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0 pointsAnthonyMouse9y ago0 comments

The combination of a fixed-amount UBI and a fixed-rate tax does exactly what people want. The marginal tax rate is completely unwavering for everyone and the effective tax rate ((tax paid - UBI)/income)) follows a nice continuous progressive curve.

> Even though you keep less of your next dollar of earnings the more you make, there's never a point at which earning the next dollar will leave you with less money after tax.

The problem is that's not the only thing you want. You also don't want marginal rates of 75%+ for low and middle income people. It's not only that taking a $20K/year job shouldn't cost you $21K/year in benefits, it's that it shouldn't cost you $15K/year in benefits while you now incur more transportation and childcare expenses.

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hibikir9y ago

A fixed amount UBI and a fixed rate tax doesn't do exactly what people want, because it is a huge tax break at the top, and a huge tax increase in the middle if we want to be revenue neutral: The shape of the curve is very different from the current one, and there would be huge winners and losers. Nothing short of a 50% fixed rate will not be a huge tax break for us in the 1%.

I don't know about you, but I don't think that the problem in the US system is that a family with two senior developers pays too many taxes.

Therefore, on top of a UBI, the only thing that doesn't screw the middle class over is to maintain a progressive tax rate.

AnthonyMouseOP9y ago

You have the math wrong.

> Nothing short of a 50% fixed rate will not be a huge tax break for us in the 1%.

The current highest bracket in the US is 39.6%, which doesn't come into play until you've made more than $400K. The vast majority of "middle class" people pay 28% marginal rates or less -- anyone up to $190K for single or $231K for married filing jointly.

A household making $200K currently pays an effective tax rate of ~22% -- and that's $200K after all the deductions. To meet the same effective tax rate with a flat tax against a $12K/year UBI would require a flat tax rate of 28%.

Moreover, to be in "the 1%" you need household income in excess of $400K.

And most of the actual 1% pay the long-term capital gains rate, currently up to 20%, whereas with a 28% flat tax they would be paying 25 to 28%.

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