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May 14, 2014 at 8:30 pm (This post was last modified: May 14, 2014 at 8:33 pm by Heywood.)
I see two better alternatives to the living wage.
1. A negative income tax.
2. A universal basic income.
Either of these would replace the ragbag of government assistance programs. Food stamps, Housing assistance, Unemployment benefits, Social security payments, etc.....those programs and their administrative cost can all go away. The "need" for minimum wage requirement(and all its detrimental effects that come with it) also go away.
First the negative income tax. For simplicity of explanation the cases will be given with a flat tax rate of 50%. In reality I would like to see a progressive tax but a flat tax is easier to explain so I will use that.
A person is granted an exemption of say $25,000. This means if that person makes $100,000 in one year they are only taxed on $75,000. If that person makes a $500,000 a year, they are only taxed on $475,000.
Earning more than the exemption will leave you subject to a positive tax, that is you pay the government money. Earning less then the exemptions means you receive a negative income tax, that is the government pays you money. Open the spoiler to see specific cases.
Let us assume the tax rate is 50%.
Case 1: Bill is a full time student and doesn't work. He earned 0 dollars in wages. Bill would get 50% of his exemption or $12,500 paid to him by the government. $12,500 is Bill's total income for the year.
Case 2: Alice earned $5,000. Since $5,000 is below the exemption she has no positive tax liability. Since she earned less then the exemption, she gets money paid to her by the government. She has $20,000 left on her exemption so she gets paid 50% of that. The government pays Alice an additional $10,000 on top of the $5,000 she received from her job. Alice's total income for the year is $15,000.
Case 3: Donna earned $15,000. She has $10,000 remaining on her exemption and gets paid half of that from the government. Donna's total income is $20,000. $15,000 from working plus half her remaining exemption or $5000.
Case 4: Carl earns $25,000 a year. Carl pays no taxes to the government, but because he has no remaining exemption, he receive nothing from the government. Carl's total income for the year is $25,000.
Case 5: Walter earns $35,000 a year. Since $25,000 is exempt from taxes, Walter only pays tax on $10,000. Walter's after tax earnings for the year is $30,000.
Case 6: Julia earns $60,000 but because of her exemption only pays tax on $35,000. Julia's after tax earnings are $42,500.
Second, a universal basic income is simply a system in which the state provides every individual(or their guardians) with a basic income. Enough to enjoy a comfortable, but very modest living. Any income earned or received on top of the Universal basic income is taxed.
(May 14, 2014 at 8:30 pm)Heywood Wrote: 2. A universal basic income.
Second, a universal basic income is simply a system in which the state provides every individual(or their guardians) with a basic income. Enough to enjoy a comfortable, but very modest living. Any income earned or received on top of the Universal basic income is taxed.
I am a fan of this option.
"Never trust a fox. Looks like a dog, behaves like a cat."
~ Erin Hunter
(May 14, 2014 at 8:30 pm)Heywood Wrote: 2. A universal basic income.
Second, a universal basic income is simply a system in which the state provides every individual(or their guardians) with a basic income. Enough to enjoy a comfortable, but very modest living. Any income earned or received on top of the Universal basic income is taxed.
I am a fan of this option.
I am a fan of either option provided the government stays out of the market thereafter(e.g. no minimum wage, etc).
How do we pay for this? I just did a rough calculation of 25,000 (dollars paid per individual) by 300 million (rounded down total population of U.S.) and came up with $7,500,000,000,000 per year. I like the idea, just would like to know how this doesn't put us further in debt.
May 14, 2014 at 8:52 pm (This post was last modified: May 14, 2014 at 8:55 pm by Silver.)
I am fairly certain that if everyone made a comfortable wage whereby they could afford to spend money on that which in our current economical situation only some people can enjoy, that eventually debt would no longer be a concern for it would dwindle.
Unless America did the wise thing, which has been done in other countries, by forgetting everyone's debt for a fresh start.
"Never trust a fox. Looks like a dog, behaves like a cat."
~ Erin Hunter
Ignoring for the moment that neither alternative is as politically easy to accomplish as a living wage bill (which itself ain't easy).
1. Let's see a realistic example. A 50% tax over 25k is ludicrous, and changing either number would substantially alter how palatable such an scheme would be - as would making the rate progressive. As it stands, it looks very ad hoc. Would you do away with deductions and exemptions? How is unearned income treated? Business income? How are capital gains treated? What consequences do you anticipate?
2. Where's the money coming from? Is the tax code otherwise the same as it is today or something else? Really, the same questions in 1) apply here too.
May 14, 2014 at 9:02 pm (This post was last modified: May 14, 2014 at 9:32 pm by Heywood.)
(May 14, 2014 at 8:48 pm)FlyingNarwhal Wrote: How do we pay for this? I just did a rough calculation of 25,000 (dollars paid per individual) by 300 million (rounded down total population of U.S.) and came up with $7,500,000,000,000 per year. I like the idea, just would like to know how this doesn't put us further in debt.
$25,000 is the exemption. A universal basic income would be about half....so now we are talking about 3.25 trillion a year which is close to what we spend now. Because there is no minimum wage, business profits would be higher which translates into even more income for the government to re-distribute. Taxes might still have to be raised, but such a system is not untenable.
(May 14, 2014 at 8:58 pm)Cthulhu Dreaming Wrote: Ignoring for the moment that neither alternative is as politically easy to accomplish as a living wage bill (which itself ain't easy).
1. Let's see a realistic example. A 50% tax over 25k is ludicrous, and changing either number would substantially alter how palatable such an scheme would be - as would making the rate progressive. As it stands, it looks very ad hoc. Would you do away with deductions and exemptions? How is unearned income treated? Business income? How are capital gains treated? What consequences do you anticipate?
2. Where's the money coming from? Is the tax code otherwise the same as it is today or something else? Really, the same questions in 1) apply here too.
Tax code should very much be simplified with only individual exemptions remaining. Instead of taxing corporate earnings and then taxing dividends. Just tax dividends at the individual rate. Corporate tax rate would be 0 on all profits except those retained by the corporation.
Tax rate would be progressive, I used a flat tax for simplicity. But if you earned $25,000 your effective tax rate would be 0. You have to earn at least $50,000 before your effective tax rate is 50%. You could implement it, so that once you earn above $25,000 the positive tax rate is progressive which taps out at a maximum of 50%. I wouldn't do brackets either. Tax rates should be progressive based on a function and not arbitrary brackets.
Case 7: John is a lazy motherfucker and doesn't work. He earned 0 dollars in wages. John would get 50% of his exemption or $12,500 paid to him by the government. $12,500 is John's total income for the year. John smokes dope all night and sleeps all day and contributes nothing to society. John is happy and content and thinks anyone that works is a dumb ass.
(May 14, 2014 at 8:36 pm)Heywood Wrote: I am a fan of either option provided the government stays out of the market thereafter(e.g. no minimum wage, etc).
Underpaying employers are far from the only problem we all pay for thanks to under-regulated business practices, so this isn't an even trade.
May 14, 2014 at 9:41 pm (This post was last modified: May 14, 2014 at 9:44 pm by Heywood.)
(May 14, 2014 at 9:27 pm)KUSA Wrote: Case 7: John is a lazy motherfucker and doesn't work. He earned 0 dollars in wages. John would get 50% of his exemption or $12,500 paid to him by the government. $12,500 is John's total income for the year. John smokes dope all night and sleeps all day and contributes nothing to society. John is happy and content and thinks anyone that works is a dumb ass.
20 years ago, I used to think that any who got government money should be put on a bus, shipped out to an onion field, and be forced pick onions to earn their government money.
I no longer see that as the case. The reason I no longer see that as the case is because I don't see the need for everyone to work anymore.
We have so much production capacity.....and that production capacity continues to increase at such a rate, that every year less and less human labor needs to be done to support humanity. It is not implausible that a time will come when no one has to work. Machine labor will be capable of supporting everyone.
So yes...under this system John would be able to sit at home and smoke pot all day....but he is going to have a Spartan existence compared to people who want better and are willing work for better while there is still a need for human labor. Chances are, that even John will pick up odd jobs that pay next to nothing(cause he is a lazy pot smoker who won't command a high wage) to earn a little bread to replace the bong he broke.
