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Sun Jun 23, 2019, 05:02 AM

Andrew Yang: Paying for a Universal Basic Income

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Reply Andrew Yang: Paying for a Universal Basic Income (Original post)
Sherman A1 Jun 2019 OP
Panacea-monger Jun 2019 #1
jromans Jul 2019 #2
Name removed Jul 2019 #3

Response to Sherman A1 (Original post)

Fri Jun 28, 2019, 04:08 PM

1. VAT: Better than increasing the income tax but not ideal

 

First, I appreciate all the content, and it's good to meet you.

Yang's claims about his 20% consumption tax are accurate, but why not a 100% net consumption tax (i.e. consumption minus earned income) instead? It would have several advantages:

1) More progressive. While I don't consider progressivity a virtue independent of fairness, much of the party has no concept of fairness and uses progressivity as a substitute. As the rich earn a smaller fraction of their income than the poor, a net consumption tax is more progressive.

2) Less distortionary. A (gross) consumption tax, while less distortionary than an income tax, still disincentivizes labor (by lowering the purchasing power of its wage). A net consumption tax obviously lacks this problem.

3) Fairer. As the traditional logic behind a citizen's dividend is to return to us what we are deprived of by the property right, taxing earned consumption makes little sense. A laborer who consumes only what he has contributed (the equivalent thereof) deprives us of nothing; his accounts are balanced, and he should pay no tax.

4) Simpler. Because a 100% net consumption tax is optimal by definition (regardless of the amount of net consumption and thus the amount of the Dividend, it reliably redistributes 100% of unearned income, which is precisely economic justice), it relieves us of the dubious task of arbitrarily determining what the Dividend shall be and how to hopefully pay for it. It is remarkable that Yang's proposal of $1000 a month is close to ideal (it's exactly what I would suggest if I thought a defined benefit were the way to go), but will $1000 a month be right 10 or even 2 years from now? With a net consumption tax, we can set it and forget it.

5) More obvious. In the debate, the moderator suggested (falsely) that Freedom Dividend would be eaten up by the VAT. Yang then had to use his precious little time appealing to arithmetic to explain that 20% of most people's monthly consumption is less than $1000. With a 100% net consumption tax, there is no arithmetic necessary to know that, if you're like the overwhelming majority, you don't collect anywhere near $1000 monthly in unearned income, much less consume it.

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Response to Panacea-monger (Reply #1)

Fri Jul 5, 2019, 09:06 PM

2. Interesting little note

He actually wants to phase out income tax and replace it with the VAT tax. That is his long term goal.

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Response to jromans (Reply #2)

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