My first thought: can this possibly be solvent? There are apx. 32 million adults in California. Are there $32 billion spent per month in-state on things that aren't those common categories?
Then I realized that this includes business purchases. Everything sold in California would become 10% more expensive. There'd be a huge incentive to buy from out-of-state, and a huge disincentive for out-of-state purchasers to buy from California merchants.
I also wonder what it does to the population/demographics over time. If you're poor in another state, there are 12,000 new reasons per adult per year to move to California.
Including B2B purchases, could the current California economy absorb $32 billion per month in additional taxes? Even if it could, this would pervert the economics of the state so badly it's hard to know what the effects would be over time.
Note that Amazon has to charge state sales tax these days too, as do many other online retailers. So "buying out of state" is going to be pretty hard. People's eBay or Craigslist game might get interesting though with the new margins.
As much as California is one of the few states that might be progressive enough to attempt this, it'd be far better if a less populated (and smaller) state attempted UBI first. If Montana torches it's economy, it's probably a lot easier to reassemble than California's.
One nice thing about California's economy is that it's robust. There's probably enough economic activity that this wouldn't totally fuck us, but the ramifications are surely much stronger than the legislator who threw this together has considered.
"The bill would authorize the department to adopt regulations to implement the program" makes it kinda sound a bit like a Brexit vote, in that the bill is really only meant to get everyone to vote to agree to do it, and then the precise details of how you'd actually implement it would be attended to later.
UBI is a popular idea, but the way you see it isn't the popular version of it, at least in California. I only know this because I had the same misconception.
I suppose by this you mean that the Californian is going to pay a higher price for out-of-state purchases compared to if they were based outside of California?
I'd be curious to see a way of doing this that didn't depend on the arbitrary "X dollars per month" stipulation and was instead just "we're putting in this tax, whatever we pull in each month will be evenly split among the citizens". If nothing else, it would allow us to get our feet wet with UBI without people worrying about it not being financially feasible.
Giving each adult $1k costs $32 billion a month.
Assuming none of GDP is attributable to the exclusions, the program seems mostly possible, at a cursory glance. Not fully funded, but reasonably close to fully funded.
The state currently spends $220 billion a year. This program would be a substantial increase to the state's expenditures, more than doubling them.
($320 billion x 10% vat = $32 billion revenue / 32 million people = $1000 per person per month)
That just over $3.8 trillion per year of California spending that needs to be taxed at 10%.
So the overall tax impact isn't my concern.
My concern is why do this at all if just routes money through the state treasury then back into consumers' pockets?
Unless, the UBI is highly distributive,taking money from the well-to-do and giving it to the poor.
But...if it's highly re-distribute then that will incentivize the rich to leave the state and incentivize the poor to come, over time that's not sustainable.
Having said all this, I still 100% support the idea behind a UBI, I just don't think we're ready to implement on a national level much less a state level.
s/highly distributive,taking money from the well-to-do and giving it to the poor/Forced wealth redistribution
Buy a $5.50 cup of coffee? You get charged $5.98 (after the existing 8.75% sales tax) and the merchant gets $5 (because 10% of the advertised price is VAT).
That's not how VAT works in any country I'm aware of. As a freelancer I don't pay VAT for any expenses. Practically, companies often pay VAT and collect it from their customers for the government. But if they pay more then they collect they get a refund.
I can't tell if you're hypothesizing about future taxes or just didn't read the bill.
Sometimes they fail badly and serve as a warning to the rest of us that 'here be dragons' and other times they unexpectedly succeed and the rest of us can learn that, in certain circumstances, living up to your beliefs with the collective wallet can work out positively, net-net.
You know, if you'd consider listening, ordinary economists could have also served as that warning in many cases — like, for instance, in the case of AB5 and its impact on freelance journalists... or the impact of not-building-housing on the housing crisis...
Given CA is mostly a one-party state, it's more about intraparty influence over the party's platform, than it is about blaming the "other" party.
Is that what you are talking about, a voluntary thing? I am all for a new form of government of voluntary "a la carte" democracy, where, e.g., if you want "free" healthcare, you can sign up to be taxed for it, or if you want "free" education, you can sign up to be taxed for that, or if you want to "help" the homeless (which I do) you can sign up to be taxed in order to "help" that too. By all means, you want to fund the CA UBI, you should demand to sign up for that, maybe through your employer or when you file your tax return every year.
Anything but voluntary payment of taxes for anything outside of the core functions of government is actually the opposite of strong ethical underpinnings; it's objectively immensely immoral and unethical, no different than other forms of theft and slavery.
We could get around that by pairing UBI with a land value tax but the nightmare that is Prop 13 makes that impossible.
It's eating itself. The thing that makes Bay Area property so valuable (many prominent companies co-located) is going to end without more housing.
Perhaps something to gradually adjust property taxes such that people with multi-million dollar houses aren’t paying taxes as though it’s a multi- thousand dollar house?
This is the problem with the proposition system - it often encourages residents to enact policies in their personal best interests that screw over a huge number of people down the road.
At what point do the needs of society overrule the housing needs of the individual?
The elderly person will end up a serious multi-millionaire by the end of this in most cases.
I don’t think so. Your stats  are just for percent of all dwellings, many of those homes are owned by large corporations that then lease them out. If you limited it owning a single home, I think it would be significantly less, more like a 25% exemption by volume(probably less by value) this is backed up by  which says home ownership is around 56%. I’m fairly sure more individuals/families than you’d think own more than one home in the state.
That said, most areas have overly draconian zoning and regulatory costs (driven in no small part by existing homeowners wanting to protect/inflate their own investment); it's a complex issue, and Ricardian rent-seeking is only one factor.
Medi-Cal is state medical for poor families in California, so a lot of people who this would help would be excluded from getting the benefit. This bill seems like just creating another bureaucracy that moves money around without improving things much.
Then, when providers can't collect on the medical debt, they'll sell it to debt collectors and write off the difference at tax time, which the proposed VAT will have to make up for.
consider how empty section 2 is this is just a trial balloon
So either they kill off medi-cal, calfresh, and calworks, or they keep them around but disallow any "double-dipping". It seems like they've chosen the politically safer option of not killing the competing aid programs completely.
It's a core tenet to some UBI proposals. I'm aware of proposals that are supplemental to, and not replacements of, other benefits.
There's a lot of rural California. The combination of modern tech enabling comfortable and connected off-grid living and UBI opens up pretty much all of it for residence, as long as there's a grocery store accessible.
This makes no sense to me. $12K/yr is a nice supplement to low incomes. But let's say I'm a trucker making $60K/yr and I lose my job. Making 20% of my previous income is definitely nice, but it's not exactly moving the needle that dramatically.
If you're primarily concerned about job losses due to automation, why not radically increase unemployment benefits and make vocational education for adults tuition free (and maybe even offer a cost of living stipend for unemployed adults who retrain)? This approach is a LOT less expensive and far more targeted.
I fully support a UBI as a form of income security, but as a corrective for technological unemployment it just seems like a really blunt, and ultimately not terribly effective instrument.
Personally, I'd rather start with a revenue-neutral Pigovian tax+dividend  on environmental externalities like carbon and disposable plastic, which set a price of unsustainable behaviors while also functioning as a progressive tax for the vast majority of people.
It still places an excessive burden on those the UBI proposal is supposed to benefit. Necessities like utilities, phones, fuel and transportation, etc will become more costly for those who are already struggling to pay for them.
I could get behind a Pigovian tax, along with a land value tax or equity tax.
While I'm not opposed to VAT a priori, 100% agreed that those options are vastly superior.
I take it is really fresh news since I can't find a reference to governor addressing the bill yet.
One under-discussed aspect of UBI is that it might render minimum wage unnecessary; people could end up working for luxuries rather than subsistence. And of course, there are other non-monetary incentives to work (intrinsic rewards, passion projects, prestige/reputation).
Still, the issue you raise is significant. The thing that bugs me about UBI as proposed, is that there isn't a clear Schelling focus, or organic emergent self-balancing process, for deciding how much it should be. I'm a fan of Yang, but the "$1000/mo" target is ultimately arbitrary, because it's a nice round number, and large enough to have a significant impact in people's lives.
But why not $750 or $1250? Why shouldn't it index to regional cost of living and/or GDP? What metric do we use to decide when/if it should update? I don't think that's a reason not to do it, and I suspect any amount of UBI will result in better outcomes than spending the same money on bloated federal bureaucracies; but it feels very zero-sum / tug-of-war to just pick a nice-sounding number, and then have to fight over raising or lowering it every election cycle.
"(b) California residents who are 18 years of age or older and receiving benefits under the Medi-Cal program, the County Medical Services Program, the CalFresh program, the CalWORKs program, or Unemployment Insurance shall not be eligible to receive a universal basic income under the CalUBI Program."
So I don't really see what the point is. If you're targeting technological unemployment why make it so that people who have unemployment insurance are ineligible?
The $1,000 is going to be spent entirely on taxes!
The range and domain of taxes being piled on CA residents has reached an unimaginable scales. I know many people and companies who have left the State for precisely this reason. Atlas Shrugged.
Perhaps 1 percentage point increase in sales tax in that time. The top income tax rate for "normal" folks has been, I believe, 9.3%, although there was an additional 1% tax on incomes over $1M added sometimes in the past few years.
A quick search didn't turn up much in the way of useful historical charts, but it sounds like your post is more politics-based than economics-based. I'd welcome better data, I might well be wrong here.
Taxes in CA have been getting out of hand for a long time. For example, we (LA County) now have a new tax on every square foot of a property that does not allow rain to hit soil. For home owners it’s hundreds of dollars per year. For businesses, thousands to tens of thousands. You pay for your home, driveway, entrance path, patio cover, concrete patio, pool, carport, garage, barn, etc. Home Depot pays for their entire building and parking lot. Just insane.
Let’s take another one: I’ve been paying taxes on every gallon of gasoline for road maintenance for over thirty years. Our roads are an absolute disgrace. They slapped on yet more taxes recently to “fix” them. So, they tax everyone for decades, don’t do their jobs, hand out ridiculous pensions and benefits and then ask for more money.
This is insane. Political? Well, if it isn’t it means over thirty years of absolute incompetence and possibly even criminal behavior on the part of various agencies. And the solution to both is political.
So, yeah, I think you are right, it is.
9.3% marginal rate from $49k to $500k, then to 10.3% over $500k.
additional 1 percentage point at the $250-300k, another 1 percentage 300k-1m, and then a 3rd additional 1 percentage point over $1m.
So the top rate is 13.3% up from 10.3%; with a tiered increase in the 9.3% rate to 10.3 and 11.3% depending on income.
That's how UBI work. Only poor people pay less than they receive.
What people have to understand is that these programs are self-defeating and incredibly destructive in the long term. They establish a base-level cost structure that is inescapable --short of some kind of a revolutionary movement.
Faced with that, businesses and capital get the hell out as soon as they can. They do this because it is FAR easier to move your operations to another State or outsource all you can to China than to fight for decades against an ideology that has effectively pitted the unthinking public (while convincing them they actually think) against the very foundations of how it is we can live as we do: Entrepreneurship, risk taking, commerce and, yes, capitalism, even if imperfect.
Just look at what China has been able to accomplish in just 50 years. They did not do that through central planning and UBI. They are far from perfect, but they got the capitalism part mostly right, and it shows.
I can image a possible situation where this ends up taking money from poor people and giving it to rich people. Unlikely, but possible. That wouldn't be good.
Unfortunately coastal ideas are defined a priori to be everyone's best interest, so experiments on them can only return one type of data. When this creates massive unintended perverse incentives, proponents will blame its failure on lack of scale and insist that it be federally imposed on the other states that want nothing to do with it.
i’d love to see the rationale for that
I would love to have someone change my mind here if I’m off base.
H1B visa holders pay state income taxes, sales taxes, and state disability insurance. They're considered residents for tax purposes at the federal and state levels which means they pay taxes on worldwide income, just like citizens and green card holders. Why should they be ineligible? That would be a repeat of SSI/Medicare, which they also pay but may never collect.
I'm perfectly well aware of the economic and tribal arguments. The former are not convincing and the proponents of the latter can go pound sand - given my preferences, I'd exclude them long before I'd exclude immigrants over paperwork.
There are people with family spanning generations on both sides and the border pretty much crossed them.
Here's a link to a NYT article about differing treatment in various states, with Cali generally lenient:
+UBI Robs from the rich to give to the poor... and give back to the rich a little bit. "Billionaires will die without UBI." It's simply not good nor true to the intent of BI to give money to people who already have plenty. "But means testing will cost so much!" Actually means testing if you earn less than C.O.B is not very expensive, and giving UBI to everyone is very very expensive. Something like 6-12x more expensive. (PGI with C.O.B. of 24k would cost $800B annually, UBI would cost 3.6T)
+aside from giving to the rich for no good reason, UBI causes an increase in commodity prices anytime the fund is issued. This is like having a highway turn at 340* and being very incensed when people crash because they are going too fast. There is no way to avoid a spike in commodity prices when giving UBI out and especially when you give it out to everyone, why? because everyone getting more money devalues money (for a brief while). See: Supply of Money (M0, M1, M2...) and the Kuwait attempt at UBI from 2011. They blamed their ministers of commerce for the crashes on the 340* turn, of course.
+ Value Added Tax is not good to fund B.I. of any kind because it's likely that this "luxury tax" will hit a lot of the recipients of the B.I. The Roosevelt Institute did a study on a potential UBI to "grow the economy / gdp by 12% annually" which is cool to consider, but one of the key assumptions is that a funding method like a VAT would not hit the households getting UBI. Plus, their study does not do UBI, just B.I. of different tiers. If the VAT hits the consumers who get the B.I. then it's taking with the left hand what was just given with the right.
+ In short: Don't give back to the rich. Don't make a VAT that taxes the poor inadvertently (B2B vat is the only vat we could support then it seems). UBI would cause commodity spikes during currency issuance and that's unavoidable, but the amount of issuance is proportional to spikes so: Only give B.I. to people below a Climb-Out-Bound. Give them ( C-Earnings )/ 2 to incentivize their working out of poverty.
Example: Climb-out Bound 24,000. You earn 12k, the government gives you 24-12 = 6k, and now you're at 18k.
The closer you climb out of poverty, the less you get, but you cannot get more than 12k, and if you work you'll make more than someone not working. Make sense?
Because what people fail to remember is the Federal reserve act of 1913 and its FEDERAL mandate that employment be kept at a running maximum (keep them ponies movin' raw hide).
+Progressive Guaranteed Income does not violate the 1913 Federal Reserve Act, but actually works with it.
Let's take your main beef about giving money back to the rich. Why is that a problem? If we're giving everyone, say, $2k/month then it's naturally a scaled % of each person's income/wealth. For a poor person it's a lot. For a 0.1% person it's basically nothing. Additionally, there are very few rich people, so the amount going to rich people vs. everyone else is miniscule. Adding rules and overhead to manage this invites loopholes without actually solving any real problems.
I agree VAT is not the best and a wealth tax would be superior from a not-taxing-poor-people perspective. However, VAT is relatively easy to implement while something like a wealth tax is more difficult.
The main criticism is that giving everyone money costs a lot more and will also cause an undue spike in commodity prices. The more rich people you give some of the BI to, the higher the spike in commodity prices, and therefore the needing people are hurt again. It's the same reason we do not give billionaires food stamps, because the cost is subsidized by the populous indirectly through tax collection. It's not magic, UBI will not somehow be immune to the way currency has worked for thousands of years, and an increase in supply of money will only hurt those who have little, so that needs to be minimized.
Do you have any economic analysis you can point to that show commodity prices will inflate significantly under UBI for more than a short period of time? This is a criticism I see often from opponents of UBI, but I've yet to see an actual economic proof for it. In the real world prices generally tend to converge over time based on margins rather than on what people are willing to pay. It's not clear that UBI would immediately increase cost of production for commodities, so basic competition in markets suggests that prices would largely stay the same. This, of course, doesn't hold true for things like housing and healthcare that exist outside normal economic markets.
It's also worth noting that there's a good chance UBI would act to reduce the hours worked by a significant number of people such that their total income remains the same as before. For example, if your target income is $50k and you're having to work two jobs today to make that much, the result of UBI for you would most likely be that you quit one of your jobs, still make $50k total, and use the extra time to have a better life. I don't put much stock in the idea that everyone who receives UBI will immediately turn around and use it as additional discretionary income rather than changing other behaviors that have knock-on economic effects.
There are 4 people out of 40 below the 3 apples/year mark and I served them in a PGI (progressive guaranteed income way). The inflation was 9 apples this year which means we minted 109 apples and had a 9% spike in commodity prices when we issue the UBI.
At Turnson's orchard, they also have 40 people, 4 below the 3 Apples/year mark, but they decided to give everybody a guaranteed income of 3 apples. They call it "UBI" and claim it will work wonders. Let's see: Turnson creates 120 new apples to cover the UBI on top of the 100 apples his orchard actually produces. The inflation is 2.4x so people who had 200 apples got another 3 apples, and ended up with the equivalent value of 84.5 apples. People who had 0 apples also got 3 and ended up with a grand equivalent buying power during commodity spikes of 1.25 apples.
At Turnson's orchard with UBI, the poorest of the poor ended up with 1.25 apples, and everybody else's currency devalued substantially.
At our orchard, with PGI, we were able to give apples to the poorest and neediest without destroying our currency's value or buying power. Inflation 9% during issuance of currency (See Kuwait in 2011 doing their UBI thing - tis one googles deep.) At Turnson's in this example, inflation is 2.4x during currency issuance and is supposed to even-out to some midpoint between 1.0 and 2.4x. 1.09 to 1.0 has the midline of 1.045 so there is more longterm inflation no matter what. How much depends on how important you think it is to devalue currency by giving some to everyone at the same time.
(Additionally, without an incentive to work, stay employed, or provide value to society, why would people not just accept their cheques and bail? Nobody in blind support of UBI seems to think there are freeloaders or slackers in the world)
At this point, I seriously doubt you've even tried to see what the actual impacts of UBI would be before you decided it was a bad thing and decided to favor welfare. If you favor welfare because you think people should have to work, that's fine and it's an opinion I can respect. But please don't try and use garbage arguments to convince people your opinion is right. If you care to read some actual data, take a look at , in which a UBI equivalent in Mexico caused less than 1% inflation. As for your Kuwait example, I don't think you actually followed the long-term impact, in which inflation for non-food items was a non-issue after the initial spike  and continued to be a non-issue in the following year . From the link:
"With a great deal of public spending coming on-stream, and the effects of the substantial “Amiri” grant of KD1000 ($3605) awarded to every Kuwaiti, inflationary pressure is a concern. However, inflation dropped to an 11-month low of 4.6% in July, the last month for which figures were available, and the rate is expected to average 4.7% for full-year 2011, according to international press reports using figures from Kuwait’s Central Statistics Office.
Food price inflation, at 9.7%, was worryingly high, but is likely to abate over the remainder of the year as international prices fall. Increases in housing costs – the biggest single component of Kuwait’s consumer price index (CPI) – are also cooling off, as much-needed new supply becomes available."
Kuwait dished out the grant for only a year, right? That's different than adding new money to the supply every year.
Thanks for providing data, I'm always interested in taking a look. Everything I have read so far further supports my claims in my original post.
For one, the example in Mexico only gives the fund to a small portion of the population, which is consistent with PGI, and inconsistent with UBI. "PGI is welfare" is an oversimplification in my opinion, that's like saying this beet and poppyseed salad is food, yes it's true, but the nuance and most of the useful information is lost.
So again, the number of people being given the B.I. and the cyclicality of the grant have not been inspected thoroughly, but if problems emerge in isolation like the ones described, why would they not be exacerbated at scale. Most people think some sort of multiplier effect will cause advances across all disciplines, but putting fuel in every car whether empty or full is not the most efficient way to get the whole fleet going.
Do I think people should be working rather than getting BI? Not exactly -- my personal view is that automation will likely wipeout many jobs and humans will have to be more and more creative for employment. Do I think rich people who have factories and make money off of robot labor should also get UBI? No. Giving to the haves creates all these inflationary, distributionary issues effectively shooting UBI in its foot. At one point it was unclear, now it is obvious. I think that's how science works.
Kuwait is small and a 10% spike in food prices is probably a big deal, don't you agree? UBI for one year or a short term or a tiny population is not actual cyclically persistent-full population UBI. The leap between "I can whittle a chess piece out of wood" and "let's play all the grandmasters blindfolded" is quite a leap.
How often is your mind changed by a study?
Doesn't progressive income tax make UBI progressive?
But yes we should fund this with a LVT not VAT.
It's a way to make VAT good, not a way to make UBI good.
If you start adding rules, it will stop working.
For one, think about China back in the day when people all gave blood to the same vat, and then some contaminated blood caused some otherwise healthy people to get ungood diseases. Why collect first + distribute when there is cost in collection and cost in distribution? Just because I can move the fridge around my house all day does not mean it will not tire me out for other tasks. Same deal, money dries up in converting between "types" so it's not smart to Collect + Progressively Tax.
Minimize motion, that's how you close the inequality gap, not by adding more oxygen-exposed piping that can be funneled, embezzled, exploited, and ridiculed.
Compare: PGI means only some people get a monthly check for Basic Income, and its based on how much you earned (this year, last year) and you can future-withdraw from what you would get next year, take too much and you owe it. It's even smaller than the social security office and would actually close the inequality gap. If you consider the most naive argument: the absolute amount of paper is minimized, that might be a simpler way to approach how collect+distribute techniques lose a lot of velocity to friction. Trying UBI with Progressive Tax is also not the same because one is multiplication and one is linear addition. $1000 to someone wealthy is not going to move the needle, but for someone at the bottom of the barrel it will move the needle a great deal, maybe even multiple indicators will move for them at that point. Thus, money is not linearly equal, its value depends largely on how much you have already.
Same reason it's nonsense to complain about including rich people in free healthcare, college, etc.
When you try to means test things, you end up needing much more administrative machinery, and you end up with weird discontinuities where it can be better not to work so you don't get cutoff from benefits and end up worse off overall.
Earn 0: get 12k GPI
Earn 10k: get 4k GPI
Earn 20k: get 2k GPI
Earn 30k: get 0 GPI
(for the example of a 24k cut-off bound)
Mathematically, a $10k Progressive Guaranteed Income like you describe plus a 50% tax on income over $20k is exactly the same as a $10k UBI plus a 50% flat tax.
The equation is pretty straightforward and there is a pretty graph here. https://pbs.twimg.com/media/EQTCmq0UwAAM7Ku?format=png
Choose a Climb-Out Bound and adjust the amounts accordingly.