[gyey]

I don't see how they would afford this. Rough approximations show that even giving $20 a month to India's 900 million adult population would mean an annual expenditure of 216 billion dollars, more than 4 times the country's annual defence budget. Where does all this money come from? Increased taxes from the middle class (so that they pay $40 to get $20)?

[chiph]

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). Family size is 3 (average household size is really 2.54 persons in the US)

US Population: 312 million, which is 104 million families (households). The Census dept. says poverty level for a family of 3 is $20,000, so that's what BI must match. This gives us annual BI payments of $2.08 trillion.

Savings from shuttered entitlement programs: Medicare, Medicaid, CHIP, ACA subsidies: $938 billion. EITC & CTC: $362 billion. Total savings is $1.3 trillion annually.

But what about Social Security (OASI/DI) with $888 billion in payments? Since that's a pay-it-forward program we can't end it suddenly (it'd be political suicide, in any case). It'd have to be tapered off in some fashion. The trust fund (Al Gore's "Lock Box") doesn't exist as a big pile of money to be tapped, as that has been turned into US-issued Treasury Bonds.

So there's a shortfall of about $810 billion each year. Could we tap into the money sent to the Pentagon? Yes, but that's "only" $610 billion and we'd have a military that isn't being paid and with increasingly obsolete equipment. Not a good situation.

[Sone7]

What are you basing that on? I don't buy the idea that America can't afford basic food and shelter for every man woman and child for even a second.

Have you ever thought about how much poverty is negatively affecting the potential future of the US? I suspect the cost to society of children growing up in an environment with constant hunger is much, much larger than the cost of feeding that kid.

[chiph]

See my edit, with some super-simplified numbers.

[JackdawX]

What you've just calculated there is the cost of giving everyone, including middle class and rich people, a $20k tax break. Obviously this wouldn't work, as the amount of tax in and out of the system needs to be the same. The easiest method or distribution to understand is negative income tax:

https://en.wikipedia.org/wiki/Negative_income_tax

https://www.youtube.com/watch?v=xtpgkX588nM

Would it work in real life? Dunno. Lets see what the outcome of the various tests are. The key question isn't the maths actually, but whether people will choose to work enough to support the system.

[hackalaugh]

Kind of thought large scale BI would come as a result of widespread automation of the labor force. This has some good points about potential sources for funding BI, as well as examples of places that have implemented some form of BI (including Alaska), and it's effects on local populations, poverty and personal productivity.

https://futurism.com/images/universal-basic-income-answer-au...

[Jweb_Guru]

Raise taxes on the wealthy (yes, including Silicon Valley programmers). It's really that simple. People just don't want it to be.

[gumby]

> Raise taxes on the wealthy. It's really that simple.

I'm a big fan of aggressively progressive tax systems but it isn't as simple as you think.

California has a very progressive tax system, with most people paying some but most of the money coming from a small number of taxpayers. Sounds great, and basically most people like it. The problem is that when the economy tanks, California takes a huge hit in income since wealthy taxpayers' capital gains drop precipitously.

Yes, there's a simple-to-describe fix: build a surplus in good times and borrow in downtimes. But this is very hard to implement.

[exclusiv]

Silicon valley programmers aren't wealthy. They have good salaries though.

[dllthomas]

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.

[chiph]

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.

[dllthomas]

> 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.

[woofyman]

>Savings from shuttered entitlement programs: Medicare, Medicaid, CHIP, ACA subsidies: $938 billion

You're proposing eliminating the health care of 120 million people? What we really need is universal, single payer health care.

[tzs]

> What we really need is universal, single payer health care.

Why does it need to be single payer? Multi-payer systems can achieve universal or near universal coverage at good costs. See, for example, Germany or Japan.

[austincheney]

The money comes from sacrificing existing entitlement programs, which might actually cost more.

Think about it like this in the US: Imagine giving everybody a basic income and eliminating minimum wage, social security, medicare, welfare, and so forth...

Naturally some people would become wealthier (paying down existing debts) and some people would become poorer (spending money more rapidly and increasing their debt burden), but these are personal decisions.

[chimeracoder]

> Think about it like this in the US: Imagine giving everybody a basic income and eliminating minimum wage, social security, medicare, welfare, and so forth...

What happens when someone inevitably spends their entire income on non-essential expenses, or bets it all on black, or gets talked into making a bad investment, leaving them with no money in the bank? Do we just tell them, "well, suck it up and get a job"? "Sorry, you can't feed yourself because you made your choice on how to spend your money"?

Replacing all other entitlement programs with a cash handout is a political non-starter.

[cmdrfred]

>Do we just tell them, "well, suck it up and get a job"?

Most entitlement programs in the United States are based on the poverty line. Currently that number is $11,770 for an individual. Working 40 hours a week you'd receive $15,080. Thus a great many working individuals simply do not qualify for much government assistance already as they not only receive more than minimum wage but they also work more than 40 hours a week.

My point is the way the system is currently designed punishes the working poor who have managed to make a life for themselves and rewards those with part time jobs, many of whom have chosen to not do so. If framed in this way I estimate that this would not only be politically viable but the party who proposed it would win in a landslide.

[pkaye]

So you are taking money out of social security and medicare which currently people earned (you return is somewhat proportional to how much taxes you paid) into a general pool? In that case, we should start applying FICA taxes on investment income also then because then it is a general tax.

[Jarwain]

I would think that medicare becomes a sort of single-payer system; you get the same Basic Income and the costs of the insurance come from the pool.

I do think that some aspects of our tax system could be reworked. Creating a wealth tax and removing income and other redundant taxes seems to be a popular idea[1]

[1](http://www.nytimes.com/2012/11/19/opinion/to-reduce-inequali...)

[gertef]

money is fungible, and SS benefits are extremely extremely loosely proportional to how much taxes you paid.

[jganetsk]

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.

[pkaye]

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.)

[gyey]

Less than 2.5% file tax returns and less than 1% pay tax.

http://www.cnbc.com/2016/05/03/guess-how-many-people-pay-tax...

[jganetsk]

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.

[surfmike]

That is also no longer a Universal Basic Income.

[jganetsk]

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.

[surfmike]

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).

[jganetsk]

Absolutely it does get around the cost issue. Someone with no income receives just a UBI. They cost the system $20. Someone with non-zero income recives both a UBI and a higher income tax burden. What net impact does that individual have on the cost of the system? If their income is greater than the UBI... the impact might be zero, or negative.

[surfmike]

Assuming a 40% tax (no idea what it would actually be in practice), everyone earning less than $50 a month would be a net cost.

As a thought experiment, imagine that you increased the UBI payments so that they took up all the gross income of the country. Now your tax rates are 100%, even though the "net impact" of the redistribution is 0. A smaller UBI is the same concept, just the percent of income distributed is smaller. The bigger the UBI, the larger your tax rates on all workers. As those tax rates reduce the supply of labour, the costs mount even more.

[bryanlarsen]

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.

[surfmike]

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.

[jganetsk]

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.

[surfmike]

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.

[IslaDeEncanta]

There's a class of wealthy people they can tap into.

[jerf]

Numbers?

Plus at societal scale "wealth" doesn't necessarily work the way it does at the personal level. I can go to the gas pump and buy as much gas as I could personally want at the price posted on the sign. You'll find that if you stepped out and tried to buy ten billion gallons of gas at that price that the situation will change in numerous ways. Confiscating the "wealth" of the rich and trying to use it to buy things that nobody is even making right now is not something you can casually assume will work; the economy itself will need time to adjust before it could even supply the desired goods at such a different scale.

The point here being not that it's impossible, or even undesirable, but merely that naively taking stock of what "the wealthy" have by current measures and assuming you can confiscate arbitrary amounts of it and use it to buy arbitrary amounts of consumer goods without having to account for any of the prices of the goods involved in that operation changing in the process isn't effective.

[forrestthewoods]

India's nominal GDP is $1,820 per person.

[IslaDeEncanta]

Which is a lot more than $240.

[ythn]

You gotta be careful of the Laffer Curve[0] though. Tap into the rich too much and they'll leave. Make it illegal to leave... well, your country is going downhill fast.

[0] https://en.wikipedia.org/wiki/Laffer_curve

[lawless123]

"You gotta be careful of the Laffer Curve[0] though. Tap into the rich too much and they'll leave."

We should tap into it on a global scale. We'll have Moon colonies in no time!

[gertef]

They won't leave if it costs them access to the hugely profitable domestic market that makes them rich.

[panglott]

What is the revenue-maximizing rate of taxation under the Laffer curve?

[IslaDeEncanta]

About 70% of income, according to estimates. It varies for other taxes (capital, consumption, etc.).

Source article: http://www.sciencedirect.com/science/article/pii/S0304393211...

[gertef]

The exact value is near impossible to pinpoint, but you can find it by gradient methods. One thing for certain is that it's lower than the rate I currently pay. ;-)

[thesimpsons1022]

the laffer curve and supply side economics is junk/propoganda masquerading as economics. It's about as real as the scientific studies exxon releases against global warming.