A UBI by definition cannot distribute the new money in a way that is not universal. If you want to keep current taxes or even change tax brackets so that they are more progressive by increasing taxes on the wealthy that could still be a UBI, but it would mean that people making >$150K annually receive additional money for the government that they clearly don’t need, even if they are in a 50% income tax bracket. However, I don’t think you can in good faith call a program that adds a new special tax that only applies to the UBI and thus deposits money in rich people’s bank accounts only to immediately yank 100% of the money back a “UBI,” as that clearly goes against the spirit of the “Universal” characteristic.
You insist that this policy was supported by Milton Friedman:
UBI has always been a fundamentally redistributive policy proposal and is what people like Dr. Luther King Jr. and Milton Friedman meant back in the 60s.
However, I doubt this is an accurate interpretation of Milton Friedman, and I have only ever heard him talk about negative income taxes. From one quickly-found source:
The crowd at Yang’s Washington, D.C., rally on April 15 burst into applause at the mention of Friedman. But the famous free-market economist’s idea of UBI doesn’t square up with Yang’s. Friedman advocated for a negative income tax, which replaces levies on low-income individuals with supplemental funds from the government. Friedman’s plan consequently ensures that everyone in society receives a guaranteed minimum income, but it doesn’t redistribute money to people who don’t need it.
Wealthy people are constantly afraid of losing their wealth, and UBI would meaningfully reduce that fear.
A UBI would not save rich people from losing >90% of their income if something catastrophic were to happen to their business/etc., and it does not act as a better social safety net than alternative policies such as negative income tax or other means-tested/emergency assistance (e.g., TANF).
I don’t think you can in good faith call a program that adds a new special tax that only applies to the UBI and thus deposits money in rich people’s bank accounts only to immediately yank 100% of the money back a “UBI,” as that clearly goes against the spirit of the “Universal” characteristic.
I don’t think the ‘Universality’ of UBI has ever meant that every person will benefit from it. The universality thing points to the fact that no-one will ever go below it. It is a minimum base income that is universally applied, and that universality has nothing to do with the tax structure used to fund said program.
A program would still be a UBI if it was funded entirely from government oil profits or some other source than taxes. It could even be funded by wealth taxes not income taxes. The source of funds is irrelevant to a UBI being a universal income floor.
However, I doubt this is an accurate interpretation of Milton Friedman, and I have only ever heard him talk about negative income taxes.
I feel like we’re going in circles with this one. I already described how NIT is functionally identical to UBI after all is said and done. It just depends on how people feel about accounting.
A UBI would not save rich people from losing >90% of their income if something catastrophic were to happen to their business/etc., and it does not act as a better social safety net than alternative policies such as negative income tax or other means-tested/emergency assistance (e.g., TANF).
You’re completely right, it would not save them from losing all of their money &/or job income, but that’s not what I’m talking about. I’m saying that they will never fall below a certain level, and that level is enough to help a person recover at least part of their dignity & wealth over time.
Imagine you’re a rich person—something goes horribly wrong—now you’re bankrupt and have $0 in your bank account. Would you rather have to wait until the next April to get a big NIT check (you’ll have to wait a year for your income to go to 0), or get your $1,000 check at the beginning of the next month?
I’ve spoken to people on TANF and means-tested emergency assistance. It sucks and is absolutely awful for everyone involved. It’s especially rough because these people are in great need and it makes them jump through so many unnecessary hoops.
First, just ignore the whole thing about TANF; I included that on a whim and I’m aware of the many criticisms of the program, but I have no interest in defending it as it is not central to the main argument I’m making. That aside...
You say that:
The fundamental issue (unless I’m misunderstanding) with tax-credit is that if you’re poor and have not made a high income, you can’t get any benefit from them.
I suppose I should not have used the term “tax credit,” as I think most tax credits are non-refundable, but there are refundable tax credits (i.e., you can be paid by the government in excess of what you owe in taxes). What I have in mind would be a refundable tax credit, which also applies for people who do not pay excess amounts in income taxes. (i.e., it would be like receiving a $X check if you have not paid any taxes)
You say that:
UBI is a government policy that distributes funds to all people equally, through redistributive taxes that are high enough for the wealthy to pay for the full amount.
Curiously, in a separate comment you also say:
I don’t think the ‘Universality’ of UBI has ever meant that every person will benefit from it. The universality thing points to the fact that no-one will ever go below it.
I’m not exactly sure how to reconcile these two comments, but what I will say is: I do not get the impression that people usually have the “the government ensures all people will stay above X income” interpretation in mind when talking about a UBI (except sometimes when they are retreating to a definitional motte, as currently appears to be the case); most people have in mind “a government policy that distributes funds to all people equally,” as you wrote in one of your comments. (I thought this is also what Andrew Yang had in mind, but I must admit some unfamiliarity with the details of his plan.)
Ultimately, I’ll just conclude by saying that I think that redefining UBI in such a way as to allow a policy such as a negative income tax just destroys the definition of a UBI, and I think you will not find many people who are sympathetic to such definitional stretching (although they may unfortunately be unaware of what’s happening).
What I have in mind would be a refundable tax credit, which also applies for people who do not pay excess amounts in income taxes. (i.e., it would be like receiving a $X check if you have not paid any taxes)
I think this is the same idea as a Negative Income Tax. As mentioned before UBI and NIT are functionally identical and only differ in accounting terms.
I want to make it clear I’m not attempting to stretch the definition of UBI to include NIT. A Universal Basic Income is a very different mechanism from a Negative Income Tax, my point is that both policies achieve the game-changing impact of a Basic Income Guarantee (BIG).
UBI is a government policy that distributes funds to all people equally
My point here is that the government distributes those funds equally, establishes that baseline of economic stability, and that does not include how it’s being paid for. GiveDirectly is running a UBI experiment where every person in Maryland Liberia will receive UBI for 3 years. The UBI is not being paid for by taxes, but by philanthropy & international aid money. Whether something is UBI or not depends on the disbursement mechanism, not on the means of funding.
From what I’ve seen it’s incredibly likely (logical economically) that direct cash transfers—or funding guaranteed income—is the most cost-effective way to help almost all people in need philanthropically. If we can prove this claim with rigorous RTC trials, it could substantially blur the lines between paying taxes dedicated for UBI & spending money on high-impact philanthropy.
Wouldn’t a rich person or organization in Maryland Liberia also want to support GiveDirectly’s UBI program?
A UBI by definition cannot distribute the new money in a way that is not universal. If you want to keep current taxes or even change tax brackets so that they are more progressive by increasing taxes on the wealthy that could still be a UBI, but it would mean that people making >$150K annually receive additional money for the government that they clearly don’t need, even if they are in a 50% income tax bracket. However, I don’t think you can in good faith call a program that adds a new special tax that only applies to the UBI and thus deposits money in rich people’s bank accounts only to immediately yank 100% of the money back a “UBI,” as that clearly goes against the spirit of the “Universal” characteristic.
You insist that this policy was supported by Milton Friedman:
However, I doubt this is an accurate interpretation of Milton Friedman, and I have only ever heard him talk about negative income taxes. From one quickly-found source:
A UBI would not save rich people from losing >90% of their income if something catastrophic were to happen to their business/etc., and it does not act as a better social safety net than alternative policies such as negative income tax or other means-tested/emergency assistance (e.g., TANF).
I don’t think the ‘Universality’ of UBI has ever meant that every person will benefit from it. The universality thing points to the fact that no-one will ever go below it. It is a minimum base income that is universally applied, and that universality has nothing to do with the tax structure used to fund said program.
A program would still be a UBI if it was funded entirely from government oil profits or some other source than taxes. It could even be funded by wealth taxes not income taxes. The source of funds is irrelevant to a UBI being a universal income floor.
I feel like we’re going in circles with this one. I already described how NIT is functionally identical to UBI after all is said and done. It just depends on how people feel about accounting.
“A NIT is like giving someone $50 and asking for nothing back, and a UBI is like giving someone $100 and asking for $50 from their next paycheck. Both result in the person getting an extra $50. The question of which is better depends on the details involved and how the person feels about them.”
Milton Friedman used guaranteed income and NIT interchangeably, and I would guess (although I can’t confirm) that he understood NIT and UBI to be two sides of the same coin. Maybe we can ask an AI language model to pretend to be Milton Friedman.
You’re completely right, it would not save them from losing all of their money &/or job income, but that’s not what I’m talking about. I’m saying that they will never fall below a certain level, and that level is enough to help a person recover at least part of their dignity & wealth over time.
Imagine you’re a rich person—something goes horribly wrong—now you’re bankrupt and have $0 in your bank account. Would you rather have to wait until the next April to get a big NIT check (you’ll have to wait a year for your income to go to 0), or get your $1,000 check at the beginning of the next month?
I’ve spoken to people on TANF and means-tested emergency assistance. It sucks and is absolutely awful for everyone involved. It’s especially rough because these people are in great need and it makes them jump through so many unnecessary hoops.
(Responding to two of your comments at once)
First, just ignore the whole thing about TANF; I included that on a whim and I’m aware of the many criticisms of the program, but I have no interest in defending it as it is not central to the main argument I’m making. That aside...
You say that:
I suppose I should not have used the term “tax credit,” as I think most tax credits are non-refundable, but there are refundable tax credits (i.e., you can be paid by the government in excess of what you owe in taxes). What I have in mind would be a refundable tax credit, which also applies for people who do not pay excess amounts in income taxes. (i.e., it would be like receiving a $X check if you have not paid any taxes)
You say that:
Curiously, in a separate comment you also say:
I’m not exactly sure how to reconcile these two comments, but what I will say is: I do not get the impression that people usually have the “the government ensures all people will stay above X income” interpretation in mind when talking about a UBI (except sometimes when they are retreating to a definitional motte, as currently appears to be the case); most people have in mind “a government policy that distributes funds to all people equally,” as you wrote in one of your comments. (I thought this is also what Andrew Yang had in mind, but I must admit some unfamiliarity with the details of his plan.)
Ultimately, I’ll just conclude by saying that I think that redefining UBI in such a way as to allow a policy such as a negative income tax just destroys the definition of a UBI, and I think you will not find many people who are sympathetic to such definitional stretching (although they may unfortunately be unaware of what’s happening).
I think this is the same idea as a Negative Income Tax. As mentioned before UBI and NIT are functionally identical and only differ in accounting terms.
I want to make it clear I’m not attempting to stretch the definition of UBI to include NIT. A Universal Basic Income is a very different mechanism from a Negative Income Tax, my point is that both policies achieve the game-changing impact of a Basic Income Guarantee (BIG).
UBI is a government policy that distributes funds to all people equally
My point here is that the government distributes those funds equally, establishes that baseline of economic stability, and that does not include how it’s being paid for. GiveDirectly is running a UBI experiment where every person in Maryland Liberia will receive UBI for 3 years. The UBI is not being paid for by taxes, but by philanthropy & international aid money. Whether something is UBI or not depends on the disbursement mechanism, not on the means of funding.
From what I’ve seen it’s incredibly likely (logical economically) that direct cash transfers—or funding guaranteed income—is the most cost-effective way to help almost all people in need philanthropically. If we can prove this claim with rigorous RTC trials, it could substantially blur the lines between paying taxes dedicated for UBI & spending money on high-impact philanthropy.
Wouldn’t a rich person or organization in Maryland Liberia also want to support GiveDirectly’s UBI program?