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Roderick

Basic income

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Anectdotally, I work a part-time job and most of my co-workers are retirees or people on disability that are trying to earn a little bit. The thing that I've seen tbat makes no sense to me is that the people on disability have to manage their hours so that they don't work too much. As I understand it, if they make $1 more than they are allowed to, they lose the entirety of theor disabilty payment for the month. This removes all incentive to work more than a certain amount when these people wouldn't really mind working more. The basic income solution seems to suggest that it would not create this disincentive because money would not be taken away if people decide to earn more. Loss aversion is a powerful force.

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Yes, that's a usual bug in a lot of "benefit" constructions. When you put it in a graph you usually see a "saw tooth" in the line rather than a straight line.

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Yes, this is the 'poverty trap', where you either have to cross a certain threshold before working becomes profitable again, or you might as well not work, which is essentially the same problem as described above. Basic income would have no such flaw.

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God we're just a bunch of awful people, aren't we, to let this shit happen? Yeesh.

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God we're just a bunch of awful people, aren't we, to let this shit happen? Yeesh.

I don't think I have much of a say. Here is a video I just received from a family member with no ironic intention:

 

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My point being that even though some of us are willing to exercise some imagination and consider that the status-quo is unnecessarily unjust, there is a group of people just as passionate about maintaining their financial advantage and rationalizing that it's more important than the health of the poor. I don't know of anything I can do to help the situation but keep an open mind, look for alternatives, and be honest about what my understandings are.

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Something doesn't quite add up for me. Let's say this basic income becomes a thing. Then if you are already working, are your new wages equal to your old wages minus the basic income? Or do you continue to make the same wages and the basic income amount is just completely removed as taxes since you already receive this amount from the government? If this fundamentally changes the way wages work I'm curious what kind of taxation would have to be in place for wages above the basic income to ensure that there is adequate tax revenue to support this.

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Yes, that's a usual bug in a lot of "benefit" constructions. When you put it in a graph you usually see a "saw tooth" in the line rather than a straight line.

 

Most of Australia's benefit schemes (as well as our tax system) are constructed to avoid this as much as possible. If you get a part-time job, you tell the government how much you earned and they will give you a portion of your unemployment payment, and if you get short-term work there's a certain amount you can earn before your payment's affected. Our income tax is similar to the US, with bands where you pay higher tax as your income rises, but the bands are defined as the maximum revenue from the lower bands plus a percentage of any income earned over the lower threshold of the band. So if you earned $85,000, your income tax is $17547 (which is how much the government would get if your income was exactly $80000) plus 37% of $5000. This gets complex to calculate, which is why payroll automatically takes a slice of your income, and the tax office provides a program that does your tax return for you. I'm sure it's similar in other parts of the world.

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Zeus, I have no idea how it would work with taxes. I was thinking about it too, how the government would sustain the system. Reorganisation of current benefits would account for part of it, as would future savings on health care and crime costs. Taxation would still be part of it, so on second thought, if employers would lower wages, that might put a dent in the tax flow. Again, I'm no economist, I'm working with the reports I read that say it's viable.

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How are the Swiss proposing to work it out? They are good at this sort of conundrum from what I can gather.

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