Will Universal Basic Income work or be necessary?

DA60 said:

I have told you this at least 3 times and still you don't get it - I have no idea why. This is the last time.

THERE IS NO SAVINGS FROM PHASING OUT SOCIAL SECURITY. The money saved is compensated by the loss of the Social Security payroll tax.

https://www.cbo.gov/publication/52408

You see the big orange pie chart on the right? You see where it says $1.1 TRILLION in Payroll Taxes for SS and Medicare? The VAST majority of that would disappear if SS disappears. You cannot tax people for Social Security if it no longer exists.

If you cannot see this, there is no point in discussing this further...no offense.

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Just change the name; keep the tax. Give it a name consistent with UBI.

Jack Hays said:

Just change the name; keep the tax. Give it a name consistent with UBI.

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It's still a new tax. First it was a tax for SS. Now it is a tax for Living Wage...two different things.

I don't care if they have some similarities - they are still two, different taxes....with two different names and two different purposes. One is just for seniors. One is for every, single adult.


Don't tell me you are actually for this Living Wage nonsense?

Excogitate said:

Hello, I recently made a video presentation on UBI and thought I'd poll some opinions on it. You can watch the video if you like; it's full of information that I thought was sorely lacking in any other videos/discussion on the matter. Enjoy!

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I am not writing your college paper for you...

DA60 said:

It's still a new tax. First it was a tax for SS. Now it is a tax for Living Wage...two different things.

I don't care if they have some similarities - they are still two, different taxes....with two different names and two different purposes. One is just for seniors. One is for every, single adult.


Don't tell me you are actually for this Living Wage nonsense?

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No, I'm not. Do you equate that with UBI?

Jack Hays said:

No, I'm not. Do you equate that with UBI?

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Yes and so do a lot of people:

https://www.theguardian.com/commentisfree/2016/jan/07/basic-income-royal-family-living-wage-economy

There is no point whatsoever to this whole thing - other than to bankrupt the nation - if the money given out is not enough for an adult to live on.

DA60 said:

Yes and so do a lot of people:

https://www.theguardian.com/commentisfree/2016/jan/07/basic-income-royal-family-living-wage-economy

There is no point whatsoever to this whole thing - other than to bankrupt the nation - if the money given out is not enough for an adult to live on.

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I haven't done any serious research so I'm not committed to any policy choice. Nonetheless I'm attracted to the idea of wiping out all entitlement payments and replacing them with a single guaranteed income floor.

Jack Hays said:

I haven't done any serious research so I'm not committed to any policy choice. Nonetheless I'm attracted to the idea of wiping out all entitlement payments and replacing them with a single guaranteed income floor.

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All entitlement payments - in terms of non-medical welfare (because this bloated whale has nothing to do with healthcare) - only add up to about $250 billion for all non-medical welfare and roughly $800 billion for SS (outside of Medicare). Now SS is break even in savings as ending SS would end the payroll tax that comes with it...there is no savings there.

UBI will replace it with $12,000 per year for EVERY, SINGLE adult (about 250 million people). That equals $3 trillion per year!!! And since all you are saving is the $250 billion in non-medical welfare and the SS is break even, than that means this thing will cost about $2.75 trillion more per year onto the national budget expenses.

If that is what you want...fine.

I sure as **** don't. I think it is sheer, well intentioned lunacy.

DA60 said:

All entitlement payments - in terms of non-medical welfare (because this program has nothing to do with healthcare) - only add up to about $250 billion for all non-medical welfare and roughly $800 billion for SS (outside of Medicare). Now SS is break even in savings as ending SS would end the payroll tax that comes with it...there is no savings there.

UBI will replace it with $12,000 per year for EVERY, SINGLE adult (about 250 million people). That equals $3 trillion per year!!! And since all you are saving is the $250 billion in non-medical welfare and the SS is break even, than that means this thing will cost about $2.75 trillion more per year onto the national budget.

If that is what you want...fine.

I sure as **** don't.

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Fair points, although I already said I'd keep the SS payroll tax. Anyway, the numbers don't add up so I'm happy to walk away from the idea.

Jack Hays said:

Fair points, although I already said I'd keep the SS payroll tax. Anyway, the numbers don't add up so I'm happy to walk away from the idea.

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Fair enough.

BTW - even if you kept the SS payroll tax as the UBI Payroll tax, that still adds roughly $1.95 trillion to the national budget spending.

Plus, since this wipes out food stamps and welfare - what the heck are single parents going to do? A single parent cannot house and feed and cloth 2 children on only $1000 per month living anywhere remotely near a city. If anywhere at all.
And even single people living in many major cities could not live in even a studio apartment and feed themselves for a grand per month either.

You would have to a) raise it from $12,000 per year to at least $15,000 per year (imo); and b) you would have to add a supplement for each child.

This would just raise the costs even farther into the stratosphere.

It's this kind of craziness that caused the Swiss to soundly defeat a referendum they had for this kind of program last year...with 78% saying 'no'.

Swiss voters overwhelmingly reject proposal for unconditional basic income - Business - CBC News

Surrealistik said:

The main problem I have with your approach is that you are singling out what is the absolute worst case, which while legitimate I think overstates the problem.

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I wouldn't claim it's representative of the public as a whole - I claim that we should make poverty policy with those who are impoverished in mind. :shrug:

yes, I acknowledge there are certain corner cases, specifically single parent households with multiple children

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Most of our poor families are now single-parent. That's representative.

Nor are poor single-parent families the only ones who will lose - our elderly on Social Security will see their incomes go down, as will people who are on Disability.

Bringing a single parent 2 child family to the poverty line is probably not achievable without undue expense or complexity (children, or specifically children of single parent households, would have to be gifted about half the full benefit).....

I think there's no question a GMI ... will be costly, but if properly structured, it will achieve its objectives while minimizing the overall cost in the process, and considerably streamlining the administrative bloat associated with the current welfare systems, and delivering more net benefit than existing programs, while also being well worth the expenditure in other earlier stated benefits (I'm sure on this point we'll fundamentally disagree).

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Happily, neither of the bolded statements are not true. Not only that, but we can achieve that laudable goal at less cost than the GMI you have outlined.

A negative income tax of -50% on all monies not earned below 200% of the Federal Poverty Line does the trick nicely. It also has the neat effect of reducing the benefit progressively, so that you don't have to subsidize the top 80% of earners. You can also modify it to include work or work-like-activity requirements for able-bodied adults and a child support component from deadbeat dads (and moms).

I additionally applied a 25% flat tax to all monies earned over 200% of the FPL, in order to A) enjoy the economic benefits of a simplified flat tax while B) maintaining a progressive tax code that taxed high income earners more than lower or middle income earners.

Using the 2017 Federal Poverty Lines, this is roughly what an example might look like:



A guy can start off at minimum wage, never earn as much as $33K, and we can still keep his single-income family above water.


Or, as is (tragically) more common, he can get divorced, in which case his net takehome pay goes down, because money is redirected to take care of his kids. At no time, however, does he dip below poverty level:





Meanwhile, the woman who didn't have a career, but now has his two kids looks like:



and is taken care of.

I do share your apprehension about the upper middle class perhaps benefiting unduly though... Let's run the numbers again at a more aggressive top 20% benefit cut off, phase out beginning at the top 40%, with say a $2000 annual benefit for children:

(2000 * 73800000 Child benefit + 12060 * 250000000 Adult benefit)*.7 (after phase out from top 40% to top 20% and exclusion of top 20%: 1 - .1 + .2) = 2.21382e+12

Subtract Welfare and SS: 2.21382e+12 - (3.921e+11 + 9.726e+11) = 8.4912e+11

Post tax clawback (this is reduced due to expanded exclusion and phase out area); back of the envelope of 20%: 8.4912e+11*.8 = 6.79296e+11 or $679.296 billion in net outlay increases.

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Retroactively taxing people is $*%&$*ing theft. Politicians who try to pass entitlement reform usually worry about losing their seats - politicians who tried to pass that should probably worry about losing their lives. It's no better than when governments go in and seize bank accounts for the purposes of raising cash. The program you've outlined - while improved, I agree - still costs an additional $849 Billion a year, meaning that it would require a larger portion of GDP in taxes than the United States has ever collected under any tax structure (to include when top rates were in the 90s) in order to sustain.

Our entitlement structure is already about to collapse. I'm not sure it can handle another near-Trillion-a-year add on.




I have to say though, that as a fellow data nerd who honestly cares about this stuff, I really appreciate you putting your math out there, and going through the numbers in public, so people can see what you are doing with them. It makes this debate much more fascinating.

I would retire the day they start a UBI. If I use my 401k to pay off the rest of my house and truck, sell my bike and then sit at home and relax. Would be pretty sweet to retire before 35, if there were some way to make it work then I'm all for it.

Surrealistik said:

It will probably be necessary. If you put the UBI at the poverty line, feature a phase out for those at the top 20% of income, and consolidate SS and existent welfare programs, then factor in tax claw backs, the cost of UBI is reduced considerably:

Government Spending Details in $ billion: Federal State Local for 2017 - Charts

250,000,000 adults
Each receiving $12,060 for a total of $3,015,000,000,000

Assume a linear phase out from the top 20% of income to the top 5% where there is no benefit (if you're making this much money, it is generally a waste to dispense these funds to you); this means that the payout is roughly 87.5% of the baseline: 1 - .05+(.15/2) = .875 leaving us with a post-means tested expense of: 2.638125e+12 or 2.638 trillion (technically this makes it a GMI; Guaranteed Minimum Income which is the better, more efficient implementation of this idea IMO).

Consolidate SS and Welfare:

Subtract Social Security's $972.6 billion (2017 budget)
Welfare: $392.1 billion

2.638125e12-(9.762e11+3.921e11) = 1.269825e12; 1.269 trillion.

Apply tax claw backs, assuming an average tax rate of 31.5% per 2015:

(1.269825e12*.685) = 8.69830125e+11 ; for a net cost of $869.8 billion. Expensive yes, but not prohibitively so. It would be slightly higher for awhile as you'd probably have to grandfather existing recipients of SS such that their UBI payout would be equivalent to the average monthly benefit of a current SS recipient ($1,341 / MO per Jan 2016); roughly an addition of $336 per month to existing SS beneficiaries, but this would be a temporary expense.


As for allegations that the UBI an equivalent disincentivize work/labour participation, there is no conclusive evidence of that whatsoever where it's been tried:

https://en.wikipedia.org/wiki/Basic_income#Work_incentives

https://niskanencenter.org/blog/ubi-pro-work/

https://qz.com/765902/ubi-wouldnt-mean-everyone-quits-working/

https://d3n8a8pro7vhmx.cloudfront.n...l_Basic_Income_for_New_Zealand.pdf?1461211267

Where work reductions occur, it's usually reciprocated by commensurate increases in training and education.

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This will never happen for the same reason that any PPACA replacement must not leave those now getting a gov't subsidy **** out of luck. My SS retirement is now $1,800/month so "trading" that for $1,341/month so that every citizen 18 or older can get their $1,200/month (or more) for life (and avoid any federal taxation?) is a non-starter.

You use the FPL in a unique way which ignores that the FPL is based on household income and household size. Assuming that any two adult citzens living together actually deserve to get the current FPL for a four person household simply defies logic. The current median household income is about $54K/year ($4,500/month) and yet you propose that a (every?) two adult household (a cohabitating couple?) would deserve over half of that just for being adult citizens and that a (every?) four adult household (a duplex shared by two couples?) would deserve more than that.

DA60 said:

No offense, but you do have a somewhat unspecific way of speaking.

If SS ends - are you saying that the payroll tax for it should not end with it? Yes or no, please?

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I apologize if I was unclear. It's not quite a yes or no matter, as there are multiple avenues of leveling replacement taxes; transferring the payroll tax proceeds from SS to the GMI is certainly a possibility for helping to fund it.

cpwill said:

I wouldn't claim it's representative of the public as a whole - I claim that we should make poverty policy with those who are impoverished in mind. :shrug:

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My point is that I find your breakdown to exaggerate the weaknesses of the GMI per that initial proposal in that not only was a single parent family selected, but that this family was assumed to be both having absolutely no income and living in an urban environment. Yes, certainly a poverty program should help the impoverished, and the GMI, particularly the revision I've forwarded does that.

Happily, neither of the bolded statements are not true. Not only that, but we can achieve that laudable goal at less cost than the GMI you have outlined.

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I am of course referring to GMI. It is sadly a weakness of the GMI in that it by definition cannot be custom tailored to individual circumstances and is generally a blunt instrument to be sure as the unfortunate consequence of administrative simplicity and minimized associated costs.

It is to be noted that if the GMI cut offs/phase outs were even more aggressive, the benefit for children could be further improved to the 50% level described earlier, thereby putting impoverished families, no matter the size, at the poverty line, while also largely eliminating the welfare trap/current disincentives associated with working.

Let's say phase out begins at the top 70% and cut off is at the top 40% of income:

Topline with 6030 child benefit and 12060 adult individual: (6030 * 73800000 + 12060 * 250000000 ) * .45 = 1.5570063e+12
Subtract SS and Welfare: 1.5570063e+12 - (3.921e+11 + 9.726e+11) = 1.923063e+11
Tax Claw back (again, effective average tax level is reduced; estimate say 10%) 1.923063e+11 * .9 = 1.7307567e+11 or $173.07 billion.

If you want to key benefits to the state with the highest cost of living (Hawaii) which has an overall index of 167.4 ( https://www.missourieconomy.org/indicators/cost_of_living/ ) the benefit (and final cost) is increased by 1.674x:

Child Benefit: 10094.22
Adult Benefit: 20188.44
Total Cost: $289.71918 billion (probably slightly less due to tax claw back rates being higher due to a more generous benefit, but that's about right).

Suddenly it's looking both a lot cheaper and more workable for lifting people out of genuine poverty country wide; again the key is in properly tinkering with the cut offs and phase out points.

A negative income tax of -50% on all monies not earned below 200% of the Federal Poverty Line[/url] does the trick nicely...

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Though I don't presently have enough time to go through it completely, it looks promising (the NIT specifically; I am not, and cannot be an advocate of 'flat' taxation which fundamentally requires some combination of redistribution of tax burden to the poor/middle class, creation of supermassive income shortfalls, and/or other reductions in social spending which hurts the poor/middle class), though I am curious about the net cost of the negative tax. I will note that I've always liked NTs as a possible approach to addressing poverty; in many ways it works essentially like a more aggressively cut off UMI (which is I think probably the most practicable form of UMI). My primary issue with negative taxation is that vs UMI is that it more directly penalizes earning income in that every dollar you work to earn results in a loss of benefit; this is the primary reason, in addition to its economically stimulative effects (as a consequence of giving money to those most likely to spend), that I prefer the UMI in balance vis a vis NIT proposals.

Retroactively taxing people is $*%&$*ing theft...

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I'm not sure what you mean by retroactive taxation as it relates to this UMI; no such retroactive taxation actually occurs per my proposal. My mention of 'tax clawback' may be the source of confusion; what I mean by that is that this is the portion of the benefit that will be taxed back via income tax for those who earn more. The cost outlined was $679.296 billion.

I have to say though, that as a fellow data nerd who honestly cares about this stuff, I really appreciate you putting your math out there, and going through the numbers in public, so people can see what you are doing with them. It makes this debate much more fascinating.

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I think of it as more of a discussion to be honest, at least thus far; it's been more of a constructive back and forth.

ttwtt78640 said:

This will never happen for the same reason that any PPACA replacement must not leave those now getting a gov't subsidy **** out of luck. My SS retirement is now $1,800/month so "trading" that for $1,341/month so that every citizen 18 or older can get their $1,200/month (or more) for life (and avoid any federal taxation?) is a non-starter. ..

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I did state that current SS recipients would be grandfathered the difference in benefits.

Further, as mentioned previously in the thread, I do think that the phase out and cut off points should probably be more aggressive than originally stated. However, trying to differentiate who deserves the benefit beyond basic means testing and customizing the payouts on a per household basis is more administrative trouble than its worth. The system is keyed to FPL on an individual basis; it does not and should not try to factor in every single particular household configuration.

Surrealistik said:

I did state that current SS recipients would be grandfathered the difference in benefits.

Further, as mentioned previously in the thread, I do think that the phase out and cut off points should probably be more aggressive than originally stated. However, trying to differentiate who deserves the benefit beyond basic means testing and customizing the payouts on a per household basis is more administrative trouble than its worth. The system is keyed to FPL on an individual basis; it does not and should not try to factor in every single particular household configuration.

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That is your opinion, yet not current "safety net" policy thus many would (rightly?) feel screwed out of their prior "entitlements". I was under the impression that your plan had all SS payments reverting (up or down) to the current SS average - if each SS recipient gets to keep their current better deal then why not each recipient of the other entitlement programs?

ttwtt78640 said:

That is your opinion, yet not current "safety net" policy thus many would (rightly?) feel screwed out of their prior "entitlements". I was under the impression that your plan had all SS payments reverting (up or down) to the current SS average - if each SS recipient gets to keep their current better deal then why not each recipient of the other entitlement programs?

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Current SS recipients get to keep their current deal because they actively paid into SS, and should certainly receive the benefits they paid for (if you're concerned about UI, totally fair; total federal spending is a mere 39 billion of its welfare operating budget; not at all bank breaking to grandfather either as needed). I'm also open to the idea of those within 20 years or so of receiving SS as being part of that grandfathering as they have certainly paid enough into the system to be entitled to any increase of benefits over what the UMI would pay out.

Surrealistik said:

My point is that I find your breakdown to exaggerate the weaknesses of the GMI per that initial proposal in that not only was a single parent family selected, but that this family was assumed to be both having absolutely no income and living in an urban environment. Yes, certainly a poverty program should help the impoverished, and the GMI, particularly the revision I've forwarded does that.

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Your program as outlined wouldn't help them, because it would reduce their take-home benefits. It would help them less, and it would help the most vulnerable amongst us less. Single-parent families are heavily concentrated among our poor (not least because being a single parent - especially when young - makes it very difficult to be anything but poor); the current situation is what reform proposals will be weighed against. This is a poverty program whose effects is to shift benefits away from the poor, and towards (with your more aggressive clawbacks) the middle class.

It is to be noted that if the GMI cut offs/phase outs were even more aggressive...

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I would like to point out something about this.

You raise the point that:

My primary issue with negative taxation is that vs UMI is that it more directly penalizes earning income in that every dollar you work to earn results in a loss of benefit; this is the primary reason, in addition to its economically stimulative effects (as a consequence of giving money to those most likely to spend), that I prefer the UMI in balance vis a vis NIT proposals

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And you are correct to say so.

The loss of benefits for dollars earned act effectively as a tax (in this case, at a rate of 50%), reducing the reward for harder/better/longer work and achievement...but the exact same is true of what your own program does when you cut off/phase out the GMI. There, too, the loss of the benefit acts as a tax - in this case, since you are applying it to upper income earners, it acts as an additional tax on top of the income/FICA/etc. taxes that they are already paying.

We cannot avoid having this effect without a true UMI (which has no phase out, clawback, or cut-off), and we cannot afford a true UMI that doesn’t slash benefits to the poor by large amounts.

Unfortunately, what you describe already happens. In some places in the federal code, the effective tax rate for the loss of benefits is 126%.

These are called Welfare Cliffs, and they pop up all over:



A very similar story is true of marriage – despite the fact that marriages statistically help people live longer, happier, wealthier, more stable lives, helping them and their children stay out of or escape poverty, we punish poor people in our welfare/tax code for getting married to the tune of thousands and thousands of dollars. It’s insane.

So while the point that an effective 50% tax rate is steep is correct (and I agree! And in the future, when it becomes affordable, I wouldn’t mind stretching the NIT out in order to reduce this rate), it remains an improvement over what we have today.

I'm not sure what you mean by retroactive taxation as it relates to this UMI; no such retroactive taxation actually occurs per my proposal. My mention of 'tax clawback' may be the source of confusion; what I mean by that is that this is the portion of the benefit that will be taxed back via income tax for those who earn more. The cost outlined was $679.296 billion

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Yes – sorry for the confusion: my fault on that. I thought you were retroactively applying taxes to previous tax years.

I want to make sure I’m reading you correctly, so next post, I’ll try to go through your numbers, and you can correct if I’ve misapplied your program.

Surrealistik said:

the benefit for children could be further improved to the 50% level described earlier, thereby putting impoverished families, no matter the size, at the poverty line, while also largely eliminating the welfare trap/current disincentives associated with working.
Let's say phase out begins at the top 70% and cut off is at the top 40% of income:
Topline with 6030 child benefit and 12060 adult individual: (6030 * 73800000 + 12060 * 250000000 ) * .45 = 1.5570063e+12
Subtract SS and Welfare: 1.5570063e+12 - (3.921e+11 + 9.726e+11) = 1.923063e+11
Tax Claw back (again, effective average tax level is reduced; estimate say 10%) 1.923063e+11 * .9 = 1.7307567e+11 or $173.07 billion.

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Alright, since I clearly had this confused, help me walk through it:

There are 324,707,000,000 residents in the United States, 93% of which are citizens, meaning we are looking to disperse benefits to ~301,97,510,000 people.

Average family size in the US is 2.53, and the birthrate is 1.88. That’s the latest number, though, and won’t be reflected among older generations, so let’s tick it up a bit, and say that we have 119,358,699,605 families with a statistical 1.53 adults and 2 children.

As I understand the program you are laying out, the bottom 39.9999% get the full benefit, it begins to phase out at 40%, and is completely gone at 70%.



If we take a look at the income growth over quintiles, for example, we can see how far American incomes move per percentage point, roughly, if we assume an even distribution. From the 40th to 60th percentile, for example, it moves about $16,165.00, or, about $808.25 per percentage point.

….meaning that “clawing back” $893.64 for every percentage point represents an effective tax rate of 110.56%. Meaning that we’ve created a massive welfare cliff that runs across 30% of US income earners, effectively locking out all growth in income for the middle class, forever.

That’s, uh. That, I think, is not good?

Surrealistik said:

I am curious about the net cost of the negative tax.

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Alrighty, let’s do some figuring:



View attachment 67215302

So, we see that we collect ~$1,790 million and spend ~626 million, for a net revenue of a little over $1.1 Trillion. In reality, the fact that we made this an even distribution has caused this number to cheat down – because the lowest income family can only go ~$7K below the average in the bottom decile, but a top-earning family can go many, many, millions of dollars over the average in the top decile, we will likely collect a bit more revenue (simply because their effective tax rate will be higher). I don’t think, however, that it’s likely to be enough to significantly change the scenario.

Now we need to compare to current revenues and costs. Some more math.

Currently we collect $1,627,834,000,000 in revenues, making for a $463,335,006,320.03 gap that we will have to make up by cutting all the programs that this is supposed to replace.


So, we come out ~$67 Billion ahead. And that’s before we reform Social Security, healthcare, etc.

'flat' taxation... fundamentally requires some combination of redistribution of tax burden to the poor/middle class, creation of supermassive income shortfalls, and/or other reductions in social spending which hurts the poor/middle class)

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That is an argument against a flat tax that starts with the first dollar, rather than the first dollar after 200% of the FPL. The effective tax rate here climbs in a perfectly progressive manner with each additional dollar earned over 200% of the FPL, the income can more than make up for the income of our current FIT, and we still get all the economic benefits (which are massive) of a flat tax structure.

(rough) Effective Tax Rates:

View attachment 67215301

I think of it as more of a discussion to be honest, at least thus far; it's been more of a constructive back and forth.

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It’s far superior to what we usually wind up with, here.

cpwill said:

Alright, since I clearly had this confused, help me walk through it:

There are 324,707,000,000 residents in the United States, 93% of which are citizens, meaning we are looking to disperse benefits to ~301,97,510,000 people.

Average family size in the US is 2.53, and the birthrate is 1.88. That’s the latest number, though, and won’t be reflected among older generations, so let’s tick it up a bit, and say that we have 119,358,699,605 families with a statistical 1.53 adults and 2 children.

As I understand the program you are laying out, the bottom 39.9999% get the full benefit, it begins to phase out at 40%, and is completely gone at 70%.

A statistically typical family getting the full benefit will get (2*4180 – you said 6080, but I think you meant the poverty line addition, which is 4180, and mistyped)+(1.53*12060)=$26,811.80.

If we take away 3.3333% of that benefit, starting at the 40% mark, then we will hit your goal of 0% by 70.

This means that you are taking away $893.64 for every additional percentage point that someone moves up relative to their peers in American income.​

If we take a look at the income growth over quintiles, for example, we can see how far American incomes move per percentage point, roughly, if we assume an even distribution. From the 40th to 60th percentile, for example, it moves about $16,165.00, or, about $808.25 per percentage point.

….meaning that “clawing back” $893.64 for every percentage point represents an effective tax rate of 110.56%. Meaning that we’ve created a massive welfare cliff that runs across 30% of US income earners, effectively locking out all growth in income for the middle class, forever.

That’s, uh. That, I think, is not good?

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Gotta limit my response to this for now as I'm running some forex trades, but this is how I figured things.

Assume that the rate of income growth between 2013 and 2014 remains constant through to 2017:

This gives us a bottom 20% mean of 11676*(11676/11594)^3 = $11925.49

A second quintile mean of 31087*(31087/30812)^3 = $31926.81

A third quintile mean of 54041*(54041/53741)^3 = $54951.08


Phase out actually begins at the 30% mark (top 70%, so 100% - 70%). It does indeed completely end at the top 40%; per the 2014 data you cited this works out to roughly $21926.15 (taking the average between the mean of the bottom 20% and bottom 40% as above: (11925.49 + 31926.81)/2 to the mean of $54951.08 for the mean of the top 40%.

Assuming a linear increase for each %: (54951-21926.15)/30 = $1100.82

vs the benefit loss per % of (4180*2+12060*1.53)/30 = $893.72 (I ran $6030 as a back of the envelop halving of the adult benefit but yes, 4180 is more appropriate)

$893.72 / $1100.82 = .8118 or 81.18% benefit loss per % of income.

Now that said, I agree, the ratio of benefit lost relative to the income increase per % is too high; not quite 110.56% high but certainly too high for my satisfaction. In my defense, the calcs were spontaneous and back of the envelope and as stated, the key is in allocation of the phase out and cut off. When I've a little more time, I'll revise and forward numbers that are more satisfactory.

Alright, errands and obligations are done, time to descend into these figures.

In general, the obvious approach would seem to be to stretch out the benefit out to the top 20% up from the top 40%; which sounds worse than it is, given that the benefit will have declined to a tiny amount by then, and what little they get will be further reduced by their higher tax rate, so per the prior numbers: (4180*2+12060*1.53)/50 = 536.236 loss per % of income increase, or 48.71% benefit loss per increment in % assuming a linear rate of income increase.

The increment in cost:

Topline with 6030 child benefit and 12060 adult individual: (4180* 73800000 + 12060 * 250000000 ) * (.3 + .25 ; those who qualify for full or partial benefits) = 1.8279162e+12
Subtract SS and Welfare: 1.8279162e+12 - (3.921e+11 + 9.726e+11) = 4.632162e+11
Tax Claw back (estimate say 12% since we've expanded the range of beneficiaries to higher brackets) 4.632162e+11 * .88 = 4.07630256e+111 or $407.63 billion net additional cost vs current budgets.

The most considerable flaw remaining would be the cost. One might argue that there's a range of people receiving the benefit who don't need it, but everyone who does, including those at the top 40-20% of income who receive partial benefit, spend the most back into the economy, which as stated would be expected to have a stimulative effect on the economy and a positive effect on demand and business formation.


With respect to your plan, I do like it overall barring the flat tax, though I understand it remains somewhat progressive via negative tax rates, and I suspect this difference will come down to an irreconcilable difference in philosophy. While your flat tax does reduce net burden on the poor vs the rich, and I largely agree with the idea of eliminating special tax subsidies, loopholes, etc, I do feel the rich and the uber rich should pay significantly more than the middle class/upper middle class in order to bankroll programs that improve equality of opportunity (free public college/trade schools), and national healthcare, both because they benefit more from social infrastructure and are its lead consumers (law/military enforcement/protection, fire, roads, legal system, market stability and regulation, etc), and because, as a % of their income, they spend the least back into the economy (the classic question: who spends more and creates more demand, which is the basis of business formation, investment and confidence? One billionaire, or twenty thousand people with $50k apiece?).

Surrealistik said:

I apologize if I was unclear. It's not quite a yes or no matter, as there are multiple avenues of leveling replacement taxes; transferring the payroll tax proceeds from SS to the GMI is certainly a possibility for helping to fund it.

Click to expand...

No apology necessary. Maybe I just am too dumb to understand what you are saying.

I commend your number crunching and that you are keeping your cool on this (many would not).

But I think the bottom line is; this 'thing' should give enough money to all people - regardless of state/municipal programs. And I just do not see how that is possible without a gigantic sum of money to be financed that would require a huge increase in taxation.

But you obviously disagree.

I think it's best if we just agree to disagree on this.

Cheers.