So, The New School's Institute on Race and the Political Economy recently released a new UBI/NIT/EITC plan, and since I like analyzing UBI plans, well, this is the right place to discuss this.
Not a true "basic income"?
So, essentially, this plan is an EITC expansion, which, off hand, is a bit cringe. I've criticized NIT/EITC expansions in the past, and I do believe that they are a bit weak. I mean, fundamentally, such a proposal, in ideal form, is going to mirror a basic income perfectly, but instead rely on the tax system or other bureaucratic institution to means test and modify benefits according to a formula based on income level, rather than just giving people an unconditional monthly check. This will give people the same benefits, but the bureaucracy will be much slower to respond to changes in situation (see: our overloaded unemployment system people couldn't even log on to during covid), and because there is a bureaucracy that gatekeeps benefits, it is much easier for a future republican or bill clinton style democratic administration to come along and "reform" the system by rolling back these changes or instituting work requirements or something. You gotta keep in mind, often times a lot of "pragmatic" thinking people will go the EITC route with UBI, claiming it's cheaper and they can just tweak a couple things about the existing system to sign it into law. But if it's that easy to modify a few lines of text in the existing tax code, think of how easy it is for future administrations to reverse that. That said, such a program by design may not have staying power and could be subject to attack by hostile republicans.
Now, these guys tend to fall into that weird "pragmatic" thinking approach centrists/welfarists tend to have with these things. A big appeal to this program, according to them, is rather than costing $3 trillion like most UBI plans, this plan will only cost $876 billion to implement, the net cost of the net transfers within the system. They also claim that giving everyone the same amount of money will dilute the purchasing power of the poor. Never mind the fact that the fact that a UBI is more expensive goes hand in hand with that. Why is a UBI more expensive? Because instead of relying on a clawback mechanism, it relies on extra taxation. The taxes will roughly equal the clawback mechanism. Only the poor get the "true" real benefit of UBI, because everyone else will have higher taxes to pay back their UBI. Ugh, I hate "progressives" sometimes. They always make these terrible arguments against universal and conditional aid when in reality it's just an ideological predisposition toward means testing the everloving crap out of everything in practice that does this.
Beyond that though, that is my one negative thing I have to say about this. Beyond this point, most of what I discuss is going to be overwhelmingly positive.
So what's the plan?
Well, this plan is essentially an EITC expansion that guarantees everyone a near poverty level income. It also is as universal as an EITC scheme can get, as it actively removes the work requirement. So basically, despite my criticisms, these guys are serious about some form of UBI, even if it's not a true UBI.
Essentially, the maximum benefit (aka, the "UBI") is $12,500 for adults, and $4,500 for children. Slightly less than the poverty line, and my plan, but still, nothing to complain about, this is very good. This benefit would be given to every adult under $10,000 for 1 adult households, and under $15,000 for under 2 adult households. It will include a phase out at $50,000 for single adult households, and $70,000 for 2 adult households. These values were chosen at being the approximate median income. This amounts to a phase out rate (read: tax, if we implemented an actual "UBI") at 31.9% for 1 adult households, and $46.4% for 2 adult households. The child basic income would have lower effective phase out rates at 11.25% for 1 adult households and 8.18% for 2 adult households.
I'm going to be honest, this isn't bad. I mean, the phase out rates are a little high, my UBI phase out would be 18.5% starting at $0, with the benefit extended well beyond the median. If I recall, for the phase out level of my plan for a single adult was in the ballpark of $70,000 and for a family of four,it was around $200,000. That said, I think my plan actually is a bit more progressive than this. Still, this isn't bad.
And despite my criticisms above, they do have protections for people in case of income changes. First of all, they aren't abolishing the traditional safety net at all. Second of all, they plan to use employer salary data to account for changes to income, as well as encouraging people to contact the IRS when their income changes. And if the IRS screws up and overpays, they would repay the UBI in a more just way, without having to worry about being hammered with penalties. These aren't perfect solutions that provide the elegance UBI offers, but this is good. They're trying.
Another minor issue I have with it is the benefit is paid out by household. I don't like this solely because what if someone leaves? I mean, a benefit of UBI is it can get people out of abusive situations FAST. Imagine leaving and then needing to contact the IRS and fill out paperwork to separate your UBI from the family's. It's a bit of a hot mess. But eh, EITC, what are you gonna do?
Tangent: This is how you play identity politics
Being from the New School's Institute of Race and the Political Economy, a lot of this plan discussed how it would affect people, and it played hard into identity politics. It discussed how white, black, latino, etc. households would be affected this plan. And it pointed out how such a plan would greatly impact minorities' lives. I've been saying this for years, really, UBI disproportionately impacts minorities because minorities are disproportionately poor and have the most to benefit. Regardless, I get screamed at for being a white dude telling minorities what's good for them and not being for targetted programs specifically for them because universal programs aren't "good enough". Well, yeah, they kind of are. These plans help minorities the most. And this article shows it. Bravo for pointing out the positive impacts of a universal program on specific identities without getting all sectarian about it.
How will they pay for it?
Well, as far as the net $876 billion cost, they don't really say. It's cheaper than other plans, but that's because they made it an EITC and focus on the net cost. My plan costs more but relies heavily on existing program cuts combined with broad based taxation to replace the phase out mechanism.
I'm sure they can raise $876 billion somewhere, it's not particularly difficult, but given they aren't repealing welfare and they dont have anything about extra taxation on high earners, I do wonder.
But say they do pay for it with, say, and I'm just guessing, a 10% flat tax on income earners beyond $50/70k. Well, here's the thing, if this entire system was proposed as a "tax", it would be "regressive" and I would never hear the end of it from progressives. Imagine taxing the poor and middle class at a rate of 32-46%, but then the rich are taxed at 10%. That isn't really..fair. And I tried to avoid that in my own UBI plan. But, for some reason, when it's an EITC, it's magically progressive through the magic of government bureaucracy and means testing.
I don't get it either. Not really a criticism at these guys in particular, but just a criticism I see from "progressives" about UBI constantly that I feel the need to throw shade at.
Conclusion
All in all, this is still one of the better plans I came across. Yang's plan was horrifically lacking in funding details at times, and despite attempting to fund it, well, he had a $900 billion deficit roughly with it because he lacked the balls to balance stuff and relied on nebulous math. He also made questionable sacrifices to the safety net, and removed the standard deduction in effect by making UBI count against taxation. Yang's plan kind of sucked.
Allan Sheahan's plan was interesting but it was mostly funded by removing tax loopholes and destroying the existing safety net, and it seemed to be fairly rough on the poor. This plan made more sense than Yang's, but it still has some issues IMO.
This plan is arguably better than both. My biggest issues with it are thus. First, it's an NIT, which makes doling out the dough more bureaucratic, and opens the program up to vulnerability from future administrations to sabotage it. Second of all, the clawback mechanism does make the plan a bit...regressive. If this were taxation, and not a phase out, progressives would lose their crap.
Another issue is they don't discuss how it would be funded, but I'd imagine it would be notoriously easy to do. $876 billion is definitely doable. So I'm not worrying about it.
If I had to give this plan a letter grade, I'd give it a solid B, maybe even a B+. I cant give an actual A to flat out NIT/EITC plans, sorry, but this is just about the best NIT/EITC plan I've ever come across, and that's the strongest compliment I can give this idea. It's solid, and it kind of mirrors my own plan in a lot of ways. I have to say I'd approve of this if it were passed in congress. I know I was very critical, but I tend to end up being attracted to the negatives than the positives, just my approach to things. But yeah, despite complaining about it so much, it's actually a really nice plan overall. Not exactly how I'd do things, but close enough where I approve.
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