There are countries with means tested programs that are not as bad, but unfortunately the political economy of the USA makes them quite unlikely to be implemented here. Mathematically, getting rid of the welfare cliff is easy: you just phase out the benefits at less than 100% (preferably at something close to the marginal tax rate - like…
There are countries with means tested programs that are not as bad, but unfortunately the political economy of the USA makes them quite unlikely to be implemented here. Mathematically, getting rid of the welfare cliff is easy: you just phase out the benefits at less than 100% (preferably at something close to the marginal tax rate - like a negative income tax). The reason this is difficult in practice is that the lower the phase out the better off some of the people receiving benefits are. If there is a large stigma associated with benefits then those who take advantage of this will be considered smooches. If there is not, the cost becomes much higher (even though it encourages work it won’t do so enough to pay for itself in the short term)
Expecting to get to a good system by fiddling with benefit phase-outs reminds me of the old saying, "Fast, good, cheap: pick two." Cause you can't have all three.
If you have large benefits, you either have to have a very quick phase-out (which means a high marginal "tax rate" and little incentive to earn income) or a slow phase-out and a very large proportion of the population is getting "welfare".
If you want to get out of that problem, you have to have low benefits. But then the basic benefit is "inadequate".
You've definitely hit on part of the problem but I don't think it is quite as bad as you suggest.
Be that as it may, besides losing some benefits entirely if you make one more dollar, everyone has different income dependent benefits and different marginal "taxes" on additional income. If most or all benefits were converted to a ubi, it would be possible to see what the marginal rate is. Under the current set up, it is effectively impossible.
Seeing the various and sundry marginal rates is not the issue.
The issue is that most of those rates are SO high that they act as a major disincentive to work and earn additional income, and so the skills that come with the higher income don’t develop. And the cycle continues.
My point is that you don't know how many that is true for. Definitely true for some and true for something like Medicaid that you either get or don't get. But I don't think it is true for all. Show me something other th as n a few anecdotal cases. I don't think you can because not only is every state and every family type different but there are wait lists for some benefits, others that people qualify for but don't even know about, and ones like home energy subsidies that depend on rates and usage.
MY point is that most people are not that stupid when it comes to their lives, and they understand if they take a minumum wage job they will only get to keep the 15% or 25% (or in some cases, -7%!) of the money they would earn (depending on their own situation). Whether they know the exact number or not. They talk to other people in the same situation. People know their situation.
The fact that it is complicated doesn’t make a (positive) case for you.
The relevant point is that the marginal rates for many are VERY. HIGH.
If your responses was that only a few face tax rates >100%, sure. So what?
It's not a question of the recipient seeing it. My point is we can't easily (and are unlikely to) tackle the problem you describe if we don't know the typical marginal rates, only a few anecdotes. You and I might see the problem but are you ever going to convince a liberal who wants to "help people"? I don't think so.
If we took most of the money currently spent on those deemed in need (there are some exceptions we'd probably agree on) and put in a UBI targeted at those with lower income, we could more clearly see the "marginal tax" on additional income.
"By eliminating all such programs and replacing them with UBI, we could do exactly that!
I don't follow. You say I'm wrong but repeat what I said as being correct?
To your ps: You can indeed target a ubi at those with low incomes. You do this by I'm lying it as income and adjusting income tax rates to reduce it for those in the middle and effectively zero it out at higher income.
We can tackle the problem of high marginal tax rates on the poor by ELIMINATING all the other programs - that cause the high marginal tax rates - and replacing them with a UBI - U meaning universal, and so for ALL; if you do something “targeted” you recreate - or exacerbate - the problem of high marginal tax rates!
I am here just restating exactly what AK said in the piece. You, OTOH, keep arguing for something that would make it worse - an oxymoronic “targeted” UBI - and seem to deny the basic fact that by eliminating all those other programs, with their income limits and restrictions and phaseouts - that THAT would eliminate the problem of high marginal tax rates on the poor.
You clearly fail utterly to grok that your “targeted” so-called UBI would create high marginal tax rates (“effectively zero it out” means effectively 100% marginal tax rate)
I'm not sure if you misunderstand me or you just have no idea what a UBI is.
The [basic] in UBI doesn't mean everyone gets more money. It tops off people's existing incomes so everyone gets AT LEAST some minimum. Preferably, people earning a little more still get something extra so they don't suffer extremely high marginal rates of"tax" on earnings. At some point their earnings are high enough that they either aren't given the UBI or they pay it back through income taxes. Everyone can't get an extra $xx,000 from the government even if we eliminate all the existing welfare programs. The money has to be targeted at the poor. Otherwise it's just a plan to reduce existing redistribution. Note this is different than targeting a particular need of the poor.
There are countries with means tested programs that are not as bad, but unfortunately the political economy of the USA makes them quite unlikely to be implemented here. Mathematically, getting rid of the welfare cliff is easy: you just phase out the benefits at less than 100% (preferably at something close to the marginal tax rate - like a negative income tax). The reason this is difficult in practice is that the lower the phase out the better off some of the people receiving benefits are. If there is a large stigma associated with benefits then those who take advantage of this will be considered smooches. If there is not, the cost becomes much higher (even though it encourages work it won’t do so enough to pay for itself in the short term)
Expecting to get to a good system by fiddling with benefit phase-outs reminds me of the old saying, "Fast, good, cheap: pick two." Cause you can't have all three.
If you have large benefits, you either have to have a very quick phase-out (which means a high marginal "tax rate" and little incentive to earn income) or a slow phase-out and a very large proportion of the population is getting "welfare".
If you want to get out of that problem, you have to have low benefits. But then the basic benefit is "inadequate".
The arithmetic is cruel and inexorable.
You've definitely hit on part of the problem but I don't think it is quite as bad as you suggest.
Be that as it may, besides losing some benefits entirely if you make one more dollar, everyone has different income dependent benefits and different marginal "taxes" on additional income. If most or all benefits were converted to a ubi, it would be possible to see what the marginal rate is. Under the current set up, it is effectively impossible.
Seeing the various and sundry marginal rates is not the issue.
The issue is that most of those rates are SO high that they act as a major disincentive to work and earn additional income, and so the skills that come with the higher income don’t develop. And the cycle continues.
My point is that you don't know how many that is true for. Definitely true for some and true for something like Medicaid that you either get or don't get. But I don't think it is true for all. Show me something other th as n a few anecdotal cases. I don't think you can because not only is every state and every family type different but there are wait lists for some benefits, others that people qualify for but don't even know about, and ones like home energy subsidies that depend on rates and usage.
MY point is that most people are not that stupid when it comes to their lives, and they understand if they take a minumum wage job they will only get to keep the 15% or 25% (or in some cases, -7%!) of the money they would earn (depending on their own situation). Whether they know the exact number or not. They talk to other people in the same situation. People know their situation.
The fact that it is complicated doesn’t make a (positive) case for you.
The relevant point is that the marginal rates for many are VERY. HIGH.
If your responses was that only a few face tax rates >100%, sure. So what?
It's not a question of the recipient seeing it. My point is we can't easily (and are unlikely to) tackle the problem you describe if we don't know the typical marginal rates, only a few anecdotes. You and I might see the problem but are you ever going to convince a liberal who wants to "help people"? I don't think so.
If we took most of the money currently spent on those deemed in need (there are some exceptions we'd probably agree on) and put in a UBI targeted at those with lower income, we could more clearly see the "marginal tax" on additional income.
“My point is we can't easily (and are unlikely to) tackle the problem you describe if we don't know the typical marginal rates, only a few anecdotes.”
lol, this is wrong, and *precisely* AK’s point.
By eliminating all such programs and replacing them with UBI, we could do exactly that!
P.S. you CANNOT do a *targeted* UBI! The U in UBI stands for Universal…
"By eliminating all such programs and replacing them with UBI, we could do exactly that!
I don't follow. You say I'm wrong but repeat what I said as being correct?
To your ps: You can indeed target a ubi at those with low incomes. You do this by I'm lying it as income and adjusting income tax rates to reduce it for those in the middle and effectively zero it out at higher income.
We can tackle the problem of high marginal tax rates on the poor by ELIMINATING all the other programs - that cause the high marginal tax rates - and replacing them with a UBI - U meaning universal, and so for ALL; if you do something “targeted” you recreate - or exacerbate - the problem of high marginal tax rates!
I am here just restating exactly what AK said in the piece. You, OTOH, keep arguing for something that would make it worse - an oxymoronic “targeted” UBI - and seem to deny the basic fact that by eliminating all those other programs, with their income limits and restrictions and phaseouts - that THAT would eliminate the problem of high marginal tax rates on the poor.
You clearly fail utterly to grok that your “targeted” so-called UBI would create high marginal tax rates (“effectively zero it out” means effectively 100% marginal tax rate)
I'm not sure if you misunderstand me or you just have no idea what a UBI is.
The [basic] in UBI doesn't mean everyone gets more money. It tops off people's existing incomes so everyone gets AT LEAST some minimum. Preferably, people earning a little more still get something extra so they don't suffer extremely high marginal rates of"tax" on earnings. At some point their earnings are high enough that they either aren't given the UBI or they pay it back through income taxes. Everyone can't get an extra $xx,000 from the government even if we eliminate all the existing welfare programs. The money has to be targeted at the poor. Otherwise it's just a plan to reduce existing redistribution. Note this is different than targeting a particular need of the poor.