[hedora]

With UBI and a flat tax, you end up paying:

tax_rate * income - ubi

to the government. Tax rate has to go up for UBI to be revenue neutral. So, it is not inflationary. It just provides safety net for low income people.

Note that this formula would greatly simplify the tax code (especially if income included capital gains and maybe excluded donations), and is also actually progressive (your effective tax rate increases monotonically with income), unlike the current US system.

[brendanyounger]

The current US federal tax system already is progressive in this way. Your first $X are taxed at 0%, the next $Y at 10%, etc. up to 37%. Your UBI in your formula is basically the standard deduction in the current system. But you still need to work or invest to make the first $X which are federal tax-free.

[afiori]

those percentages only apply if you decide not to do any of the various legal variants of money laundering

[lcnPylGDnU4H9OF]

> money laundering

Just for the sake of precise communication: it’s tax evasion.

[afiori]

tax evasion is illegal, carefully moving money, expenses and debt can be legal.

[lcnPylGDnU4H9OF]

That kinda just means that tax evasion is still not totally precise but I still think it's closer to the mark than money laundering. They can both be either illegal or legal in similar ways and, indeed, the same otherwise-legal actions can be seen as either or both in different contexts. It's just a matter of semantics whether one's (seemingly legal) actions are better labeled as one or the other, and the tax evasion seems to more sense in this context.

Money laundering refers to making "dirty" money (profits from criminal activity) "clean" by introducing it into the general financial system in a way that doesn't easily trace it back to the crime. The way Breaking Bad used the car wash business to launder the drug money is a good example: the car wash business model doesn't have easy means of verifying the volume of legitimate transactions (e.g. inventory) so the owner can just arbitrarily perform fraudulent transactions with the dirty money. I presume it's far more complex when actual banks are involved but it's the same basic concept of making dirty money appear legitimate through some transaction.

Tax evasion is just not paying taxes. Whether or not someone avoids paying taxes through loopholes is only really a legal technicality that I don't think most people care about when discussing this topic. Corporations avoid paying the tax they should and that can be reasonably described as tax evasion even if it's not strictly illegal tax evasion.

[hedora]

“Strategic tax planning”

[hedora]

For instance, you can time (usually, defer) your income to make sure you are never in a higher tax bracket. That doesn’t worth with flat tax with UBI.

One big problem with stock based compensation is that it pushes income into a big windfall year. The top marginal tax rate in the US is something like 52%. So, someone that would pay 25-30% effective tax in a fictional average year ends up paying 52% on multiple years worth of income.

Also, you can’t use the standard deduction to make your taxes negative. Assuming the average effective federal tax rate is 25%, to convert the standard deduction to UBI, it’d be reduced from $22,500 to $5600, but applied to the total tax owed, leading to the IRS paying you if you paid less than $5600 in taxes pre-deduction.

I think $5600 is too low. It should be enough to live off of. The 25th percentile household income in the US is $40000. $10,000 UBI per person seems more reasonable (probably still too low) to me.

[hellisothers]

How do you usually defer your income if you are a W2 earner which I think most people are?

[afiori]

the people that use "I cant believe it is not a crime!" strategies are often not "most people"

[mvdtnz]

US income tax is already progressive and therefore increases monotinically with income. There's no reason to believe UBI and increased income tax brackets would result in a simpler tax system or removal of the various carve-outs - that's a totally separate issue and a poltical landmine.

[dgfitz]

So, when hundreds of millions of people got checks because covid, that wasn't inflationary? Sure feels like it was. UBI is the same thing.

[AnimalMuppet]

You're not listening. During Covid, we did not do what the GP said. So no, UBI (implemented the way the GP said) is not the same thing.

[dgfitz]

You're also not listening. It won't work. There is no reality where it works. We all know this and pretend otherwise.

Everyone on this forum with hundreds of thousands to millions of dollars in the bank will just stop working. Who pays for the UBI?

It just will not work, there is no path forward where it can.

[dagw]

If you have millions of dollars in the bank, you can invest frugally and get more than UBI off of interest/dividends today. If you're not happy with just that and still working, you won't be happy with just UBI either.

[hedora]

The main effect of UBI getting people to not work is that it raises the bar for working from “I don’t want to live outdoors and starve” to “you are paying me more than my time is worth”.

People that use ubi to quit their jobs mostly end up investing their time in things like additional education, higher paying (per hour) part time positions or entrepreneurship.

[FpUser]

>"Everyone on this forum with hundreds of thousands to millions of dollars in the bank will just stop working."

Why would UBI stop the category from working? From my personal perspective - I am an independent, make good money, have savings and work on my own terms and schedule. I just can't imagine stopping doing what I do and loose the income and freedom it gives me for some meager $1000 or so a month.

[dgfitz]

* lose

I wish this forum had a !remindme, it will not work. Everyone knows it will not work. It really is a fun idea and I wish it would work. It will not work.

[AnimalMuppet]

That's a different claim than the one you made in reply to hedora. There, you claimed post-Covid inflation as evidence, despite the fact that it didn't disprove hedora's position at all. Here, you claim (without any proof) that everyone will stop working. Even people with millions in the bank, who are working now, will stop working... because they get an extra $1000 a month?

You could be right, but I'd like more than a bald statement that "it is so" before I believe you...

[insane_dreamer]

> There is no reality where it works.

except for all the trials already done that show that it _does_ work

[AnimalMuppet]

I don't think there has been a trial that shows what happens if you do it, permanently, for everyone, and raise taxes enough to pay for it.

I don't agree with dgfitz's dogmatic "it will not work". But I don't agree with your claim, either. There has never been a city- or state-wide trial, let alone a national one, that increased taxes to pay for it. So under actual conditions, no, we don't have evidence that it works.

[insane_dreamer]

I agree there have not been any permanent trials (wouldn't be a trial, then). However, we were discussing whether "it works" or not, in terms of the impact on society (i.e., "nobody will work anymore!", etc.), not how it would be paid for, which is an important but separate question.

Raising taxes is only one mechanism. There's also reduced spending (the defense budget is now approaching $1T).

Its seems there are two opposite arguments taking place: 1) AI will eventually displace a very large number of jobs and there are no ideas emerging as to what new industries will appear to provide jobs for the displaced (and that is because the new industry would have to be something that AI is incapable of doing cost-effectively, and we only need so many barbers), and 2) people who are capable of working but do not work should not be receiving compensation from the government.

I honestly don't know if UBI is the solution (I prefer means-tested BI rather than UBI but I concede that means-tested is problematic). But there had better be a solution, because 1) above is inevitable (probably not in the next 5 years, but in the next 25 years, certainly).

[dragonwriter]

Where is even the theoretical argument that raising taxes in a progressive manner to pay for it will adversely effect the way it works?

[mike_hearn]

"Trials" by true believers who don't understand their own proposal?

We don't need trials to know if UBI can work or not. Basic economic literacy is all you need. It's like saying there's a bunch of trials that show 2+2=5. No review of the trials is required, all the statement means is the trials were incorrectly designed/run.

The concept of UBI boils down to "something for nothing", which is incoherent, practically a violation of the laws of physics. Money is not wealth. You cannot simply pass a law that magics wealth into existence. The only way to give everyone a minimum standard of wealth is via the already heavily used strategy of taking wealth away from other people who are creating it, and then hoping it doesn't bum them out so much they stop working.

[dns_snek]

We're not creating something out of nothing unless you ignore improvements in productivity and automation over the past few centuries, as well as the ones that are coming.

As time goes on, we need fewer and fewer people to do the work required for a population of given size to survive. That is an indisputable fact - how does that factor into your mental model?

[int_19h]

We are already doing it with various forms of welfare, except that it comes with a very large bureaucratic overhead because of the myriad of rules as to who can claim what. UBI with properly calibrated tax brackets is no different.