The amounts to survive on don’t have to be that high because as basic income applies to all, rents wouldn’t have to be as high as they are.
Hmmmm. Rents are determined by supply and demand. Suddenly putting additional money in people’s pockets is inflationary, not deflationary.
Consider, part of what rent is paying for is the livelihood of the landlord. If the landlord is receiving basic income, that “livelihood amount” can be eliminated, it becomes room that the capitalist can use to reduce prices to try to gain more customers. Given what we know about competition, if a capitalist can lower prices in a competitive market, s/he will.
The landlord exists in a one-to-many relationship with his or her tenants. That means that the deflationary effect of the landlord’s basic income is reduced relative to the inflationary effect of the tenant’s basic income by that 1/many ratio.
But this doesn’t just apply to rent. This applies to every basic expenditure of life — the producers don’t need as much money to live, so can charge less.
Sure. But even more to my point, the ratio of landlord to tenant is huge compared to the ratio of producer to customer. The net deflationary effect will approach nil.
That said, your main objection seems to be the old return to capital flight arguments.
I didn’t make a capital flight argument.
These arguments are mostly nonsense, as any serious businessman knows that taxes are one of the last concerns, well after profitability.
Our mythical serious businessman knows that taxes are one of the expense components that is subtracted from revenues to determine profitability. He also knows that his stock price depends on profitability. So, in the pubically held corporation, his own compensation depends to a substantial extent on his ability to manage the aggregate’s tax burden.
And, if the business is not publically held, there is similar pressure placed upon him to be profitable by his or her spouse. (Which may or may not be greater than the pressure felt by the CEO.) :-)
So, I’d have to say that tax rates and tax management is VERY important to the business.
Because a smart investor does the math.
$1000 at 8% = 80. $80 -2%=$78.40
$1000 at 10% = 100. $100 -20% = 80.
Sure. that’s kind of my point, and the entire point behind lowering the corporate tax rates in the US generally. It makes domestic investment more profitable.
Tax rates, because they’re calculated after expenses, are one of the last costs smart investors look at. And areas that have basic income are far more likely to be areas that higher profitability can be achieved. Why? Because more people have money to buy things.
Interesting to hear a supply side argument being made in this context.
Problem is that although your last sentence is undebatably correct, the prior sentence is speculative. If you give basic income to me (I’m reasonably well off, but not rich) I’m putting it in the stock market. A low income person will buy stuff with it. Somewhere between those two points, the accelerative effect of the additional money starts to die out; and it is therefore questionable how much economic stimulus you will derive from it.
The other variable is the LEVEL of basic income we’re talking about. Refer to my prior post. The amount of money necessary to move these economic needles is, by my estimate, in excess of the ability of the taxpayer to fund. There’s an equation there:
Tax increase to fund basic income < = > Amt of basic income obtained
Obviously, if you’re low income and pay nothing in taxes, that’s a helluva deal. However, there’s a break point somewhere, and that “somewhere” depends on how much in basic income we’re talking about. Above the breakpoint, it becomes a hard sell to get anyone to agree on a tax increase knowing they’re going to be paid out less than the increase.
Capital flight based on taxes is also far less common than the wealthy business owners would like you to believe because moving your business means having to find a whole new set of suppliers, customers, dealing with new competition, and that’s just the business side.
Well, you’re assuming a certain TYPE of business. I agree that the guy who runs an auto shop in California is not going to move it all to Texas and start over again because we don’t have taxes here. But large corporations move workloads overseas all the time, and along with them (over time) millions of jobs, simply to become more profitable.
Further, this is the information age, after all. If I’m running an internet business, I can stick it anywhere I like. No fixed costs. The only thing that’s stopping me is the social stuff you allude to. EVerything has a price.
However, when Maryland instituted a millionaires tax a few years back, the Comptroller reported a year or two later than the number of millionaires filing Maryland tax returns had dropped by a third or a half or something like that. So although businesses don’t “flight”, people do, if they can. You obviously can if you’re retired, but you can also run companies from anywhere nowadays.
Your argument about tax rates of 70% being way to high are simply divorced from history. Look at the rates of GDP growth across the US. The top 20 years were all years were the top marginal tax rates were above 50%.
Sure. We were a smaller country both population and economically. Smaller economies are more volatile in their GDP numbers than larger ones are.
That’s why you need to use per capita GDP in real numbers, rather than gross GDP in nominal numbers; and besides, nobody paid those rates anyway. They were just there to force investment into things the government wanted investment in. In return, you got nothing from the investment, but you lowered your AGI. The investment was made profitable not by ROI before taxes, but ROI after taxes.
You may not be aware of this, but did you know that in the last Carter year (when top marginal was still 70%, I believe) the rich paid almost exactly the same % of their income in taxes as they did in the last Reagan year, after he had dropped the top rate down to 28%?
(Chuckles) I was a young technician in 1980; that was my first year in business. I remember all the rich salesmen running around the office cursing Reagan, saying “I thought our taxes were supposed to go DOWN”. :-). Yep. Reagan lowered the rates, but also got rid of all their tax shelters. Lots of well to do people paid more under Reagan than they did when the top rate was 70%.
If higher taxes cause capital flight, surely lower taxes cause capital influx right?
You do realize that high tax states, for the most part, are losing population, and the low tax states are gaining population, right? Let me know if you need citations.
That’s what they tried to do in Kansas. And it failed, spectacularly.
That’s not why it failed in Kansas. It failed in Kansas because crop prices took a dive. A BIG dive. Go look at how Kansas gets its money over those years. (Actually, I wrote another story on that someplace, but I feel lazy. I’ll dig it out if you need it.)