Universal basic income (UBI) is an attempt to address one side of the conflict between wages and economic rents pointed out over 200 years ago by David Ricardo. Without addressing both sides of...
Universal basic income (UBI) is an attempt to address one side of the conflict between wages and economic rents pointed out over 200 years ago by David Ricardo. Without addressing both sides of the dynamic, you're shooting yourself in the foot. From the article:
Implementing a UBI without a tax code in place designed to capture economic rent will, in time, erode the income gains to the benefit of rent-seekers. The same is true for other schemes such as Universal Healthcare, higher minimum wages, infrastructure spending etc. Implementing a UBI alongside a VAT is worse than implementing UBI without it for both political and economic reasons. A budget-neutral UBI plan should spark caution in all who identify as progressive in one way or another; for it will mean the UBI isn’t high enough and odds are will entail more than the necessary cuts in public spending to avoid waste and overlap with the traditional Welfare bureaucracy. Implementing UBI alongside a Transaction Tax, which replaces all other taxes, will be even worse. Supporters of UBI of good faith should run like hell from this scenario....
I've got no clue about economics basically, so I'm wondering: Couldn't we just get rid of all those complex regulations for taxes and benefits at basically the income-tax level? say your earnings...
I've got no clue about economics basically, so I'm wondering: Couldn't we just get rid of all those complex regulations for taxes and benefits at basically the income-tax level? say your earnings as paid by whoever is x and your post-tax income is i(x). We can throw constrains at this function to make it reasonable and catch a lot of the common problems.
i(0) = basic income
i'(x) > 0 (for every increase in x, you want an increase in i. That's just a common sense incentive.)
i''(x) < 0 (your income curve keeps leveling off, i.e. progressive taxation for bigger wages)
This way, you can adjust the specifics of that function to balance your budget as desired. Funding secured. Add in a negative taxation rate for small wages (i'(0) > 1, i.e. for every dollar you earn, you are given more as "tax") to incentivize people to seek some form of productive work if you're into that.
But I'm probably thinking to simplistically..
Or you could mandate that the government builds affordable housing in appropriate quantities, to adress the problem posed in the article.
I studied this shit in school and have returned to it in depth over the past decade or so, and I'm only just starting to really grasp key elements. What's kind of scary is how many basic questions...
I studied this shit in school and have returned to it in depth over the past decade or so, and I'm only just starting to really grasp key elements. What's kind of scary is how many basic questions are still poorly addressed in economics. Virtually all have seen, and many still do, serious discussion and disagreement. I feel far less embarassed by my list of questions than when I first compiled it.
The private revenue of individuals, it has been shown in the first book of this Inquiry, arises ultimately from three different sources: Rent, Profit, and Wages. Every tax must finally be paid from some one or other of those three different sorts of revenue, or from all of them indifferently. I shall endeavour to give the best account I can, first, of those taxes which, it is intended, should fall upon rent; secondly, of those which, it is intended, should fall upon profit; thirdly, of those which, it is intended, should fall upon wages; and, fourthly, of those which, it is intended, should fall indifferently upon all those three different sources of private revenue. ... [I]t is necessary to premise the four following maxims with regard to taxes in general.
I. The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state....
That is, Smith argues for progressive taxation.
II. The tax which each individual is bound to pay ought to be certain, and not arbitrary. The time of payment, the manner of payment, the quantity to be paid, ought all to be clear and plain to the contributor, and to every other person.....
The tax system should be clear, fair, and consistent.
III. Every tax ought to be levied at the time, or in the manner, in which it is most likely to be convenient for the contributor to pay it....
The collection scheme should be efficient.
IV. Every tax ought to be so contrived as both to take out and to keep out of the pockets of the people as little as possible over and above what it brings into the public treasury of the state...
Again, efficiency in administration.
Smith then considers possible taxation schemes:
Taxes upon Rent. Taxes upon the Rent of Land. This is the land tax, considered interms of unimproved value, buildingsand improvements, and rents or profits.
Taxes on Profit, or upon the Revenue arising from Stock. Interest and surplus.
Taxes upon the Capital Value of Land, Houses, and Stock
Taxes upon the Wages of Labour. Income tax. Smith describes these as "Absurd and destructive".
Taxes which, it is intended, should fall indifferently upon every different Species of Revenue. Capitation (head) and Consumable Commodities (consumption or value-added). Of these: "Such taxes, in proportion to what they bring into the public treasury of the state, always take out or keep out of the pockets of the people more than almost any other taxes."
I'm not arguing that Smith is the last word on economics, by any means. He's an early observer (though certainly not the first), and a keen one (thugh not infallible). He is very frequently misrepresented (the "invisible hand" myth - a 20th century invention popularised largely after 1950), and much of his writing is studiously ignored.
But he's thoughtful and considered many of the isues we still wrestle with, often raising points largely forgotten.
As to what tax system Smith would prefer, my read is that he's listed the alternatives ocurring to him in order of preference.
Universal basic income (UBI) is an attempt to address one side of the conflict between wages and economic rents pointed out over 200 years ago by David Ricardo. Without addressing both sides of the dynamic, you're shooting yourself in the foot. From the article:
I've got no clue about economics basically, so I'm wondering: Couldn't we just get rid of all those complex regulations for taxes and benefits at basically the income-tax level? say your earnings as paid by whoever is x and your post-tax income is i(x). We can throw constrains at this function to make it reasonable and catch a lot of the common problems.
i(0) = basic income
i'(x) > 0 (for every increase in x, you want an increase in i. That's just a common sense incentive.)
i''(x) < 0 (your income curve keeps leveling off, i.e. progressive taxation for bigger wages)
This way, you can adjust the specifics of that function to balance your budget as desired. Funding secured. Add in a negative taxation rate for small wages (i'(0) > 1, i.e. for every dollar you earn, you are given more as "tax") to incentivize people to seek some form of productive work if you're into that.
But I'm probably thinking to simplistically..
Or you could mandate that the government builds affordable housing in appropriate quantities, to adress the problem posed in the article.
I studied this shit in school and have returned to it in depth over the past decade or so, and I'm only just starting to really grasp key elements. What's kind of scary is how many basic questions are still poorly addressed in economics. Virtually all have seen, and many still do, serious discussion and disagreement. I feel far less embarassed by my list of questions than when I first compiled it.
Adam Smith, whom I seriously recommend reading, addresses taxes toward the end of Wealth of Nations, which I've read only in part yet, and am taking opportunity of your question to revisit.
Smith writes in Part II:
That is, Smith argues for progressive taxation.
The tax system should be clear, fair, and consistent.
The collection scheme should be efficient.
Again, efficiency in administration.
Smith then considers possible taxation schemes:
I'm not arguing that Smith is the last word on economics, by any means. He's an early observer (though certainly not the first), and a keen one (thugh not infallible). He is very frequently misrepresented (the "invisible hand" myth - a 20th century invention popularised largely after 1950), and much of his writing is studiously ignored.
But he's thoughtful and considered many of the isues we still wrestle with, often raising points largely forgotten.
As to what tax system Smith would prefer, my read is that he's listed the alternatives ocurring to him in order of preference.