UBI is generally thought of as a solution to rising AI. The taxes would come from the corporations generating income from AI and redistributed towards the people, in a sort of "fake" market economy, because the alternative is that the rich own all assets and their economy grinds to a halt because consumers don't have money to buy the corporations' goods anymore, which also causes the corporations to fail too.
I have to read more on how this works in Germany, but the idea of UBI would be that everyone would get 400 eur. I know that is not possible right now without taxing individual income even more, and as such my view is we should come up with tech we can tax. I dont have the specific silver bullet for how it could work, but would it be possible to tax every robot that replaces a human worker? Or tax anything that 10x’s productivity in any field, but at a level where it still is very motivating for an investor to make that 10x investment by letting them keep 8x of the output?
That sounds like a problem, so they ask this magical wonder machine to solve it. It will write pro-UBI statements that instantly convince politicians that maybe those who profited the most from magical wonder machine can now afford to pay more than zero taxes.
After that, it's dolce vita and stargazing until they die.
The whole point is that a UBI is a realization of the wealth that is being automatically generated. Calculate it from the GDP. It doesn't require a tax. Prices continue adjusting accordingly.
There are other taxes than income taxes. My idealistic view of UBI is a way to share the increasing benefit of automation. So if a factory owner fires all his employees and replaces them with robots, his increased profits are rather heavily taxed and go to UBI. I am aware of how logistically difficult it would be to have a fair "automation tax" though. But the point is: income tax is not the only tax, and probably not even the best tax, to fund UBI.
Although not an expert I've never seen a realistic individual and/or corporate tax rate that would generate enough revenue to enable UBI. Is there one?
Indeed, in the UK we have a personal allowance of around £10k of income which is not taxed. If you either remove that allowance or add the UBI to your earned income (same answer), you collect a lot more tax and the budget is now higher.
I think we have to be clear though, we are expecting to have to increase taxation to pay for UBI. If the need for UBI is driven by automation removing jobs, then the extra wealth that the automation creates is going to have to be re-distributed. It is also time to revisit the special treatment that capital (especially land) gets in the tax system. Land Value Tax is perhaps a much more socially aware approach.
To address the concept of UBI up front, I'm not a fan of it. I could get into the philosophical arguments of it but tugging heartstrings is one of the first signs of a failed argument (name calling is a close second). However, I will also say that I don't see any other way to deal with the kind of job disruption we're going to see as a nation over the next 15 years with AI tech progressing. Anyone who wants to argue against roughly 40% of the country getting a UBI for 5 years or so along with new job field training hasn't thought through what roughly 150 million armed and broke Americans can lead to.
FY2019 the US saw a tax revenue of $3.46 trillion in total tax monies, with right at half of that coming from income taxes at $1.72 trillion. Meaning, taxation for UBI would be a tax increase of $350 billion on top of current income taxes if you wanted to pay every single American a $1k monthly UBI. Last census showed 20% (ok, actually 19% but rounding up to keep numbers simple) of Americans do not pay payroll taxes (this is why I did not count FICA taxes with the $1.72 income tax number, because when I say 20% I mean 20%. So I excluded people who pay FICA, have an SSI exemption, income to low, ect)) so that means the base population numbre of 350 million I used now is 280 million total Americans (and we both know that a quick glance at the current U6 number on an unemployment chart will crush the pipe dream of 280 million Americans having jobs and paying federal taxes. So now we're talking some serious tax increases. And I think a lot of people might be shocked at how many people with two UBI checks coming into their household would consider that retirement money....adding even more tax burden to the rest.
I know some people like to blame Trump, some Biden, and some point to Obama....but we've been trying the free money experiment since the Great Recession with those first moves Bush made and every President has followed since. The Federal Reserve slammed rates to zero and kept them there because there has never been an economic recovery. Which is why the Fed has also artificially supported several private markets (don't even get me started on the Federal Reserve's trading desk when they want to buy a crap ton of stocks or bonds to stop a market slide when it starts getting around +1,000 or more.), and all it's achieved is giving us terrifyingly large asset bubbles and even more scary debt bubbles. Without getting off into a novel on the topic, quite simply, the answer is no....we do not have the resources available to hand out UBI. I've heard some advocate the logic of it's fine since we can print as much money as we need. People who say this simply don't understand how the US economy and the Federal Reserve work as for every single USD that is created...there is also debt created via the interest owed on that one dollar. This is why anyone who says they can pay the debt off or not add to it is either lying or selling something. The literal only way to address the US's debt (both public as well as Unfunded Liabilities....which total $170 trillion in debt just counting Medicare and SSI) is liquidation. Sure, we could "tell" the Fed no more interest and to waive all interest owed it....but that would make the USD toilet paper globally. And if that ever happens that the world views the dollar as useless then we'll see a crash on the scale of Mad Max stuff like doom prophets on youtube always swear is happening in 5 hours.
If someone is single and needs help, you can't beat the military (I joined the Army for this precise reason) for food, clothing, shelter, income, insurance, ect. That's where I got a lot of my college education for free, but if single there are way to many grants to not be able to do a few night classes a week since there are no wife or kids at home waiting on you. If you have a family as I did (wife and two toddlers) it was even better as the Army gave us free housing and extra money for groceries and my family enjoyed my benefits. As far as the intellect argument....we live in the age of the autodidact thanks to the internet. Anyone that can't be bothered to take half an hour a day to educate themselves doesn't want or need help. I left my job in automation right after the recession and since all that had happened I decided to learn how the economy works, how the dollar works, what the Fed is and how it works, how it applies geo-politically, ect. It's why nowadays I sit at home in my boxers and trade the markets while also having a second portfolio that is more passive and functions best if left alone.
Any practical UBI will require a large increase in taxes. If this isn't an income tax, it will be a payroll or sales tax, which both have a similar effect. A UBI pilot needs to model that tax just as much as the actual money transfer. If a practical UBI system contains a "massive disincentive to work", a model of such a system should contain this as well.
It is not the tax on the UBI that is referred here. It is whatever tax will be neccessary to finance it. You can't reason about this by looking at the current rax system, since it would most likely need to change.
You can refactor it to net 0. Take n tax brackets. For each tax bracket estimate how much x% income is raised by UBI, then raise the taxes in that bracket to that same x%.
In the $0 income bracket this would be tax_rate:=100% , in the >$100K bracket it might be tax_rate:=1%.
So now your UBI is paid for but it's not doing anything useful.
However, you can now tune your tax brackets "as per usual" to get a more desirable outcome; lowering taxes in the lowest bracket and raising them in the highest.
The new ability you get is that while previously your progressive tax brackets only allowed you to control the upper limit of the income band , you now also have the ability to control the lower limit of the income band.
I don't think that can be true realistically. Some people have to lose money in order for "universal income" to work. It may look sightly different if middle and upper class people "get" 12k a year, while having to pay the UBI tax of 20-30k a year (or whatever the numbers are) but on net it should be no different.
Until we have robots doing all work that are publicly owned, someone will have to be losing, on net, with UBI.
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