Quote:
Originally Posted by indes
You're going to have to elaborate on that for me. How would everyone getting stop people from doing what I posted above?
The only way would be if everything inflated to levels where the UBI would just be swallowed up into all our other expenses (extremely likely) in which case there is no reason to have a UBI at all.
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The problem with having it means tested is that the incentives are bad.
Take someone who is getting a $2k/month UBI. If you reduce the UBI by 50% for a dollar of earned income (like the PBO analyzed at the request of a senator) then you have the following situation.
If we assume someone chooses to work to earn extra money over and above their UBI they pay the following:
UBI clawback: 50%
Current Federal Income Tax: 15%
Current Alberta Income Tax: 10%
CPP: 5.25%
EI: 1.58%
So before any new taxes are implemented to pay for UBI (which would absolutely be necessary) with the clawback someone getting their first job faces a marginal tax rate of 82%. At minimum wage of $15, that means that persons effective take home pay is $2.72 per hour. How many people do you think will get out of bed for $2.72 per hour? And it's probably less as taxes would have to go up.
If everyone gets the UBI no matter what the UBI is more expensive, but the marginal tax rate on someone's income is still pretty low, so that person has a much stronger incentive to still work and earn extra money.