[ExI] Universal Income

Tara Maya tara at taramayastales.com
Thu Sep 7 21:35:21 UTC 2017

> On Sep 7, 2017, at 1:21 PM, Stuart LaForge <avant at sollegro.com> wrote:
>  Why should they have to give up their Universal Income
> in order to start their own businesses if there is no law requiring it?

Maybe I don’t understand how Universal Income supposed to work.

Here’s a toy scenario, simplified and exaggerated, but my best stab at understanding how it would work:

Let’s assume the best and say that anyone with any income would be taxed the same percent, and everyone would receive the same amount. And imagine four players: Poor Jack, Rich Dick, Middle Class Marty and Politician Pete. 

Poor Jack has no job and no income; Rich Dick owns many assets and has an disposable income of 5 million units a year. Politician Pete wins votes from Poor Jack and Middle Marty by promising to tax Rich Dick, say, 20%, to fund the pool for UI. Of course, Middle Marty, who makes 20,000 units a year, also has to pay 20% of that, but he’s glad to do so, even though it means his income drops to 16,000 units, because he also gets UI (?) and so has an income of 26,000.

That works well at first, and Poor Jack starts to receive just enough to keep him alive, say, 10,000 units a year. But of course, the divide between Poor Jack and Rich Dick would still be huge, so at the next election, Politician Pete would promise to increase the tax, say, to 50% in order to give Poor Jack $20,000. And of course, there’s also money in there for Politician Pete, and his legions of paper pushers, to run the thing.

Of course, as soon as Poor Jack has more money, Rich Dick, his landlord and the owner of the large mega-internet-store and also several media companies, would simply raise the price on his rent, food, and media, and so Poor Jack would find that he could barely survive on $20,000. Meanwhile, Dick, no dope, would also fund Politician Pete, or a rival party member, Politician Paul, and work out some new tax codes that would redefine Dick’s own income as effectively zero, so that his taxes would go down to nothing. The tax burden would now fall completely upon Middle Class Marty, who now has to pay more for housing, food, and entertainment because of the money being thrown at Poor Jack, who meanwhile contributes nothing of his own to the economy. Marty’s income, after tax, is 10,000 but he also receives 20,000, so he’s doing better on the face of it, with an income of 30,000 units, but everything is more expensive now…. And the income he earns (after tax) is now much less than he gets from UI, so at some point, he may wonder, why bother working at all?

Some Middle Marties decide to take it easy, because why bother, and some suffer temporary set backs that drop them into Poor Jacks, and some go work for Politician Pete or Paul pushing paper, and there are less and less Middle Marties paying for the pool that funds UI. Neither Poor Jack, nor Politician Pete, nor, at this point, even Rich Dick pays into the pool, so it’s all the backs of the middle class, which will therefore shrink. At least it could be said of Rich Dick that he is contributing to making and selling things, but the number of people who drop of out of productive labor to leech off the system would inevitably grow, until you basically have no middle class left, only the rich leeches and the poor leeches and the government leeches.

At that point, there’s a bloody revolution instead of an election, and thousands die.

Not a great system, as far as I can see. What I am missing here?

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