promethea.incorporated

voximperatoris:

socialjusticemunchkin:

wirehead-wannabe:

voximperatoris:

The linked article,  “A Philosophical Economist’s Case against a Government-Guaranteed Basic Income,” is even better.

I would have liked to see some exploration of more possibilities, including a NIT, but overall the first section of the linked article is good. The rest of it is mostly appeals to liberty based on moral intuitions that I don’t share, so I can’t comment on how convincing others will find it.

In general though, yes, we need more people playing around with the numbers and trying to figure out exactly how expensive all of this would be.

IT DOESN’T ACCOUNT FOR THE EFFECTIVE MARGINAL TAX RATES OF PEOPLE CURRENTLY RECEIVING ANTI-POVERTY PROGRAMS

If we replace all income taxes and anti-poverty programs (and also all the bullshit benefits like the mortgage deduction) with a flat income tax equivalent to the current highest marginal tax bracket and a basic income equivalent to what we can afford then, we’ve certainly superficially increased taxation substantially, but the massively increased simplicity in the economy must be accounted for in any analysis that wishes to be actually sufficient.

Having an anti-poverty program with a cutoff income is equivalent to effectively having a really bullshit form of taxation with marginal tax rates all over the fucking place which distorts the economy far more than a nominally higher but stable and predictable flat marginal tax rate (because we aren’t hiding any bullshit anywhere). Anti-poverty programs with bullshit cutoffs also introduce deadweight loss (or else I’ve seriously misunderstood what deadweight loss means) and if deadweight loss is equivalent to the square of the effective tax rate, a universal flat tax rate minimizes it.

(And for the progressives who are worried about progressive taxation: the beauty of a basic income is that it turns anything that is not a head tax because fuck head taxes, even a consumption tax even though people usually think those are regressive, into an effectively progressive tax; no need to fuck up the system otherwise because social justice is built-in to it anyway!)

This is also why NIT and UBI are effectively the same fucking thing and why we can’t just look at how much we are “taxing”; their difference is merely an accounting trick because the effective marginal tax rate is always the same in both (assuming both are implemented with the same base parameters).

You motherfuckers don’t just increase all taxes by a flat 50% because what the fuck, you abolish the FICA because it’s a bullshit tax, and tax everyone’s income at the highest marginal tax rate of approximately 40% (or more if you want to replace some of the lost taxation from abolishing the FICA, but seriously just implement a basic income and otherwise privatize pensions there’s no need to make it complicated).

The Philosophical Economist is a lazy motherfucker who should not be commenting on economics. Address basic income properly or go home. If steelmanned basic income, in its best and strongest and most justifiable form, is found wanting; then I will try to find something else. Until then, I only see people whacking at strawmen and weakmen.

Look, David Henderson is a smart guy. He’s not an idiot. He’s not a “lazy motherfucker”.

Your main objection is (as you put in all caps): “IT DOESN’T ACCOUNT FOR THE EFFECTIVE MARGINAL TAX RATES OF PEOPLE CURRENTLY RECEIVING ANTI-POVERTY PROGRAMS”.

Well, so what? Most people aren’t receiving funds from anti-poverty programs. I’m not sure why you think this sinks any part of his analysis. Yes, having steep “welfare cliffs” discourages them from working. And this is bad:

But these welfare cliffs (and that’s the most extreme you can make it) don’t cause any marginal disincentive to work for people above the level of the cliff.

And also, this is mitigated to large extent by the fact that you just can’t get welfare for the reason “I just don’t feel like working”. You have to have a real need. Now that creates fraud and bureaucracy all over the place. But it also increases the incentive to work.

A flat 40% tax may be more “predictable” than the current arrangement. It’s also a really freaking high tax! That decreases the incentive to work for everyone, not just the poor.

That is why taking everyone’s money and then giving it back to them causes deadweight loss. Willingness to supply labor is not perfectly inelastic; you tax it, you discourage it. A targeted welfare program also causes deadweight loss, even a higher level of deadweight loss for the people affected, but less overall because it covers fewer people.

The main point here is that you act like you have an absolutely knockdown argument that Henderson is an idiot for not recognizing. Yet your argument is pretty much irrelevant. A basic income or a negative income tax would cost a lot of money, much more than the current welfare system. You can’t make up the difference by eliminating (as Trump would say) “waste, fraud, and abuse”. You have to not just “superficially” raise taxes. You have to actually, genuinely raise taxes. By a lot.

Now of course you can simply pay out less for the basic income. Just eliminate all welfare and give everyone an equal share of the funds, without raising taxes. But then it’s not nearly as much money as the basic income people want. Though David Friedman estimates that providing people with the truly minimal amount they need to live, “enough food and shelter so that their lack would not greatly reduce your life expectancy,” is about $500 a year.

Eyeballing that graph, the effective marginal tax rate from $20k to $80k is about 85%. From $30k to $45k it’s about 66%. From $70k to $100k (the only part really above the welfare cliff) it seems to be pretty close to 40%.

That is not insignificant when the US median household income is around $50 000. According to Wikipedia, in 2010 the average income of the middle quintile was within the welfare cliff region.

Also, it looks like my 40% was a gross overestimate based on being accustomed to nordic levels of taxation (For comparison: the state of Finland pays out to its social programs the equivalent of around $15k a year per citizen.) and the US actually has significantly lower taxes.

I can’t spare the time for a thorough analysis right now but the entire point of the basic income is to use higher marginal taxes to phase it out from the non-poor, something I haven’t seen included in these calculations. The taxes hurt my brain so I won’t calculate them, but calculating the price of a basic income from the assumption that the lowest nominal tax brackets would stay the same is deeply mistaken because the entire point of the basic income is to make the effective marginal taxes visible and transparent and spread them more evenly.

I did take a quick look at the entire US government budget though and it seems that if I was made Economy Czar, I could gut the state enough to fund a basic income of $10k to adults and $6k to children by removing all kinds of useless non-social-program spending as well. Naively assuming the FairTax is revenue-neutral as proposed, combining it with this one seems to be my new favorite proposal. Thoroughly politically impossible because I wouldn’t be nice to the middle class and corporate cronies, but theoretically elegant and beautiful.