undefined | Better HN

0 pointschiph12y ago0 comments

Caveat: Not a professional analysis, and not the OP.

There's 248 million people ages 16 and older in the US, of which 63% are in the labor force[1]. So 156 million people are available for work (not all of whom are employed).

Total population is about 330 million.

If each of them were to get a basic monthly stipend (this is everyone, including infants) of $1200, that's $396 billion per month in payments.

Per working individual, that's a tax burden of $2538 per month. And that's just for this program - there's also the rest of government to pay for. Military, roads, police + fire protection, and so on. This also assumes that the basic stipend replaces all other existing entitlement and welfare programs. Which isn't likely, because politics.

Yes, the working individual will also receive a stipend payment, reducing their net tax burden to $1338. But for an hourly employee, that comes out to about $8.35 per hour worked that goes to tax. Even with the new $10.10 minimum wage proposal, that leaves them just $1.75/hr as incentive to work, vs. just staying home and living off the stipend.

[1] http://factfinder2.census.gov/faces/tableservices/jsf/pages/...

0 comments

5 comments · 2 top-level

smsm4212y ago· 2 in thread

Note also if you living on the dole, you get free housing, free healthcare, free phone, free childcare services, free education, etc. etc. All of which you'd have to pay for if you were stupid enough to work. So actual initiatives are even worse. Even now, welfare already pays more, if benefits are counted, than a minimum-wage job:

Welfare currently pays more than a minimum-wage job in 35 states, even after accounting for the Earned Income Tax Credit, and in 13 states it pays more than $15 per hour.[1]

In fact, in 33 states and the District of Columbia, welfare pays more than an $8-an-hour job. In 12 states, including California, as well as the District of Columbia, the welfare package is more generous than a $15-an-hour job. In Hawaii, Massachusetts, Connecticut, New York, New Jersey, Rhode Island, Vermont and Washington, D.C., welfare pays more than a $20-an-hour job, or more than 2.75 times the minimum wage.[2]

[1] http://www.cato.org/publications/white-paper/work-versus-wel...

[2] http://www.cato.org/publications/commentary/why-get-welfare

Of course, there are incentives to work still, but $1200/month and accompanying tax raise may kill them for many more people than now.

loup-vaillant12y ago

Of course, a sufficiently high ABI would have welfare gotten rid of: no more free housing, schooling, nothing: just live with your ABI.

To really calculate the cost of ABI, you need to subtract the cost of welfare.

smsm4212y ago

That won't work. If it worked, we woudn't need free housing, schooling etc right now - giving people money would be much easier. The problem is that money is fungible - if you give people money instead of free housing, they'd just by some crap on it and then will come back to you and complain they have nowhere to live, and you're back to square one. That's why there are so many non-monetary benefits - because you can't sell free schooling and buy beer or fancy shoes or a lottery ticket on it. Some benefits - like free phones - can be sold, and they are actively abused and sold.

1 more reply

dllthomas12y ago· 1 in thread

Your math assumes we're paying for it with an employment-contingent head-tax, which would be totally crazypants. Most income is earned by high earners, most earners are not high earners.

dllthomas12y ago

From another perspective, the total income of US persons in 2010 was over $12 trillion/year[1]. People are currently paying a total of $899 billion in federal income tax. Assuming we distribute the burden evenly per dollar earned, assuming incentive to work is linear in dollars, and assuming there are no other effects we would see incentive to work drop by something a little over one third. This leaves dramatically more incentive than the above numbers would indicate. For the record, though, $14k/yr is about twice the BI level that I personally (tentatively) favor.

[1] https://bber.unm.edu/econ/us-tpi.htm

[2] https://www.jct.gov/publications.html?func=startdown&id=4363

j / k navigate · click thread line to collapse