Net here is the amount received by the individual in basic income, less the portion of their taxes going to pay for the basic income, assuming it is funded with a 50% flat tax. So yes, if you earn $20k, are given $20k, and are taxed (for the purposes of funding the BI) $10k, the net (direct) effect of the basic income program on your bottom line is $10k.
Is basic income taxable or not? If it is taxable, the federal budget can be expanded. If not, tax rates would need to change. If a person makes $100,000, what should their net taxes be? They will recieve $34,400 in basic income, if they paid 45% tax, it would only be a net of $10,600 in taxes.
Except that basic income has to be paid for with taxes. So everyone that works has a higher tax that they pay. Now below a given yearly earned income, the money you get from BI exceeds the additional increase in taxes. But above that threshold, you would be paying more in taxes than what you get back from BI. The real question, is where do you draw that line? At 50K a year? 100K? Or do you get it from property tax (and include all assets someone owns, including foreign holdings, as taxable)?
You don't decide. The point of Basic Income is that it's unconditional and universal. If somebody can prove they're a citizen, they get the BI, no need to determine their income.
As for a $4k tax being "crippling to a good chunk of them" -- no, you misunderstand the nature of BI. If we're paying $20k worth of BI in this scenario, then the mean income should be about $40k (since a good level for BI -- in basically any economy -- is about 50% of the mean). We could then support a flat $20k/person BI with a flat 50% earned-income tax. This means that the payments and receipts, per person would look like this:
As you can see, people making the mean income or less would make nothing at all. People making moderately more than the mean income would pay a little bit, but no more than they currently pay to support benefits programs. The only people paying a lot would be the people who could afford it.
Yes, taxes on the average worker would go up by the same amount as they're receiving in basic income. So the effective costs of a basic income program are a very small fraction of $3.2 trillion.
Certainly. With a tax-based universal basic income, the vast majority of individuals would be net beneficiaries.
As of 2011, an individual paying >$12k/yr in USA federal taxes is in the top 25%. [0] With a basic income of $1k/yr, anyone in the bottom 75% would effectively be receiving a 100% refund of all taxes, not only the funds earmarked for BI.
There is also the option of voluntary basic income systems, which have the advantage of being immediately implementable. [Disclosure: currently developing a voluntary basic income project/study]
What I got out of this was the suggestion to fund Basic Income by taxing unearned income. I'd like to read more on how the numbers would actually work out. If that were the only funding source of BI, then how much impact would that be on the rich, and how much benefit would that be for the people that could use BI?
Apparently the total income in the US is $13,401,868,693,000 (according to http://bber.unm.edu/econ/us-tpi.htm), which is about $43k per person.
So funding a $20k/person basic income would correspond to about 50% tax? Actually I think this is an overestimate, since the declared incomes do not cover social security and corporate taxes.
Most implementations I've read lean towards it being similar to a negative tax (there are other possible implementations out there). So if you file $0 income, you get a $10,000 credit/refund. If you make $200,000 income, you pay $20,000 in taxes.
So taxes on the top brackets pay for basic income on the lowest brackets, with the understanding that the impact isn't changing much for most people because we already have a progressive tax system and this is just a simpler/more efficient way to distribute.
If you make $160K a year, your tax increases to fund the basic income program will be a lot more than the $1K you'll receive, so there won't be extra for rent at all.
And this is the way it's supposed to be: High earners will be net losers, people with low/sporadic/zero market income will be net gainers.
You increase taxes to provide the basic income, so on net you're not providing it to everyone. On gross you provide it to everyone so that there's no sharp drop off at any point.
Depends on how that income gets taxed. At a certain level of income, the gains of basic income are lost to extra taxation. However you always know that if you get fired you have a safety net, so it provides value to you even if you get 0$ net effect.
You get this money without even working. Any money you earned while working (there would be no more minimum wage under this system) would be in addition to the $12,000 you got from the basic income. Also the basic income is presumably not taxed, as it's welfare income.
The only way I can see Basic Income working is if the average person has a net income change of $0. That means someone making the average income of ~$45k/yr gets a $10k check from the government every year, but also has their taxes go up by ~$10k. I believe others have referred to this as a negative income tax.
From what I can tell the average salary of a hackernews reader is above $100k. Each of us would probably end up paying ~$800+ per month in additional taxes, maybe up to $1,500/mo for those making that BigCo money. [1]
The first question is, does that sound reasonable? Do you want to subtract $400 from each paycheck for the sake of total strangers? And I guess the second question is, why aren't we doing that now? How much do each of us currently give to support other people in various ways?
I think Basic Income is a good idea. If people have more money, they'll be able to click on internet ads and buy things, and that will help the companies that many of us work for. But it won't be an even exchange and many people here will end up with less disposable income. I think that it will be worth it in the long run, to ensure that the economic engine that produces our paychecks continues to function. But I don't know if every UBI proponent is prepared to deal with the short term costs.
[1] I completely made these numbers up. Could be more, could be less.
The idea with a basic income is that it's taxed back from the wealthier. There's no way without knowing income distribution and tax rates, but I would imagine that someone making $150k pre basic income is not seeing any change in their take home salary post basic income, and someone making $500k before basic income will actually come home with a little bit less (that is just my hypothesis - I don't know the details surrounding this).
Basic income is just a redistribute tax mechanism, but it's one that tries to remove bureaucracy and politics from social security programs surrounding qualifications, etc.
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