Wednesday, April 28, 2021

Could we fund medicare for all with my old UBI numbers?

 A thought occurred to me. While I do not desire to rerun the numbers of the entire federal budget given how messed up 2020 and 2021 are when it comes to the federal budget, I did do broader reform of the federal tax system in my early versions of UBI. I sought to replace the entire tax system with a 43.5% flat tax or so, and I just thought, gee, you know what? I wonder if I could fund medicare for all with it? Well, Medicare for all would add a 11.5% tax burden to that roughly 43.5% rate, bringing it up to like 55% or so. And then the rich pay 14% on local taxes, which would bring their rate up to 69%.

In theory this could work, although it would leave us little room to fund other things like free college, infrastructure, etc. There are also some issues with this. First of all, everyone would have a 55%+ flat tax imposed on them to make this work. That is an insane amount of money. While it could theoretically work similarly to Milton Friedman's 50% clawback mechanism on income in his NIT plans, I would ideally like to keep the marginal tax rate below 50% on most. Another issue is these numbers might not be viable any more. First of all these numbers came from the relatively fiscally responsible year of 2016. Obama was in office, we had sane taxing and spending policies, and we didnt have orange morons cutting taxes just because while raising defense spending through the roof. We also havent been spending trillions of dollars like the past 2 fiscal years because of the COVID depression and fallout from it. And finally, my UBI plan back then was $12,000/$4000. I bumped it up more, and that might raise the rate again. 

Also did I mention it shifted a massive amount of the burden to the lower and middle classes? That's why it's so feasible, it's a flat rate. The poor and middle class pick up the slack of the upper class to keep the rich's taxes below the laffer curve rate.

If we go with tax rates minus healthcare, on a purely federal level, we got the bottom quintile paying 21.5% with UBI, or, excluding income tax refunds, 33.1%. And with medicare extra they'd probably not pay for healthcare. The middle quintile would be paying 34%. And that's the REAL middle class (news flash, people who make 6 figures arent middle class as they're by definition not in the middle). Medicare extra for all could raise their rates probably to around the upper 30s or 40%, but if they rejected it they would have to pay employer based coverage anyway, so I'm not seeing why it should be counted. 

The rich would pay 53.3% in federal taxes, which would amount to same rough rate they would pay with a flat UBI tax and medicare for all. With local taxes it would amount to 67%. And I'm guessing most of them would get whatever insurance they wanted. 

So that said, I think my new plan is better? Sure, we could keep the rich's rates stagnant while getting medicare for all, but it would amount to everyone else paying more. Much more. Like 67%+ more. 

Once again I think my shift toward medicare extra for all, and funding UBI without reforming the entire tax system to a flat tax, are probably for the best. 

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