Citizen's Dividend

[WiseOne]

Where are you getting $300/month from?

USD and the swiss franc are about equal in value. For a family of four (2 adults, 2 kids), the "poverty level" income to which you refer would be about $6250 per month - presumably tax free. You would have to earn well over $100K here to get that net income.

The goal of the citizen's dividend should be to guarantee a bare sustenance income, not a middle class lifestyle, while doing away with the machinery of means testing which is not only a poor assessor of actual need, but also an expensive and inefficient waste of resources. It's too easy for some people to game the means-testing system, and the response of making it more complicated to navigate effectively excludes others from getting the benefits they need.

I also like the idea that only citizens get the dividend, AND it would replace many programs that are being used to provide benefits to non-citizens who can't support themselves and thus have no business being here. It's thus a neat way to prevent states from spending your hard earned dollars in such an inappropriate manner, or at least it would force them to be completely transparent about it.

[jafs]

Relative costs of living.

If MG is correct, and the $2500 swiss francs is just above the poverty level income for somebody in switzerland, then it would translate to less than half of that in the US - the US poverty level in 2016 is about $12K/yr. In other words, the equivalent US$ cd would be somewhere around $1200/month.

So to translate the 625 swiss francs/month/child, I took about half of that in USD.

You can't take the face amount of the swiss franc idea and simply substitute US$ - that wouldn't be an apples-apples comparison.

So, if you're comparing a family of four, then take about half of your amount, and you get about $3000/month, which is about $36K/yr, not anywhere near $100K/yr.

Where would you set the level? If it's currently set just above the poverty level, that sounds pretty "bare sustenance level" to me.

[jafs]

Thanks.

I like yours a lot

Well, there's no gallery available to choose from - maybe I'll just leave it for now.

[Pointedstick]

The whole internet is your gallery!

[jafs]

I can't just be a mystery, wrapped in an engima?

Maybe a little embarrassing, but I have no idea how to go about uploading a picture, or where to find a good one. I play chess often, so perhaps a chess-related picture would be good. Or something musical.

Anybody want to give me a little tutorial on what to do?

Thanks in advance.

[jafs]

Ok - I found a picture I like.

Now I just need to know how to make it my avatar.

[Xan]

And, heck, never mind Gates, et. al. My wife and I are in the lower range of middle class - why should the government give us $30K/yr? We don't need it, and haven't earned it in any way that I can tell.

That's the whole point, you get it without 'earning' it. How do the people on welfare now 'earn' it, as you imply?

We also don't need it - did you miss the first part of that sentence?

People on welfare get help because they need it.

And some people earn things and money as well.

A CD that provided us with $30K/yr of income would fit neither of those categories, so it makes little sense to me.

How do you view Social Security? When you're taking it, and you don't "need" it, does it still make no sense? (I'm not challenging; I'm really curious.)

A bit more challenging: I'm still not sure you understand the disincentives that I (and everyone else) am talking about. Do you discount that problem entirely because you don't understand it, or because you don't think it's a problem? Suppose I recast your proposal to "subsidize" everybody's income up to $15K this way: you want to enact a 100% tax on all income between $1 and $15K. Does that sound like a good idea with good incentives? The problems with this are the same as with our current welfare schemes (although this one is more extreme, of course).

[jafs]

I would probably change the SS system to work in a similar fashion.

That would mean if we didn't need it, we wouldn't get it, and that would be fine with me.

As it turns out, we'll probably need it, although I've played with the idea of not taking it if that's feasible.

I've already answered your comments about disincentives by pointing out that a cd of $15K/yr is equally disincentivizing as a mi program of $15K/yr. You failed to respond to that point at all.

I don't know why people are arguing against the current system when they respond to my comments about a different idea - have they not read/understood my posts?

All systems will have some drawbacks - there aren't any perfect ones.

[jafs]

Hey, I figured it out.

But, nobody offered to help

[Xan]

I've already answered your comments about disincentives by pointing out that a cd of $15K/yr is equally disincentivizing as a mi program of $15K/yr. You failed to respond to that point at all.

It's false.

If I have a citizens' dividend of $15K, and I want to start a business, or just go out and earn some extra spending money, then I can do it.

If I have this subsidy thing, then I am complete discouraged from doing so.

[MachineGhost]

The main complaint was that the plan would be too expensive. It was $2500 francs/month per adult and $625/month per child. That's an absurdly high "basic" income level, even given the high living costs in Switzerland. A shame, because it would have been nice for the first vote on a citizen's dividend to be on a realistic plan.

Sigh. Third time I've had to mention this. $2500 francs is only about $300 francs above the poverty level in Switzerland. It's not a "high" basic income level. But I don't understand the reasoning for paying children. I would have voted no just based on that provision. We don't want to encourage rampant breeding as a method to get wealthy (except in Japan, so maybe that is the way again to make it work there).

In order to measure poverty in Switzerland, a poverty threshold that is based on a social existence minimum is used. Therefore, people who do not have the financial means to acquire goods and services necessary to an integrated social life are considered poor. The poverty threshold is fixed according to the norms of the Swiss Conference for Social Assistance (SKOS) and consists of a fixed amount to cover living expenses, individual housing costs as well as CHF 100 per month per person aged 16 or over for additional expenses. In 2014, the poverty threshold on average was CHF 2219 per month for a single person and CHF 4031 per month for a household with two adults and two children.

In 2014, 6.6% of the Swiss population i.e. approx. 530,000 people were affected by income poverty. The median poverty gap reached 17.3% meaning that half of the people affected by poverty in Switzerland had to live off an income that represented a maximum of 82.7% of their respective poverty threshold. The most exposed groups were single-parent households, adults living on their own, people without post-compulsory training or education, people who are economically inactive and those who live in a household with a low participation in the employment market.

Source: http://www.bfs.admin.ch/bfs/portal/en/i ... 07/01.html

Anyway, I actually now think smaller countries like Switzerland are the most at risk from technological unemployment and they must know it. Just give it time and it will pass once enough people see their jobs threatened.

[clacy]

The measure failed miserably. Nearly 77% rejected the proposal.

[jafs]

I've already answered your comments about disincentives by pointing out that a cd of $15K/yr is equally disincentivizing as a mi program of $15K/yr. You failed to respond to that point at all.

It's false.

If I have a citizens' dividend of $15K, and I want to start a business, or just go out and earn some extra spending money, then I can do it.

If I have this subsidy thing, then I am complete discouraged from doing so.

If you want to start a business, you can do it now, right? Just get a loan and do it. And, the motivation is the desire to have a business and make a lot more than $15K/yr.

And, a mi set at the right level wouldn't discourage anybody from getting a decent full-time job that pays more (which is what we want people to have, right?).

There might be some effect on part-time job seeking by adults, that's true. But I don't see why adults should be getting crummy part time jobs without benefits anyway. Those are more suitable for teenagers/college students to get a little spending money (and in my model, I suspect those people wouldn't be getting the subsidies).

Also, you're assuming the only motivator for people is money. Some people might like to work for other reasons, and would choose to work a bit even if they didn't have to.

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

[jafs]

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.

[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.