Hacker News new | ask | show | jobs
by jltsiren 754 days ago
Pretty much every serious proposal, because that't the essence of the "basic income" part.

In a system with income-dependent benefits, poor people usually have the highest marginal tax rates. Often something like 70-90%, and sometimes above 100%. Not because of nominal taxes but due to losing benefits when their income increases.

Basic income can be largely cost-neutral. It would replace most common benefits, and it would be funded by most people paying a flat tax rate for all of their income. Typically you would see it only as an accounting trick: your nominal income tax is higher, but you receive a large automatic tax credit. People receiving benefits would have more incentives to work, which is the primary effect.

1 comments

So offer tax deductions if they have a family, for each kid they have, if they pay rent etc. France is already doing that for individual enterprises. No need to give away cash or checks and people do have an incentive to actually work. And don't call it UBI when it's not.
This was about the basic income aspects of UBI, which are orthogonal to the decision who is entitled to the benefits.

What you are suggesting is already done, and it's exactly what's wrong with the current system. When there are multiple separate low-income benefits, it's easy to accidentally create incentives against working. You try to work harder, but you lose 80% or 110% of the additional income to taxes and lost benefits. The latter because you cross one or more thresholds for the benefits.

Basic income avoids this with better coordination. There are no income thresholds for "low-income" benefits and no lower tax brackets for low to medium incomes. Everyone receives benefits in some technical sense, but most people pay them back through higher nominal taxes. In practice, most people would not receive basic income and would not pay any higher taxes. They would just do their tax calculations in a different way.