I feel like the quote you pulled out of Youtube is slightly unfair in the extent to which he endorses the idea. In my opinion, it sounds like he full-throat endorses the general method and aim of the idea just not the exact transfer amounts and the method to raise revenue (sales/VAT tax vs carbon tax). Here is the quote in more context:
"The plan is just a version of the negative income tax. Milton Freedom first proposed it...and as a student 40 years ago I thought it was a pretty good idea. And it turns out I wasn't alone in that judgement...In 1968 a 1000 economists endorsed a negative income tax along these lines. What Andrew Yang is proposing is a version of what these 1000 economists endorsed back in 1968. Could 1000 economists all be wrong? Laughs Well yes they could. But I don't think in this case they are. My own view is that a universal income financed by an efficient tax, something like a value added tax, might well be worth considering. And I'm one of the signatories...of a plan to do something similar with a carbon tax."
The author makes a reasonable argument against using an income tax to pay for UBI, but Andrew Yang’s platform was to establish a Value-Added Tax, not an income tax.
I don’t think that the same negative substitution incentive occurs with a VAT: purchases become more expensive, but individuals are taxed in proportion to how much they purchase rather than how much income they make, so saving/investing is incentivized.
I’m not an expert and I’m interested in seeing how I might be wrong, but that’s my initial thoughts on his argument.
My quick read of the NYT piece is a comparison of Yang's plan and Warren's plan, and it concludes that Warren's is unworkable (e.g., how do you value the present value of Rihanna's future royalties? This has to be determined for Warren's wealth tax, but not Yang's VAT tax).
It does not read like an endorsement — just an assessment that Yang's plan is better than a plan he describes as unworkable (Warren's).
In the Youtube, he says: "My own view is that a universal income financed by an efficient tax, something like a value added tax, might well be worth considering" — hardly a full-throated endorsement.
Has he said anything else that is more positive? Or more specific with regard to the amount of UBI that he thinks would be appropriate/efficient? I wouldn't call either of these things an endorsement.
Andrew Yang is too early with the UBI, which in this case means he’s wrong. We still need humans to make things and the future. A negative income tax would work better now and would be a better segue to UBI.
My understanding of Friedman's position was that the negative income tax was a politically viable (if unlikely) system that would be an improvement (more freedom, less socialism) over the social programs we currently have. Not that he thought the negative income tax was the "ideal".
> The key is that the ideal goals of a tax system (e.g. generate lots of revenue with little inefficiency and little impact on taxpayers' personal financial situation and few unequally distributed loopholes like corporate tax avoidance) are not the goals of lawmakers who define the tax system.
There are actually lots of viewpoints from which that set of "ideal goals" are not ideal.
And, of course, tax reform can happen with a different set of goals than Milton Friedman's ideals.
> In the video, he focuses on a theoretical tax system just like our current progressive income tax, but with all brackets >25% limited to 25%, and argues that it would be an improvement (according to ideal goals).
Well, if its just like our current system but for that change, the main difference will be a tax cut for high income earners and reduced revenue. That doesn't seem consistent with the so-called "ideal goals" set out earlier.
You're full of misconceptions: Andrew Yang's not rich, his net worth, contrary to the hate propaganda prompted being wrongly lumped in with billionaires, is estimated to be ~$600k to $2.2 million.
You don't apply the same VAT rate to every product/service, e.g. staples that say poor people (rather that we all depend on) could gave lower tax rate; likewise if adding a certain VAT on everything while also giving everyone $12,000 per year means that you have to spend $200,000 on non-staple items before you're paying more into the UBI system than you're getting from it - and if you're sitting spending $200k per year on things you're not hurting.
And if you're making assumptions about Yang, could it not be you're making wrong assumptions elsewhere as your foundation for your conclusions? You clearly just hear some small shallow snippets from clearly untrustworthy sources that lack integrity/truth. Maybe instead research Yang and his policies thoroughly.
> A basic income can be funded by taxing bad things...
The author is assuming that you can increase revenue by imposing new taxes, but that is rarely true. Tax revenue as a percentage of GDP has been nearly constant for the last 70 years, even as tax policy has fluctuated all over the place[1].
"the idea of a negative income tax is to treat people who are poor the same way we treat people who are rich"
... BS ...
There is nothing the same about taking a significant amount of money from one group and giving a significant amount of money to another group, even if you use a unified mechanism to accomplish it. Regardless of how you feel about the issue, let's at least keep the discourse honest.
I'll be honest: although most people around here are fans of basic income, negative income tax, etc., I am not for one simple reason: the second that more than 50% of the population is on the 'receiving' end of things and not on the 'paying' end, the motivation of society as a whole to enforce responsible governance and efficient use of government funds diminishes significantly. The pain of waste just doesn't sting so badly when it's not "your" money being wasted.
As a nation, we already pay a disgusting portion of our total income tax revenue toward interest (over 25% if you exclude FICA income). As painful as it may be, at some point our country is going to have to own up to the credit binge we've been on and either significantly raise taxes & keep spending the same, or keep taxes the same & significantly reduce spending to keep our debt problem from getting further out of control. Alternatively, the federal government could reclaim control of the money supply from the federal reserve and inflate its way out, but this is also really a form of tax; if the assets & income you had yesterday are worth less today because the government printed itself some funds ... you have been taxed, my friend.
All of these things, however, would be political suicide and I don't expect to see it happen any time soon.
It seems weird to be criticizing a group for identifying a problem that actually exists (welfare traps / phase out cliffs / perverse incentives) while proposing a solution to it that would actually work better (NIT/UBI). There are proponents of a negative income tax on both sides, e.g. conservative economist Milton Friedman.
>$12,000/year per American adult who is not already on welfare or social security...
Is not what's being proposed by pretty much anyone.
$12,000/year per American adult who isn't already earning $X/year is how I understand it. A negative income tax, effectively.
Even if it's not administered that way (i.e., everyone gets a $1k check every month), then you raise taxes in such a way that every dollar earned means you earn more, but that by, say, $48k/year you're paying at least $12k/year in taxes.
Milton Friedman was a proponent (an originator?) of the idea of a negative income tax (as opposed to services). The idea of course, is that the problem of being poor is money, not services. Rather than explain it here, you can see him summing it up: http://www.youtube.com/watch?v=xtpgkX588nM
> Given this, it is counter-productive to build a tax system that asymmetrically benefits the people at the very top
I don't think anyone really argues for this, even the most conservative tax plans I hear about are flat.
I think he may be thinking how capital gains are taxed at a much lower than income. But this isn't a tax break for the wealthy per se, and it's not in place to create more jobs.
"The plan is just a version of the negative income tax. Milton Freedom first proposed it...and as a student 40 years ago I thought it was a pretty good idea. And it turns out I wasn't alone in that judgement...In 1968 a 1000 economists endorsed a negative income tax along these lines. What Andrew Yang is proposing is a version of what these 1000 economists endorsed back in 1968. Could 1000 economists all be wrong? Laughs Well yes they could. But I don't think in this case they are. My own view is that a universal income financed by an efficient tax, something like a value added tax, might well be worth considering. And I'm one of the signatories...of a plan to do something similar with a carbon tax."
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