{"items": [{"author": "Peter", "source_link": "https://plus.google.com/103618186481362054522", "anchor": "gp-1312831343730", "service": "gp", "text": "I like this system in general, but there are some border cases which need to be covered separately. For example, what do you do with a parent who has no income other than the public assistance and due to an addition (it could be drugs, alcohol, or gambling) doesn't spend enough of the assistance on the children to keep them basically provided for. I'd say it would be necessary for the gov't to remove the children and place them in foster care.", "timestamp": 1312831343}, {"author": "Jeff Kaufman", "source_link": "https://plus.google.com/103013777355236494008", "anchor": "gp-1312831952528", "service": "gp", "text": "@Peter: the programs that this is supposed to replace are the assistive ones: food, housing, medical care, earned income tax credit, etc. Probably social security. The need for other types of social services (child protective services, etc) would be unchanged (except that ideally with it would be needed less).", "timestamp": 1312831952}, {"author": "Ben", "source_link": "https://plus.google.com/101391698163358104473", "anchor": "gp-1312832534858", "service": "gp", "text": "Other than simplicity, is there a reason to keep the marginal tax rate flat (at 38% for all income levels) instead of progressive (increasing it to, say, 50% for income earned above $1 million)?", "timestamp": 1312832534}, {"author": "Alex", "source_link": "https://plus.google.com/100936518160252317727", "anchor": "gp-1312832623243", "service": "gp", "text": "It's rather well-established fact that people are poor decision-makers when it comes to spending money wisely. Furthermore, the poor have less education than average, and may be substantially worse at deciding how best to spend their money. There are entire industries based on extracting money from poor people who make bad decisions with their money (e.g. credit cards, pawn shops, cash advances, loan sharks, etc.). Why should I as a taxpayer trust someone on public assistance to make good decisions with the money I give them?\n
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\nI'm not saying the current systems aren't seriously and critically flawed, but I'm not convinced this is the best solution.\n
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\nAlso, do you have a graph of the effective overall tax rate under your plan? I'd gnuplot it but I'm feeling lazy. :)", "timestamp": 1312832623}, {"author": "Jeff Kaufman", "source_link": "https://plus.google.com/103013777355236494008", "anchor": "gp-1312833467942", "service": "gp", "text": "@Ben: the goal is to change only a little how much we redistribute income. The current maximum tax bracket is 35%, and 50% would be a big jump. I'm looking here at how to fix things at the low end, where they currently make less sense. What to do at the high end is a separate question, really. Generally, though, the worry is that if you make the top marginal tax rate too high then it will decrease investment too much.", "timestamp": 1312833467}, {"author": "Jeff Kaufman", "source_link": "https://plus.google.com/103013777355236494008", "anchor": "gp-1312834317512", "service": "gp", "text": "@Alex: the industries you are listing all make their money because the people they make their money off don't have enough money. At the low end, volatility in income means huge shifts in the affordable quality of living. Existing services can't mitigate this properly because they take a while to get started. So my understanding is people deal with this insecurity by taking out (ultimately expensive) loans from the only people willing to lend to them.\n
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\nYou may or may not be right that poor people make a lot of bad choices. I don't know. Morrison's book doesn't back that up, with the welfare mothers she met (in the early 1970s) generally making very good choices. Whether or not the money given would be spent as well as possible, though, I think it probably would be spent more effectively than it currently is. The current system of trying to enforce sensible spending choices has high overhead, and gets things wrong.\n
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\nI think the graph you're asking for is:\n
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\nhttp://i.imgur.com/itz6m.png\n
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\n(It's labeled \"affine income tax\" because that was what I was calling this before I found it already had a name)", "timestamp": 1312834317}, {"author": "A", "source_link": "https://plus.google.com/114855363824787514897", "anchor": "gp-1312834536533", "service": "gp", "text": "@Alex\n Google and/or Wiki \"conditional cash transfer\" programs. While they have stipulations on funding, they're very minor (e.g. \"send your kid to school and make sure they're vaccinated\") and don't restrict spending at all, yet have achieved considerable success in reducing poverty. \n
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\nTurns out, even \"undereducated\" people, on average, make optimal decisions based on the resources they have (or do not have).", "timestamp": 1312834536}, {"author": "Jeff Kaufman", "source_link": "https://plus.google.com/103013777355236494008", "anchor": "gp-1312834968416", "service": "gp", "text": "@Amber: while I think you're mostly right, how would you determine whether their decisions were \"optimal\"?", "timestamp": 1312834968}, {"author": "b", "source_link": "https://plus.google.com/109680641548243670506", "anchor": "gp-1312835707470", "service": "gp", "text": "It seems like there's a good case for not handling health care this way, because health care costs are unpredictable and are spread unevenly across the population. If everybody gets a pile of money, the lower-risk types will tend to judge health insurance as a bad deal, driving up prices for the higher-risk types (this is a classic adverse selection problem), but then some of the lower-risk types will suffer catastrophic health problems that exceed their ability to pay. If we give everybody a voucher that can only be spent on health insurance, and tell would-be insurers that they can only accept the vouchers if they accept them from everybody, then we have a lot less adverse selection and a lot fewer problems from people being uncovered when disaster strikes, and we soften the impact of some people being stuck with more expensive health issues than others. (Alternatively, we could have a government-run health system that everybody has access to - the debate over which combination of those two options to use is an interesting one, but not really so important for the issue at hand.)", "timestamp": 1312835707}, {"author": "Alex", "source_link": "https://plus.google.com/100936518160252317727", "anchor": "gp-1312835745938", "service": "gp", "text": "Actually, I'm just looking for the graph of f(x) = (0.38 x - 10000) / x; Wolfram Alpha (which is occasionally handy) uses bad axes in this context.\n
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\nIt's possible I'm wrong, but it's one thing to say \"x is better policy than y\" and quite another to say \"x is a really good policy that achieves all of our goals in the real world.\" If there's good evidence out there that poor, public assistance\u2013dependent people make good financial decisions given cash transfers, I think this idea has a lot going for it.", "timestamp": 1312835745}, {"author": "A", "source_link": "https://plus.google.com/114855363824787514897", "anchor": "gp-1312835853237", "service": "gp", "text": "I meant in the economist's sense of rational decision-making: they will act to make sure they and their children are better off. (there are also benchmarks involving health, education, and economic activity)\n
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\nThis is even true without cash transfers, but the problem is that poverty incentivizes short-term gains over long-term rewards. Without extraordinary luck, people stay poor despite behaving in a fairly understandable fashion.\n
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\nGross simplification to be sure, and the edge cases (addiction, physical disability, etc) deserve attention. Yet.", "timestamp": 1312835853}, {"author": "Jeff Kaufman", "source_link": "https://plus.google.com/103013777355236494008", "anchor": "gp-1312836060919", "service": "gp", "text": "@Alex: what does your f(x) let you determine?", "timestamp": 1312836060}, {"author": "Alex", "source_link": "https://plus.google.com/100936518160252317727", "anchor": "gp-1312836287471", "service": "gp", "text": "Effective total tax rate, as a percentage. So at $100,000 of income, tax is $38,000, minus the $10,000 of unconditional cash transfer, or $28k. Therefore the effective tax rate for someone earning $100k is 28%.", "timestamp": 1312836287}, {"author": "Jeff Kaufman", "source_link": "https://plus.google.com/103013777355236494008", "anchor": "gp-1312837431539", "service": "gp", "text": "@Alex: that gets confusing at the low end: for $1K it's -962%. That might be why wolfram alpha gave funny axies?", "timestamp": 1312837431}, {"author": "Alex", "source_link": "https://plus.google.com/100936518160252317727", "anchor": "gp-1312837910238", "service": "gp", "text": "In the middle ($5k-$50k, where lots of people are), it's a useful way to compare this idea to current tax rates, since marginal tax rates, being effectively a derivative, are noisy and highly sensitive to sharp edges in policies.", "timestamp": 1312837910}, {"author": "Rick", "source_link": "https://www.facebook.com/jefftk/posts/233908773314152?comment_id=234245416613821", "anchor": "fb-234245416613821", "service": "fb", "text": "Jeff, I think this proposal makes a lot of sense.", "timestamp": "1312891208"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/233908773314152?comment_id=234252829946413", "anchor": "fb-234252829946413", "service": "fb", "text": "I'd thought about it before, but reading in Barbara Morrison's book brought it back into my head.", "timestamp": "1312892645"}, {"author": "Eric", "source_link": "https://plus.google.com/105086402673996622245", "anchor": "gp-1312914294070", "service": "gp", "text": "I like this system a lot, in principle. I'd like to hear arguments AGAINST it, actually, because I don't see them - and that means my perspective is (potentially dangerously) skewed. I grew up in a (retrospectively) wealthy family, so I don't understand how money really works on the lower ends of the spectrum. Yet, anyway. We'll see about the future.\n
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\nAlso, one slightly odd remark - you/we may want to be careful in setting how children factor into these calculations, rather than fixing a 10k per person base income. I'd be really worried about \nincentivizing\n people to have children. Making them feel \nfree\n to have children, be relatively unburdened, sure. I'm just worried whether the numbers would lead people to have children for purely financial gain.", "timestamp": 1312914294}, {"author": "Ross", "source_link": "https://www.facebook.com/jefftk/posts/233908773314152?comment_id=234442279927468", "anchor": "fb-234442279927468", "service": "fb", "text": "I think the mises graph is probably quite off what an actual household would experience. They are assuming you have a bunch of benefits you probably don't. Most notably, Section 8 is next to impossible to get in many states and AFDC is time limited.", "timestamp": "1312920827"}, {"author": "Jeff Kaufman", "source_link": "https://plus.google.com/103013777355236494008", "anchor": "gp-1312922039377", "service": "gp", "text": "@Eric\n Arguments against:\n
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\n(1) it would be more expensive than we think, primarily because people would be getting benefits they don't currently get. Signing up for current benefits is difficult or impossible (section 8 housing) or limited to a certain number of months (TANF cash grants). So by making it easier to get them, we'd dramatically increase how much this would cost.\n
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\n(2) it would decrease people's incentive to work. Sure, you keep 62 cents of every dollar you earn, but if you expect to get $10K in perpetuity whether you work or not, why work?\n
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\n(3) this is going to require raising taxes on the rich. As calculated, the top tax bracket goes from 35% to 38%, but because of (1) and (2) it might need to go up even more. This would reduce the returns to investment and make potentially limit growth.\n
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\n(4) as you said, people might have children for the money.\n
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\nOne potential solution would be lowering the $10K/person to something harder to live on.", "timestamp": 1312922039}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/233908773314152?comment_id=234454866592876", "anchor": "fb-234454866592876", "service": "fb", "text": "@Ross: that's a good point, and would probably make this more expensive to implement. To make this closer to revenue neutral we could scale down the initial $10K to the average per person benefit we give to people with no income.", "timestamp": "1312922400"}, {"author": "Sean", "source_link": "https://plus.google.com/107270646379592003271", "anchor": "gp-1312986980892", "service": "gp", "text": "1) That's in the short run. The much more difficult long-run analysis would be to see how much extra GDP is generated by having people with a functional income who are creating more drag via direct payment but much less drag because other factors (health, education, crime) will all go down. Plus, they would actually be spending money in the economy, which is a good thing.\n
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\n2) Personally, I feel that we've reached the tipping point past which we cannot maintain full employment at 40 hour work weeks because producing new physical goods is too expensive and we both undervalue and create too many barriers to increasing the amount of non-physical (art, ideas, etc.) goods. I don't have good evidence to back this up, but I submit that productivity per hour is skyrocketing, while payrolls remain stagnant. We're back to pre-recession outputs but not to pre-recession employment. This trend is only going to continue. Look at Foxxconn in China. Also, giving people incentive to work is more than about returns; it's about giving them a framework where they can produce something of value to society in exchange for compensation. It does not necessarily mean washing dishers for 30 years. This problem is more with the expectations of the haves than it is with the values of the have-nots.\n
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\n3) Good. The economy only works when money circulates, and right now the rich have been engaged in mass reduction monies in circulation for 40 years. They prefer to hoard than spend.\n
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\nSide note: being rich and being poor; if we accept (and I do) prior arguments, then at both ends of the spectrum, you're incentivized to make short term decisions over long.\n
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\n4) Yeah, so this one is actually a problem. I'd say just do diminishing returns on each child. 10k for the first, minus 10% for each follow-on. You'd never reach zero, but you'd make it harder fast.", "timestamp": 1312986980}, {"author": "George", "source_link": "https://www.facebook.com/jefftk/posts/233908773314152?comment_id=539738539397839", "anchor": "fb-539738539397839", "service": "fb", "text": "I just want to say that the Ludvig von Mises institute that you link to is an awful, awful, awful thing and in general I don't trust them on any question about economics or taxes (or, I guess, anything). How does their marginal rate computation compare to figure 2 in http://waysandmeans.house.gov/.../eugene_steuerle... ? Mises might or might not have bad information in this case, but in general I would discourage you from linking to them and lending them credibility.", "timestamp": "1368857588"}, {"author": "George", "source_link": "https://www.facebook.com/jefftk/posts/233908773314152?comment_id=539739642731062", "anchor": "fb-539739642731062", "service": "fb", "text": "Also, a higher marginal rate can both create an incentive to work less (get to keep less of each dollar earned) and an incentive to work more (need to work more to afford the same things) and the way people respond to these incentives isn't very clear without empirical data.", "timestamp": "1368857916"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/233908773314152?comment_id=540337459337947", "anchor": "fb-540337459337947", "service": "fb", "text": "@George: better data would be good here.
Their \"maximum available\" line in figure 2 is pretty similar to the line in my first figure. Probably the differences come down to being calculated for a different state (Virginia vs Colorado) and the Ludvig von Mises people being slippery. I've added this graph to the post: http://www.jefftk.com/news/2011-08-08", "timestamp": "1368987603"}, {"author": "Kevin", "source_link": "https://www.facebook.com/jefftk/posts/233908773314152?comment_id=540355826002777", "anchor": "fb-540355826002777", "service": "fb", "text": "The wikipedia page on basic income guarantee has a section on examples of implementation: http://en.wikipedia.org/wiki/Basic_income_guarantee...", "timestamp": "1368991728"}]}