Hacker News Reader

Comment by lambdapie | Hacker News Reader

Basic income is just classical economics rebranded, and basic income is not drastically different from welfare systems that are simple, rule based, and have minimal compliance monitoring, for example Australia's.

Most of the arguments for basic income apply just as well to a welfare system like Australia's. The ones that to not are the worst ones. E.g. it's said that basic income avoids disincentivizing work. And yet as an accounting identity, all redistribution schemes must disincentive work for some people. Welfare systems place a greater disincentive to work on the poorest, which to me makes sense as many of these people have a lower intrinsic incentive to work in the first place. In any case, the lower marginal effective tax rate for the poor under basic income, is only possible because of a higher marginal effective tax rate for the middle class.

View on HN

Wasn't the money in Namibia given out to some of the poorest members of the community? The articles cited a 301 percent increase in self-employment. The concerns about gaming the system are certainly real, but it seems to me that you will always have outliers who want to take advantage. The question is whether or not a certain percentage of people behaving badly is worth the overall benefits to society, and I believe that is it.

As far as it being more of a burden on the middle class, I would happily pay more if it meant that everyone was getting more in return. Furthermore, why does it only have to be the burden of the middle class? If a corporation sees a 500 million dollar increase in profits because it aggressively automated its processes, why can't we institute rules to mandate they pay a certain percentage of the back into the UBI fund? More money for people means more potential consumers of their goods, right?

> In any case, the lower marginal effective tax rate for the poor under basic income, is only possible because of a higher marginal effective tax rate for the middle class.

Yes. Though simplicity has its own benefits. Simple schemes are cheaper to run and monitor. And they cause less economic disruption of people moving away from efficient behaviour.

Why would you need tax with a basic income? Flip it around and incorporate the tax into the income distribution.

I don't understand your point. Can you clarify?

For reference, when I speak of "marginal effective tax rate" I mean the marginal effective tax rate after including (1) welfare payments to you, (2) the tax you pay and (3) any basic income you receive, although (3) does not directly contribute to the marginal effective tax rate, since it is zero.

I'm just thinking that instead of taxing some other money (primarily debt) to fund the basic income, the basic income itself can be the money (though, additional monies may be desired), which would obviate any need for taxes/reclaimation.

The usual justification for this is that it's simpler, and reduces additional incentives to cheat the system and additional overhead. We currently have a means already in place to claim a portion of an individual's income, through taxes. More-traditional means-tested welfare systems have additional overhead of a second system trying to investigate your income to determine how the government chooses to interfere in your finances. The proposed intuition is that you get a simpler system with less overhead by just giving out a flat UBI payment, and also claiming some amount of that back via taxes that people already file, rather than employing an army of people to investigate your income every month before deciding how much to give out.

I'm not entirely certain that I've actually answered the question you intended to ask. If I'm way off the mark, could you try rephrasing a bit?

> I'm just thinking that instead of taxing some other money (primarily debt) to fund the basic income, the basic income itself can be the money

The basic income can't be the money that pays for the basic income, unless your concept is that the government prints additional money for the basic income directly (note this is distinct from the Fed printing money and buying government securities, which is just debt financing.) That's possible, just as it is for any government spending, if you break the whole independent central bank system.

Reply on news.ycombinator.com