Citizen's Dividend

[WiseOne]

The definition of poverty in Switzerland is very, very different from what it is in the US. The word "poverty" probably shouldn't be even used. "Minimum for a comfortable middle-class lifestyle" is more like it.

Under the proposed plan, a family of two adults, no kids, would get $5000 a month. This would be an annual after-tax income of $60,000.

The Federal Poverty Line for the same married couple in the US is $16,020.

Cost of living in Switzerland is high, but it's lower than NYC (I looked that up).

For a citizens' dividend in the U.S., I'd pitch it to the federal poverty line, not the Swiss one. That would bankrupt us in short order. About 80% of Swiss voters recognized that too.

Jafs - the issue with the "I don't need it" argument is simple: Who determines that you don't need it, and does your definition of "need" match theirs? Probably not. And realize, whoever it is determining need doesn't do it for free. You have to have offices full of people who must be paid, office rent to pay, lots of office services & supplies, etc etc. All this costs money. Then multiply that by 70-odd (the number of different programs all with different ideas of "need" and money to distribute), and then again by 50 (the number of states).

It would be much simpler to increase max tax rates to make the program revenue-neutral. So I'd expect to get my dividend but pay all or most of it back in taxes. A person getting very high income would get the dividend but end up paying more in taxes, depending on how the rates are set.

The other great thing about the dividend is the disincentive issue that enough other people have talked about. And I'm still waiting to hear about disadvantages.

[jafs]

The part I agree with here is that our current system is too complicated/bureaucratic, and that there are some bad incentives in it, ones that discourage what we want to encourage, and vice versa.

A cd would simplify the system, for sure.

But so would a mi program - just set the minimum income level, and subsidize people up to that level. I would guess that could be done simply as well.

The idea of taxes and revenue neutrality is an interesting one. Do people like that idea? It means that you don't get any net gain if you're doing pretty well. And, that if you're doing really well, the program is a higher drain on your income.

Also, another aspect of both of these ideas is that simplifying the system, although attractive, would put a lot of people out of work. So, then we have a bunch of people formerly employed looking for jobs. It's not like there are a lot of jobs around these days.

I think part of the problem is that it's not clear exactly what the intention is with a cd - if it's just simplifying the system, it would do that. But it seems like there are some other, less well defined goals at play as well.

Overall costs of living in Switzerland vs. the US appear significantly higher, from what I've found. I think you're getting stuck on the raw numbers there.

[jafs]

Any federal program that's simple will overlook regional differences, and thus be a bit less satisfying.

This is true of cd, mi, minimum wage, poverty level calculations, etc.

$1000/month generates vastly different purchasing power in NYC and in rural Mississippi, to use an obvious example.

If the goal is to keep people out of poverty, we'd really have to use different figures for different areas, and that makes things more complicated.

[Pointedstick]

A question for citizen's dividend folks.

Let's assume that it's implemented, and everybody gets $15K/yr. What would you do if you got that?

I'd just put it in the bank or invest it - it wouldn't change anything else for me. Or I might give some to charity as well. In some circumstances, it might result in people just quitting their jobs and living on the cd.

First year: Fancy new standing seam metal roof

Second year: New high-efficiency HVAC system and solar panels, making the house net zero energy

Third year: New kitchen cabinets and counters (my cabinets are literally falling apart), and any other misc. high-dollar home improvement projects that I've had on the back burner

Fourth year: In conjunction with selling my existing vehicle, a nice high-MPG, hybrid, or electric Japanese hatchback

Fifth year: Really nice long-overdue vacation, private school for kids if necessary, things like that

Etc.

You could argue that I could easily do all of these things right now. I easily have enough cash to do all of this stuff, like tomorrow. But the fact that I haven't reveals that these spending priorities are not deemed important enough to pursue at my current level of income/savings/wealth. The basic reason is that $15,000 a year in free money is worth $325,000 in investments. For ERE folks like me, saving it would be silly; spending it on things that need buying is much more impactful than just socking it away. It would take 25 years of investing the dividend to equal a yearly income from those investments of the same amount--and all for what? $30k of free money yearly instead of $15k? $30k is enough to make my family financially independent, but I could achieve the same thing much faster by spending the dividend and saving $325,000 myself. And I could keep saving beyond that and use the dividend to spend on things lower on the revealed preference scale that are nice-to-haves. Such a payment would probably reduce the drive among some to achieve an extremely high level of savings.

I would be hugely in favor of something like this--in conjunction with blowing away all the other programs, of course. I would no longer worry about quitting my job and having my family's healthcare situation deteriorate. This is a problem Obamacare was supposed to solve, but I've run the numbers and it simply doesn't work for us. My income would be so low that we'd have to be on Medicaid, where the service is slow and low-quality. The Obamacare marketplace is a joke since prices have gone up by double-digit percentages yearly and they're not really a very good deal to begin with; deductibles are very high, but monthly payments are not very small to compensate unless you qualify for huge subsidies, which in and of themselves are a gigantic disincentive to earn more so that you don't lose those subsidies. I periodically shopped around before Obamacare for private insurance and always saw a good assortment of cheap, high-deductible plans that looked like they made sense and had reasonable prices, but those don't seem to exist anymore.

[clacy]

I'm surprised that the vote was so lopsided. I was kind of hoping Switzerland would be a test run for such a radical idea.

http://www.bbc.com/news/world-europe-36454060

[jafs]

So this would help PS do things he could do already, but isn't doing. And, given the fact that he could easily do them now, in his own words, he doesn't need this program.

Anybody else?

Every time I've looked at ACA plans I've found very good ones with reasonable premiums and cost-sharing stuff as well. You have to be between 100-400% of the federal poverty level, with good subsidies at the lower end of that.

The "silver" plan is the best, with cost sharing as well as premium subsidies.

[jafs]

A Swiss person I read a quote from (could have been an official of some sort) said about the cd program - "If you pay people to do nothing, they'll do nothing".

It sounds like concern about disincentivizing people from working was a big part of why this got voted down there.

[Pointedstick]

A Swiss person I read a quote from (could have been an official of some sort) said about the cd program - "If you pay people to do nothing, they'll do nothing".

It sounds like concern about disincentivizing people from working was a big part of why this got voted down there.

That's a dig at welfare programs in general, not just this idea. I don't know what welfare programs are like in Switzerland today, but that comment is applicable here in the USA with the status quo.

The point of a citizen's dividend is that at least theoretically, it attempts to avoid the "paying people to do nothing" effect because it's paying people regardless of whether or not they do anything, not paying them to do nothing. A conventional means-tested, "need-based" welfare program is the true example of paying people to do nothing, because as soon as they start to do something, their "need" decreases and they don't get the money anymore.

[jafs]

I understand the idea.

But I just don't think it works better than a minimum income program, for one.

So far, it might help you fix up your house, or quit your job. For me, it would probably have little effect and, if there were one, it might mean we'd just retire sooner (assuming the ACA is still around, and depending on taxes a bit).

I don't see it making people more productive yet - in fact, it's the opposite, isn't it?

With WiseOne's idea of taxes and revenue neutrality, rich people will fight it, because their taxes will go up, middle income folks probably wouldn't care much one way or the other, if it's a wash for them. So the lower end people would like it, but I don't see that it would make them be more productive, if they could live on the income without doing that.

Oh, also - fix your cabinets if they're falling apart, man

[jafs]

Actually, if the cd isn't taxed, and it eliminates/replaces SS, we'd do better with it.

We could retire sooner, not have to subsidize our retirement until SS kicks in, pay the same or maybe a bit less for health care with an ACA plan (than for Medicare), and wind up with more income in retirement.

I've changed my mind - I'm all for it now

[Xan]

The part I agree with here is that our current system is too complicated/bureaucratic, and that there are some bad incentives in it, ones that discourage what we want to encourage, and vice versa.

A cd would simplify the system, for sure.

But so would a mi program - just set the minimum income level, and subsidize people up to that level. I would guess that could be done simply as well.

The idea of taxes and revenue neutrality is an interesting one. Do people like that idea? It means that you don't get any net gain if you're doing pretty well. And, that if you're doing really well, the program is a higher drain on your income.

Also, another aspect of both of these ideas is that simplifying the system, although attractive, would put a lot of people out of work. So, then we have a bunch of people formerly employed looking for jobs. It's not like there are a lot of jobs around these days.

I think part of the problem is that it's not clear exactly what the intention is with a cd - if it's just simplifying the system, it would do that. But it seems like there are some other, less well defined goals at play as well.

Overall costs of living in Switzerland vs. the US appear significantly higher, from what I've found. I think you're getting stuck on the raw numbers there.

Those people who would lose their jobs are already drawing a paycheck for achieving nothing. Why not just make it official?

The cost of giving this money to "millionaires" would be miniscule. There just aren't that many. (Also, do you define "millionaire" by net worth or income or something else?) You only don't like it because you think millionaires are icky. One of the points of this is to reduce the class warfare.

The 100% tax on income up to $15K is just dreadful. What a steep price to pay.

[rhymenocerous]

Why is there no discussion about inflation as a result of these policies? Give everyone $50k per year and soon the prices of goods will rise so that no one can live on that amount anymore. If we give everyone $1m per year, there would be no more poverty, right?

[Xan]

Why is there no discussion about inflation as a result of these policies? Give everyone $50k per year and soon the prices of goods will rise so that no one can live on that amount anymore. If we give everyone $1m per year, there would be no more poverty, right?

My understanding of the idea of a citizens' dividend, as opposed to "basic income" which sounds like the same thing (note that that's also different from jafs's "minimum basic income") is that the citizens' dividend adjusts to what the economy can handle. If productivity is high and not everyone needs to work, then there's a dividend. Productivity drops, and so does the dividend. http://www.socred.org/index.php/blogs/v ... l-dividend

Inflation is definitely a concern. But the same concern would apply to many programs which this could replace.

I'm not convinced myself that a dividend is the way to go. But it seems like one of the better ideas I've seen.

[jafs]

The part I agree with here is that our current system is too complicated/bureaucratic, and that there are some bad incentives in it, ones that discourage what we want to encourage, and vice versa.

A cd would simplify the system, for sure.

But so would a mi program - just set the minimum income level, and subsidize people up to that level. I would guess that could be done simply as well.

The idea of taxes and revenue neutrality is an interesting one. Do people like that idea? It means that you don't get any net gain if you're doing pretty well. And, that if you're doing really well, the program is a higher drain on your income.

Also, another aspect of both of these ideas is that simplifying the system, although attractive, would put a lot of people out of work. So, then we have a bunch of people formerly employed looking for jobs. It's not like there are a lot of jobs around these days.

I think part of the problem is that it's not clear exactly what the intention is with a cd - if it's just simplifying the system, it would do that. But it seems like there are some other, less well defined goals at play as well.

Overall costs of living in Switzerland vs. the US appear significantly higher, from what I've found. I think you're getting stuck on the raw numbers there.

Those people who would lose their jobs are already drawing a paycheck for achieving nothing. Why not just make it official?

The cost of giving this money to "millionaires" would be miniscule. There just aren't that many. (Also, do you define "millionaire" by net worth or income or something else?) You only don't like it because you think millionaires are icky. One of the points of this is to reduce the class warfare.

The 100% tax on income up to $15K is just dreadful. What a steep price to pay.

What will all of those people do, if they lose their jobs? Unemployment is already high, and there aren't a lot of jobs around, certainly not a lot with decent pay and good benefits.

I don't think they're "icky", I just don't think they need help, that's all. And, it's just an easy way to point out that facet of this. But, if we used WiseOne's idea, not only wouldn't they get more money, they'd wind up with less, because their taxes would go up. What do you think of that idea?

And, what would you do if you got $15K/yr?

[MachineGhost]

I still haven't seen any justification for giving millionaires money.

Social cohesion. But also if you put on means testing then you no longer have a Citizen's Devidend, you have a minimum guaranteed income which involves the same deep state bureaucracy we have now. So its the lesser of two evils.

[MachineGhost]

The definition of poverty in Switzerland is very, very different from what it is in the US. The word "poverty" probably shouldn't be even used. "Minimum for a comfortable middle-class lifestyle" is more like it.

I don't think setting the "poverty" line smack dab between the lower class and the lower middle class is unreasonble. The lower class "working poor" is essentially a modern version of Oliver Twist-style poverty with no hope of ever getting out of it. The main point of the CD is to get rid of poverty; the rest are all ancillary benefits like increased civic participation. With all this free time and not having to struggle under the sins of poverty, people will feel a lot more invested and patriotic. Do I need to oversate how important that is for the Black and Hispanic communities???

Under the proposed plan, a family of two adults, no kids, would get $5000 a month. This would be an annual after-tax income of $60,000.

The Federal Poverty Line for the same married couple in the US is $16,020.

Cost of living in Switzerland is high, but it's lower than NYC (I looked that up).

For a citizens' dividend in the U.S., I'd pitch it to the federal poverty line, not the Swiss one. That would bankrupt us in short order. About 80% of Swiss voters recognized that too.

To make it comprable to CHF we have to adjust USD for differences in purchasing power. So that $16K USD is equivalent to only $21K CHF. If everything in Switzerland is universally only that much more expensive (I doubt it since they have a constrained supply problem as a small country), I don't think $21K CH gonna go very far there compared to $16K USD here. It simply might not be workable to eliminate poverty in Switzerland.

Also, the FPL discriminates against women. It's a relic. You really think having an adult spouse in the family is worth only $4K more? I bet child rearing alone costs multiples more in equivalent labor wages. It's not gonna solve anything if we don't pay women what they are worth.

[MachineGhost]

Also, another aspect of both of these ideas is that simplifying the system, although attractive, would put a lot of people out of work. So, then we have a bunch of people formerly employed looking for jobs. It's not like there are a lot of jobs around these days.
[/qupte]

That's the whole point of the Citizen's Dividend. How are we gonna "Starve The Beast" without a fallback position for all the newly unemployed and redundant government workers, the overwhelming which are the colored? If we want to seriously reform or abolish the IRS, we've got to take care of all the CPA's like moda (anyone know where he is, BTW?).

I think part of the problem is that it's not clear exactly what the intention is with a cd - if it's just simplifying the system, it would do that. But it seems like there are some other, less well defined goals at play as well.

Its not unclear; maybe only to you. The CD is to kill the "Beast" once and for all. Yes I'm sure it upsets your utopian liberal sensibilities, but almost all of us in here are libertarians, RINOs or conservatives, not liberals. We fully recognize the unjust "waste, fraud and abuse" that comes along with the "Beast".

[MachineGhost]

If the goal is to keep people out of poverty, we'd really have to use different figures for different areas, and that makes things more complicated.

Yes, its a problem, but in this age of computing power where we can track literally hundreds of different sales tax rates for every locality, its not gonna be an issue for the Treasury department to normalize purchasing power across the 11 different nations of the USA for the CD.

[MachineGhost]

So this would help PS do things he could do already, but isn't doing. And, given the fact that he could easily do them now, in his own words, he doesn't need this program.

He needs this program in terms of improving his living standard because the cost of spending his current savings is especially painful compared to a "free" $15K you get immediately without having to wait 20-30 years. Now multiply that process out by a few million and you'd have an economic renaissance in the country overnight.

You're way too focused on the "need". It has no role in the CD.

[MachineGhost]

Every time I've looked at ACA plans I've found very good ones with reasonable premiums and cost-sharing stuff as well. You have to be between 100-400% of the federal poverty level, with good subsidies at the lower end of that.

The "silver" plan is the best, with cost sharing as well as premium subsidies.

Relatively, they are all very bad plans compared to what you could get before ObamaCare or under Medicare. So again this is going to be a disincentive to earning more income because its better to stay on the "free" Medicaid than be kicked out and be forced to get worse coverage under ObamaCare.

[MachineGhost]

Why is there no discussion about inflation as a result of these policies? Give everyone $50k per year and soon the prices of goods will rise so that no one can live on that amount anymore. If we give everyone $1m per year, there would be no more poverty, right?

Because you're mobilizing current unproductivity enforced by welfare (increased job-talent match efficiency, disabled, working poor, uneducated, increased entrepreneurship, etc.). And also because it'll cost less than what it costs to administer and distribut to existing welfare state. But the biggest reason is because automation and robotics will increase productivity so much it will more than accomodate any increased demand, i.e. post-scarcity.

There's always going to be the "losers" out there that want to be hedonistic druggies or whatever, but at least now you'll personally have the time and money to go save them if you're so worried about them.

If I got an additional $15K from the government, I would invest it unless I wanted to upscale my lifestyle by taking on higher expenses. It would really depend on the hedonist benefits: would I be happier investing or happier being less frugal? And this is important, because the CD will allow you to decide your personal level of happiness. You don't have that luxury at all when you are forced to work for a living or are stuck on welfare because you'll lose it if you try to improve your lot in life. Now, if I didnt need that $15K to improve my future living standards or current, I would become a Silicon Valley-style philanthropist, but that's just me.

[Pointedstick]

Am I being silly not wanting to go on Medicaid? I've heard horror stories, but if it's a secret gift horse, then I'm a lot closer to FI than I thought. It galls me that there's no option, though.

[jafs]

So this would help PS do things he could do already, but isn't doing. And, given the fact that he could easily do them now, in his own words, he doesn't need this program.

He needs this program in terms of improving his living standard because the cost of spending his current savings is especially painful compared to a "free" $15K you get immediately without having to wait 20-30 years. Now multiply that process out by a few million and you'd have an economic renaissance in the country overnight.

You're way too focused on the "need". It has no role in the CD.

That's exactly my criticism of it.

If he wants to improve his stuff, he can do it now, easily, according to him. And, the only likely result would be that he has to work a little bit longer before taking his extreme early retirement.

[jafs]

Every time I've looked at ACA plans I've found very good ones with reasonable premiums and cost-sharing stuff as well. You have to be between 100-400% of the federal poverty level, with good subsidies at the lower end of that.

The "silver" plan is the best, with cost sharing as well as premium subsidies.

Relatively, they are all very bad plans compared to what you could get before ObamaCare or under Medicare. So again this is going to be a disincentive to earning more income because its better to stay on the "free" Medicaid than be kicked out and be forced to get worse coverage under ObamaCare.

I'd need some data/sources on that extremely broad statement.

My research on the ACA plans is that they're generally quite good, since they're required to offer a certain set of basic care, including a bunch of preventive things at no cost. And, the costs for us, even without subsidies, are quite comparable to employer-sponsored plans - maybe just a little higher.

PS doesn't want Medicaid because he thinks it sucks, so you guys should discuss that difference of opinion.

[jafs]

Am I being silly not wanting to go on Medicaid? I've heard horror stories, but if it's a secret gift horse, then I'm a lot closer to FI than I thought. It galls me that there's no option, though.

Yes, that's exactly what you should do, given that you're a well-educated, working professional with lots of savings. You're just the kind of person that Medicaid is designed for.