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by surfmike 3455 days ago
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.
1 comments
jganetsk 3455 days ago
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.

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surfmike 3455 days ago
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.
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jganetsk 3454 days ago
That's not at all what the great-grandparent comment said. It was talking about the aggregate cost of the entire system. And the great-great-grandparent was wondering "just where is the money going to come from?" but fundamentally it's not a problem. As long as the total basic income of a country is less than the total income of a country, the latter can be redistributed into the former.
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surfmike 3454 days ago
By this argument, if the basic income == the total income of a country, there is still no aggregate cost. Maybe, but I'd argue that such a system would come with huge costs due to the massive increase in taxation.
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