For "doubling the personal income tax", I originally interpreted that to mean that, to raise the $3T, we would need to double the personal income tax revenues.
The issue is the premise.
In theory you can have a basic income with a phase out, which pursuant to this dubious accounting would be much less expensive. But in practice it's exactly the same thing.
The reason phase outs are a bad idea -- and this is an issue with a great deal of the existing assistance programs -- is that benefits phase outs and taxes are equivalent, so they should be evaluated together to avoid silly results.
Suppose you have a system for housing vouchers (or any other assistance program) where you get $5000/year at $0 in income with a 20% phase out rate as income increases. Meanwhile there is an income tax with a 15% rate from $0-$50000 and 25% thereafter. Then what you really have is a 35% rate from $0-$25000, followed by a 15% rate from $25000-$50000, followed by a 25% rate above $50000. Which makes no sense, isn't what was intended, and shouldn't have happened. And it only gets worse and harder to reason about as you add multiple programs which each have their own phase out conditions.
The way to resolve this is to eliminate the phase outs entirely and have the government recover the money through normal taxes, e.g. by setting a single uniform rate. That nominally makes the tax rate higher for some people, but in practice it's the same thing and makes it a lot easier to avoid accidentally creating a ridiculous tax rate schedule.
Your example can literally hold true, even with all of the above, AFAICT. Yes, we may charge a hypothetical person $12k, and give him back $10k, for a net of $2k. But there will also be others, presumably poorer, that are paying much less in taxes than they're getting in UBI, and that must come from somewhere...
Of course, and it would come from taxpayers with above average incomes. That's the entire point of the system.
But even someone who comes out ahead, because they e.g. receive $10,000 and only pay $6000 in taxes, is still giving back $6000. Only the remaining $4000 has to be covered by someone else, not the entire amount. Accounting for this drastically reduces the net amount other taxpayers actually have to cover -- half the recipients would be covering their own UBI entirely and even the other half will on average cover 50% of it, making the actual cost only a quarter of the amount quoted. Which is in line with the cost of the existing assistance programs it would be replacing.
Comments
The issue is the premise.
In theory you can have a basic income with a phase out, which pursuant to this dubious accounting would be much less expensive. But in practice it's exactly the same thing.
The reason phase outs are a bad idea -- and this is an issue with a great deal of the existing assistance programs -- is that benefits phase outs and taxes are equivalent, so they should be evaluated together to avoid silly results.
Suppose you have a system for housing vouchers (or any other assistance program) where you get $5000/year at $0 in income with a 20% phase out rate as income increases. Meanwhile there is an income tax with a 15% rate from $0-$50000 and 25% thereafter. Then what you really have is a 35% rate from $0-$25000, followed by a 15% rate from $25000-$50000, followed by a 25% rate above $50000. Which makes no sense, isn't what was intended, and shouldn't have happened. And it only gets worse and harder to reason about as you add multiple programs which each have their own phase out conditions.
The way to resolve this is to eliminate the phase outs entirely and have the government recover the money through normal taxes, e.g. by setting a single uniform rate. That nominally makes the tax rate higher for some people, but in practice it's the same thing and makes it a lot easier to avoid accidentally creating a ridiculous tax rate schedule.
Of course, and it would come from taxpayers with above average incomes. That's the entire point of the system.
But even someone who comes out ahead, because they e.g. receive $10,000 and only pay $6000 in taxes, is still giving back $6000. Only the remaining $4000 has to be covered by someone else, not the entire amount. Accounting for this drastically reduces the net amount other taxpayers actually have to cover -- half the recipients would be covering their own UBI entirely and even the other half will on average cover 50% of it, making the actual cost only a quarter of the amount quoted. Which is in line with the cost of the existing assistance programs it would be replacing.