Guaranteed/Basic Income

[cm husker]

 

 

 

 

Well, I guess I'm not quite done because I need to say this.

I like what Friedman had to say on his plan of a negative income tax and agree with it. It also appears that he was the architect behind the EITC and I also think that is an effective tool. But someone here misrepresented his support of the program "basic minimum income" as outlined in the linked OP. MF did not support this thought of simply giving everyone a minimum income. He says as much in the 1968 video with William F Buckley. All of his comments in the video and in the linked article pertain to his negative income tax plan and the ideals of the EITC. I wholeheartedly agree with him on those things. He flat out said just giving people the minimum income won't work because it would destroy incentive to work. He supported a 50% (at least the example he used) negative income tax, he did not support the plan as presented in the OP.

All of the linked videos and articles seem to be in support of Friedman's negative tax plan. None of them support the "give everyone a minimum income" plan outlined in the OP linked article. I thought that was the plan being discussed here. Am I wrong about that? cm has repeatedly said "see the video" "read the linked articles", "they will address your concerns about inflation" he represented that they were in support of the mincome plan. They are not and the other articles do not mention inflationary concerns at all. The reason they don't mention inflationary concerns is because those comments are about Friedman's negative tax plan (which I like) and they are not about the "give everybody $20K or $30K" plan that keeps getting bantered about. That is the plan I don't think will work. This whole f'ing deal has been caused by somebody claiming Friedman supports it, which he doesn't, and by claiming this litany of articles debunk any inflationary concerns, which they don't.

So, which plan is it that you cm and you BRB seem to think is a good idea now? The mincome plan presented in the OP or Friedman's negative income tax plan dealt with in all the articles and video? It would vastly help the discussion if everyone was talking about the same thing.

whether you structure it as a negative income tax or a basic income, in principle it's essentially the same thing, and Friendman discusses as much. It's just a small variant in how you calculate it.

But whether you write someone a check, give them a subsidy, or give them a tax break, that is a form of income from the government.

The 2 plans as presented are not the same thing. Friedman directly said his negative income tax would not work at the 100% rate. That is what simply giving everyone an amount, say $20K, would be the equivalent of. He said it would destroy incentive to work. He then went on to use a 50% negative tax rate as an example. The other issue is, we already have EITC which is a form of a rebate to those who work. It fails to address those who don't/can't work. So, I guess my question would be, does this new mincome plan replace preexisting EITC credits and all forms of tax deductions or not? Because, if it does replace them, then many of my inflationary concerns get tempered very quickly. However, the OP plan as I interpreted it, was a totally new thing that did not necessarily have to replace existing tax code issues. The only thing it was mentioned that it would replace was the highly inefficient welfare type programs. There is a huge difference in considering this based on what all is and isn't affected. Another thing to consider that makes a big difference is where is it funded from. It matters if it is handled with dollars already in the system somewhere or where those dollars come from if they aren't already in the system. If we're going to start (or more accurately, continue to on a much larger scale) redistributing more income through the taxation system, I believe it is important to address who and how that is done. That OP article really provided no details other than a general idea. Call me a sticky wicket but I don't take too well to grandiose ideas with no details. As an idea it is interesting. But it is severely lacking any amount of detail where I could say I think it is good or support it. I guess when an idea is as poorly presented as that one is, my default position is it is bad until it can be shown to work. I really do like the negative tax idea though. Like really like it.

Am I less of a dick now? It's ok, you can say no.

Yes, I know what he said. But if he set his minimum income level at $30k, then it's really no different than setting a guaranteed income at $15k. The principles are exactly the same, but he has added a nuance that he hopes will diminish disincentives to "live off of the guaranteed income). On the flipside, his approach still disincentivizes in some ways work that takes you to his minimum income threshold. The advantage of the basic income is everyone partakes, either in the form of a check from the government or a credit again income tax owed. That said, I"ve long argued that a NIT is preferable to the current system (if we refuse to go to "a consumption + rebate" tax model, which is my favorite approach).

 

I dont' recall if the OP article addresses tax reform directly, but through out the thread, I've stated that this would have to be coupled with replacing the bureaucracy of the current system, including IRS inefficiencies. It would also replace the EITC, the home mortgage deduction, food stamps, social security, medicare/medicaid, etc. That's why many libertarians love it. Instead of the government directing money for you, it is put into your hands to spend in the market where you please (that's also another example of why this is NOT inflationary).

 

I agree that a lot of detail is required, particularly around funding. I think it's reasonably likely that I personally wouldn't see a decrease in my tax bill, for example. But, I do think that it would be ideal if we could stop treating one person who make $200,000 much differently from another person who make $200,000, or one person who makes $35,000 from another person who makes $32,000 (and qualifies for benefits via a means test), which is exactly what happens today.

 

 

I think there's a political reality in every developed country where productivity is concentrated in the hands of a minority of people that dictates we need to "share" the fruits of that productivity, if for no other reason than to avoid a "workers revolution." There are already a bunch of unwieldy, inefficient policies in place to address this reality. My only position is that this guaranteed income (with tax reform) seems like a far more efficient means of achieving what is widely considered a necessary goal (even if it's an undesirable one).

 

So, simply put; figure out how much is required and then ask everyone to pitch in based on their means - not based on their means, minus whatever special tax breaks that can be taken advantage of.

 

 

Transparency, transparency, transparency should be the theme in approaching these reforms. What drives toward a transparent evaluation of dollars actually spent and by whom.

I agree with all of this. I also would prefer to see the NIT with a consumption tax. However, I still maintain that the mincome plan in the OP could be a very different animal. The devil is in the details and it didn't have any.

 

 

 

See, we aren't that far apart (think I was the first to actually introduce NIT as an approach in this thread).

 

But just to confirm that we aren't too far apart, you acknowledge and agree that a person earning $0 in a NIT scheme would be provided a "guaranteed income" of 50% of whatever the minimum threshold is, right? So if the threshold is $30k, the $0 earner receives $15k.

 

The problem I have with MF's version of the negative income tax is that if I make $30k, I don't think I get any bump. Granted, I'm not losing anything (as I would be in today's system), but it does diminish some amount of incentive to go from say $25k (which means I have a total income of $27.5k under the NIT) to $30k, if the marginal effort required to reach $30k isn't worth the $2,500 I'd be getting in extra pay. That's not a huge deal because we aren't losing out that much on productivity, but it's why I'm more supportive of a basic income tax for everyone (essentially a stipend or rebate), which would be more fair in application.

[84HuskerLaw]

The basic point or justification of the earned income tax credit (important word is 'earned' btw) is that it was a way to reward the welfare recipients who have been living off the system for generations basically to go out and find work, even if it was basic minimum wage, part time stuff. Every dollar of 'earned' income was very valuable in several important ways:

1. the EIC credit rewarded earning wages for folks who were not otherwise working.

2. the work it incentivized was going to encourage the new working welfare recipitent to continue working, gain valuable experience and develop, hopefully, a stronger work ethic and let the new working person realize the mental and emotional benefits and self worth and esteem from work and becoming self supporting over time.

3. every dollar of work generated income is going to be taxed over the future lifetime of the new workers so perhaps in the early years of the EIC, the low wage earner will be getting more back that he or she every paid in, but as time goes on, the worker will become a more valuable, productive, employable worker who will earn more and graduate off the EIC and become a NET tax payer instead of tax receiver.

This entire plan was designed, NOT as a supplement to 'welfare in its traditional form' so much as a way to encourage the non working members of the society to become working members. It is an incentive and encouragement to work and not be a drain on the society's resources.

 

This is what MFriedman was demonstrating and giving an example for the Congress and politicals. How to use the free market economy coupled with tax policies to increase gainful employment and increase the gross national product and grow our economy to create wealth for all Americans. Not rocket science but good basic capitalist economics. Giving people money or food or housing or healthcare or other basic necessaries of life is without a doubt a disincentive to work for those same things. Anytime people are offered something for nothing, the vast majority will quite rationally take it. You are rewarding the wrong behavior in a sociologocial manner.

[cm husker]

I got the EITC when I served in the military. It's not just for generational welfare recipients.

[cm husker]

The NIT, as a form of guaranteed income, is no different in many ways from expanding the EITC but eliminating the phase out.

 

The reality, most research shows that the vast majority of people who receive stipends don't use it to reduce work effort, but rather to increase their total take home. That's why I don't find the "people will quit working" arguments convincing at all. In fact, probably the opposite will occur, except the added benefit is we can do away with the minimum wage, which is probably the single biggest barrier to young people entering the labor market and building skills early that will pay off later.

[JJ Husker]

 

 

 

 

 

Well, I guess I'm not quite done because I need to say this.

I like what Friedman had to say on his plan of a negative income tax and agree with it. It also appears that he was the architect behind the EITC and I also think that is an effective tool. But someone here misrepresented his support of the program "basic minimum income" as outlined in the linked OP. MF did not support this thought of simply giving everyone a minimum income. He says as much in the 1968 video with William F Buckley. All of his comments in the video and in the linked article pertain to his negative income tax plan and the ideals of the EITC. I wholeheartedly agree with him on those things. He flat out said just giving people the minimum income won't work because it would destroy incentive to work. He supported a 50% (at least the example he used) negative income tax, he did not support the plan as presented in the OP.

All of the linked videos and articles seem to be in support of Friedman's negative tax plan. None of them support the "give everyone a minimum income" plan outlined in the OP linked article. I thought that was the plan being discussed here. Am I wrong about that? cm has repeatedly said "see the video" "read the linked articles", "they will address your concerns about inflation" he represented that they were in support of the mincome plan. They are not and the other articles do not mention inflationary concerns at all. The reason they don't mention inflationary concerns is because those comments are about Friedman's negative tax plan (which I like) and they are not about the "give everybody $20K or $30K" plan that keeps getting bantered about. That is the plan I don't think will work. This whole f'ing deal has been caused by somebody claiming Friedman supports it, which he doesn't, and by claiming this litany of articles debunk any inflationary concerns, which they don't.

So, which plan is it that you cm and you BRB seem to think is a good idea now? The mincome plan presented in the OP or Friedman's negative income tax plan dealt with in all the articles and video? It would vastly help the discussion if everyone was talking about the same thing.

 

whether you structure it as a negative income tax or a basic income, in principle it's essentially the same thing, and Friendman discusses as much. It's just a small variant in how you calculate it.

But whether you write someone a check, give them a subsidy, or give them a tax break, that is a form of income from the government.

The 2 plans as presented are not the same thing. Friedman directly said his negative income tax would not work at the 100% rate. That is what simply giving everyone an amount, say $20K, would be the equivalent of. He said it would destroy incentive to work. He then went on to use a 50% negative tax rate as an example. The other issue is, we already have EITC which is a form of a rebate to those who work. It fails to address those who don't/can't work. So, I guess my question would be, does this new mincome plan replace preexisting EITC credits and all forms of tax deductions or not? Because, if it does replace them, then many of my inflationary concerns get tempered very quickly. However, the OP plan as I interpreted it, was a totally new thing that did not necessarily have to replace existing tax code issues. The only thing it was mentioned that it would replace was the highly inefficient welfare type programs. There is a huge difference in considering this based on what all is and isn't affected. Another thing to consider that makes a big difference is where is it funded from. It matters if it is handled with dollars already in the system somewhere or where those dollars come from if they aren't already in the system. If we're going to start (or more accurately, continue to on a much larger scale) redistributing more income through the taxation system, I believe it is important to address who and how that is done. That OP article really provided no details other than a general idea. Call me a sticky wicket but I don't take too well to grandiose ideas with no details. As an idea it is interesting. But it is severely lacking any amount of detail where I could say I think it is good or support it. I guess when an idea is as poorly presented as that one is, my default position is it is bad until it can be shown to work. I really do like the negative tax idea though. Like really like it.

Am I less of a dick now? It's ok, you can say no.

Yes, I know what he said. But if he set his minimum income level at $30k, then it's really no different than setting a guaranteed income at $15k. The principles are exactly the same, but he has added a nuance that he hopes will diminish disincentives to "live off of the guaranteed income). On the flipside, his approach still disincentivizes in some ways work that takes you to his minimum income threshold. The advantage of the basic income is everyone partakes, either in the form of a check from the government or a credit again income tax owed. That said, I"ve long argued that a NIT is preferable to the current system (if we refuse to go to "a consumption + rebate" tax model, which is my favorite approach).

 

I dont' recall if the OP article addresses tax reform directly, but through out the thread, I've stated that this would have to be coupled with replacing the bureaucracy of the current system, including IRS inefficiencies. It would also replace the EITC, the home mortgage deduction, food stamps, social security, medicare/medicaid, etc. That's why many libertarians love it. Instead of the government directing money for you, it is put into your hands to spend in the market where you please (that's also another example of why this is NOT inflationary).

 

I agree that a lot of detail is required, particularly around funding. I think it's reasonably likely that I personally wouldn't see a decrease in my tax bill, for example. But, I do think that it would be ideal if we could stop treating one person who make $200,000 much differently from another person who make $200,000, or one person who makes $35,000 from another person who makes $32,000 (and qualifies for benefits via a means test), which is exactly what happens today.

 

 

I think there's a political reality in every developed country where productivity is concentrated in the hands of a minority of people that dictates we need to "share" the fruits of that productivity, if for no other reason than to avoid a "workers revolution." There are already a bunch of unwieldy, inefficient policies in place to address this reality. My only position is that this guaranteed income (with tax reform) seems like a far more efficient means of achieving what is widely considered a necessary goal (even if it's an undesirable one).

 

So, simply put; figure out how much is required and then ask everyone to pitch in based on their means - not based on their means, minus whatever special tax breaks that can be taken advantage of.

 

 

Transparency, transparency, transparency should be the theme in approaching these reforms. What drives toward a transparent evaluation of dollars actually spent and by whom.

I agree with all of this. I also would prefer to see the NIT with a consumption tax. However, I still maintain that the mincome plan in the OP could be a very different animal. The devil is in the details and it didn't have any.

 

See, we aren't that far apart (think I was the first to actually introduce NIT as an approach in this thread).

 

But just to confirm that we aren't too far apart, you acknowledge and agree that a person earning $0 in a NIT scheme would be provided a "guaranteed income" of 50% of whatever the minimum threshold is, right? So if the threshold is $30k, the $0 earner receives $15k.

 

The problem I have with MF's version of the negative income tax is that if I make $30k, I don't think I get any bump. Granted, I'm not losing anything (as I would be in today's system), but it does diminish some amount of incentive to go from say $25k (which means I have a total income of $27.5k under the NIT) to $30k, if the marginal effort required to reach $30k isn't worth the $2,500 I'd be getting in extra pay. That's not a huge deal because we aren't losing out that much on productivity, but it's why I'm more supportive of a basic income tax for everyone (essentially a stipend or rebate), which would be more fair in application.

Yes, I agree that a $0 income person should be bumped up to half of the minimum threshold, 15k in a 30k system. I think it could work even bumping extremely low income people to almost a livable wage aND 15k probably doesnt get them there. Besides that, if they can't live on it, the whole plan kind of falls apart. And I think we also both agree there could be better blending just above and below that 30k demarcation point. The people between 15k and 30k would be the ones I would be most concerned with introducing any disincentive to work. It could be graduated to alleviate that concern I believe. Otherwise we would get the situation, as in Moiraine example, of going a few dollars over some threshold and losing out on a bigger amount. Even though it would likely work and still be better without that graduated blending, I believe it would have to be implemented to make it politically acceptable. Many people less conservative than me just wouldn't stand for a plan that caused even a few people to opt out of work if they are physically and mentally able. I could live with it if t helped fix our current broken system. Going to a consumption tax also would help address many of those types of concerns.