Comment by hedora

Comment by hedora 6 months ago

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 6 months ago

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.

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afiori 6 months ago

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

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- lcnPylGDnU4H9OF 6 months ago
  
  > money laundering
  Just for the sake of precise communication: it’s tax evasion.
  
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  afiori 6 months ago
  
  tax evasion is illegal, carefully moving money, expenses and debt can be legal.
  
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  lcnPylGDnU4H9OF 6 months ago
  
  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.
  
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- hedora 6 months ago
  
  “Strategic tax planning”
  
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  hedora 6 months ago
  
  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.
  
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mvdtnz 6 months ago

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.

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dgfitz 6 months ago

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.

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AnimalMuppet 6 months ago

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.

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- dgfitz 6 months ago
  
  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.
  
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  dagw 6 months ago
  
  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.
  
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  FpUser 6 months ago
  
  >"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.
  
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  dgfitz 6 months ago
  
  * 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.
  
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  AnimalMuppet 6 months ago
  
  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...
  
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  insane_dreamer 6 months ago
  
  > There is no reality where it works.
  except for all the trials already done that show that it _does_ work
  
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