basically a negative income tax for the working poor in the US
That would increase incentive to work for the poor, but decrease the incentive to work hard enough to stop being considered poor. They can’t have the income tax be negative for everyone.
The idea is that you’re taxed on the UBI, as well, so your tax rate remains flat (or flatter than the current system) regardless of your income.
The big divergence is with the way welfare works now, when, depending on state, every dollar you can make, on average, costs you $1.50 in benefits, up to ~$70,000 for a single mother. That is, working makes you actively worse off. (Google “Welfare Cliff” for more information on this phenomenon, if you’re interested.)
One of the big things which happened during Clinton’s administration was a systematic adjustment of welfare cut-off points to reduce the gradient of the various welfare cliffs; this resulted in a labor boom, which coincidentally coincided with the .dot boom. Over time inflation ate away at the gradients, and further adjustments raised the cliff face, and we’re now worse-off than before in that regard.
So you can very much have a system in which the government is providing more welfare and yet people have a stronger incentive to work. That just seems bizarre in our universe, where every increase in welfare actively -destroys- people’s incentive to work, since their receipt of welfare is more or less conditional on their not working.
That would increase incentive to work for the poor, but decrease the incentive to work hard enough to stop being considered poor. They can’t have the income tax be negative for everyone.
The idea is that you’re taxed on the UBI, as well, so your tax rate remains flat (or flatter than the current system) regardless of your income.
The big divergence is with the way welfare works now, when, depending on state, every dollar you can make, on average, costs you $1.50 in benefits, up to ~$70,000 for a single mother. That is, working makes you actively worse off. (Google “Welfare Cliff” for more information on this phenomenon, if you’re interested.)
One of the big things which happened during Clinton’s administration was a systematic adjustment of welfare cut-off points to reduce the gradient of the various welfare cliffs; this resulted in a labor boom, which coincidentally coincided with the .dot boom. Over time inflation ate away at the gradients, and further adjustments raised the cliff face, and we’re now worse-off than before in that regard.
So you can very much have a system in which the government is providing more welfare and yet people have a stronger incentive to work. That just seems bizarre in our universe, where every increase in welfare actively -destroys- people’s incentive to work, since their receipt of welfare is more or less conditional on their not working.