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I haven't read much on BI, so I'm sure this has already been answered already, but: how do the numbers add up?

The US poverty line for a single person is $11k. For simplicity, let's say BI gives everyone in the US $10k per year. Times 313.9 million, that's $3.1 trillion per year. The US government spent, overall, $3.45 trillion in 2013. How would we be able to afford basic income?




Think "working-age adult" (perhaps even "household") not "individual". Also, assume that taxes will reclaim that basic income from folks making significantly more than the poverty line.

According to Wikipedia, only the bottom quartile of the US population earns less than $22500 per household; if you assume that BI isn't simply added on tax-free to higher-earning households' net income, that makes it more like 1/4 of the 80% of the population over age 14 would be eligible for full BI benefits. So, call it 20% of your original population estimate.

That makes it roughly $600 billion, with the potential chance of largely replacing welfare ($532 billion* in 2013) and federal disability ($166 billion), not to mention some portion of Social Security and other programs.

Sounds like a reasonable idea to at least explore IMHO.

* per charts at usgovernmentspending.com


Some good points. That does seem to get us to the right ballpark. However:

- Can you really exclude kids? They still need someone to support them. They may not get their 10k, but their parents need extra (presumably around 10k for each child) to support them.

- If you switch to a means-tested system (the article actually advocates for everyone gets 10k, not just the poor), don’t you lose many of the benefits the article advocates? Eg, you go back to the complexity of having to determine who’s eligible, rather than gaining the efficiency of just saying “everyone”.

- A means-tested system also creates the perverse incentive that the article’s BI would bypass: people near the threshold for BI have a weakened incentive to work extra for fear of losing or lessening their BI.

Edit: Actually, a comment lower down points out that our social security expenditures were $1.3 trillion in 2013[0], so that's our lower bound. "Income derived from Social Security is currently estimated to keep roughly 20% of all Americans, age 65 or older, above the Federally defined poverty level." Since BI would replace SS, we'll be paying at least that amount to start with.

[0] http://en.wikipedia.org/wiki/Social_Security_(United_States)


The idea of BI is generally to give everyone the money and reclaim it through taxes from those who "aren't eligible", where several models are proposed (land, consumption, or income).

Take income taxes (I like that model for its simplicity because both sides are income):

You get your $10k, but there's a progressive income tax. To invent some random figures: for the first $10k (on top of BI) you pay nothing, at $50k you pay $10k, at $100k you pay $30k. For example: for every dollar between $10k and $50k: $0.25, for every dollar beyond $50k: $0.40.

Once you earn $50k, your BI cancels out, anything higher and you contribute to the BI of others. (simplifying some more: income tax contributes to BI, all other public expenditures are paid through other taxes, like land or consumption).

Progressive taxes are well understood, relatively abuse-free (it can only be gamed by not declaring income), and at no point create a >100% marginal tax rate: tax grows faster than before, but never faster than your income.

That way the complexity of welfare, its abuse and people falling through its cracks is eliminated (or so proponents hope), while still "effectively paying" the $10k in BI only to those who really need them.

(Disclaimer: the tax brackets above probably break down easily when applied to reality, so only use them to discuss the model ;-) )


So take from the rich and give to the poor.


No, take from everyone and give to everyone. In a non-biased way. Hey, the rich get their $1k check every month too.


But that's only getting back part of the $1000+ that was taken from them


So what? You've never heard of taxes before? It's how a society functions.


Not if its funded by a land value tax instead of an income tax.


Most implementations I've read lean towards it being similar to a negative tax (there are other possible implementations out there). So if you file $0 income, you get a $10,000 credit/refund. If you make $200,000 income, you pay $20,000 in taxes.

So taxes on the top brackets pay for basic income on the lowest brackets, with the understanding that the impact isn't changing much for most people because we already have a progressive tax system and this is just a simpler/more efficient way to distribute.


Negative income tax and basic income are best seen, imo, as separate concepts. Basic income is simply giving everyone the same amount of money and then probably taxing it as income in itself, with the base level personal exemption being at least the amount given out.

I'm of the opinion that a negative income tax is a bad idea simply because it really does create the situation where the next dollar you earn on the low end can make things worse for you (or at least not improve them). Why even bother working at a low level job if what they pay you just comes out of your stipend? This is a problem mentioned with the current programs as well, where getting a job can get you cut off from the things that were saving your life, even if the job pays shit.

Pure basic income, on the other hand, means that every dollar you earn increases your income.


Huh? Nobody's suggesting a 100% rate. Every dollar you earn increases your income with a negative income tax, it just doesn't increase it by a full dollar. It might be 90 cents. Still a fairly strong incentive to work.


Fair enough, but at the lowest income levels every cent counts. I don't see any benefit in it. It seems like people prefer it because of a similar misunderstanding about the alternative (that the basic income isn't taxed for people who earn significantly more, thus its price tag is exactly N people * N dollars).


Fair enough, but at the lowest income levels every cent counts. I don't see any benefit in it.

Isn't that directly contradicting the point you made earlier? If every cent counts at the lower level, then even earning 90 cents on the dollar extra is still plenty incentive to attempt to earn more.


Some adjustments:

People under 18, 25%

Felons/criminals, probably 3%

Removing social security, medicare, and most other government social welfare programs should remove a giant chunk of the federal budget. I think if you re-do these numbers that will appear a lot more affordable.

Proponents of BI say it can't exclude anyone. That is silly. Things we consider the most basic fundamental rights: voting, free speech, are restricted for large groups such as convicted felons. It would be reasonable that anyone who fails to conform with government rules of accepted social behavior should also be excluded from BI.

The more serious problem with BI is how the dollars flow toward prices. If you make a blanket distribution of money to a large group of money the end result may just be price inflation in the goods that exist in a limited quantity, most specifically real estate.

I think BI is a fairly poor idea. But, being realistic I am trying to imagine what it would look like in use. All I see is a tool for governments to control large segments of lower middle class citizens. That may well be the goal.


Isn't excluding criminals likely to reduce what is often touted as a positive effect of BI: reducing crime by giving people what they need to survive?


> If you make a blanket distribution of money to a large group of money the end result may just be price inflation in the goods that exist in a limited quantity, most specifically real estate.

Land may exist in reasonably fixed quality, but real estate in the relevant sense (e.g., housing units) do not exist "in fixed quantity", and more money chasing them around causes more of them to be available, just like most goods. You'd expect some increase in market clearing price, sure, but also an increase in units of housing "sold" in the market (including rentals). Which is rather the point.


>Felons/criminals, probably 3%

You imply that they shouldn't get BI. Perhaps, though, the incentive for criminality would be less with BI? Especially if good drugs (particularly pot) are legal and cheap.


There are many effective ways to limit real estate speculation and thus price inflation. Land taxes, un-restrictive planning regimes, capital gains taxes on real estate sales, strong tenant protection laws, loan to value and loan to disposable income ratios, margin calls on mortgages for investment properties.

Society has to make a fundamental choice about whether they want shelter to be primarily shelter or primarily an asset for speculation.


Actually rather than dock prisoners' basic income, confiscate it as part of their sentencing to fund their internment. That makes prisons a lot more self-sufficieny.


(1) The primary sources of funding usually suggested for BI are cutting existing means-tested benefit programs and increasing high-end income taxes. (Note that many of these existing programs are currently joint federal/state funded programs, so unless BI was done the same way, this would also involve shifting some spending from the states to the federal government.)

(2) The full single-person household federal poverty line is a very high target to aim for per person for BI in an initial implementation. Half of the two-person household FPL per adult citizen and permanent resident (about $7500/each), and, if BI is going to paid to children (or, rather, guardians on their behalf) the full marginal amount for an additional family member (about $4000/each) per child (again citizens and permanent residents) is probably a more reasonable target to aim for, but I'd expect an initial implementation to start out below that and work up.


You increase the taxes by an average of $10K which means nothing at the low end (people below the poverty line) and more than that at the high end

but ideally the middle class breaks even on the idea, they pay $10K to the basic income fund and get about $10K at the start of the year as a prebate on the next year's basic income tax


I can think of three sane approaches. First, BI does not necessarily need to be above the poverty line. We can also go to a progressive BI, which may better be describe as a negative income tax, where the poor get more than the rich. And we can increase taxes.


> We can also go to a progressive BI, which may better be describe as a negative income tax, where the poor get more than the rich.

That's called a "means-tested social benefit program", and is one of the thing BI advocates see it as replacing (we have plenty of those now) -- one of the main problems they see is that such programs create perverse incentives, since they reduce the marginal value of additional income to the poor, since the additional income reduces the benefit from the social benefit program. That perverse incentive is one of the things BI is proposed to cure.


That is the same problem we have with a progressive income tax. The major problem I have with current programs is not that they increase the marginal tax rate, but that, at certain points, they increase the marginal taxrate to over 100%. Having a single program, that is also denoted entirely in dollars, will let us explicitly control the effective marginal tax rate.


The US social security budget is 1.3trillion, so diverting all of it to BI would get people 30% of the way towards the goal of reaching the poverty line.

It may be that getting everyone above the poverty line is infeasible. It may be that the poverty line may be sidestepped, say, by relocating to a poorer (less costly) region of the country.

Food for thought. I haven't really formed an opinion on it, really. The numbers don't look that off, at first inspection.

Reference: http://en.m.wikipedia.org/wiki/Social_Security_(United_State...


I'm not sure you could to do straight math like that as it does depend on the implementation. I presume there would be corporate tax laws introduced that would re-coupe most dollars associated with employees. So a govt could craft whatever policies they want in order to make it work out.


More tax. More specifically, an amount of extra tax that for a typical person would roughly balance out the extra (say) $10k/year in basic income, so that the net effect on government finances would be small.


I didn't RTFA, but if you instead assume it just goes to adults (~221M) then that's $2.2T. I think BI gets rid of SS/Medicare/Medicaid/etc, which gets you back roughly $2T.


In 2012 Medicare, Medicaid, and Children's health funding was $732 billion. And I don't know how you get rid of SS since the government would still need to make payments that are higher than any typical basic income level.

http://www.cbpp.org/cms/?fa=view&id=1258


You could transitionally subsume SS by making SS benefits, as a special transitional case, non-cumulative with BI -- how this works:

(1) eliminate separate SS tax when you establish BI (probably keep a tax of about the same level overall rolled into general income tax, you probably need it to fund BI, but you no longer have dedicated SS contributions)

(2) The SS eligibility you have earned from your past contributions remains, except any time when you would get SS, your BI is deducted from your SS benefits (so you never get less benefits from BI+SS than you would have gotten from the worst of the two, but also never more than you would get from the best of the two.)

So, over time SS withers, and to the extent its duplicative its effectively eliminated immediately, but no one loses the minimum guarantee they had already secured from SS.


I don't know much about BI or the numbers either, but I'm guessing that BI would replace some existing spending.

Social security, unemployment, food stamps, etc seem to account for 1/3rd of the total federal budget in 2013 [1].

[1] http://nationalpriorities.org/analysis/2012/presidents-budge...


I'm guessing we would only need to divert a fraction of the money currently being used on weaponry and military to cover the difference.


You'd guess wrong. In 2012 the entire defense budget was $689 Billion.

http://www.cbpp.org/cms/?fa=view&id=1258


Good point. I don't know that I favor basic income when the enormity of the funding required is put in perspective. I'd rather see some kind of allotment for bill-pay for lower-income/no-income individuals, whereby things like their rent, health costs, cell phone bill, & transportation costs would be provided for up to a certain amount. Something like $5000 annually would go a long way towards helping out low-income people, and the paperwork necessary to receive benefits would serve as a disincentive for people who don't need the assistance to try to receive it.


Does that count health care for wounded veterans and other "side effects" that last far longer than any single war or Presidential term?


Because income taxes would go up as well. The poor would benefit but the rich might actually end up with a net loss. A basic income is nothing more than a redistribution of wealth, and in theory, might not cost anything more.


Same way we pay for anything else, cutting spending and increasing taxes.




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