Friday, 18 October 2019

Killer Arguments Against Citizen's Income, Not (24)

One of the worst I've ever seen, from, a veritable car crash:

Sounds great, right? … it does, until you look under the hood:

How Yang proposes paying for it is by introducing VAT (Value Added Tax) of 10%, that’s a $100 on every $1,000 you spend! The VAT will hit the middle class the hardest, those making and spending $120K per year break even. Those who make and spend $40K per year, will really only be effectively getting $8K per year, $153.85 per week.

His maths is rubbish. Assuming VAT paid is proportional to income/spending, the actual net Freedom Dividend minus VAT for...
- a non-earner would be 'only' $10,800;
- a middle-earner on $40,000 would be $6,800. FD = $12,000; minus 10% VAT on spending $40,000 + $12,000 = $5,200;
- a higher earner earning $120,000 would actually be negative $1,200. FD plus $12,000; minus 10% VAT on spending $120,000 + $12,000 = $13,200.

That seems very progressive to me, if that's what you are into. (Yes, VAT is the worst kind of tax, but let's stick to his static calculations).

[Quoting Yang] "We currently spend between $500 and $600 billion a year on welfare programs, food stamps, disability and the like. This reduces the cost of the Freedom Dividend because people already receiving benefits would have a choice between keeping their current benefits and the $1,000, and would not receive both."

So everyone on Welfare, SNAP, Disability or any other government assistance just gets excluded from the “Freedom Dividend” club, unless they give up their “current benefits”. This further widens the income inequality gap, pushing those less fortunate deeper into poverty.


Yang's whole point is that if his FD is an alternative to existing welfare, to keep the overall additional cost down*. Somebody who is currently entitled to more than $12,000 a year in various welfare payments, they can keep them.

It's hardly "giving up" if you can choose a higher figure. Nobody is "excluded" and everybody with other earnings up to $108,000 would be better off . That narrows income inequality gap and pushes nobody further into poverty (again, glossing over the dead weight costs of VAT), the precise opposite of what he claims.

* Somebody worked out that all the various overlapping state and federal welfare schemes already average out at $7,200 per adult per year, so bumping that up to $12,000 is no biggie.