Andrew Yang's Freedom Dividend (Universal Basic Income)

Intended for constructive conversations. Exhibits of polarizing tribalism will be deleted.
Lucky C
Posts: 755
Joined: Sat Apr 16, 2016 6:09 am

Andrew Yang's Freedom Dividend (Universal Basic Income)

Post by Lucky C »

I'm surprised that this apparently hasn't been a topic yet, but Andrew Yang is proposing $12k/year/person in universal basic income that he calls a Freedom Dividend. So basically if he was actually able to make this happen, anyone living at the Mustachian level or leaner would be able to quit immediately, if they were comfortable with the stability of the law and the amount of assets they had set aside for a rainy day or other projects. Based on a safe withdrawal rate of 3%, if you were guaranteed this $12k/year that would be like getting $400k closer to your FIRE goal times every member of your household over 18!

Another proposal that has a much more likely chance of happening is Kamala Harris's tax credit of up to $6k per year per household. I haven't noticed people talking about this much because it wouldn't be too meaningful for the average family, but it would be a significant FIRE boost. I don't know the details but I imagine it would be $6k for a married couple under a certain income level, on top of existing tax credits. So this would be the equivalent of being $200k closer to FIRE at a 3% withdrawal rate, or for singles probably $3k/year or $100k.

I've already met my FIRE goals, so I would not be tempted to have these proposals, however unlikely they are to pass, influence my vote for president. I suspect that these policies could be more detrimental than beneficial as we are not yet (and probably never will be) living in a techno-utopia where universal basic income would work, but I have not done enough research to be confident either way.

The question for those who plan on voting Not-Trump and who have a long way to go to reach FIRE: will these proposals influence your voting at all? I imagine if I hated my job and still had $200k+ to go to reach FIRE, I would be tempted to selfishly vote for Yang or Harris for these reasons. Even in my position where I don't really need more "free money", I find myself happy that Harris is doing pretty well simply because a $6k tax credit would put us at 0% withdrawal with our current part time income.

jacob
Site Admin
Posts: 15907
Joined: Fri Jun 28, 2013 8:38 pm
Location: USA, Zone 5b, Koppen Dfa, Elev. 620ft, Walkscore 77
Contact:

Re: Andrew Yang's Freedom Dividend (Universal Basic Income)

Post by jacob »

Lucky C wrote:
Mon Jul 01, 2019 7:41 am
I'm surprised that this apparently hasn't been a topic yet, but Andrew Yang is proposing $12k/year/person in universal basic income that he calls a Freedom Dividend.
viewtopic.php?f=20&t=3653 (326 posts and counting ...)

Optimal_Solution
Posts: 57
Joined: Tue May 07, 2013 4:56 pm

Re: Andrew Yang's Freedom Dividend (Universal Basic Income)

Post by Optimal_Solution »

I expect to "retire" in the next year or two so I would personally benefit from some sort of UBI while not having to pay for it via income taxes. But I certainly would not vote in favor of it because I am philosophically opposed to it. I think it would adversely distort market incentives, increase dependency on the government, and centralize more power into government hands to be misused by present or future politicians.

EdithKeeler
Posts: 1099
Joined: Sun Sep 01, 2013 7:55 pm

Re: Andrew Yang's Freedom Dividend (Universal Basic Income)

Post by EdithKeeler »

As a person on the verge of retirement, I say “cool!”

As a person who is working and makes good money, I say “boo,” because the $$ has to come from somewhere, and some of it will come out of my paycheck in the form of taxes.

I think before UBI is implemented, we need to do something about our health care system. I think at the end of the day, rejiggering our health care/health insurance system will ultimately pay for itself between what we pay for premiums, profits to insurers, salaries for administrators, write offs for the poor, etc. But it’s a political hot potato.

After that, we need to shore up social security, which is easy enough to do (except politically!!) by increasing the cap on income for high earners, and maybe by raising FRA by a year or two.

I think once those are done, then maybe we talk about UBI. The first two are much more pressing issues, imho.

latearlyFI
Posts: 40
Joined: Sat Jan 12, 2019 9:24 am

Re: Andrew Yang's Freedom Dividend (Universal Basic Income)

Post by latearlyFI »

I read Yang's book, "The War on Normal People" and that explains very well why we desperately need UBI. It will benefit the majority of the population. Only the very wealthy will pay out more in taxes, as they should - because at the moment they are able to loophole, offshore etc to avoid taxes eg Amazon pay zero Federal Taxes. VAT is very good at collecting the taxes and unburdening the people that pay the bulk of income tax and doesn't apply to basic necessities like food. He has a very detailed explanation and plan on his website. www.yang2020.com I love it's all there to read and think about, not just a vague platitude of, "this is what I'll do". He also explains it well in this podcast: -

https://www.youtube.com/watch?v=cTsEzmFamZ8&t=50s

I lot of people initially balk at it, but upon deeper review see the sense in it, and how very beneficial it would be. Giving back more power to the people. It would be for all US Adult Citizens, a $1k a month, and they would spend it back into the economy, much locally, which would directly benefit local communities. Please at least give him a look. I think we're doomed unless we get him into the white house. He is the only one with a vision and a clear understanding of where our tech is taking us.

FIRE 2018
Posts: 126
Joined: Fri Jul 19, 2019 7:32 am
Location: Florida

Re: Andrew Yang's Freedom Dividend (Universal Basic Income)

Post by FIRE 2018 »

Too bad during the debates the moderators do not even give him the time of day.

latearlyFI
Posts: 40
Joined: Sat Jan 12, 2019 9:24 am

Re: Andrew Yang's Freedom Dividend (Universal Basic Income)

Post by latearlyFI »

He's in the next debate, hoping he will get more air time this time. Might be tough because he is very respectful. In all his interviews he doesn't interrupt or dominate, he really sticks to his Humanity ethos. Can't wait to watch it. I found the mud slinging by other Candidates really annoying in the first debate. I want to listen to solutions not attacks for the past.

Campitor
Posts: 1227
Joined: Thu Aug 20, 2015 11:49 am

Re: Andrew Yang's Freedom Dividend (Universal Basic Income)

Post by Campitor »

latearlyFI wrote:
Wed Jul 24, 2019 3:26 pm
VAT is very good at collecting the taxes and unburdening the people that pay the bulk of income tax and doesn't apply to basic necessities like food. He has a very detailed explanation and plan on his website. www.yang2020.com
I couldn't find Yang's in-depth VAT explanation on his website and what I did find was lacking any substance or depth: https://www.yang2020.com/policies/value-added-tax/

However I did find this:

https://www.taxpolicycenter.org/briefin ... burden-vat: Because lower-income households spend a greater share of their income on consumption than higher-income households do, the burden of a VAT is regressive when measured as a share of current income: the tax burden as a share of income is highest for low-income households and falls sharply as household income rises. Because income saved today is generally spent in the future, the burden of a VAT is more proportional to income when measured as a share of income over a lifetime. Even by a lifetime income measure, however, the burden of the VAT as a share of income is lower for high-income households than for other households. A VAT (like any consumption tax) does not tax the returns (such as dividends and capital gains) from new capital investment, and income from capital makes up a larger portion of the total income of high-income households.

https://www.cnsnews.com/news/article/va ... ic-adviser: According to a Congressional Budget Office study on the general topic of a VAT, if it were imposed as a new tax, the VAT would increase administrative costs and place a burden on the poor.

“(A)s a new tax, a VAT would be more costly for the federal government to administer and more costly for businesses to comply with,” said the CBO report. “In addition, the VAT's heavier burden on the poor could not be offset much by adjusting its tax base.”

Further, the CBO study said that “(t)axing consumption is inherently regressive--that is, the burden of the tax as a share of income is greater for families having lower income. A VAT would be regressive because lower-income families spend more, and save less, of their income.”

Taxing consumption is also inherently costly, both to administer and to comply with, because no general consumption tax currently exists at the federal level in the United States,” the report added.


https://www.cbo.gov/sites/default/files ... ngavat.pdf: The administrative and compliance costs of a VAT would be substantial--about $5 billion to $8 billion per year. Moreover, these costs would be largely independent of the amount of revenue raised by the VAT. This independence obviously makes the VAT a poor choice as a minor revenue raiser because the administrative and compliance costs would be so large relative to the amount of revenue raised. [/b].

I award Yang's VAT proposal two Rasperries. :roll:

7Wannabe5
Posts: 9372
Joined: Fri Oct 18, 2013 9:03 am

Re: Andrew Yang's Freedom Dividend (Universal Basic Income)

Post by 7Wannabe5 »

@Campitor:

I agree. Greatly increased inheritance tax towards equalization of educational/entrepreneurial opportunities would be better. Fresh roll on the American dream each generation.

trfie
Posts: 180
Joined: Wed Feb 04, 2015 12:35 am

Re: Andrew Yang's Freedom Dividend (Universal Basic Income)

Post by trfie »

FIRE 2018 wrote:
Wed Jul 24, 2019 4:02 pm
Too bad during the debates the moderators do not even give him the time of day.
The debates are unfair. Why is it up to the moderators to decide whom to give more time, which influences dramatically the public perception, polls, and who goes on to win? Supposedly the moderators are allocating time based on public polls, but it's been clearly shown that it is not the case.

Why people believe in the charade is a mystery to me (especially after the last election when it was leaked that the Democratic party leadership were heavily favoring Clinton over Sanders, including actions during the primary season).

trfie
Posts: 180
Joined: Wed Feb 04, 2015 12:35 am

Re: Andrew Yang's Freedom Dividend (Universal Basic Income)

Post by trfie »

7Wannabe5 wrote:
Mon Jul 29, 2019 12:25 pm
@Campitor:

I agree. Greatly increased inheritance tax towards equalization of educational/entrepreneurial opportunities would be better. Fresh roll on the American dream each generation.
Except that it's not going to equalization of opportunity, it's going to overseas wars with a supermajority of Democratic/Republican Congressperson approval.

And if the inheritance tax were "greatly increased", the wealthy would just take their wealth and job creation overseas. There have already been a few billionaires who have renounced US citizenship and left. As Kevin O'Leary said, the wealthy are not stupid. If you increase taxes, they are going to restructure how they receive income, or leave, etc.

tonyedgecombe
Posts: 450
Joined: Thu Aug 30, 2012 2:11 pm
Location: Oxford, UK Walkscore: 3

Re: Andrew Yang's Freedom Dividend (Universal Basic Income)

Post by tonyedgecombe »

trfie wrote:
Mon Jul 29, 2019 4:02 pm
And if the inheritance tax were "greatly increased", the wealthy would just take their wealth and job creation overseas. There have already been a few billionaires who have renounced US citizenship and left. As Kevin O'Leary said, the wealthy are not stupid. If you increase taxes, they are going to restructure how they receive income, or leave, etc.
Of course that's what they say, whether it's enough to make a difference is another question.

ajcoleman22
Posts: 70
Joined: Mon Apr 16, 2018 8:45 am

Re: Andrew Yang's Freedom Dividend (Universal Basic Income)

Post by ajcoleman22 »

Or they simply hire their kids for preposterous salaries and pass the wealth that way. There are so many ways around inheritance taxes they should just be abolished.

FIRE 2018
Posts: 126
Joined: Fri Jul 19, 2019 7:32 am
Location: Florida

Re: Andrew Yang's Freedom Dividend (Universal Basic Income)

Post by FIRE 2018 »

The wealthy can surely hire the best and most experienced financial advisors and tax attorneys to help them address the item if the inheritance tax is increased. Making a will and putting assets into a trust are some ways the wealthy avoid paying inheritance taxes.

7Wannabe5
Posts: 9372
Joined: Fri Oct 18, 2013 9:03 am

Re: Andrew Yang's Freedom Dividend (Universal Basic Income)

Post by 7Wannabe5 »

Well, then the wealthy can just as easily find some way around any method of redistribution or progressive taxation. So, no point in UBI either.

FIRE 2018
Posts: 126
Joined: Fri Jul 19, 2019 7:32 am
Location: Florida

Re: Andrew Yang's Freedom Dividend (Universal Basic Income)

Post by FIRE 2018 »

The wealthy for the most part are smarter and take more risk planning than the average Joe or Mary. Not only are they smart, they surround themselves with talented people to guide, advise and protect them from outside forces trying to get a piece of their pie.

ajcoleman22
Posts: 70
Joined: Mon Apr 16, 2018 8:45 am

Re: Andrew Yang's Freedom Dividend (Universal Basic Income)

Post by ajcoleman22 »

7Wannabe5 wrote:
Tue Jul 30, 2019 1:10 pm
Well, then the wealthy can just as easily find some way around any method of redistribution or progressive taxation. So, no point in UBI either.
Agreed.

7Wannabe5
Posts: 9372
Joined: Fri Oct 18, 2013 9:03 am

Re: Andrew Yang's Freedom Dividend (Universal Basic Income)

Post by 7Wannabe5 »

@ajcoleman22:

So, you are betting on something like...
My machine will take off a head in a twinkling and the victim will feel nothing but a refreshing coolness. We cannot make too much haste, gentlemen, to allow the nation to enjoy this advantage.
Joseph-Ignace Guillotin, Statement to the French Assembly, 1789.
or maybe just...

Image

latearlyFI
Posts: 40
Joined: Sat Jan 12, 2019 9:24 am

Re: Andrew Yang's Freedom Dividend (Universal Basic Income)

Post by latearlyFI »

Campitor wrote:
Mon Jul 29, 2019 11:50 am
I couldn't find Yang's in-depth VAT explanation on his website and what I did find was lacking any substance or depth: https://www.yang2020.com/policies/value-added-tax/

The big Tech Companies & wealthy don't pay tax the way it's set up now. A VAT would unburden the lower & middle class and close the loopholes.

A VAT is currently used by 160 out of 193 countries, including every developed nation except the US, because it is a more efficient way of generating revenue with no loopholes. Big companies and rich people are excellent at moving things around to avoid taxes – Amazon, Google, and other companies funnel hundreds of billions in earnings overseas. A VAT makes it impossible for them to benefit from the American people and infrastructure without paying their fair share.

Taxing income is an increasingly ineffective and inefficient way to generate revenue over time. Take a company like Amazon—it can do tens of billions in business and pay no income tax in a given period while storing its income overseas. A Value-Added Tax is a much more efficient way to capture the true value of the American infrastructure and will be increasingly necessary over time as more and more work is done by software, robots and artificial intelligence. With a VAT of half the European level, we can pay for Universal Basic Income for all American adults of $1,000 per month.

Implement a Value-Added Tax at 10%, half the European level. Over time, the VAT will become more and more important to capture the value generated by automation in a way that income taxes would not.
This VAT would vary based on the good to which it’s applied, with staples having a lower rate or being excluded, and luxury goods having a higher rate.
Use the VAT revenue to pay for the Freedom Dividend of $1,000/month per adult, Universal Basic Income.

https://www.youtube.com/watch?v=nlGPtWX ... e&t=43m42s
https://yanglinks.com/

I was living in Australia when they implemented a VAT - called a GST and it didn't apply to basics & helped reduce income tax, so moved the tax base to a fairer system for all.

Things that are GST-free in oz include:

most basic food
some education courses, course materials and related excursions or field trips
some medical, health and care services
some menstrual products (from 1 January 2019)
some medical aids and appliances
some medicines
some childcare services
some religious services and charitable activities
supplies of accommodation and meals to residents of retirement villages by certain operators
cars for disabled people to use, as long as certain requirements are met
water, sewerage and drainage
international transport and related matters
precious metals
sales through duty-free shops
grants of land by government
farmland
international mail
exports
sales of businesses as going concerns
some telecommunications supplies
eligible emissions units.

People earning less will only pay a very small amount of VAT in comparison to the wealthy and would receive $12k a year - and be miles ahead of where they are now. Leading to reduced poverty and closing the inequality gap.

Campitor
Posts: 1227
Joined: Thu Aug 20, 2015 11:49 am

Re: Andrew Yang's Freedom Dividend (Universal Basic Income)

Post by Campitor »

Australia's 2018 population was 24.7 million (roughly the same as Texas). US 2018 total population was 327.2 million. You can't extrapolate the impact of a GST a.k.a VAT on an economy/population of this size using Australia as a model.

But nevertheless, it looks like GST has incentivized tax avoidance/tax sheltering which is causing downward trends in tax revenues, which in turn has incentivized the Australian government to increase taxes and/or implement some taxes on currently tax exempt products. Hmm...who could have predicted that? :roll:

https://www.theguardian.com/business/gr ... th-reality:

Taxes essentially come from three areas – labour, capital and consumption. Since 2001-02, when the GST had come into effect, the PBO has found that all three categories have fallen with the biggest fall coming from consumption

https://www.aph.gov.au/About_Parliament ... alth_taxes:

Conclusion

Since 2001–02, behavioural changes and policy decisions have led to a decline in consumption tax receipts as a share of GDP. A larger share of consumption has moved to those categories that are exempt from the goods and services tax (GST). Excise duties (and excise equivalent customs duties) have declined across all categories, with the most notable decline observed for fuel products, resulting from the policy decision to cease the indexation of fuel excise rates between 2001 and 2014 and the improvements in fuel efficiency that have occurred over the past decade.
Similarly, both tobacco and alcohol excise have decreased as a per cent of GDP. The decrease in tobacco excise reflects the dramatic decrease in the consumption of tobacco since 2001–02, which has been partly offset by policy decisions to increase the excise rate. The reduction in alcohol excise reflects changing consumer preferences combined with the complex and inconsistent taxation of alcohol products.
Tax on capital in Australia is primarily captured through company tax. Policy changes over recent decades have generally reduced the statutory tax rate and broadened the company tax base. Given the Government’s policy to reduce the company tax rate over the next decade, company tax receipts as a share of GDP are expected to come under further downward pressure.
For many countries including Australia, company tax receipts have been adversely affected by the increasing use of international tax planning practices, known as Base Erosion and Profit Shifting (BEPS), by multinational companies. The OECD/G20 BEPS framework is attempting to lessen the effects of these tax planning strategies, though it faces significant challenges. Australia has adopted a separate legislative response to tighten the tax laws for multinational companies, which appear to be having some effect.
Although most of the tax on capital is collected through company tax, there are other forms of savings that generate returns and are taxed outside of this system. Since 2001–02, it has become increasingly common for individuals to hold savings in superannuation, particularly since access to generous tax concessions was made more flexible. These savings are taxed concessionally (or are tax-exempt), leading to lower tax receipts from returns to this form of capital relative to other forms of capital. Further increases in the Superannuation Guarantee (which is legislated to increase from 9.5 to 12.0 per cent over the medium term) will increase the share of labour income that is concessionally taxed and the share of savings that are concessionally taxed.
Labour income can come in the form of direct earnings, superannuation contributions or fringe benefits. Direct labour earnings are taxed through the progressive personal income tax system. However, as personal income tax thresholds are not indexed, without policy change, personal income tax receipts rise as a share of GDP due to bracket creep as incomes rise. The increasing use of the ‘share economy’ could potentially affect personal income tax receipts, but as of yet the data does not show a substantial effect.
Commonwealth taxes on consumption, capital and labour each have potential vulnerabilities that warrant monitoring. Given current policy settings and recent consumption and structural trends, there is a likelihood that taxes on consumption will continue to trend downwards, taxes on capital will be flat or trend downwards and an increasing proportion of labour income will be taxed concessionally through the superannuation system. If these risks to tax receipts eventuate and in the absence of other taxation reforms, then maintaining Commonwealth Government revenue at recent levels as a share of GDP will lead to an increasing reliance on taxes on labour income through the personal income tax system.

Locked