access to the money may also be different. With UBI, most likely people register once and then receive the income without incident indefinitely, and only need to work out taxation if they're employed. Whereas NIT likely requires people to continually submit tax returns stating their lack of income (which is potentially more stigmatising).

[deleted]

Re: India floats the idea of a universal basic income

#196

Post by knightofmars »

Chathamization wrote: post #192
aninhumer wrote: post #187

Earlier quoted context omitted.

Yeah. And additionally, how people get access to the money may also be different. With UBI, most likely people register once and then receive the income without incident indefinitely, and only need to work out taxation if they're employed. Whereas NIT likely requires people to continually submit tax returns stating their lack of income (which is potentially more stigmatising).

> Whereas NIT likely requires people to continually submit tax returns stating their lack of income (which is potentially more stigmatising). It also means a lot of people simply won't get the benefits. In the U.S., a lot of people who are eligible for welfare programs never take advantage of them because of the administrative hurtles (to take one example, "Only about 1 in 6 people who are eligible for child care sub…

I'd say it's more likely due to lack of design than thoughtful malicious design.

Re: India floats the idea of a universal basic income

#197

Post by aptwebapps »

piyush_soni wrote: post #188
lngnmn wrote: post #155

India is very special, traditionalist society. As person who have spent a considerable time living in North India, I would say that people will turn this free money into gold and garments and other status symbols, like mobiles, which in turn, will cause inflation and soaring of prices of gold and other assets. The analogy could be a land in the great plains of US. In San Francisco or New York the value and the price…

You say as if there are temples offering free food on a daily basis in every nook and corner in India. The reality is so different from your experience.

I don't think that the GP's point was that free food is ubiquitous, merely that it is underutilized where it is available. I'm not commenting on whether that's actually the case, mind you.

Re: India floats the idea of a universal basic income

#198

Post by aptwebapps »

lngnmn wrote: post #155

India is very special, traditionalist society. As person who have spent a considerable time living in North India, I would say that people will turn this free money into gold and garments and other status symbols, like mobiles, which in turn, will cause inflation and soaring of prices of gold and other assets. The analogy could be a land in the great plains of US. In San Francisco or New York the value and the price…

" ... which in turn, will cause inflation and soaring of prices of gold and other assets."

Whether they do that or not, it is not likely to cause much inflation. Funding for the scheme is meant to be taken from other, existing, programs, so the total stimulus is zero or near zero. Even if it does boost the price of some luxury items, and I am skeptical that will do so to any significant degree, that would simply reduce the consumption of said luxuries. Also, you aren't going to buy much gold with 7k p.a..

Re: India floats the idea of a universal basic income

#199

Post by ozy »

gizmo wrote: post #191
ozy wrote: post #151

My vote goes to redistribution of wealth, by means of a progressive tax that starts negative. It is the human thing to do. But it also aligns with economics and politics. Redistribution: because more money at the bottom, means a larger overall market, and I think a more stable economy. Progressive tax: any paying work will always improve your situation. (So people stay motivated to work.) Taxing wealth creation (and…

The negative income tax is not a progressive idea. It was originally proposed by Milton Friedman as a way to dismantle the social safety net and get rid of the minimum wage, food stamps, social programs, pensions, and all those other programs previous generations have fought and died for. What do people get in exchange? Well, a bunch of money, but nowhere near enough to buy all the services they just lost from the fr…

"Subsidies take that into account, the negative income tax does not."

In my country there are both subsidies, and tax breaks for such situations. Is anything I said implying we abolish that? I would suggest it translates to more negative tax for such situations.

"It's a far right idea that, if executed, would have horrific consequences for the poor."

It is wealth redistribution. Which is not a far right idea. Any kind of wealth redistribution is good for those who have little. (Unless you redistribute it only to the rich, but that is not commonly understood with the term.)

But you imply it does not? Would you mind doing that "napkin" math and show us what you mean?

Re: India floats the idea of a universal basic income

#200

Post by azernik »

gizmo wrote: post #191
ozy wrote: post #151

My vote goes to redistribution of wealth, by means of a progressive tax that starts negative. It is the human thing to do. But it also aligns with economics and politics. Redistribution: because more money at the bottom, means a larger overall market, and I think a more stable economy. Progressive tax: any paying work will always improve your situation. (So people stay motivated to work.) Taxing wealth creation (and…

The negative income tax is not a progressive idea. It was originally proposed by Milton Friedman as a way to dismantle the social safety net and get rid of the minimum wage, food stamps, social programs, pensions, and all those other programs previous generations have fought and died for. What do people get in exchange? Well, a bunch of money, but nowhere near enough to buy all the services they just lost from the fr…

"Progressive tax" is not a comment on the political origins of the idea. It is a technical term for any tax which has a higher effective tax rate for richer people (the opposite being a regressive tax).
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