[holy_city]

(not an economist but I'm really interested in this)

What's the difference in theory and practice between UBI and changing the standard deduction/marginal rate? Like if we give out $6k a year to everyone through a $500 check, what is the difference in how that money is spent versus if we increased the standard deduction to where people would pay $6k less in taxes? (assuming that people are in fact paying at least $6k)

I get that this is partly an experiment to figure this out, but what does the current theory say?

[derefr]

> assuming that people are in fact paying at least $6k

That's the big difference. UBI most helps the people who are paying the least tax right now, such that a pure deduction wouldn't do anything for them. It's a "negative regressive" tax, whereas an increase in deductions/decrease in marginal rates—or a tax credit—is a "negative progressive" tax.

[dragonwriter]

A tax credit, if it is refundable, is exactly the same as UBI, and even if nonrefundable isn't “negative progressive” in the sense that a deduction is.

[Suncho]

(I'm not an economist either, but I'm also really interested in this)

> What's the difference in theory and practice between UBI and changing the standard deduction/marginal rate? Like if we give out $6k a year to everyone through a $500 check, what is the difference in how that money is spent versus if we increased the standard deduction to where people would pay $6k less in taxes? (assuming that people are in fact paying at least $6k)

You've partly answered your own question. One of the big differences is that people who wouldn't have paid at least $6k in taxes wouldn't get the full benefit. It's also true that the standard deduction is a deduction of your taxable income. Depending on your tax bracket, that's going to reduce the amount you owe by a different amount.

We could instead talk about doing it as a tax credit similar to the Earned Income Tax Credit, but giving it to everyone equally regardless of whether they're working. This would be more like a basic income. If we can pay people the tax credit at finer intervals instead of in one lump sum at the end of the year, that's even better.

The disadvantage is that people would still have to file tax returns. The people who need the money the most are also the ones who are least likely to be able to navigate the system. If it's exactly the same amount of money to everyone unconditionally, then we reduce the bureaucratic burden by not tying it to the tax system.

Here's a video where I answer the question of why basic income should go to rich people. I advocate keeping the complexity separate from the cash benefit system and putting all that complexity on the taxation side.

https://youtu.be/ylm1jN9cMRQ?t=430

[ilaksh]

People like me who are poor generally pay zero in taxes. Go ahead and crucify me for it. At least I am honest.

[aeternum]

If you received money in addition to paying zero in taxes, would it give you more opportunity to get a higher paying job?

[AareyBaba]

Imagine you are a high school graduate working minimum wage at a shitty fast food restaurant that just about pays your rent and food. If you had a minimum income your could think of quitting your job and going to a trade school or community college and get a better job in a year or so. The minimum income gives you the cushion to take chances at changing your life.

[shooner]

Is a higher-paying job the goal of UBI? I thought the fundamental macro issue was that as automation of one kind or another becomes an increasingly inherent part of new technologies, it will inevitably depress the human job market beyond its ability to employ enough people to maintain the economy.

[dragonwriter]

> Is a higher-paying job the goal of UBI?

Avoiding trapping people in positions where they need a dead end job with no advancement potential which forecloses opportunities for self-improvement is, indeed, one of many arguments for UBI.

> I thought the fundamental macro issue was that as automation of one kind or another becomes an increasingly inherent part of new technologies, it will inevitably depress the human job market beyond its ability to employ enough people to maintain the economy.

That's less credible of an argument than that it will create a rate of change of needed skills which will leave people stuck who cannot afford to retrain.

Short of AGI or output levels so high that diminishing returns make greater output of minimal value, automation should multiply the value of human labor while shifting skills in demand.

[ilaksh]

The plan is for the startup to make money eventually or for one of my side projects to turn into a business. If my entire income was replaced then I would focus on making the side projects into real businesses if possible. But that is a small amount but much more than $500.

[redblacktree]

Frankly, people that close to the edge can't budget out a yearly installment. The fact that it's monthly, instead of coming once a year in the Spring, is a huge difference.

[aeternum]

The concept you describe, often referred to as a negative income tax, is really just another form of UBI. Should function in a very similar way.