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Comment by marcell | Hacker News Reader

I'm very skeptical of basic income as commonly understood.

The typical basic income program I've seen goes something like this: give every person in the country $10k to live on, no strings attached. [a]

1) As defined above, this is horribly inefficient and expensive. I, a software engineer in Silicon Valley, would receive this $10k. How does this benefit society? I already make over $100k; I don't need additional income support.

2) As noted elsewhere in this thread, the US has 300M residents; naively the cost of this program would be $3T!

3) If you do start to add guidelines for poverty, etc., you just reproduce the current welfare system that exists in the US, which balances available government revenue against our desire to help poor people.

[a] https://en.wikipedia.org/wiki/Basic_income, "all citizens or residents of a country regularly receive an unconditional sum of money ... in addition to any income received from elsewhere"

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The catch is very simple; you receive $10k, but as your income is $100k+, your income tax will go up by $10k + $X.

1) You getting the $10k benefits society in that we don't add any administration on the front end - deposits go to everyone, and then the taxing back step is already being done (as you're already filing taxes). So cheaper administration cost overall than doing a means test or whatever.

2) A basic income has to be introduced with corresponding tax increases. For some people the basic income is a net positive (if you're currently poor, broadly). For others it's a wash (middle class, by whatever definition). For others (like you and me, most likely) taxes will go up to pay for the poor. But then there are all the savings basic income leads to - fewer administration costs, fewer costs of poverty (like homelessness and crime), etc.

3) Right, don't do that. Handle it through taxation at the back end.

1) How is this more inefficient than our existing welfare system? Seems a lot more efficient to give everyone money rather than spend $100M on bureaucratic infrastructure for verification and employment tracking.

2) It benefits society because you no longer have to work to live. This affects how you make decisions about your employment. You would be more likely to change jobs when you're unhappy, for example. This is good.

3) Whether you make $40k, $100k, or $500k, the $10k isn't there to prove "additional income support". The system could be set up so that after basic income is implemented, your disposable income is the same as it was before--people making $40k wouldn't have $10k in free money to spend, because their taxes would go up $10k a year, for example. The key here is that if they choose not to work for some period of time, they can. That's not how I think it ought to be implemented, but the principle is true.

4) If government handed out $10k to everyone, they could tax everyone $10k and it would be like nothing happened. The difference in implementation would be that the additional taxes would be progressive, while the benefits are flat. So if you make over $100k a year, you might be taxed $15k more than you were before, but you would also receive $10k. Without a doubt, an effective basic income would require a more progressive tax structure than what we have.

5) "If you do start to add guidelines for poverty, etc.," not familiar with this reference, but presumably a basic income would eliminate extreme poverty. Do you mean like, for example, what would someone who was physically incapable of working receive? Is the basic income enough?

> Whether you make $40k, $100k, or $500k, the $10k isn't there to prove "additional income support". The system could be set up so that after basic income is implemented, your disposable income is the same as it was before--people making $40k wouldn't have $10k in free money to spend, because their taxes would go up $10k a year, for example.

> So if you make over $100k a year, you might be taxed $15k more than you were before, but you would also receive $10k.

So basically as a middle class person, I don't benefit at all, I may even lose money, but some kid who has no income and wants to live in his parents basement gets $10k/yr for contributing nothing to society? Am I understanding this correctly?

The upper class won't care - this is pennies to them, but this is going to bite the middle class badly and completely change their incentives to avoiding getting housing and living as cheaply as possible to minimize or eliminate work.

You always have to think very carefully about the incentives you create with something like this. This seems to create very bad incentives to me, incentives which would have caused me to make very, very different decisions in life drawing me away from any sort of productivity in society.

I'm not strictly against this idea, but as you've presented it, I can't see a way this would ever be implemented, how would you sell it to the middle class?

> So basically as a middle class person, I don't benefit at all, I may even lose money, but some kid who has no income and wants to live in his parents basement gets $10k/yr for contributing nothing to society? Am I understanding this correctly?

The benefit for you is that you'd be living in a better society. Hopefully, you'd see reductions in crime, improvements in various service jobs, etc.

That kid gets $10k/year, sure, but then again lots of people already have the means to live in their parents' basements. Most of them prefer not to do so.

However, there'll be other people getting that $10k/year. Single mothers could spend more time with their children. More people would become educated. The job market would become more liquid for employees, hopefully improving working conditions.

The idea is that the taxes scale, so for the middle class the tax is negligible. You get $10k, and your taxes are increased by $12k if you're making less than $100k.

As for teenagers sitting in their parents basement - The thought is that $10k lets them live and do anything they please instead of being tied to a shitty job or their parents basement. In theory they will choose to contribute to society in some way and not just play video games all day.

But that is what we need to test - Will people choose to play video games and watch TV all day, or choose something fulfilling and 'productive.' Then we have to redefine productive, some other comments in this thread speak about that.

It might seem more efficient to give everyone money rather than spend on bureaucratic infrastructure until you've realised just how many adults don't work or pay income tax or claim welfare. The choice between raising taxes or cutting incomes for the people that do really need the welfare payments isn't a pretty one...

I'm also a bit skeptical, which is why there is a need for experimentation on the topic.

Aside from that:

1. You'd have the freedom to quit your job without fearing homelessness or hunger. Suddenly, you're a lot less stressed.

2. We are wasting trillions on making new fighter jets or new wars we don't need, surely we can cut those programs and then spare a few trillion for something more useful.

3. An open question, I think. The guidelines for poverty would likely have to be open to change in order for a UBI to work.

1.) We'd have to implement it so that starting somewhere on the pay scale, taxes increase so that by some point you pay back to full $10k you received. Naively: $25k income you pay back $1000 of the $10k in taxes at $50k, pay back $2500, etc. That way you, making over $100k, essentially get $0 basic income by the end of the year.

2.) You probably have to say "everyone over 18 gets $10k, each child up to 3 per family gets $2k"...or something similar. Getting $10k per child creates some crazy incentives. (2010 there was roughly 70m people under 18, so it's only $2.38 trillion! ;)

3.) You can probably remove a ton of welfare programs if you do this, but not all. You can't completely remove the safety net, but a lot few people should have to be serviced by said net.

> Naively: $25k income you pay back $1000 of the $10k in taxes at $50k, pay back $2500, etc. That way you, making over $100k, essentially get $0 basic income by the end of the year.

If I recall correctly about 50k is median income for the working population, so you're still paying most of your population at least $5000. And that's just the currently working population, there are so many non-working adults who will also want the free money, I can envision the divorces being had for an extra $10k right now... the incentives this creates are very bad.

"As noted elsewhere in this thread, the US has 300M residents; naively the cost of this program would be $3T!"

So you raise taxes. For the people who don't need the extra $10k... well, that's OK, because their taxes will go up by some amount. Possibly more than $10k, possibly less. It depends on how much they earn.

You do still have the problem of determining what the progressive tax looks like, but this is a simpler problem than administering a large number of social welfare programs, all with their own eligibility criteria.

Naively, a $3T program would increase the US budget by around 50% even if you eliminated all existing social security and unemployment benefits.

I can't see determining a politically acceptable and GDP-neutral progressive tax that finds an average of 50% extra per person as a simple problem, and that's even before you start dealing with the backlash from equally unhappy people whose existing welfare or social security program entitlements add up to more than $10k per annum...

> 1) As defined above, this is horribly inefficient and expensive. I, a software engineer in Silicon Valley, would receive this $10k. How does this benefit society? I already make over $100k; I don't need additional income support.

So give basic income only to people doing less than the basic income, and take it away once you are doing more. That's how it's been implemented in some countries, and I don't see any reason not to follow this scheme.

The point is that determining who is worthy or not is difficult and just giving it to everyone reduces administrative costs. Tax rates for high earners can be increased so above a certain point the benefit would be outweighed by additional taxes.

No non-strawman BI scheme that I have seen proposes just giving everybody the same net basic income, somehow pulling the money out of thin air. Everyone's gross income would rise but middle to high income households would have their income taxation increase to compensate.

Presumably progressive tax increases would accompany a guaranteed income such that some percentage of the population would get no net benefit, at the least. The point is that it's much cheaper to administer than traditional safety net programs and less nannyish.

I've always heard it pitched as some sort of sliding scale. Basically you'd get a certain amount based on your level of current employment but it doesn't require many of the checks Welfare has. I've also seen people say doing a basic income then eliminate food stamps and welfare and it ends up being a cost savings.

It sounds good in theory that this very odd system of income could end up _saving_ us money, but I don't actually know if that's true and is probably highly dependent on whatever scale is used when deciding how much basic income a person receives.

Personally, I think one way to handle funding is that current tax deductions might count in some form as coming 'from' basic income so if you were already making significant income, then maybe there would be no additional government expenditure.

Negative income taxes (linked in other comments) is similar to this idea.

it's more or less negative tax; part of your income is already tax-free, BI is just stretching the idea the other way than it usually happens. also don't forget to cut the cost of most welfare - BI should handle most of it. it might actually cost less if welfare administration is expensive enough!

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