Do not confuse welfare with Universal Basic Income. If you get $1k in welfare does it make sense to take a $1k job, lose your welfare and end up with the same $1k? No.
If you get $1k UBI, does it make sense to take a $1k job and end up with $2k? Yes.
This is why so many pilots show increases in work.
@scottsantens Welfare that cuts off as soon as you have other income always seemed to me like it was clearly designed to trap people.
That being one of the frequent criticisms against government aid, you'd think they would have designed it not to do that.
...or, more cynically, they made sure that was in there, so they could always attack it on that basis.
(...which, in the light of recent House shenanigans about The Border Crisis™, seems entirely on-brand.)
@woozle @scottsantens In a smart system (…I know :/) it’d function on different tiers instead of getting cut off at a certain point, and the tiers wouldn’t be larger than one can afford to lose.
And not just income, as unmarried disabled people find, which is especially cruel.
...and how about a lag between gaining employment and cutting off assistance, too? It takes time to recover and build your reserves back up. [edited for wording & explanation]
(I'd do a smooth curve rather than tiers, just so people don't feel they have to avoid making more than X amount -- something like negative income tax.)
UBI seems like a better idea, though, if only because it's so much simpler and thereby less prone to political manipulation and administrative overhead costs.
@woozle @WhiteCatTamer @scottsantens Most US means tested "safety net" programs phase out as income increases. While that does reduce the marginal gain from earnings, it isn't like the sharp cutoffs 50 years ago. The US also has a "negative income tax" in the form of the Earned Income Tax Credit. Conservatives used to love this, now they complain about how many people don't pay federal income tax.
Means tested programs are a pain to administer, UBI could be a lot more efficient.
@dan131riley @WhiteCatTamer @scottsantens
My understanding of the EITC is that it's just a refund -- so it's only in effect if you make enough to pay income tax in the first place, and the amount you can "receive" (the refund of what you paid) goes down as the amount you pay decreases.
...whereas a negative income tax would start somewhere below the zero-income-tax level.
@woozle @WhiteCatTamer @scottsantens
US EITC is a refundable tax credit, not a refund.
"A refundable tax credit is one which, if the credit exceeds the taxes due, the government pays back to the taxpayer the difference. In other words, it makes possible a negative tax liability."
https://en.wikipedia.org/wiki/Tax_credit#Refundable_vs._non-refundable
It is true that for the US EITC you need some income, but that's due to how the credit phases in and then out with income, see the graph at
https://en.wikipedia.org/wiki/Earned_income_tax_credit#Graph,_2020
@dan131riley @WhiteCatTamer @scottsantens
...yes, I think that's basically what I said (going by the graph, anyway; the language is... unclear). You can't ever get back more than you put in.
@woozle @WhiteCatTamer @scottsantens
With a normal credit, you can't get back more than you put in. EITC is a refundable credit, if the credit exceeds the tax liability, the taxpayer can (and usually does) get a larger refund than what they put in.
If the ramp started with a positive credit at zero earned income, that would be a straight negative tax. The way it starts at zero and ramps up is supposed to encourage work by making the marginal gain from work more than 100% for low income.
@dan131riley @WhiteCatTamer @scottsantens
Well, I may be in a position to verify that this upcoming tax season -- if all goes well, I'll be earning taxable income, but definitely on the low side.
Scott Santens
Woozle Hypertwin
Jay
Dan Riley