I still don't understand how UBI will be paid for. If my calculations are correct, even 560 USD per month would require Finland to increase tax revenue by a third in order to fund it, if the UBI was provided to everyone in the country.
That already seems hard enough. How realistic would it be to give even more?
Any realistic UBI scheme works by adjusting marginal tax rates to compensate. Everyone gets the BI but it’s effectively taxed away from those with enough other income. Assuming the BI replaces many of the current benefits, it can be implemented by only slightly increasing tax rates for the highest income brackets.
Finland currently has unemployment at 5.4% and working age economic inactivity (i.e. people who do not pay income tax but are also mostly not eligible for benefits) is closer to 30%.
If the state is paying out the equivalent of a livable income to >5x as many working age people as before that's a big increase in [net] income tax burden on the employed. Given that many of these economically inactive people are not looking for work by choice (probably because they don't need the money), there's a big question over whether that's an income tax burden worth imposing.
It is true that the best place to fund UBI is not from a pure income tax. In the same way raising the minimum wage inflates the general cost of goods, but at a lesser rate than the poorest earners see their incomes rise, having a UBI with a (preferably progressive with annual per-capita credit) generalized transnational / sales / exchange tax across the whole economy would work better. That would include income, but it wouldn't exclude capital gains, trade, consumer purchase, etc.
The payments are not contingent on anything, but people earning enough more than the payments are getting less basic income than they are paying in taxes towards basic income.
Hypothetically let's say you raised taxes by a third across the board. Only people who's taxes went up by more than that 560 a month would be paying more than they received in UBI. So it's a little bit deceptive in terms of how much taxes would need to increase by. The tax increase and monthly UBI amount should be tuned together to have the desired redistributive effect.
> There would still be the potential problem of people choosing not to work (affecting tax revenue), but this is much harder to predict of course.
I know a lot a people who don't have a job, but do a shit tons of work.
Think of all those retired people building stuff for the family.
People who really don't want to do anything exist, some of them are mentally sick and need help, but I think every one want to do something (at some point in their life).
One aspect of UBI in Finland that isn’t talked about as much as it used to be, is that it was meant to replace the rather extensive National health benefits notably the handicap pension. The argument was to save on the management cost of those programs.
Some people with a significant handicap, typically those who benefit from assistance to afford a powered wheelchair, were against it because it was likely that their benefit would be greatly reduced. There is also a large portion of the country that is considered handicapped for not obviously somatic reasons (depression and alcoholism) that would lose a lot. I have never heard any Finn disagree with the support that the latter group receives but I would assume that the assistance that they receive is controversial.
The initial goal there was to reduce the cost of managing all assistance programs (not to reduce inequality which isn’t necessarily seen as a major problem as long as everyone has a roof & eats) and was more a fringe right-wing idea.
The idea of UBI is that you will replace most of current social support methods, reducing the administrative cost.
The disagreements I often see are on how large portion of social support can be replaced by UBI. In your calculations, how much of the 560 per month would be needed to be supported by new taxes?
Unemployment benefits are more than $560 per month in Finland apparently, so this wouldn't be able to replace that (certainly not in a way which makes the administrative cost unnecessary).
The general idea is that you do not get UBI on top of current unemployment benefits, and by having a universal income a lot of benefit programs will become obsolete.
One can for example look at people with part time and compare the average dependence on social support vs those who are unemployed. The assumption is that those with some income are part of fewer benefit program and interacts with fewer social administrators.
Do Finland have a similar system to Sweden where Unemployment benefits depend if the person paid a unemployment insurance when they were employed?
I'm not familiar with the Swedish system but in Finland the unemployment benefit depends on whether you paid an unemployment insurance fund a membership fee during your employment. It's something like an insurance except the fees don't cover most of the costs and the state covers them instead.
Arguably, the tax increase is zero: all the money is immediately returned. What matters is the redistribution: who pays more (and how much) and who gets more.
Also, for those who pay more, part of the tax increase is fictitious, since it would be compensated by their UBI. Someone paying $2000 before and $3000 now would not actually see an increase of $1000, just $440.
You can't really argue that, because that applies to all taxation. It is like answering "Who is going to pay for the army?" by saying "the money is given to soldiers who spend it, and put it back into the economy - so really it costs nothing".
The flaw in that thinking is that, by design, a UBI will involve the consumption of real resources (like how maintaining an army involves lots of sunk resources including people's time) that could have gone into something else that creates more resources. The consumption of resources is going to appear as a cost to someone, because the people and activities consuming them didn't directly create anything.
At the moment we have an economic system that ensures consumption of real resources is matched by creation of real resources, using money as a measuring stick to prove that nobody in the chain of production believes value is being lost (net value, anyway). The cost of short circuiting that, as UBI does, is never going to be 0 and someone will have to pay it.
In the soldier's case, they will spend their time and then get paid that money, with which they'll spend more resources. So for each tax dollar that enters, more than one dollar of resources is spent.
In the UBI's case, this is not true: the expense of resources is exactly the same, the State is just taking away the decision on which resources to spend it on from one group (net tax payers) to another (net tax receivers).
> At the moment we have an economic system that ensures consumption of real resources is matched by creation of real resources
But that's true with UBI as well (assuming it's done with taxation instead of issuing currency). If you give part of your paycheck to another person, the resources accounting is still net zero (society-wide).
> So for each tax dollar that enters, more than one dollar of resources is spent.
That is true; which imposes an interesting upper bound on army size before the economy collapses.
> In the UBI's case, this is not true
A UBI is exactly the same, except that the resource burn is smaller than employing someone in the army because instead of being guarenteed to waste a soldiers time there is only potential to waste a citizens time, which is an improvement.
> the State is just taking away the decision on which resources to spend it on from one group ... to another
Yes. Group 1 is the group that will decide to create more resources with what they are given and Group 2 are consumers. We know that is true in practice, because if it wasn't a UBI would be pointless.
> If you give part of your paycheck to another person, the resources accounting is still net zero (society-wide).
That is not so. If you get given your paycheck automatically you clearly have not created any real resources. If you spend it, you are clearly claiming something of value. For the overwhelming majority of people in the overwhelming majority of cases, the resources are for immediate or medium-term consumption, and the society wide net is reduced resources.
That already seems hard enough. How realistic would it be to give even more?