One question: has anyone else ever done the math on this?
Let's suppose we have a basic income of $1,000 per month per citizen. This is barely enough to get by in someplace like eastern Washington and not enough to get by in someplace like Seattle but it's a nice round number so let's go with it.
The US population is about 300 million. But let's assume only adult citizens receive basic income. If you want children you have to provide for them yourself. How many adult US citizens are there? Well, Barack Obama won 51.1% of the popular vote in 2012 with about 66 million votes with 58% turnout. By my calculations that's a voting-eligible population of about 220 million.
220 million people receiving 12,000 a year is around 2.6 trillion dollars. Total federal tax revenue is around 2.8 trillion dollars, and total expenditures are around 3.5 trillion. You think you can make up the difference by eliminating other entitlements? You can't. Look it up. Basic income + defense + transportation already exceeds the current budget, with nothing left over for courts, embassies, Medicare, the space program, or the Coast Guard. And that's with a particularly low basic income that isn't really enough.
So you're left with having to raise taxes. Fine, you might say, just tax the rich--except even if you subtract out a lot of entitlements to close the budget gap, including social security, you still have to raise maybe an extra trillion dollars in tax revenue just to keep a comparable deficit.
The only way to really make basic income work is if it's effectively means tested. One way of doing this might be to say: if you get paid 72,000 a year, your salary drops to 60,000 and the government taxes your employer for the 12,000 that you receive in basic income; either that or you just don't receive basic income anymore, it's mathematically equivalent. But that is more of a guaranteed minimum income than a basic income anymore, and it's politically that much more difficult.
I completely agree, it's interesting how many people love to jump to economic theorizing about how people will act, and how few people look at the actual cost to implement.
I read through a breakdown in one of the Basic Income books, of what it would cost just to get a $10,000/year basic income. Here's just some of the changes that would be needed:
* cut military spending by a third;
* get rid of ethanol subsidies;
* get rid of mortgage interest tax breaks;
* get rid of "married filing jointly/separately" filing status, make everyone file just for themselves
And that's just the ones that jumped out at me. Virtually all tax loopholes would have to be gotten rid of, and more. All for just the $10K/year basic income level.
So, just as a question of the political cost to implement, Basic Income seems like a laughable non-starter.
Forgive me if I'm wrong, but wouldn't basic income also increase the tax revenues from goods and services, and by creating more jobs because of the increased buying power of the poor? Especially since close to 100% of the basic income money will continue to circulate in the economy. Give Bill Gates a trillion dollars though and there's zero tax revenue on that.
Give Bill Gates a trillion dollars though and there's zero tax revenue on that.
Obviously I'm not advocating giving $1T to Bill Gates, but this is a fundamental misunderstanding that gets repeated over and over again. Rich people do not keep their money under their mattresses. Much of it they keep in a variety of financial instruments, most commonly stocks and bonds. Sale of stock is how many companies finance their operations, which includes, among other things, hiring people who pay taxes. Bonds are how corporations and governments fund things like building factories, roads and schools.
Even if Bill just kept it in the bank, the bank now has more money to lend at easier terms to businesses needing capital.
There is a serious economic study and debate about how much of a "multiplier" effect you get from handing money to a poor person vs. to a rich person. It wouldn't surprise me if it were higher for the poor person, but it's surely not 0 for the rich person.
Virtually every minimum income proposal I've read about involves it being clawed back through taxation when you're earning more money. A key difference is it isn't means tested - you don't have to prove that you deserve a living - instead, at the end of the year at tax time, the income you report determines whether the government decides to basically claw back the basic income in the form of tax.
In practice I don't think that would be any different for the middle and upper classes in the US than it is now - you sort out your withholding in advance and pay it during the year, and then you don't owe much at the end of the year. You'd just be withholding your basic income because you're not poor.
it obviously phases out as income increases. You avoid the disincentive by making the phase out smaller in slope than the increase in income. i.e. every dollar you earn removes 30 cents of basic income.
I really dislike how little people think BI systems through before dismissing them. You are smarter than all the economists who support it?
Yes; if you'd bothered to read the last paragraph of my comment before responding to it, you would have seen that I reached the same conclusion.
> I really dislike how little people think BI systems through before dismissing them
I really dislike how people like you can't be bothered to read and comprehend someone's comments before making these little dismissive responses. You should work on your reading comprehension before you accuse other people of not thinking things through.
Let's suppose we have a basic income of $1,000 per month per citizen. This is barely enough to get by in someplace like eastern Washington and not enough to get by in someplace like Seattle but it's a nice round number so let's go with it.
The US population is about 300 million. But let's assume only adult citizens receive basic income. If you want children you have to provide for them yourself. How many adult US citizens are there? Well, Barack Obama won 51.1% of the popular vote in 2012 with about 66 million votes with 58% turnout. By my calculations that's a voting-eligible population of about 220 million.
220 million people receiving 12,000 a year is around 2.6 trillion dollars. Total federal tax revenue is around 2.8 trillion dollars, and total expenditures are around 3.5 trillion. You think you can make up the difference by eliminating other entitlements? You can't. Look it up. Basic income + defense + transportation already exceeds the current budget, with nothing left over for courts, embassies, Medicare, the space program, or the Coast Guard. And that's with a particularly low basic income that isn't really enough.
So you're left with having to raise taxes. Fine, you might say, just tax the rich--except even if you subtract out a lot of entitlements to close the budget gap, including social security, you still have to raise maybe an extra trillion dollars in tax revenue just to keep a comparable deficit.
The only way to really make basic income work is if it's effectively means tested. One way of doing this might be to say: if you get paid 72,000 a year, your salary drops to 60,000 and the government taxes your employer for the 12,000 that you receive in basic income; either that or you just don't receive basic income anymore, it's mathematically equivalent. But that is more of a guaranteed minimum income than a basic income anymore, and it's politically that much more difficult.