Presidential jobs address, 9-8-2011

[Angua]

Presumably to be able to have a better standard of living than the basic? Maybe I'm misunderstanding completely though.

[Zamfir]

There's two approaches here (with mixes possible of course). They're sometimes called a "guaranteed income" and a "basic income". In the first case, the government identifies people who don't earn enough money (by whatever standard) and gives those people enough to reach the minimum. The second approach is that the government gives everybody the minimum, independent of how much other income they have.

They're the same for people who do not work, and can be made almost the same for people who earn a lot more than the minimum (since the higher taxes of system 2 are compensated by the basic income they also get). But for people who don't earn a lot, for whatever reason, the systems differ a lot. In the first system, there is no point at all in accepting a job below the minimum. You have to work, but you won't be one penny richer. So a high minimum will lead to people who would like to work, but can't find a job that pays enough to make ti a better deal than staying at home and receive the minimum.

[Griffin]

Yeah, the "guaranteed minimum" punishes you for working by essentially taxing your labour at 100% up to whatever the limit is. It is quite possibly the worst system ever devised, incentive-wise, AND involves a lot more overhead AND favours the rich over the poor AND...

Well, I can't think of any actual positives for the system beyond the fact that people won't starve, but when you've basically got a system that says "okay, this portion of the population is not allowed to work or we will take all their money", I've got a feeling you're going to have a lot of frustrated unhappy people.

While the basic income system has the same incentive structure as a free market, but a more equitable balance of bargaining power and the opportunity for those lest well off to invest and do business. It discourages work in some ways (people don't HAVE to work), but think for a minute - the movers and shakers and producers in society, do they HAVE to work? Fuck no. Most of them could retire today and live comfortably off that cash for the rest of their life - but they don't, because the vast majority of people are not satisfied with the bare minimum, financially - they want to feel like they're working towards something. All "having" to work does is insure you don't get compensated as much as you deserve because you literally have no other option than to agree to bad deals.

In many other ways, it encourages people to work, because it allows them to act outside the moment, to plan for the future, to take risks and to work without being terrified of what happens if their job disappears. If there's anything that helps make a market healthy, its the removal of uncertainty, and this goes a long way to doing that for the labour market.

[Zamfir]

Well, I can't think of any actual positives for the system beyond the fact that people won't starve, but when you've basically got a system that says "okay, this portion of the population is not allowed to work or we will take all their money", I've got a feeling you're going to have a lot of frustrated unhappy people.

Well, that's why countries hardly ever have a simple guaranteed income, but accompany programs with some set of extra requirements, obligations to look for work, accept suitable job offers, join training programs, etc. Or restrict them to a specific set of people, like people with heavy disabilities, or students, or the retired. Plus there are usually gradual phase-outs and other trickses to smooth the transition to work. Doesn't work perfectly, but a pure minimum income guarantee is more a theoretical construct than a scheme people seriously propose.

The problem with a basic income is on thye other side: what about people who voluntarily do not want to work much or hard, and are OK with a reduction in income? Like stay-at-home partners of people with enough income, people who retire early (or work less) to live off their savings, people who work the bare minimum in order to have time for a big hobby or art, or just plain lazy people.

All of those are prefectly fine life choices, but hardly choices that should be involuntarily supported by other people. It's one thing if this is a side effect. But in a basic income scheme this would easily be the main effect, and other effects would be side effects.

[Griffin]

All of those are prefectly fine life choices, but hardly choices that should be involuntarily supported by other people.

Quick Summary: Why not?
More in depth...
Well, all of those people will have their money flow back into the system soon enough (since they aren't investing it or profiting, it means they're spending it) and most of them probably wouldn't have been terribly productive anyways. They're jobs will quickly be filled by people who do want to work, and if there is eventually a labour shortage... well, great. Labour shortages tend to spur innovation, efficiency, and advancement.

If the problem is that there isn't enough work to go around (and it does, in fact, seem to be that way), then less people fighting for jobs (while maintaining a larger base of consumers and customers) is probably a good way to encourage productivity in general, if not for every individual.

All of those are prefectly fine life choices, but hardly choices that should be involuntarily supported by other people.

Under what justification? Why should crippled people get involuntary support, but happy people shouldn't? Why is it okay to "involuntarily support" others to keep people alive but miserable, but not to keep people happy? Why is it okay to "involuntarily support" others to bail out bank executives who made poor decisions, but not to give the average person a base standard of living? Why is it okay to "involuntarily support" people to pay for a politicians private jet, or to send corporate satellites to space, or to regulate industry, or to conduct research, or to send people overseas with guns?

No, see, taxes work like this: We, as a society, decide what we want. If we decide that a basic income is worth enough to implement, of COURSE those choices should be involuntarily supported - that's how taxes and government spending works. (And are stay at home parents and people who worked hard enough to live off their savings with some government support really that terrible that they shouldn't deserve the same benefits society gives everyone else under said system?)

Unless you were, you know, trying to make an actual argument they shouldn't be supported instead of just assuming everyone agrees on it?

I don't even know if we actually even disagree or how much, but the assumption that everyone would agree with that statement really bugged me.

[Zamfir]

Yes, a tax system should do what we want it to do. So I am arguing that we, as a society, should not necessarily want to use it for a total basic income. That's surely part of the process of finding out what we want that tax system to do? Determining what "we" want is far more difficult than determining what you or I want.

I think this is the core of the issue:

Why should crippled people get involuntary support, but happy people shouldn't?

Because the first group didn't choose to have little money and little work, while the second did. So money is going to help the first group a lot more than the second. If you transfer the same amount to both groups, you will either set the amount too low for the first group, or unnecessarily high for the second group. That's a nasty coupling that will most likely end badly for the people in the first group.

It's the Skylla and Charibdis of a social safety net. If you make the system too needs-targetted, you create a barrier against escaping need. Poverty traps suck.

But every loosening of the system will transfer a larger share of the money to people who do not need it, whose life is not much improved by the money. A total basic income system is mostly a system that taxes people to give money to other people who don't want it much. As a side effect, it also transfers money to people who do need it much, but you'll be hard pushed to make that flow large enough given the deadweight of the first.

A good system finds a complicated path between those two: making sure that people whose lifes are deeply affected by lack of money can get money without getting poverty-trapped, while keeping the system targetted enough to sustain a useful size. That's not an easy task, nor are we doing it very well already. But I think a basic income is a far too simple solution to improve on the current systems.

[CorruptUser]

That and crippled* people are supported for morale purposes; most people want to know that if they are injured/crippled, they and their families won't starve to death. Most people don't give a damn about whether or not a lazy person starves.

*'Disabled' always seemed to me to be more offensive than 'crippled'.

[aleflamedyud]

Yes, a tax system should do what we want it to do. So I am arguing that we, as a society, should not necessarily want to use it for a total basic income. That's surely part of the process of finding out what we want that tax system to do? Determining what "we" want is far more difficult than determining what you or I want.

I think this is the core of the issue:

Why should crippled people get involuntary support, but happy people shouldn't?

Because the first group didn't choose to have little money and little work, while the second did. So money is going to help the first group a lot more than the second. If you transfer the same amount to both groups, you will either set the amount too low for the first group, or unnecessarily high for the second group. That's a nasty coupling that will most likely end badly for the people in the first group.

It's the Skylla and Charibdis of a social safety net. If you make the system too needs-targetted, you create a barrier against escaping need. Poverty traps suck.

But every loosening of the system will transfer a larger share of the money to people who do not need it, whose life is not much improved by the money. A total basic income system is mostly a system that taxes people to give money to other people who don't want it much. As a side effect, it also transfers money to people who do need it much, but you'll be hard pushed to make that flow large enough given the deadweight of the first.

A good system finds a complicated path between those two: making sure that people whose lifes are deeply affected by lack of money can get money without getting poverty-trapped, while keeping the system targetted enough to sustain a useful size. That's not an easy task, nor are we doing it very well already. But I think a basic income is a far too simple solution to improve on the current systems.

I'm generally with Griffin on this one, but I also want to make one other note:

A basic-income scheme gives the money not only to the poor but to everyone. This means it doesn't just replace welfare and Social Security (pension system), it also replaces unemployment insurance and child benefits (though the basic income for a dependent child will almost definitely be less than for an adult and entrusted to their parents (though as they get older it should come into their own ownership and rise towards that of an adult), of course). Especially in the case of replacing child benefits (provided that the income support of the basic-income isn't completely wiped out by inflation, which is the real worry of this scheme), this helps to combat middle-class squeeze. Since the basic income is truly basic (again assuming it's not wiped out by inflation), it also helps to encourage paying down one's debts among the middle classes, because if you earn enough to live on from work, the basic income will supplement you with just a little more, enabling you to pay down old debts or save and invest for the future.

[Zamfir]

Yes, I understand that a basic income applies to everyone. I just don't see how that changes what is see as the main objection to a baisc income, namely that such a system would transfer a significant amount of money to people who do not particularly need it, who could earn more money by themselves if they had wanted more money. I am all in favour of giving money to people who have a difficulty making enough money on their own. But I don't see the big attraction in using taxes to give money to people who could earn it for themselves if they wanted to, but just voluntarily choose not to do so.

Of course, that division between voluntarily and involuntarily is not sharp, or easy to recognize by any practical system. Any real-world system that transfers money to one group will inevitably transfer some money to the other group, as an inevitable side effect. Attempts to minimize that amount run at some point into poverty-trap problems or privacy issues. But a basic income abandons any attempt to minimize that side effect. It allows the side effect to dominate the system.

I'll use numbers from the Netherlands to add some detail. The Netherlands already have a fairly comprehensive system of social insurances and government support. It's probably one of the countries where a universal basic income would be the smallest change compared to the status quo.

First groups that are msotly unaffected by the change:
- People above 65 already receive a universal basic income in the Netherlands, called AOW. This group is mostly not eligible for other supports. The group is 17.1% of the population.
- (Parents of) children below 18 (16 if they get a job) get a small universal child support. Just as people over 65, kids are not eligible for other support systems. Giving more money to this group is mostly a separate question from a basic income, IMO. This group is 11%.

So that brings us to the group between 16/18 and 65, roughly the working-age population. This is where a basic income would have its largest effects.
- The employed group (over 12 hours/week) is apparently 44.3% of the total population. For comparison: the US counts 45% of its population as employed (47% before the crisis), but the definition might be different. Similar numbers apply to most industrialized numbers with a high female work participation. Out of this group, some would be net receivers of a basic income, if their income is low or they work few hours. But most will have to be net payers, at least on year-to-year basis (over lifetime is another issue of course)

Other people in the working-age group already get a government-organized income. These are:
5% --People with a work-affecting disability, a notoriously large group in the Netherlands because people have used it as dumping ground for the long-term unemployed. A lot of these are partial-disability, s also count as employed or on another benefit.
2.1% --People with temporary unemployed benefits, based on their previous income. So a basic income would be a loss for most of these people, unless they get a top-up.
2.2% -- People on welfare, who are obliged to accept any job offered to them.
0.5% -- A small legacy system for widows (f/m) and orphans.
So in total, 9.8% of the population is of working age and receives some form of benefits.

If we add these figures, kids + people over 65 + employed(over 12 hours) + working-age people on benefits, we get 82.2%. that leaves 17.8% "other". That is an underestimate, since the enumerated categories have overlap: people over 65 with a job, people on partial benefits who also have a job, people who receive two types of partial benefits and count in both groups.

That's the problem in a nutshell: if you compare a universal basic income to the existing system, the single main difference is a transfer of money to this "other" group. And this group is big, even assuming that a basic income will have no effect at all on people's willingness to work. Larger than the entire old-age pension system which is partially a savings vehicle, not just a transfer system. The year-on-year net payers into the system will very much notice when this new group is added to the balance, and the group of net payers will probably have to grow too to accomodate the increased system.

And for the largest part, these people do not particularly need or deserve more money than they already have. They are stay-at-home partners, students (who currently get a stipend of about 250 euro/month, plus a loan system), people who retired early on their savings. Nothing wrong with those things, but why create the largest social security system ever to support them in things they were content to do anyway?

[Vaniver]

Yeah, the "guaranteed minimum" punishes you for working by essentially taxing your labour at 100% up to whatever the limit is. It is quite possibly the worst system ever devised, incentive-wise, AND involves a lot more overhead AND favours the rich over the poor AND...

What? That's not how any guaranteed minimum or negative income tax proposal I've seen has ever worked. Typically, it's combined with a flat tax system, and so the process looks like:

1. Start with total income for the period.
2. Subtract the threshold value.
3. Multiply by the tax rate.
4. Pay positive amounts; receive negative amounts.

(If the tax rate is 30%, say, and the guaranteed minimum should be $12k per year, then the threshold value is $40,000 per year- if you earn less, you get money from the government, and if you earn more, you pay money to the government. Marginal tax rates are equal across the whole income distribution- they don't have to be, but it gets rid of period-dependent foolishness.)

Now, you could argue that a flat tax rate benefits the rich over the poor- but the impact of a negative income tax with a threshold set around the median income compared to our current tax schedule can't be broken up into "rich" vs "poor."

[aleflamedyud]

And for the largest part, these people do not particularly need or deserve more money than they already have. They are stay-at-home partners, students (who currently get a stipend of about 250 euro/month, plus a loan system), people who retired early on their savings. Nothing wrong with those things, but why create the largest social security system ever to support them in things they were content to do anyway?

Because:

* Here in the States we don't have stipends for being a student or a stay-at-home spouse. In fact, many households face a "crunch" of having to pay for child-care out-of-pocket because they cannot afford to have one spouse/parent stay home and take care of kids.

* Because a half-decent living ought to be considered a moral obligation of society towards each individual.

* Because, once again, there's a vast amount of good and productive things people might do (like, for example, PARENTING) that simply can't get monetized, and sometimes could never be monetized (like PARENTING, and may I remind you that many countries don't have child benefits?).

[stevey_frac]

* Because a half-decent living ought to be considered a moral obligation of society towards each individual.

Wow. Just wow. Sense of entitlement much?

Society owes you a living? Really? Wake up. Society doesn't owe you, or anybody else shit.

[sardia]

Ought, should and does are not the same thing.
The hospitals don't have to pay for the poor who stumble into emergency rooms and save them. But they do.
Wanna go to a hospital where they won't treat you without making you pay first? Try it, the chinese do it already. It's not fun to wait in line while your love ones are dying.
If you extend this view of what society, aka the agreement between you and everyone else who lives in the nation aka a social compact, you can agree to anything. Right now we don't agree to provide a stipend to members of society that he is talking about. But we do provide a stipend to those who are old and healthcare to the old as well. Remember social security and medicare/medicaid?

If you're outraged by entitlement, how about the entitlement programs themselves? Why can't those old farts do what the Eskimos did with their seniors: They wander off into the forest and starve to death. That way society uses no resources to bury, kill or help them when they become a burden.

[stevey_frac]

There is a very very deep chasm between public health care and

'Society has a moral obligation to provide me with a decent standard of living, even if I don't contribute to society'.

I'm not arguing for the destruction of all social programs. They have their place. I've even said some should be beefed up.

But I find this concept of 'Society owes me a decent living' very narcissistic...

[Malice]

There is a very very deep chasm between public health care and

'Society has a moral obligation to provide me with a decent standard of living, even if I don't contribute to society'.

I'm not arguing for the destruction of all social programs. They have their place. I've even said some should be beefed up.

But I find this concept of 'Society owes me a decent living' very narcissistic...

No no no. It's not "Society owes me a decent living." It's "I owe it to the rest of society to contribute when I can to giving all of my fellow citizens a decent living." It's not about my safety net, it's about my obligations as a human being and a member of a national community.

[jakovasaur]

There is a very very deep chasm between public health care and

'Society has a moral obligation to provide me with a decent standard of living, even if I don't contribute to society'.

I'm not arguing for the destruction of all social programs. They have their place. I've even said some should be beefed up.

But I find this concept of 'Society owes me a decent living' very narcissistic...

No no no. It's not "Society owes me a decent living." It's "I owe it to the rest of society to contribute when I can to giving all of my fellow citizens a decent living." It's not about my safety net, it's about my obligations as a human being and a member of a national community.

...How is that different?

[Zamfir]

It's "I owe it to the rest of society to contribute when I can to giving all of my fellow citizens a decent living." It's not about my safety net, it's about my obligations as a human being and a member of a national community.

That's rather at odds with a basic income. A basic income doesn't carry an obligation to try to contribute to society, explicitly and intentionally. It gives money to everyone, whether they have tried to do something in return or not. That's a difficult program to sell on the grounds that people owe something to society.

[Malice]

There is a very very deep chasm between public health care and

'Society has a moral obligation to provide me with a decent standard of living, even if I don't contribute to society'.

I'm not arguing for the destruction of all social programs. They have their place. I've even said some should be beefed up.

But I find this concept of 'Society owes me a decent living' very narcissistic...

No no no. It's not "Society owes me a decent living." It's "I owe it to the rest of society to contribute when I can to giving all of my fellow citizens a decent living." It's not about my safety net, it's about my obligations as a human being and a member of a national community.

...How is that different?

It's selfless and noble instead of selfish and narcissistic? I'm just trying to express that people arguing for a basic income are not necessarily arguing because they want free gummint money, but because they believe a society should care for its citizens.

Zamfir, that's why I said "contribute when I can". I don't know how anybody could propose with a straight face a basic minimum income system that didn't involve any taxes whatsoever. And yes, it's shamefully hard to sell the notion that people should take care of one another, which is why it is usually sold with "here is your safety net, you selfish prick".

[stevey_frac]

It's selfless and noble instead of selfish and narcissistic? I'm just trying to express that people arguing for a basic income are not necessarily arguing because they want free gummint money, but because they believe a society should care for its citizens.

Sweet! The next time you want to feel noble, let me know, and I'll give you the number to a Swiss bank account.

[aleflamedyud]

It's selfless and noble instead of selfish and narcissistic? I'm just trying to express that people arguing for a basic income are not necessarily arguing because they want free gummint money, but because they believe a society should care for its citizens.

Sweet! The next time you want to feel noble, let me know, and I'll give you the number to a Swiss bank account.

Another argument in favor:

Let's assume that the major economists supporting this policy are right, and basic-income is the one major welfare program that's pretty-much guaranteed not to distort markets. Provided we stop it from causing major inflation, it's not going to cause poverty traps or any of that stuff.

It's also not going to make a big splash in already middle-class or well-off incomes. If you earn $50k/year, a $10k/year basic-income brings you up to $60k/year. That's a noticeable boost, but it probably really just means you can now afford a bit more saving and investing for the future than previously. If you earn $70k/year, $10k/year puts you over the "happiness threshold" where additional money stops meaning additional happiness (according to many studies). If you earn $80k/year or $90k/year (say, as a well-paid software engineer), another $10k/year from the government is really just a duplicate of your year-end bonus. If you earn $100k/year, then either the additional $10k is so little you won't notice it, or you're living in some place like Manhattan or Brooklyn with a really abnormally high cost-of-living and you should probably budget better anyway. So as you earn more and more, the cushioning effect of the basic income grows smaller and smaller, in terms of percentage of your income.

But this shows part of why high-earners resent welfare measures: even if they receive the measure (like a basic income), it doesn't really impact their actual budgets all that much, while low-earners can get a much more substantial percentage-boost to their budget from the welfare measure (like basic income).

[stevey_frac]

But your example is bullshit.

If you are giving $10k to the people who are making $20k / year, you have to take it from the people on the other side of the bell curve. We can't just give money away, without it being hugely inflationary. It has to come out of taxes. So, if you are over the bell curve, say, at $60k, the government has to claw back $10k to give it to the poor schmuck making $20k. Actually, it's probably worse then that, since i'm pretty sure the bell curve is more like a poisson distribution, and heavily biased towards low income (i.e. there are more people making 30k then 60k). So the taxes on the upper middle class would have to.. probably double, or triple what it is now. Thus removing all incentive for the most productive members of our society to work hard, thus crumbling the economy around us, and driving us all into crushing communist Russia style poverty (where they had no incentive to work either).

[sardia]

Way to slippery slope my friend. Counter example, a classic I might add, Sweden, Canada and other western European nations. They have higher tax rates in order to provide more services that most people in America pay for out of pocket or through private insurance paid for out of pocket. They aren't the vibrant economies that you may, perhaps erroneously, describe the US as, but they aren't poor post socialism USSR that you claim they would be.

I think the way others are describing it, that is what upsets you. How about a program that you already accept but expanded. Say we give social security to everyone, regardless of age or status. Then expand medicare/medicaid to everyone. Would that be better? The same problems are solved, but in a more roundabout manner. Instead of a lot of money being given out, give a little money and subsidize costs of essentials. Perhaps you are of a background that would explain your harsh views?

Btw, poisson distribution? Really? Care to elaborate? Maybe you mean an exponential decay function?

[CorruptUser]

Well, the Poisson distribution (like many distributions) with large enough parameter(s) approximates to a Gaussian Distribution...

...which is NOT how you model things like income. Weibull (powers of the exponential) or Lognormal (Gaussian of ln(x)) would be far more appropriate.

[stevey_frac]

I'm from Canada. We don't do anything like what is described here, handing out thousands of dollars to everyone.

You say i'm applying a slippery slope, but there is evidence to back up each step, which means it's not a slippery slope.

Here are the steps laid out. Each is well founded.

1) You want to boost the incomes of the slightly less well off
2) There are a lot of these types of individuals, more then the slightly well off.
3) In order for this to not be horribly inflationary, you must tax the slightly more well off, quite harshly.
4) The really poor now longer need to work, and there is reduced incentive for the slightly well off to work harder, because of the higher tax rates.
5) Less work is accomplished, through some combination of the above.
6) Economy contracts.

A logical chain of events isn't a slippery slope...

I used the Poisson distribution, because when i was looking at income distributions it seemed as though it was quite likely that there were very few people who make absolutely nothing, but quite a lot of people who made next to nothing. That seems like it would give you a nice Poisson distribution. It was late, I'm not a statistician, I'm fine with saying I got that bit wrong.

[The Reaper]

I'm from Canada. We don't do anything like what is described here, handing out thousands of dollars to everyone.

You say i'm applying a slippery slope, but there is evidence to back up each step, which means it's not a slippery slope.

Here are the steps laid out. Each is well founded.

1) You want to boost the incomes of the slightly less well off
2) There are a lot of these types of individuals, more then the slightly well off.
3) In order for this to not be horribly inflationary, you must tax the slightly more well off, quite harshly.
4) The really poor now longer need to work, and there is reduced incentive for the slightly well off to work harder, because of the higher tax rates.
5) Less work is accomplished, through some combination of the above.
6) Economy contracts.

A logical chain of events isn't a slippery slope...

3 -> 4 is a pretty good leap. 4 is your definition of a state, not really what'll actually happen, 5 happens with robots anyway, and 6 is mostly speculation.

[Garm]

1) The poor are lazy
2) ????
3) Economy contracts.

FTFY

[Bubbles McCoy]

1) The poor are lazy
2) ????
3) Economy contracts.

FTFY

You find the idea that giving people free money will reduce their propensity to earn money as unrealistic? I think modern welfare systems manage to avoid this trap in many cases, but this basic premise isn't particularly wrong.

As for distributions, the Lévy distribution may be closer to what you want stevey.

[stevey_frac]

1) Everyone is lazy.
2) ????
3) Economy contracts.

FTFY

More like this actually.

[netcrusher88]

I find that remarkably ignorant.

Unemployment is not high because people don't want jobs, unemployment is high because there aren't nearly enough jobs to go around, and the economy is shit because there isn't enough money flowing because so many people don't have any money because they don't have a job.

Jobs will exist (and people will take them!) when demand for labor exists, which will happen when demand for products exists.

Also, I reject as ludicrously contrived the idea that someone's going to be lazy because they're only going to see a 85% increase in income instead of a 90% increase.

EDIT: er, that they're only going to see 85% of the additional income instead of 90%.

[LaserGuy]

I'm from Canada. We don't do anything like what is described here, handing out thousands of dollars to everyone.

2) There are a lot of these types of individuals, more then the slightly well off.

Not really, no. You could aim that, for example, everyone should be at least at the LICO (low-income cutoff) level or higher. Only about 10% of the population are below this threshold.

3) In order for this to not be horribly inflationary, you must tax the slightly more well off, quite harshly.

I don't think it's quite as bad as you think. Cancel CPP, EI, GIS, and normal welfare to start with. Those programs are obsolete. Cancel most income tax deductions--keep maybe personal exemption, but drop most of the rest: RRSP, TFSA, charitable, tuition, all of Harper's stupid targeted ones (bus passes, children's sports...), etc. The government is already giving you a large income supplement, which will at least partially offset the loss of deductions, except for the very highest income tiers. Your guaranteed supplement is treated as income, so the higher up you go in the tax system, more of it gets returned to government as well. Ideally, you can just run the tax system as: calculate your total income, subtract person deduction, multiply by the appropriate tax bracketing scheme, and you're done. Bonus points because you can scrap most of the CRA by massively simplifying the tax system. I'd be surprised if that wasn't enough to cover the whole thing. If not, make up the difference by increasing the GST.

Deductions badly screw up the tax system anyway, so getting rid of them is a good thing. It makes no sense that someone making $200k/year should have an effective tax rate of 15% because they can hide most of their income in deductions.

[Garm]

I'm not really pro-basic income but you said in point number four that points five and six happen because poor people are lazy. I was just shortening your argument for you.

[stevey_frac]

Not really, no. You could aim that, for example, everyone should be at least at the LICO (low-income cutoff) level or higher. Only about 10% of the population are below this threshold.

Welfare already does this, or close to this, I think. If it doesn't, it probably should. This is no where near the level of subsidization being discussed in this thread, where one poster claimed that 'Society owes everyone a decent living'.

Deductions badly screw up the tax system anyway, so getting rid of them is a good thing. It makes no sense that someone making $200k/year should have an effective tax rate of 15% because they can hide most of their income in deductions.

Actually... it does. You don't want this individual to just sit on their money. You want them to invest it. You want them to buy a second house and rent it out. You want them to invest in stocks. You want them to buy bonds. Above all, you don't want this individual to save all his or her excess.

Also, the example you give isn't realistic, at least in Canada. You'd have to have close to 100k in deductions.

[stevey_frac]

I'm not really pro-basic income but you said in point number four that points five and six happen because poor people are lazy. I was just shortening your argument for you.

lrn2readmoar?

I said in point number 4 that there was reduced incentive for both well off and poor people to work.

[Garm]

I'm not really pro-basic income but you said in point number four that points five and six happen because poor people are lazy. I was just shortening your argument for you.

lrn2readmoar?

I said in point number 4 that there was reduced incentive for both well off and poor people to work.

Ah, yes. Saying that middleclass people wouldn't want to continue to work harder makes it okay that you call poor people lazy. My mistake.

[Bubbles McCoy]

Ah, yes. Saying that middleclass people wouldn't want to continue to work harder makes it okay that you call poor people lazy. My mistake.

You find it offensive to suggest that people work in order to get money?

[stevey_frac]

Ah, yes. Saying that middleclass people wouldn't want to continue to work harder makes it okay that you call poor people lazy. My mistake.

Damn straight?

If it it made little to no difference to my financial well being to work an extra 10 hours a week, my work-life balance would shift strongly in favor spending more time at home with my son.

I'd assume that most rational, feeling human beings to be the same, regardless of income? We work hard, for the money. If you take the money bit out of it...

Edit:

Also, i said 'reduced incentive to work'. Not lazy. They are different. Stop putting words in my mouth.

[netcrusher88]

"Not quite as much more money" is not "no money".

[LaserGuy]

Actually... it does. You don't want this individual to just sit on their money. You want them to invest it. You want them to buy a second house and rent it out. You want them to invest in stocks. You want them to buy bonds. Above all, you don't want this individual to save all his or her excess.

Also, the example you give isn't realistic, at least in Canada. You'd have to have close to 100k in deductions.

Not nearly as hard as you might think. Dividends, for example, are already taxed at a very low rate, so if a significant part of your income comes from that, you're most of the way there already. Max out your RRSP contribution, give a bunch of money to the Conservative Party, personal exemption for you, your spouse, and your kids (and contribute to their RESPs, send them to soccer camps...). In one of the most famous of such distortions, is that, in the United States, multi-billionaire Warren Buffet has noted that because of how deductions are set up in that country, he regularly ends up paying a lower tax rate than his secretaries. Anyway, having one person making $200k a year is not necessarily more stimulating to the economy than having 10 people making $20k a year. The latter case is important because most of the money will get spent on consumption; the former case is important because most of the money will (probably) end up being invested.

If it it made little to no difference to my financial well being to work an extra 10 hours a week, my work-life balance would shift strongly in favor spending more time at home with my son.

This sounds like a good thing to me.

[netcrusher88]

If it it made little to no difference to my financial well being to work an extra 10 hours a week, my work-life balance would shift strongly in favor spending more time at home with my son.

This sounds like a good thing to me.

Agreed. I'm not seeing a downside - someone else who does need or want them will do those 10 hours of work. That's the desired endgame, isn't it?

[Bubbles McCoy]

Not nearly as hard as you might think. Dividends, for example, are already taxed at a very low rate, so if a significant part of your income comes from that, you're most of the way there already. Max out your RRSP contribution, give a bunch of money to the Conservative Party, personal exemption for you, your spouse, and your kids (and contribute to their RESPs, send them to soccer camps...). In one of the most famous of such distortions, is that, in the United States, multi-billionaire Warren Buffet has noted that because of how deductions are set up in that country, he regularly ends up paying a lower tax rate than his secretaries. Anyway, having one person making $200k a year is not necessarily more stimulating to the economy than having 10 people making $20k a year. The latter case is important because most of the money will get spent on consumption; the former case is important because most of the money will (probably) end up being invested.

A few things:

-Dividends are one of the few things that are typically taxed at the full corporate rate, so overall the tax on dividends is quite high. Also, I doubt pure-dividend income is characteristic of people making $200,000/year. The Buffet thing is a very valid critique, but that deals with overall capital gains taxes opposed to just dividends.

- Donations to the Conservative Party (or any political part) are not deductible.

- What does stimulus have to do with anything?

If it it made little to no difference to my financial well being to work an extra 10 hours a week, my work-life balance would shift strongly in favor spending more time at home with my son.

This sounds like a good thing to me.

Where's the money coming from? Stevey said that if they got a bunch of free money, they'd work less - if everyone got this money, there'd be no one doing that work to pay for that money in the first place.