*sigh*, welfarists. M i rite? Often times the first criticisms I hear from UBI are that it's too expensive and we could have a much better policy if we had more means tested welfare instead. How it would be cheaper, and cheaper is better, right? Well...no, not really.
Sure, policies that are more targetted are cheaper, but they're cheaper because they dont impact as many people.
And when we think about it, who is to say who is deserving and who is not? Again, often means testing comes back to the elizabethian poor laws, and how it is to separate those who are deserving, ie, single parents with children, the disabled, the elderly, etc., from those who are not, like abled bodied people who can (and in their minds SHOULD) work. Again, there's always a certain level of moral judgment in deciding whether someone is worthy in welfarism, and if you're not, well, you can screw off and die for all they care.
But putting that aside, often times, people just...don't seem to understand UBI in pushing these ideas. They often think that if we have UBI it would destroy all welfare and make people worse off, and that bill gates doesnt need money and it would be more "progressive" if we had targetted aid at the poor and blah blah blah. I've heard these ideas so often I already wrote an article debunking them, but to do so again, I felt like it would be good to write another, this one focusing more on the actual logistical challenges associated with means testing UBI.
In order to understand my position on UBI, you need to understand the UBI I propose. Long story short, I propose a UBI that would have a 20% tax on all earned income, combined with a $15,000 a year UBI for adults, and $5400 for children. It would not replace all welfare, but only the redundant programs that could not be adequately replaced with UBI. For other cash programs that often offer more money, I propose just imposing my 20% tax on them. This leads to a situation in which virtually everyone currently on welfare would benefit from my UBI, and those who don't are such marginal edge cases, I'm perfectly okay with just making the utilitarian decision here to side with UBI.
But say, we went with an NIT to save money. In the best case scenario, it would be structured exactly like my UBI. It would have a cutoff at $75,000, with a 20% clawback mechanism below that, and a 20% tax above that. This would amount to...exactly the same policy, just done by the IRS instead of say the social security administration or similar agency. It would require more paperwork on the end of people claiming the benefit, and would likely be less universal because of that. Anyone who does not file a tax return may not get the UBI. So that's a negative from the get go, at least for me. Maybe some paternalists are okay with that, because quite frankly they dont want people who don't work getting UBI, but that's a moral decision on their part I disagree with. I mean, push comes to shove, NIT could end up turning into the UK's universal credit over time, with more and more requirements to be added to satisfy those who believe those who live on government money deserve to be punished for it in order to force them into work.
This is the best case scenario, btw. One that maintains the exact incentive structure I do, just with the more bureaucratic aspects of NIT instead.
Often times, NIT policies are MUCH more regressive than this. Despite a lot of progressives thinking giving UBI to rich people is "regressive", a lot of NIT style "UBI" programs have much steeper clawbacks at the bottom. Oshan Jarow's proposal has a 33% clawback rate, and would cost $800 billion. But progressives probably think it's so great because it solved poverty, has a clawback rate better than welfare, and "only" costs $800 billion-1 trillion.
There's a problem though. If you're at the bottom, you're paying for it. At $13000, a 33% clawback rate tops out at $39,000.
Under my UBI plan, someone making $39,000 would benefit in net by around $7200, bringing their income up to around $46200. While Jarrow's plan (as well as most NIT plans) dont give a strong indication of how they plan to raise $1 trillion to pay for this NIT, but odds are the taxes they raise likely will come from the top of the spectrum. Sooo progressive, right? Yeah, but...will their taxes go up by 20%? Probably not. Even a tax rate of 10% would be lauded as amazingly "progressive" by this kind of "progressive's mindset". Except....
Remember. My plan has a 20% clawback and a 20% tax for those above the clawback. Imagine they dont raise taxes up to say, $100k, and over $100k they tax at above 10%. Okay...well....most people above $100k would do better under this plan than my plan. Sure, someone making $100k under my plan might pay in $5000, so they'd pay less, but someone who is ultra wealthy and makes millions would...save hundreds of thousands or millions in taxes. Because it's less steep at the top and more steep at the bottom.
Most NIT plans are like this. The New school's plan also does something like this where it has phase our rates ranging from 11% up to 46%, with an $876 billion cost. Again, how they will raise this money is unknown but taxing the wealthy is likely part of it. How much I wonder? Who knows. But honestly, mathematically, because they're clawing back the benefits at the bottom more harshly than my plan would, they would need less taxes on the top to make the math work. See how that works?
NIT proposals have clawback rates that often exceed my proposed 20%, and are sometimes as high as 50%, which was Milton Friedman's proposed amount. And in exchange, you get a plan that's actually more regressive than mine as it helps those at the bottom far less, while reducing the tax burden at the top. And then people laud this as a massive saving of money, and claiming we stuck it to those rich people by not giving them a UBI they don't need and by implementing a tax on them. But my own plan gives them a UBI...but at the expense of taxing them even higher, meaning they likely contribute more to the program, and those at the bottom benefit more. So my plan is ACTUALLY more progressive.
Honestly, I feel like I'm in the "patrick star's wallet" meme arguing with these types of progressives. They often insist they're oh so progressive and moral for taxing the rich and not giving them public money they deem them as not deserving. But in reality, their plans are actually LESS PROGRESSIVE than mine. Because their proposed NIT would likely effectively tax the poor at higher rates and the rich at lower rates. But at least they can say they "saved money" by not giving the rich a UBI.
I swear, these guys just care about their little moral high horses. They care about being able to say they care about the poor and blah blah blah but when push comes to shove, they'll push for plans that actually help the poor less in practice.
Virtually all NIT plans I've seen are like the ones I've seen above. They often "tax" the poor at 30-50% rates, in order to "save money", meaning they tax the rich less to pay for it, because the number that shows up on a budget spreadsheet is smaller and doesn't need as many taxes to fund.
But if people understand that clawbacks and taxes are functionally the same thing, then they understand the issue for what it is.That these plans shift the burden to the poor and away from the wealthy in practice. Likewise, people need to understand that the high costs of funding a UBI are actually an illusion. Because NIT and UBI are the same policy, they actually cost the same, they're just implemented in different ways. The difference is that one shows up on a budget spreadsheet giving people a heart attack, but is full of redundant transfers, and the other does not.
The only reasons I favor a UBI are because a UBI sends a stronger moral message about who should get it (everyone, as a right of citizenship), and it makes it harder for the government to "game" the policy in order to limit eligibility and turn it into just more welfare. An NIT could be sabotaged by say, republicans, centrist democrats, to end up having the same labyrinthine bureaucracy and arbitrary requirements to get aid. Whereas with UBI, you can't do that. This saves the end user tons of time filling out forms and dealing with bureaucracy, and also gives them freedom to live as they want without the government going all paternalist on them.
People often fear government money because they fear the government will use it to tell them what to do. but that's what welfare IS. It's literally social engineering to pressure people into the work force and to live in certain family arrangements and the like. It's conditional, it requires the beneficiaries to behave in certain ways. And UBI tries to avoid that. Because I have a more libertarian ideology based on "indepentarianism" and "real freedom", where I want people to be free to live as they want, with minimal influence telling them what to do. I despise the paternalism associated with welfare and would pursue UBI to avoid that.
Now, one more thing I want to address before this ends. What if we just...stopped giving people a UBI above a certain amount? Say we had the same 20% clawback combined with a $15,000 UBI that we always do. The benefit would top out at $75k. What if we didn't give anyone above $75k a UBI?
Well...without modifying the tax structure, that would PROBABLY create a welfare trap. Because you would benefit or pay $0 at $75,000, but at $75,001, you'd remove $15000 in UBI overnight. So you would end up suddenly losing $14999 for that extra dollar earned, creating a welfare trap.
And sure, we could set it at a different level, $100k, $150k, whatever, but still, the second you go over, someone would LOSE $15,000 the second they earned $1 more than the cut off. It would create perverse incentives to not earn more, and create a weird hurdle where you would need to earn $15000 more just to start going up in net income again.
Why? because the 20% tax applies to all income. I'm not actually taking the UBI away, everyone gets it, including rich people. and suddenly at a certain income, it goes away. Hmm.
Why not just take it away at a slower rate then? Say, for every dollar earned, they pay 20 cents to give it back. Uh...but my brother in christ, THAT'S WHAT I'VE BEEN DOING! That's what the flat 20% tax is in my UBI plan. It's the clawback mechanism. It's just that when the mechanism is called a tax and the benefit is universal means testers and welfarists lose their fricking minds and I feel like I'm literally arguing with patrick star in trying to explain the situation to them.
And you could ask, okay, why not a 40% effective tax rate? have the 20% clawback and the 20% tax? Well, people above that cutoff generally already pay 40-50% taxes in practice, so now you're advocating they pay 80-90%, which is above the projected laffer curve, which would disincentivize work effort to a dangerous degree.
See, every aspect of my UBI plan has a reason for it. And trying to modify it in ways where you dont know what you're doing, out of your principles or morality, would likely do something that screws it up. Either you'd tax the poor harder, and the rich less, or you'd introduce a hostile bureaucracy that would make the benefits far more conditional and allow for a lot more conditionality similar to existing welfare schemes under republican and even centrist democrat rule. Or you'd just...break the plan somehow. At the best, you're just reinventing the wheel.
I really feel like I'm arguing with patrick star when it comes to debating people who are anti UBI in this way. And while maybe they mean well, it's like they need a thorough education on UBI that only this blog and other pro UBI sources of knowledge can provide. So if I linked this to you in frustration, please read this carefully, and also read whatever links I linked because a lot of my perspective is actually based on me building up this knowledge for years by studying this policy in many different ways, including looking at what other people do with their plans. There's a reason for everything, even if it doesn't seem apparent. Just...read my stuff if you wanna actually understand where I'm coming from on this.
Hopefully, this is the last time I have to address this issue on here.
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