Good - let's have a real world test and see whether there is something behind UBI as a concept.
And perhaps this'll be the first program to survive the trolls and nay-sayers who will find the smallest niche failures and sspout the "If ANYONE falls through the cracks it's a FAILURE!"
It’s not UBI if you means test a lot of the poor out of it, which this bill actually does. Instead, it’s just going to push them even further away from things like stable housing, as landlords jack up rents to eat it all up.
Also, it’s funded by a regressive tax. Also, my reading says everyone’s rent (edit: and child care!) is going up 10%, but hopefully, I’m wrong:
> It is the intent of the Legislature to fund the CalUBI Program with a value-added tax of 10 percent on goods and services, except medicine, medical supplies and equipment, educational materials, including textbooks, tuition or fees for education, food, groceries, and clothing.
>You don't know the result until you do the experiment.
Same reason you don't jump off a building to test gravity. There are better ways to test than irreparably derailing an economy by +not closing the inequality gap and +causing spikes of inflation any time you dish out money, proportional to how much you dish out
Even in CA this has no chance of passing, right? I mean they couldn't even pass the mass transit zoning changes. CA may be relatively liberal but I don't think it has the appetite for this level of increased taxation and spending.
The thing is CA has a system where legislation can be passed by popular vote. This has it's up and down sides, but anything can pass in CA with enough public support.
Didn't Finland also tell the recipients ahead of time when the test would be ending? I know if I was told, "We're doing a UBI test for 2 years, you'll get 1k a month, no strings attached", I wouldn't quick working. I'd just pocket the free money since I know it's going to dry up at at a fixed date. If they said "Here's 1k a month forever, no strings attached", I'd sell my house and move to a low CoLA area where I could live off the 1k and persue other interests.
It seems that the line at the bottom about the 10% VAT on many goods and services seems just as interesting as the UBI (especially when the UBI seems to exclude many of the poorest Californians).
I wonder how they will administer the VAT without other states cooperating with them.
I am very confused about the math of this, unless California has a surplus of taxes coming in.
Without even taking into account the existing tax rate in California, wouldn't this need an average of 10k of spending per person a month getting this to work out?
Then again there are enough restrictions on this (seemingly largely the ones that would actually benefit the most from this) that it actually works out...
So that does spread that out a bit if you take into account anyone buying those manufactured goods outside of the state.
Then that personally raises the question on how this would scale nationwide, the cost to the business would ultimately be largely pushed down to the consumer. Maybe that is getting a bit ahead of ourselves, but I keep hearing about a UBI and I struggle with seeing the logistics of it.
I’m in favor of UBI, but it only works with floors on housing, healthcare, and possibly even food (which are more or less in place through ag subsidies anyway). All of this will just be eaten up by rents and rising healthcare costs, and means testing it makes it even more absurd, as it will exclude most vulnerable populations.
Given the recent state-wide rent control, it’s hard to see this as anything other than a sop to landlords.
Gavin Newsom is a weak leader. He can't control his party so we see no alignment on common-sense high-priority issues like housing and instead get DOA poppycock like this. Voters need to take Newsom to task for wasting this mandate. Will anything of merit result from the Democrat monopoly on power in Sacramento? BTW this is just Evan Low trying to break out and make a name for himself with high-profile publicity-stunt legislation.
> (b) California residents who are 18 years of age or older and receiving benefits under the Medi-Cal program, the County Medical Services Program, the CalFresh program, the CalWORKs program, or Unemployment Insurance shall not be eligible to receive a universal basic income under the CalUBI Program.
I must be misunderstanding something. If you're unemployed and getting unemployment benefits you don't get your UBI? Isn't that part of the point of UBI?
Edit: Thanks to everyone helping me understand what I was missing!
Yes and no? The point of UBI is to replace all of that social spending (and its resultant nasty discontinuities), so that’s keeping with the spirit, kind of. Though even better (under the logic of UBI) would be to give it to everyone and get rid of those programs.
The idea with UBI is that it replaces other forms of government assistance. Since this is a test and obviously California doesn't want to end it's unemployment insurance in case the test goes badly, it's exempting those people using the other programs from this one.
One of the stated benefits of UBI is that it has the potential to replace other forms of welfare more efficiently. Instead of people getting separate benefits for food, housing, unemployment, etc, they get the one benefit: UBI. This removes the problem of "I don't work hard enough to be poor in America", where the people going through the worst situations have to spend the most time going through forms and bureaucracies.
Instead, you just get UBI. In good times and in bad, so there's no weird income caps and disincentives to work. People don't have to deal with welfare cliffs (https://www.learnliberty.org/blog/the-welfare-cliff-and-why-...) and/or multiple welfare off-ramps simultaneously anymore.
Having UBI and still keeping means-tested welfare removes one of the best benefits of UBI. Most serious UBI proposals do what this one does: Either keep your current benefits or go on a UBI, whatever works best for you.
> Most serious UBI proposals do what this one does: Either keep your current benefits or go on a UBI, whatever works best for you.
I appreciate that we wouldn't want the situation where instituting UBI stops (for example) severely disabled veterans getting specially adapted cars.
But doesn't this mean we retain all the forms and bureaucracies and weird income caps and disincentives to work, and the administrative costs that go with them?
> But doesn't this mean we retain all the forms and bureaucracies and weird income caps and disincentives to work, and the administrative costs that go with them?
Mostly not, because everyone whose weird byzantine collection of benefits doesn't add up to more than the UBI will abandon all of them and choose the UBI. That should be nearly everybody even if it isn't literally everybody.
I'm confused by "18992.1 (B)." So if you fall on hard times (e.g. unemployment) and UBI would be most beneficial you now have to pick between UBI and health insurance? That doesn't make basic sense to me, and undermines the whole "universal" part.
Plus managing those exclusions would likely cost more than it would save (imagine all the additional management overhead of cross-checking programs and or having people certify they aren't on them/policing fraud).
Actually I find the under-18 restriction kind of questionable too, since this could be a great system for supporting poor families. The real reason this cannot just happen outright is that it "competes" with too many other benefits that it could just outright replace instead.
The biggest problem with scrapping health insurance for UBI is that health insurance is astronomically expensive. I can see the argument for giving families with kids $1K/per kid, and just scrapping the food program to name one example.
Perhaps the authors of the bill are unaware that the U in UBI means Universal.
If your unemployment benefits are less that UBI, you should get the difference in UBI, similarly excluding Medicaid recipients seems well, plain stupid.
My read on the exclusions is that UBI as a form of welfare solves an issue all our other welfare programs have: attempting to apply credits to very specific costs instead of eliminating loads of administrative overhead and terrible paperwork by just giving people money to spend on what they actually need. cash instead of a giant coupon book which doesnt cover edgecases.
So I could understand if they want to try to replace existing welfare programs with UBI and then ratchet up the UBI amount until its better than the old programs (and more flexible).
But as-is, yeah, this doesnt help some of the ppl who need it most
the question is, does the bill make an exclusionary period, I agree that UBI is more cost effective than food stamps to provision, but medicaid isnt the same thing.
Can they not do basic math? There are around 30 mil adults in California. Even if provision 18992.1 (b) is 5 mil people, that's still 25 mil people. That's 25 mil * $12,000 = $300 bil a year. The ENTIRE California state budget for 2020 is only $220 bil.
They would have to more than double the tax revenue for a state with already very high taxes.
Now, assuming the most generous interpretation of their 10% VAT proposal... which means a 10% VAT on things like rent, transportation, etc. CA has around 11.5mil households with apx $40k/household of spending, which yields $460bil @ 10% => $46bil in additional tax revenue.
Checked my (already filled in mail-in ballot). No, Evan Low (who introduced this) aren’t getting my vote now. (and I have to request a new ballot now :( )
Boy, I already pay some of the highest taxes in the country and now I get to pay more. For what? They cannot manage anything else properly in this state.
WA has no income tax and their schools aren’t worse. Oregon has no sales tax and their schools aren’t worse.
Are CA public schools by far the best in the nation? ( they are not)
Edit: before you jump into the “other means funding” - I lived (and owned house) in WA and CA and the overall tax burden is MUCH higher in CA
What’s more is MA has many if the best public schools and Romneycare (at 3% uninsured, that’s the lowest amongst the 50 states) and its taxes aren’t higher than CA’s.
CA somehow manages to waste a lot of money. SF has city budgets higher than some states and still says it needs more money.
I don’t think it’s necessarily waste. It’s cost of living. If city employees need to make 6 figures just to be able to afford living in the city, of courses taxes will be higher to compensate. High taxes with zero improvement in services.
This is correct. School funding has little correlation to performance because there is little accountability or performance measurement. Even where you might think higher salaries would result in better teachers, this does not happen in any timely fashion because union rules results in long tenure of incumbent instructors in most places.
Don’t forget that those same unions are a political powerhouse in terms of keeping California effectively a single party State, and so long as they remain a reliable means of winning elections, the legislature as it is currently composed has every incentive not to change this. Keep in mind public sector unions are ultimately paid by the taxpayer via a series of payments which originate from us, go through the State and school districts, eventually a teacher’s paycheck and then from their dues, into the unions who turnaround and support the elections and re-elections of their favored politicians.
Another datapoint. Adjusted for demographics Texas and Florida have the third and fourth best test scores in the country.[1] (California ranks at 46th). Unlike California, Florida is one of three states with universal pre-k.
Florida has the lowest in-state tuition in the country.[2] This includes UF, ranked as the seventh-best public university, at an average of $6300.(UC Berkeley averages $14,000.) 39% of Florida college students pay zero tuition.
Florida has the second highest quality roads in the union[3]. It's consumer electricity prices are nearly 50% lower than California.[4]
Florida has no state income tax, relatively modest property taxes, and a 7% sales tax. Nor does it overextend itself fiscally to provide high-quality government services on a low tax base. It ranks second in the union for state fiscal health.[5]. (California, even in the midst of the greatest tech boom in history ranks 42nd.)
- I live in the Bay Area, we largely have some of the worst schools on average. Yes some areas are perfect but the majority you don't want your kid going to.
- Roads? What roads? The roads that are over-congested? The roads that have potholes that are measured in feet deep?
- Power, water, clean air? Surely some of that is covered in the fees I already pay for? I pay some of the highest water/sewer/electric rates in the country.
- Safety? I have a statistically higher chance of getting mugged in the Bay Area then most other parts of the country. I have lived in Oakland and San Francisco for a decade. I never see police but have seen lots of crime.
Again, I ask, what for? I already pay some of the highest tax rates here. My property tax is expensive, my income tax is high. I get very little back from the state. Why would I trust the state to mishandle even more money?
You're paying high taxes because they can tax you that highly and you haven't moved away yet. When they increase them and you still don't move their take away will be that they can probably raise them even higher.
The worst one I measured in my neighborhood was about 12 inches so I guess the majority are more in the 3-6inch ranch. Enough that its an issue. I live in one of the nicer parts of Oakland too. https://www.youtube.com/watch?v=ZmCNMQ7TOgY
You don't have to tell me about Prop 13, its a joke and I push to remove it as often as I can.
>My complaint is that I pay some of the highest taxes in the country for some of the lowest benefits.
And my argument is that you are undervaluing the cost of the benefits it provides.
Particularly in a cosmopolitan city, there are layers upon layers of infrastructure and society which need to be supported. Here you are standing on top of it all complaining about the breeze.
Paying your fair share is recognizing that you are in a position of privilege and giving back those who allow you to be there. The system depends on people like you to strengthen the ladder you used to climb up in life, not pull it up behind you.
You pay high taxes because Prop 13 disallows fair taxation of long-held wealth. So the person with $500M of property, in another state, would be shouldering a fair amount of burden, but here in California they will be taxed nearly nothing if they've held the land for decades.
Instead, we have high sales tax, and high income taxes so that long-time wealthy residents have it easier.
What percentage of your income goes to taxes? In the EU almost half of your income would be withheld for different taxes, and depending on the country, you would also get absymal health care, with a system that forces you to pay out of pocket, after a part of your salary was already taken to pay for universal health care.
Compared to EU California is indeed a heaven. Not kidding. Half of the startups in SV for example will not even bother to start given EU regulatory compliance.
About 1/3 of your salary goes to taxes as a CA resident making 6 figures. In addition there are payroll taxes, but those are taken out before you salary; not sure if the EU does things like that.
Note that in the US, Government expenditures on healthcare are higher than in the average EU country, yet a much smaller fraction of the population get government provided healthcare.
The top tax bracket in CA would require you to make well over $1M for a married couple: a rate of 37% federal + 13.3% state. But depending on your definition of "almost half", this could be much lower - a combined rate of 41.3% starts at about $325k for a couple. These are income taxes only, mandatory medicare and social security taxes add a bit more.
Is the idea isn't that economy is far from efficient and that this cost will be recouped by having people way more productive and happier (thus not faking illnesses, idleing at work they don't enjoy) ?
VAT seems an odd way to fund Basic Income. It should be part of the income tax system. I believe Friedman called it a negative income tax. If it's a livable BI, it should replace welfare and similar benefits.
It actually makes a lot of sense, because the primary benefit of using income tax is the progressive rate structure, but for a tax funding a UBI you actually want a flat rate because the tax is the de facto phase out of the benefit.
We currently have two systems that basically invert each other. On the one hand, we have a progressive tax. On the other hand, we phase out assistance for the poor as incomes increase. These two things cancel out. With a UBI you "pay more tax" but you don't lose the assistance. When the assistance is cash that's a no-op.
Except that administratively it's dramatically simpler -- you don't have to vary the tax based on how much money anybody makes, you don't create arbitrage opportunities for rich people to pay lower tax rates intended for poor people, you don't accidentally create poverty traps by imposing de facto higher marginal rates on lower income people than higher income people due to overlapping benefits phase outs, etc.
“The program would be paid for with a state value-added tax of 10 percent on goods and services, with exemptions for groceries, medicine, medical supplies, clothing, textbooks and other items. Recipients of several programs, including the state's Medicaid plan, would be ineligible.”
Not to wax too political here, but the insane part to me isn’t even the UBI bit which I’m not fond of but open to changing my view in the coming decades, the insane part is the introduction of a new type of tax we previously didn’t have, and near as I can tell isn’t intended to replace the sales tax, and not just a new tax, but at a pretty high rate.
Actually you know what? I just looked at the bill text, it was less than I thought and it was more insane than I thought. Here’s section 2:
“SEC. 2. It is the intent of the Legislature to fund the CalUBI Program with a value-added tax of 10 percent on goods and services, except medicine, medical supplies and equipment, educational materials, including textbooks, tuition or fees for education, food, groceries, and clothing.”
It is the intent of the legislature to fund it with a VAT, and if you know anything at all about California law, then you probably know that means a ballot measure which will need 2/3 support from the electorate. Theoretically that ballot measure could be used to replace the sales tax, but it probably won’t be because only part of the sales tax is State, and much of it is appropriated by law to fund very specific projects or programs.
The money doesn't disappear. An argument can be made that transferring money from the rich to the poor will boost the economy rather than hurting it. The average taxpayer should be net-zero: the exact same amount going out in new taxes as is coming in in UBI. They'll scream "my taxes went up by $1000 per month!" conveniently ignoring the $1000 per month cheque they're also receiving.
That's assuming a fully costed proposal, which this one isn't.
> But anything that redistributes wealth from the top 0.1% is the right direction.
No. No, it's not. There are several ways to do it that are very much not the right direction. (See Venezuela for a couterexample.)
Note well: This does not mean that this specific proposal is in the wrong direction (though I suspect it is). I merely mean that "just take it from the 0.1%, it will all work out" is a very inadequate failure mode analysis.
If you double taxes, but the money is literally just going back into people's pockets, less administration fees of the UBI program, it's just income redistribution and can completely work.
Read the bill - many of CA's existing welfare programs are staying in place. Their INCREASING admin costs with this bill. UBI should replace most/all other welfare programs, if reducing admin costs is a goal.
I think GP's use of "less" meant "subtract", not that it would decrease the administrative costs of welfare programs.
I don't think you can realistically (or ethically) get rid of welfare programs when introducing UBI. This is the issue I had with Andrew Yang's "Freedom Dividend" proposal, too. Some people are bad at managing money or have emergencies $12k won't cover. As a society, we cannot allow them to starve in the street because of this.
I think, UBI is great, but I think you really need a guaranteed baseline -- for people on hard times. Which is to say it should be whatever the base poverty line is. I think about $32,000.
But at that rate it should definitely replace all other programs save medical.
I also think VAT plus land ownership tax should be where the bulk should come from. Possibly also a rent-holder's tax for foreign national-owned properties that might be 10%/year of value. It should be household based too. Like perhaps 2,000 for first adult, 1k per adult in house, 500 per child.
To be really ideal it needs to give people the freedom to 'choose' work as something to get 'more' reward. This would put supply of jobs above demand, and drive up wages too. Some would choose to focus on side projects, or art, science, studies, college, etc... Some might just play games all day, but who knows maybe they become e-sports athletes and earn thousands doing that.
I think also though, single payer should come before UBI, not after. I think that should be first since people are dying because of that. I'd like to see states start trying to implement that on their own, maybe it works out great and other states copy them.
If the advocates of UBI would present it as plain and simple redistribution, I'd be more favorable to it. Instead, many seem oddly hesitant to acknowledge the increasing taxes side of it.
Excluding food, education, medical, and a few other expenses, you need to spend $10k / month to come out behind on this bill.
That’s $120K/year. Assuming a 33% effective income tax rate, that’s $180k, pre tax, no savings, or expenses for food, etc. That’s well into the 80th percentile income bracket in CA, and it’s probably possible to be in the 90th percentile and still come out ahead (factor in retirement savings, college, etc):
Considering what it excludes the rich will make out like bandits compared to those it claims to help. They already spend less of their incomes on consumption while at the same spend a much higher amount on luxury versions of those categories.
As with any government tax and benefits program, it is what comes out of committee that will truly matter. VAT taxes usually land harder on the middle class than upper or lower simply because of how people typically spend their income. They are great though at masking the cost of government and increases in the cost and goods of services is more likely to be put upon the provider of each rather than government.
Reducing costs, fines, and fees for required government services and licensing would go a lot further to reducing the burden on the poor, that $36 driving license renewal doesn't look annoying at 120k but at 25k it means something.
> Now, assuming the most generous interpretation of their 10% VAT proposal... which means a 10% VAT on things like rent, transportation, etc. CA has around 11.5mil households with apx $40k/household of spending, which yields $460bil @ 10% => $46bil in additional tax revenue.
The median income in California is $75k, not $40k. On top of that, this is an alternative to existing assistance programs, so you either get to recover the money spent on those or you get to remove the people who continue to receive them from the population receiving the UBI. I'm not saying the numbers for this bill necessarily balance, but you're using the wrong ones.
> They would have to more than double the tax revenue for a state with already very high taxes.
Nominal tax rate with a UBI has to be discounted by the full amount of the UBI, because you're not paying it if you're getting it back. It obviously doesn't hurt you to pay $10,000 more in taxes if you're then receiving a $12,000 UBI.
This confuses the heck out of people because it means that a UBI costs "nothing" -- but that's how it works. It's purely redistributive. It doesn't cost anything on net, it only moves money around. At the individual level, it costs people above the median something, but still not the amount of the tax, only the difference between the UBI and the amount of the tax. The rest they get back.
All they have to do is change the way the current basic income system works. Right now basic income is granted to any corporate bank with charter. They are free to create M0 money out of thin air as debt on their balance sheets to loan out money that they don't have (fractional reserve). There are about 4500 commercial banks in the USA. If California simply assumed this role of money creation within the state it'd have more than enough to distribute for a universal basic income instead of the normal centralized basic income to corporations that then filters out according to their whims.
"California Resident" is a significant phrase. Here's an entire document that details how California determines it [0], specifically how it taxes those individuals. Sections F through I, with specific details in G, govern these specifications. How about doing a little digging before appealing to wild speculation?
> How about doing a little digging before appealing to wild speculation?
Since you are being condescendent about this, would you perhaps mind letting me know where in that document it states that you need to have entered the US legally to be resident?
That is a right exercises against the government. Specifically the Courts which are created by Federal and State statures. The labor in question is on behalf of the government.
It is a cost that the government has to provide you if they want to try you. Put another way, it is saying the government has the right to try someone only if they can provide a fair and speedy trial (with lawyers for those who can't afford one). If they cannot provide this, they cannot try you for a crime. Thus, by choosing to try someone, they consent to the payment required to provide these services.
At least in theory, this does not involve you receiving someone else's labor without their consent.
I think you're drawing a distinction where one does not exist. The government pays for these services with tax money (which you seem to be suggesting is "receiving someone's labor without their consent")
I think the distinction still exists, just in a slightly different form.
Let's take two alternative government. One that works by having volunteers and one that prints money to pay people.
Right to a speedy trial: Government 1 cannot charge you unless they have enough volunteers to guarantee a speedy trial. If there aren't enough volunteers, you still have this right by the government not charging you (even if you really deserve it). Government 2 cannot charge you unless they have printed enough money and found enough people willing to accept it as payment to guarantee you a speedy trial. If they can't find enough people willing to do this job, they can still provide this right by not charging you.
Right to health care: Government 1 cannot provide this right unless it has enough volunteers. If there aren't volunteers, then it cannot provide you the basic health care. Government 2 cannot provide you this right unless it has enough people willing to accept money to do so. If people aren't willing to, for what ever reason, you aren't going to get health care.
This is a fundamental difference between rights that say "The government cannot X unless they Y" (in some cases the Y exception may not exist at all) and that say "The government must Z".
Logistically you might be able to have the second kind of right functioning with a near 100% up time, due to how the sorts of people are recruited to do the work needed to provide that right, but it is still a fundamental difference from the first kind.
How is that, in any remote capacity, the same thing?
One is being forced to give my money to someone else for reasons of "fairness", the other is a right to not be locked up for a reasonable amount of time after being accused of a crime.
One of those involves taking my freedom, the other, my money.
It's simply the other side of the ledger. The process requires labor, paid for by the government via taxation (taking other people's money). It's precisely the same thing.
My view on taxes is that it’s already the government’s money. Redistributive policies aren’t different in moral character from eg setting an interest rate. The most valuable thing about UBI is that it creates the conditions for a free market in labor. I can only guess that would be better for the economy than the current state of forced labor.
They print it and they defend its value by providing a legal and defense framework within which the market operates.
If it is better for the economy that quantitative easing happen via cash payouts to the people rather than via capital injections to banks, the government has the purview to do that.
It is hard to justify government control of the money supply with the argument that they protect its value when you look at the value of the dollar over the past hundred years.
> Nothing that requires the labors of other is a "right".
Nothing is a "right". FTFY.
Rights are subjective human ideas and are defined by the systems humans create and perpetuate. Rights/natural rights as a concept are an exercise in semantic and philisophical masturbation.
If you pass this without passing radical reform of zoning and building millions more homes, it will be yet another wealth transfer mechanism from poor consumers to wealthy California landholders. Rents will eventually match the increase in income as way too much demand chases an incredible, inhumane, History Will Judge You shortage of supply.
Which, amazingly, is one of the reasons this could actually pass. California's property class seem to get everything they want, even if it's voting down small and inadequate reforms like SB-50 was (it was a start but not even remotely enough).
California should be thinking about absolutely nothing else that's big except fixing their housing crisis. It's so big at this point that it's actually causing most of the other major problems.
Housing is an essential. You can’t just go homeless without significant consequences. That’s not “voluntary”. Just moving somewhere else is not always viable.
To prove an extreme case, if I point a gun at you and say “$1k or I shoot”, you’re likely to pay. You gained not dying, but are you richer? Or did I merely use my power to impose an urgent need on you that you needed to pay for?
Do you have anything I can read that explains why this must be true? I dont have a natural intuition that this has to be the case, nor one that its definitely false either though.
I've always wondered if you just took billions from the richest Californians and gave that money to the poorest Californians if the people that had their money taken would actually be better of in the long run.
If you increase the amount and velocity of money going through the economy could it not be possible that the rich that had their wealth transferred actually end up better off? I suppose it would largely depend on where the taken capitol had been invested and or if it was just sitting in low yield savings accounts.
Imagine the case of a working class family that has lived in CA for generations. The elderly grandmother owns a home because she bought it in the 1950s when things were not so broken. She has two grown children, each with families. One family lives in her house with her, because that’s all they can afford, but that’s okay because they want to stay close to home.
The other family rents a home nearby, because by the time whey were adults, hosing was out of reach.
In California, the only thing stopping rent increase is people’s ability to pay. In San Francisco, a 3bd apartment costs at least $4500/mo, and the median price is more like 8-10k per month.
That is because there are so very few available, and there are enough two income bankers and tech worker households who make enough to justify that rent that the market has no room for anyone else.
We go back to the working class family example, assuming the adults are gainfully employed and each making $60k/year. All they want is to continue living in the town they grew up in, where they have friends and decent jobs and their elderly parent to stay near. They pay $4000/mo, which is near the low end of market rate for a 3bd home for their family of 4, and also about half their after-tax income.
Now this UBI program (or any other change) happens, and a lot more income is suddenly flowing nearby. Anyone who for any reason finds themselves needing a new apartment has a little more money available, and so they can inch up just a bit in the market. But because demand so radically dwarfs supply, this means rents just tick up about 10% in short order.
So back to that family, the landlord notices the market has moved, and he raises the rent 10%. The landlord gains $400/mo. The tenants gain nothing except the “privelege” of non-eviction.
They now have to decide to pay more just to stay in place, or to try and downgrade to a worse apartment to keep costs in check. And if they do downgrade, they’re just displacing someone else who is farther down the economic ladder.
You described a free market scenario, which works on a whiteboard.
In the real world, California property owners have a monopoly on a fixed supply of housing, and nobody gets to participate in the California economy without a place to sleep at night. Thus any increase in productivity locally just goes to the property owners in short order, as they are enabled by the policies they’ve long fought for to extract their rental tax up to the ability of each person to pay. They use this unilateral power to extract all the gains.
Your last paragraph beautifully sums up a point I try to make constantly on a local facebook community group Im a member of. It's chock full of people that celebrate the fact their house is worth 10X what they bought it for 20 years ago, and then out of the other side of their mouth bemoan that housing is so expensive that their kids cant afford to live there.
Housing can either be a good investment, or remain affordable, both can not simultaneously happen.
> So back to that family, the landlord notices the market has moved, and he raises the rent 10%. The landlord gains $400/mo. The tenants gain nothing except the “privelege” of non-eviction.
It seems like that "privilege" is worth to the tenant than the money, even after the increase. Otherwise they would have moved. Therefore, it is not a zero sum game.
Hmm... I'm not sure you understand how a free market works or what a monopoly is. Or "fixed supply". But you're quite correct that anything like UBI won't help make housing more affordable. However, it doesn't make anyone else any better off either. It just devalues the dollar a little. Why not cap rents and raise the minimum wage too while we're at it doing absolutely nothing to help.
I wrote a long answer to your post but a shorter one is this: the housing market in California is absolutely a zero sum game due to policies that essentially hold the supply as fixed.
I think zero-sum was meant from a perspective of a fixed-resource being divvied up among more and more people. In that case each person gets a smaller and smaller theoretical share. Any exchange is locally fair but globally everybody is becoming worse and worse off. This is especially true if you disconnect the concept of living in your own home from the investment opportunity. I doubt many people are going "Sorry honey, we cannot afford a house now or probably ever, but hey that's fair because if we could afford it with so little money we'd be getting access to an unreasonably good performing investment and that wouldn't be fair to others." I think most (reasonable) renters would settle for significantly worse performing housing market in exchange for cheaper housing so that they could transition from renting to owning.
It's worth modeling it as negative, because administration consumes non-trivial amounts of it, and in practice, often quite significant amounts of it.
Part of the UBI idea is to reduce that overhead, though I'm at a loss as to how to ensure it stays low. The same politicians that turn our current system into a haphazard mess of special carveouts and regulations will still be in power and will have all the motivations (if not more) to add more carveouts and regulations to the new UBI.
Housing markets are a zero-sum game if you refuse to build more housing when demand exceeds supply
If ten families want houses and there are only nine on the market, one family will go without whether you have auctions, price caps, land taxes, means testing, subsidies, or any other economic intervention, because nine is less than ten
Houses get built, maybe just not in the favorite places. People get roommates. Sure housing is more inflexible than some products, but not a whole lot.
> Houses get built, maybe just not in the favorite places.
So 9 out of 10 families get to live in a commutable distance to where they work, or 2 families get to live in half the appropriate space. Not good for the economy, not good for the families, very good for landlords.
Whether or not housing is naturally flexible, CA's government has done pretty darn well making it inflexible. See rents vs. inflation.
Every dollar of rent above costs for construction and necessary administration is a monetary redistribution from the renting class to property owners. CA doesn't lack land, and it doesn't lack the ability to pour concrete into earthquake-safe cubes with plumbing; the difficulty in construction and resulting high rents is the result of intentional obstruction and regulatory capture by the benefiting property owners.
Has California real estate valuations and rents not exceeded inflation for the past decade+? In economic equilibrium should rents not equal amortized construction costs? Have increasing rents not impacted commuting distances and housing availability for the renting class worker? Would these impactions not hurt the economy as a whole? Or do you disagree that regulatory barriers to building housing benefit those who own existing housing?
> In economic equilibrium should rents not equal amortized construction costs?
No.
I mean, even with the kind of generic-market idealized assumptions (such an unlimited competition) that never really apply to real estate anyhwere, rent would equal the amortized cost of providing the rental property, including land acquisition, construction, maintenance, etc.
I agree that my earlier argument is simplistic in its presentation, (here I would treat 'construction costs' as to build and operate an apartment, amortized over lifetime and apartments in a building -- I understand I could have phrased that better but terseness is necessary lest every comment devolve into an essay) but is still correct in its assessment: CA rents are far in excess of any reasonable economic equilibrium, per 'amortized cost of providing the rental property, including land acquisition, construction, maintenance, etc.' Given in particular that in CA (the bay area and SF too) land is in surplus[0].
[0]Regulatory-allowed access to said land, on the other hand, is less permissive.
> CA rents are far in excess of any reasonable economic equilibrium, per 'amortized cost of providing the rental property, including land acquisition, construction, maintenance, etc.'
Really? Show the numbers. I was under the impression that the Bay Area had a very high land ownership premium, that is, that land acquisition costs are very high compared to rents.
Plus, real prices are usually out of line with economic equilibria in dynamic markets, the equilibrium is the price that a market would achieve if it was in a steady state with no changes for an infinite period. A sustained market distortion raises the equilibrium, it doesn't maintain prices above the equilibrium. Prices above (or below) equilibrium are so are do to frictional forces which cause prices to adjust toward equilibrium at a limited rate. So, I'm not sure why you are harping on equilibrium, it seems to be the wrong issue for what you seem to be concerned about.
> Given in particular that in CA (the bay area and SF too) land is in surplus[0].
Even if that was true, regulatory permitted access largely effects rent through land acquisition costs, not independently of it, so it would explain why both land acquisition costs and rents were higher than they would otherwise be, but not why rents are higher than they would be expected to be given costs to landlords including land acquisition costs.
>Even if that was true, regulatory permitted access largely effects rent through land acquisition costs, not independently of it, so it would explain why both land acquisition costs and rents were higher than they would otherwise be, but not why rents are higher than they would be expected to be given costs to landlords including land acquisition costs.
>>reasonable economic equilibrium
Sorry for the delayed reply:
Please see >reasonable in the above, there is nothing economically reasonable about the CA market distortion. Rents are higher than they would expected to be given costs not unjustifiably burdened by regulatory permitting. Which would be the (or at least a) reasonable standard for determining what rents should be at equilibrium which provides a basis for what rents should be in the real world and clearly indicates that rents in the real world are excessively high and not economically justified. I don't see where I've been unclear about this.
Pretty sure it's not the landlords and wealthier classes that are making CA's government into a giant tarpit. They'd love to see less and smaller government.
Over-regulation is only a part of the cost. The biggest part is the demand. But don't worry, whenever people figure out that silicon valley jobs can easily be relocated, to basically anywhere, that will all work itself out.
> Pretty sure it's not the landlords and wealthier classes that are making CA's government into a giant tarpit. They'd love to see less and smaller government.
They, like anyone else, want to see a government act in their interest. Sometimes that means less government, sometimes it means more. Democrats want more government in healthcare, Republicans want more government in immigration; it is about what they want not how they get it.
And yes it will sort itself out, much like Detroit has worked itself out after the auto boom. It is just sad seeing myopic governance[0] lead CA towards that future.
[0]"Democracy is the theory that the common people know what they want, and deserve to get it good and hard."
And when demand exceeds supply by enough, the prices go up until they reach a point where it becomes non-unprofitable and then people stop "refusing" to build more housing.
And who is refusing to build more housing? I will personally arrange for as much housing as you like in any neighborhood in any city in California. Oh, for the price that you desire? OK, nope, sorry doesn't work that way.
> You write as if markets are a zero sum game, however they are most certainly not.
People who say this are only ever looking at the node level, not the network level. Sure, new wealth is added to the network, but at a miniscule trickle compared to the everyday activities of the economic network.
"Wealth is not zero sum" essentially, if taken to its logical conclusion, means "everyone can be a billionaire!" No, they cannot.
>an incredible, inhumane, History Will Judge You shortage of supply.
I'm starting to feel it's really just the massive demand. California cities are already quite dense. We can certainly do more but to say we're historically failing just doesn't make sense to me.
I'd love to see numbers on just how much pent up demand there is and how much building would need to take place before residents felt it but I realize its not an easy thing to estimate.
They are not dense. Not by any measure. Show me a statistic that shows that the Bay Area is dense in comparison to anywhere else in the world. I am so sick of people make such incredibly inaccurate statements about density and housing.
This is only the United States. You are talking about problems in the United States and comparing them to other cities in the United States most of which have the same problem. Its worth mentioning also that San Francisco city proper is a tiny area and not remotely reflective of the Bay Area. It has 800K people in an area with almost 8 million people.
For comparison's sake. Seoul, South Korea has 40K people per square mile (total population of 8 million people). That is the entire city. Overcrowded San Francisco city proper has 17K people per square mile and it is by far the most dense part of the Bay Area.
I mean forget about the ridiculously crowed cities in Asia like Tokyo and Seoul ( Or the worst being Hong Kong ), even the European Cities are more populated. And SF isn't anywhere near close.
If Americans dont fix housing problem, any form of UBI is meaningless.
We’re due for a recession here in California. I follow the real estate gurus and they’re a bit perplexed on why we aren’t in one yet.
The timing of UBI and an impending recession are a bad formula for the state and will definitely change the political landscape of California. ie likely to see some politicians voted out of office and flipping the majority.
I’d be a lot more interested if they’d fund it via property tax instead of VAT. Since California has such severe restrictions on housing construction, anything that puts more money in people pockets just gets absorbed by higher rent. The entire CA game is the fixed supply of housing eating up most of the economic output of individuals who aren’t grandfathered in. So if you’re going to fix it, collecting against the property owners who have spent decades greatly enriching themselves by making it prohibitively difficult for anyone new to move in would be a good start. Then when you go to try and remove the barriers to housing supply, they’d suddenly have a lot more reason to get on board (or at least get out of the way).
I’d be a lot more interested if they’d fund it via property tax instead of VAT. Since California has such severe restrictions on housing construction
If you increase property taxes, doesn't that make housing developers less likely to build high-value, high-density housing? And don't the property tax increases on existing housing just get passed on to the renters?
I've never rented in California, but I've rented in 13 other states, and in the handful of cities where I've lived during a property tax increase, the rent went up quite a bit (especially Chicago). One place even itemized it on the rent statement.
The precautionary principle seems to be thrown to the wind here.
The unintended consequences of such a policy are far-reaching and poorly understood. UBI has seen a lot of coverage in the media recently and gets a lot of people excited on social media. Most coverage of it is shallow, but even the most in-depth studies of it that have been performed have been too small scale to have any bearing on the reality of transforming an entire state's economy.
It would be nice if we lived in a post-scarcity (or sufficiently close) economy where we could afford these things. I doubt we do.
Very mixed feelings on this. I'm in favor of UBI, but the devil is in the details and this bill doesn't pass the smell test.
As noted elsewhere, $1000/month for all adult residents adds up to more than the state's current budget.
The bill doesn't appear to remove other welfare programs. UBI is usually touted as a moral-judgement free program that replaces all the targeted welfare programs (food stamps, housing allowances, etc).
So, I'm glad people are taking UBI seriously. But, bills like this feel like a footgun. People are rightly suspicious of UBI (at minimum, it's new and untested) and bills like this do nothing to assuage their fears.
> The bill doesn't appear to remove other welfare programs
And I think that is the correct move. I'd expect the need for SNAP benefits, housing assistance, etc. would decrease (probably dramatically so) after UBI's implemented. But there will always be people who need help. You can't turn a blind eye to someone in need just because they're getting $12k/yr.
In theory, any UBI program would provide an amount equal to, or greater than, whatever amount was previously being provided.
So, if CA food stamps + local housing assistance = $12k, then UBI would also be $12k. Otherwise, as you say, UBI isn't enough.
If this were part of a broader plan to consolidate benefits into a single program, it would make more sense. Give everybody the $1000 (or whatever amount) and if they qualify, bump that $1000 to $2000 (or whatever amount works out).
The whole point of UBI is to get out of managing many programs, with the overhead those entail. And if you have a libertarian tilt, it also gets us out of dictating morals to the poor.
There is no hope of something like this passing in the US. If it doesn't disenfranchise at least a few hated social groups its flat out un-American and the people won't stand for it. Fuck over felons, recent immigrants, black people, or someone like this and you might have a chance of getting it through. I'll grant you that California is its own weird little world, so yeah maybe its possible there, but for sure this won't fly in the US.
Ah no, I am not saying California is up to this, but the rest of the US definitely is. I am from VA and can assure you that people would not be comfortable giving money equally to say, sex offenders or black people, as their WASP neighbor here. California is not like the rest of the US at all, so I withhold my opinion on what could pass there.
My main problem with this is that if you're poor you'll have to give up Medi-Cal (California's Medicaid program -- aka health insurance for the poor) and other state-funded benefits to be eligible.
Health care spending can and has bankrupted many people with private insurance who are very well off compared to Medi-Cal recipients, so if the poor were forced to give up Medi-Cal to get $12k of UBI per year, and then spend that money on private health insurance, and spend even more of that money on food (since they'd also have to give up food stamps), it makes absolutely no economic sense for them to do that.
As far as the poor are concerned, this is an attempt to get rid of Medi-Cal and substitute it with private health insurance, and same with the other state-funded programs that help the poor.
The way it stands now this is an awful idea, and I'd only support it if it was truly universal and did not require the poor to give up the state support they have now.
If this proposed program doesn't actually help the poor then what is the fucking point?
> Health care spending can and has bankrupted many people who are very well off compared to Medi-Cal recipients, so if they were forced to give up Medi-Cal to get $12k of UBI per year, and then spend that money on private health insurance, and spend even more of that money on food (since they'd also have to give up food stamps), it makes absolutely no economic sense for them to do that.
So then they wouldn't do that. It says you can't get the UBI if you get Medi-Cal, it doesn't say you can't decline the UBI and continue to get Medi-Cal, right?
The entire point of a UBI is that it replaces all of these hacked together assistance programs with something with less overhead (no eligibility testing bureaucracy) and less economic distortion (giving restaurant workers food assistance when they already have access to food and could better use the money for transportation or education etc.)
If you like Medi-Cal, propose it as a "public option" -- instead of getting it if you're poor, you get it if you pay $6000/year or whatever it actually costs the state. Then people can take their $12,000 UBI, use $6000 to buy Medi-Cal and have $6000 left over. But then it lets people to choose not to, e.g. because their spouse's employer-subsidized private insurance would cover them for an additional $4000/year and they'd rather come out ahead by $2000.
Having both is silly because it doesn't get rid of that inefficiency. If you instead wanted people to have a $12,000 UBI and $6000 in medical coverage then just give them $18,000 and let them decide whether they want to buy $6000 in medical coverage or something else. You can debate the amount of assistance but it still makes no sense to force people to buy specific things.
If you buy into some of the logic I've seen kicking around recently that:
>housing shortage prevents poor people from participating in centers of high productivity, which reduces their economic output
then attracting as many warm bodies as possible to these "centers of productivity" will result in an explosion of wealth production
206 comments
[ 4.5 ms ] story [ 257 ms ] threadAnd perhaps this'll be the first program to survive the trolls and nay-sayers who will find the smallest niche failures and sspout the "If ANYONE falls through the cracks it's a FAILURE!"
> It is the intent of the Legislature to fund the CalUBI Program with a value-added tax of 10 percent on goods and services, except medicine, medical supplies and equipment, educational materials, including textbooks, tuition or fees for education, food, groceries, and clothing.
However, I think another real world test to join the others is fine. You don't know the result until you do the experiment.
Same reason you don't jump off a building to test gravity. There are better ways to test than irreparably derailing an economy by +not closing the inequality gap and +causing spikes of inflation any time you dish out money, proportional to how much you dish out
Finland did a real world UBI test. Unless you don't consider Finland part of the "real world."
I wonder how they will administer the VAT without other states cooperating with them.
Without even taking into account the existing tax rate in California, wouldn't this need an average of 10k of spending per person a month getting this to work out?
Then again there are enough restrictions on this (seemingly largely the ones that would actually benefit the most from this) that it actually works out...
So that does spread that out a bit if you take into account anyone buying those manufactured goods outside of the state.
Then that personally raises the question on how this would scale nationwide, the cost to the business would ultimately be largely pushed down to the consumer. Maybe that is getting a bit ahead of ourselves, but I keep hearing about a UBI and I struggle with seeing the logistics of it.
Given the recent state-wide rent control, it’s hard to see this as anything other than a sop to landlords.
I must be misunderstanding something. If you're unemployed and getting unemployment benefits you don't get your UBI? Isn't that part of the point of UBI?
Edit: Thanks to everyone helping me understand what I was missing!
Basically, no double dipping.
Instead, you just get UBI. In good times and in bad, so there's no weird income caps and disincentives to work. People don't have to deal with welfare cliffs (https://www.learnliberty.org/blog/the-welfare-cliff-and-why-...) and/or multiple welfare off-ramps simultaneously anymore.
Having UBI and still keeping means-tested welfare removes one of the best benefits of UBI. Most serious UBI proposals do what this one does: Either keep your current benefits or go on a UBI, whatever works best for you.
I appreciate that we wouldn't want the situation where instituting UBI stops (for example) severely disabled veterans getting specially adapted cars.
But doesn't this mean we retain all the forms and bureaucracies and weird income caps and disincentives to work, and the administrative costs that go with them?
Mostly not, because everyone whose weird byzantine collection of benefits doesn't add up to more than the UBI will abandon all of them and choose the UBI. That should be nearly everybody even if it isn't literally everybody.
Plus managing those exclusions would likely cost more than it would save (imagine all the additional management overhead of cross-checking programs and or having people certify they aren't on them/policing fraud).
Actually I find the under-18 restriction kind of questionable too, since this could be a great system for supporting poor families. The real reason this cannot just happen outright is that it "competes" with too many other benefits that it could just outright replace instead.
The biggest problem with scrapping health insurance for UBI is that health insurance is astronomically expensive. I can see the argument for giving families with kids $1K/per kid, and just scrapping the food program to name one example.
Edit: making it clear it's federal level not state level legislation.
If your unemployment benefits are less that UBI, you should get the difference in UBI, similarly excluding Medicaid recipients seems well, plain stupid.
> Medi-Cal program, the County Medical Services Program, the CalFresh program, the CalWORKs program, or Unemployment Insurance
I'm not entirely sure why, though.
> Medi-Cal is California's Medicaid program.
Because the ACA basically allows states to opt-out of providing medicaid, Medicaid has separate agencies for every state.
So I could understand if they want to try to replace existing welfare programs with UBI and then ratchet up the UBI amount until its better than the old programs (and more flexible).
But as-is, yeah, this doesnt help some of the ppl who need it most
They would have to more than double the tax revenue for a state with already very high taxes.
Now, assuming the most generous interpretation of their 10% VAT proposal... which means a 10% VAT on things like rent, transportation, etc. CA has around 11.5mil households with apx $40k/household of spending, which yields $460bil @ 10% => $46bil in additional tax revenue.
This won't work. It's just meaningless hot hair.
Schools. Roads. Sewers. Water. Clean air. Power. Safety. Just to name a few.
Nothing important really.
Edit: before you jump into the “other means funding” - I lived (and owned house) in WA and CA and the overall tax burden is MUCH higher in CA
CA somehow manages to waste a lot of money. SF has city budgets higher than some states and still says it needs more money.
Florida has the lowest in-state tuition in the country.[2] This includes UF, ranked as the seventh-best public university, at an average of $6300.(UC Berkeley averages $14,000.) 39% of Florida college students pay zero tuition.
Florida has the second highest quality roads in the union[3]. It's consumer electricity prices are nearly 50% lower than California.[4]
Florida has no state income tax, relatively modest property taxes, and a 7% sales tax. Nor does it overextend itself fiscally to provide high-quality government services on a low tax base. It ranks second in the union for state fiscal health.[5]. (California, even in the midst of the greatest tech boom in history ranks 42nd.)
[1] https://www.vox.com/2015/10/26/9617514/test-scores-naep-2013 [2] https://www.valuepenguin.com/student-loans/average-cost-of-c... [3] https://www.usatoday.com/story/money/2019/07/08/states-that-... [4] https://www.eia.gov/electricity/state/ [5] https://www.usnews.com/news/best-states/rankings/fiscal-stab...
They have different needs which are met with different tax burdens. If you want the luxury of living in CA, then you need to pay your share.
- I live in the Bay Area, we largely have some of the worst schools on average. Yes some areas are perfect but the majority you don't want your kid going to.
- Roads? What roads? The roads that are over-congested? The roads that have potholes that are measured in feet deep?
- Power, water, clean air? Surely some of that is covered in the fees I already pay for? I pay some of the highest water/sewer/electric rates in the country.
- Safety? I have a statistically higher chance of getting mugged in the Bay Area then most other parts of the country. I have lived in Oakland and San Francisco for a decade. I never see police but have seen lots of crime.
Again, I ask, what for? I already pay some of the highest tax rates here. My property tax is expensive, my income tax is high. I get very little back from the state. Why would I trust the state to mishandle even more money?
You're paying high taxes because they can tax you that highly and you haven't moved away yet. When they increase them and you still don't move their take away will be that they can probably raise them even higher.
You're the sucker here.
Also, feet-deep pot-holes? So how many cars are bottoming out each week?
California's tax burden is ~9%, and within 1% of the median: https://wallethub.com/edu/states-with-highest-lowest-tax-bur...
You don't have to tell me about Prop 13, its a joke and I push to remove it as often as I can.
https://www.youtube.com/watch?v=ZmCNMQ7TOgY
You live in the most expensive real-estate in the country and complain that it costs money to maintain.
Pay your fair share.
My complaint is that I pay some of the highest taxes in the country for some of the lowest benefits.
Not sure what this has to do with me paying my fair share?
And my argument is that you are undervaluing the cost of the benefits it provides.
Particularly in a cosmopolitan city, there are layers upon layers of infrastructure and society which need to be supported. Here you are standing on top of it all complaining about the breeze.
Paying your fair share is recognizing that you are in a position of privilege and giving back those who allow you to be there. The system depends on people like you to strengthen the ladder you used to climb up in life, not pull it up behind you.
Instead, we have high sales tax, and high income taxes so that long-time wealthy residents have it easier.
Just one example: http://sfappeal.com/2013/05/arrest-warrants-issued-for-sf-sc...
Note that in the US, Government expenditures on healthcare are higher than in the average EU country, yet a much smaller fraction of the population get government provided healthcare.
It actually makes a lot of sense, because the primary benefit of using income tax is the progressive rate structure, but for a tax funding a UBI you actually want a flat rate because the tax is the de facto phase out of the benefit.
We currently have two systems that basically invert each other. On the one hand, we have a progressive tax. On the other hand, we phase out assistance for the poor as incomes increase. These two things cancel out. With a UBI you "pay more tax" but you don't lose the assistance. When the assistance is cash that's a no-op.
Except that administratively it's dramatically simpler -- you don't have to vary the tax based on how much money anybody makes, you don't create arbitrage opportunities for rich people to pay lower tax rates intended for poor people, you don't accidentally create poverty traps by imposing de facto higher marginal rates on lower income people than higher income people due to overlapping benefits phase outs, etc.
So, by VAT, maybe they mean a 10% haircut on absolutely everything?
https://www.newsweek.com/new-bill-would-give-nearly-every-ca...
And the relevant bit:
“The program would be paid for with a state value-added tax of 10 percent on goods and services, with exemptions for groceries, medicine, medical supplies, clothing, textbooks and other items. Recipients of several programs, including the state's Medicaid plan, would be ineligible.”
Not to wax too political here, but the insane part to me isn’t even the UBI bit which I’m not fond of but open to changing my view in the coming decades, the insane part is the introduction of a new type of tax we previously didn’t have, and near as I can tell isn’t intended to replace the sales tax, and not just a new tax, but at a pretty high rate.
Actually you know what? I just looked at the bill text, it was less than I thought and it was more insane than I thought. Here’s section 2:
“SEC. 2. It is the intent of the Legislature to fund the CalUBI Program with a value-added tax of 10 percent on goods and services, except medicine, medical supplies and equipment, educational materials, including textbooks, tuition or fees for education, food, groceries, and clothing.”
It is the intent of the legislature to fund it with a VAT, and if you know anything at all about California law, then you probably know that means a ballot measure which will need 2/3 support from the electorate. Theoretically that ballot measure could be used to replace the sales tax, but it probably won’t be because only part of the sales tax is State, and much of it is appropriated by law to fund very specific projects or programs.
Whew ...
That's assuming a fully costed proposal, which this one isn't.
It's easy to throw around FUD. But anything that redistributes wealth from the top 0.1% is the right direction.
No. No, it's not. There are several ways to do it that are very much not the right direction. (See Venezuela for a couterexample.)
Note well: This does not mean that this specific proposal is in the wrong direction (though I suspect it is). I merely mean that "just take it from the 0.1%, it will all work out" is a very inadequate failure mode analysis.
Show me a success story where this didn't become a gigantic suck on the funds
I don't think you can realistically (or ethically) get rid of welfare programs when introducing UBI. This is the issue I had with Andrew Yang's "Freedom Dividend" proposal, too. Some people are bad at managing money or have emergencies $12k won't cover. As a society, we cannot allow them to starve in the street because of this.
But at that rate it should definitely replace all other programs save medical.
I also think VAT plus land ownership tax should be where the bulk should come from. Possibly also a rent-holder's tax for foreign national-owned properties that might be 10%/year of value. It should be household based too. Like perhaps 2,000 for first adult, 1k per adult in house, 500 per child.
To be really ideal it needs to give people the freedom to 'choose' work as something to get 'more' reward. This would put supply of jobs above demand, and drive up wages too. Some would choose to focus on side projects, or art, science, studies, college, etc... Some might just play games all day, but who knows maybe they become e-sports athletes and earn thousands doing that.
I think also though, single payer should come before UBI, not after. I think that should be first since people are dying because of that. I'd like to see states start trying to implement that on their own, maybe it works out great and other states copy them.
That’s $120K/year. Assuming a 33% effective income tax rate, that’s $180k, pre tax, no savings, or expenses for food, etc. That’s well into the 80th percentile income bracket in CA, and it’s probably possible to be in the 90th percentile and still come out ahead (factor in retirement savings, college, etc):
https://statisticalatlas.com/state/California/Household-Inco...
Re-reading your comment, this is probably just another way of saying the math doesn’t work out.
Income or property tax increases are probably necessary.
As with any government tax and benefits program, it is what comes out of committee that will truly matter. VAT taxes usually land harder on the middle class than upper or lower simply because of how people typically spend their income. They are great though at masking the cost of government and increases in the cost and goods of services is more likely to be put upon the provider of each rather than government.
Reducing costs, fines, and fees for required government services and licensing would go a lot further to reducing the burden on the poor, that $36 driving license renewal doesn't look annoying at 120k but at 25k it means something.
The median income in California is $75k, not $40k. On top of that, this is an alternative to existing assistance programs, so you either get to recover the money spent on those or you get to remove the people who continue to receive them from the population receiving the UBI. I'm not saying the numbers for this bill necessarily balance, but you're using the wrong ones.
> They would have to more than double the tax revenue for a state with already very high taxes.
Nominal tax rate with a UBI has to be discounted by the full amount of the UBI, because you're not paying it if you're getting it back. It obviously doesn't hurt you to pay $10,000 more in taxes if you're then receiving a $12,000 UBI.
This confuses the heck out of people because it means that a UBI costs "nothing" -- but that's how it works. It's purely redistributive. It doesn't cost anything on net, it only moves money around. At the individual level, it costs people above the median something, but still not the amount of the tax, only the difference between the UBI and the amount of the tax. The rest they get back.
A ubi test that isn’t universal seems potentially counterproductive to me.
Combining UBI with open borders / non enforcement of immigration policy is going to be interesting from a budget point of view.
[0]: https://www.ftb.ca.gov/forms/2019/2019-1031-publication.pdf
Since you are being condescendent about this, would you perhaps mind letting me know where in that document it states that you need to have entered the US legally to be resident?
At least in theory, this does not involve you receiving someone else's labor without their consent.
Let's take two alternative government. One that works by having volunteers and one that prints money to pay people.
Right to a speedy trial: Government 1 cannot charge you unless they have enough volunteers to guarantee a speedy trial. If there aren't enough volunteers, you still have this right by the government not charging you (even if you really deserve it). Government 2 cannot charge you unless they have printed enough money and found enough people willing to accept it as payment to guarantee you a speedy trial. If they can't find enough people willing to do this job, they can still provide this right by not charging you.
Right to health care: Government 1 cannot provide this right unless it has enough volunteers. If there aren't volunteers, then it cannot provide you the basic health care. Government 2 cannot provide you this right unless it has enough people willing to accept money to do so. If people aren't willing to, for what ever reason, you aren't going to get health care.
This is a fundamental difference between rights that say "The government cannot X unless they Y" (in some cases the Y exception may not exist at all) and that say "The government must Z".
Logistically you might be able to have the second kind of right functioning with a near 100% up time, due to how the sorts of people are recruited to do the work needed to provide that right, but it is still a fundamental difference from the first kind.
One is being forced to give my money to someone else for reasons of "fairness", the other is a right to not be locked up for a reasonable amount of time after being accused of a crime.
One of those involves taking my freedom, the other, my money.
If it is better for the economy that quantitative easing happen via cash payouts to the people rather than via capital injections to banks, the government has the purview to do that.
Nothing is a "right". FTFY.
Rights are subjective human ideas and are defined by the systems humans create and perpetuate. Rights/natural rights as a concept are an exercise in semantic and philisophical masturbation.
Which, amazingly, is one of the reasons this could actually pass. California's property class seem to get everything they want, even if it's voting down small and inadequate reforms like SB-50 was (it was a start but not even remotely enough).
California should be thinking about absolutely nothing else that's big except fixing their housing crisis. It's so big at this point that it's actually causing most of the other major problems.
You say the poor tenant will transfer wealth to the wealthy landlord as if the tenant is losing. However -- they are both gaining.
Say the rent is $1000.
Obviously, the property usage right is worth to the landlord less than $1000, otherwise he would've just used the property himself. He gains.
The property usage right is worth more than $1000 to the tenant, otherwise he would've just kept the money. He gains.
Both people gain. Both people get richer. Both people ended up with more than they had prior to the transaction.
To prove an extreme case, if I point a gun at you and say “$1k or I shoot”, you’re likely to pay. You gained not dying, but are you richer? Or did I merely use my power to impose an urgent need on you that you needed to pay for?
I've always wondered if you just took billions from the richest Californians and gave that money to the poorest Californians if the people that had their money taken would actually be better of in the long run.
If you increase the amount and velocity of money going through the economy could it not be possible that the rich that had their wealth transferred actually end up better off? I suppose it would largely depend on where the taken capitol had been invested and or if it was just sitting in low yield savings accounts.
Imagine the case of a working class family that has lived in CA for generations. The elderly grandmother owns a home because she bought it in the 1950s when things were not so broken. She has two grown children, each with families. One family lives in her house with her, because that’s all they can afford, but that’s okay because they want to stay close to home.
The other family rents a home nearby, because by the time whey were adults, hosing was out of reach.
In California, the only thing stopping rent increase is people’s ability to pay. In San Francisco, a 3bd apartment costs at least $4500/mo, and the median price is more like 8-10k per month.
That is because there are so very few available, and there are enough two income bankers and tech worker households who make enough to justify that rent that the market has no room for anyone else.
We go back to the working class family example, assuming the adults are gainfully employed and each making $60k/year. All they want is to continue living in the town they grew up in, where they have friends and decent jobs and their elderly parent to stay near. They pay $4000/mo, which is near the low end of market rate for a 3bd home for their family of 4, and also about half their after-tax income.
Now this UBI program (or any other change) happens, and a lot more income is suddenly flowing nearby. Anyone who for any reason finds themselves needing a new apartment has a little more money available, and so they can inch up just a bit in the market. But because demand so radically dwarfs supply, this means rents just tick up about 10% in short order.
So back to that family, the landlord notices the market has moved, and he raises the rent 10%. The landlord gains $400/mo. The tenants gain nothing except the “privelege” of non-eviction.
They now have to decide to pay more just to stay in place, or to try and downgrade to a worse apartment to keep costs in check. And if they do downgrade, they’re just displacing someone else who is farther down the economic ladder.
You described a free market scenario, which works on a whiteboard.
In the real world, California property owners have a monopoly on a fixed supply of housing, and nobody gets to participate in the California economy without a place to sleep at night. Thus any increase in productivity locally just goes to the property owners in short order, as they are enabled by the policies they’ve long fought for to extract their rental tax up to the ability of each person to pay. They use this unilateral power to extract all the gains.
Housing can either be a good investment, or remain affordable, both can not simultaneously happen.
It seems like that "privilege" is worth to the tenant than the money, even after the increase. Otherwise they would have moved. Therefore, it is not a zero sum game.
Part of the UBI idea is to reduce that overhead, though I'm at a loss as to how to ensure it stays low. The same politicians that turn our current system into a haphazard mess of special carveouts and regulations will still be in power and will have all the motivations (if not more) to add more carveouts and regulations to the new UBI.
If ten families want houses and there are only nine on the market, one family will go without whether you have auctions, price caps, land taxes, means testing, subsidies, or any other economic intervention, because nine is less than ten
So 9 out of 10 families get to live in a commutable distance to where they work, or 2 families get to live in half the appropriate space. Not good for the economy, not good for the families, very good for landlords.
Whether or not housing is naturally flexible, CA's government has done pretty darn well making it inflexible. See rents vs. inflation.
Every dollar of rent above costs for construction and necessary administration is a monetary redistribution from the renting class to property owners. CA doesn't lack land, and it doesn't lack the ability to pour concrete into earthquake-safe cubes with plumbing; the difficulty in construction and resulting high rents is the result of intentional obstruction and regulatory capture by the benefiting property owners.
Has California real estate valuations and rents not exceeded inflation for the past decade+? In economic equilibrium should rents not equal amortized construction costs? Have increasing rents not impacted commuting distances and housing availability for the renting class worker? Would these impactions not hurt the economy as a whole? Or do you disagree that regulatory barriers to building housing benefit those who own existing housing?
No.
I mean, even with the kind of generic-market idealized assumptions (such an unlimited competition) that never really apply to real estate anyhwere, rent would equal the amortized cost of providing the rental property, including land acquisition, construction, maintenance, etc.
[0]Regulatory-allowed access to said land, on the other hand, is less permissive.
Really? Show the numbers. I was under the impression that the Bay Area had a very high land ownership premium, that is, that land acquisition costs are very high compared to rents.
Plus, real prices are usually out of line with economic equilibria in dynamic markets, the equilibrium is the price that a market would achieve if it was in a steady state with no changes for an infinite period. A sustained market distortion raises the equilibrium, it doesn't maintain prices above the equilibrium. Prices above (or below) equilibrium are so are do to frictional forces which cause prices to adjust toward equilibrium at a limited rate. So, I'm not sure why you are harping on equilibrium, it seems to be the wrong issue for what you seem to be concerned about.
> Given in particular that in CA (the bay area and SF too) land is in surplus[0].
Even if that was true, regulatory permitted access largely effects rent through land acquisition costs, not independently of it, so it would explain why both land acquisition costs and rents were higher than they would otherwise be, but not why rents are higher than they would be expected to be given costs to landlords including land acquisition costs.
>>reasonable economic equilibrium
Sorry for the delayed reply:
Please see >reasonable in the above, there is nothing economically reasonable about the CA market distortion. Rents are higher than they would expected to be given costs not unjustifiably burdened by regulatory permitting. Which would be the (or at least a) reasonable standard for determining what rents should be at equilibrium which provides a basis for what rents should be in the real world and clearly indicates that rents in the real world are excessively high and not economically justified. I don't see where I've been unclear about this.
Over-regulation is only a part of the cost. The biggest part is the demand. But don't worry, whenever people figure out that silicon valley jobs can easily be relocated, to basically anywhere, that will all work itself out.
They, like anyone else, want to see a government act in their interest. Sometimes that means less government, sometimes it means more. Democrats want more government in healthcare, Republicans want more government in immigration; it is about what they want not how they get it.
And yes it will sort itself out, much like Detroit has worked itself out after the auto boom. It is just sad seeing myopic governance[0] lead CA towards that future.
[0]"Democracy is the theory that the common people know what they want, and deserve to get it good and hard."
And who is refusing to build more housing? I will personally arrange for as much housing as you like in any neighborhood in any city in California. Oh, for the price that you desire? OK, nope, sorry doesn't work that way.
People who say this are only ever looking at the node level, not the network level. Sure, new wealth is added to the network, but at a miniscule trickle compared to the everyday activities of the economic network.
"Wealth is not zero sum" essentially, if taken to its logical conclusion, means "everyone can be a billionaire!" No, they cannot.
"Not a zero sum game" means "both parties profit". That profit may not be money, therefore does not imply anything about billionaires.
I'm starting to feel it's really just the massive demand. California cities are already quite dense. We can certainly do more but to say we're historically failing just doesn't make sense to me.
I'd love to see numbers on just how much pent up demand there is and how much building would need to take place before residents felt it but I realize its not an easy thing to estimate.
Person per mile squared? https://en.wikipedia.org/wiki/List_of_United_States_cities_b...
For comparison's sake. Seoul, South Korea has 40K people per square mile (total population of 8 million people). That is the entire city. Overcrowded San Francisco city proper has 17K people per square mile and it is by far the most dense part of the Bay Area.
If Americans dont fix housing problem, any form of UBI is meaningless.
[1]https://en.wikipedia.org/wiki/List_of_cities_proper_by_popul...
[2]https://en.wikipedia.org/wiki/List_of_cities_by_population_d...
The timing of UBI and an impending recession are a bad formula for the state and will definitely change the political landscape of California. ie likely to see some politicians voted out of office and flipping the majority.
If you increase property taxes, doesn't that make housing developers less likely to build high-value, high-density housing? And don't the property tax increases on existing housing just get passed on to the renters?
I've never rented in California, but I've rented in 13 other states, and in the handful of cities where I've lived during a property tax increase, the rent went up quite a bit (especially Chicago). One place even itemized it on the rent statement.
The unintended consequences of such a policy are far-reaching and poorly understood. UBI has seen a lot of coverage in the media recently and gets a lot of people excited on social media. Most coverage of it is shallow, but even the most in-depth studies of it that have been performed have been too small scale to have any bearing on the reality of transforming an entire state's economy.
It would be nice if we lived in a post-scarcity (or sufficiently close) economy where we could afford these things. I doubt we do.
https://en.m.wikipedia.org/wiki/Alaska_Permanent_Fund
I agree that the CA proposal feels reckless, though.
As noted elsewhere, $1000/month for all adult residents adds up to more than the state's current budget.
The bill doesn't appear to remove other welfare programs. UBI is usually touted as a moral-judgement free program that replaces all the targeted welfare programs (food stamps, housing allowances, etc).
So, I'm glad people are taking UBI seriously. But, bills like this feel like a footgun. People are rightly suspicious of UBI (at minimum, it's new and untested) and bills like this do nothing to assuage their fears.
And I think that is the correct move. I'd expect the need for SNAP benefits, housing assistance, etc. would decrease (probably dramatically so) after UBI's implemented. But there will always be people who need help. You can't turn a blind eye to someone in need just because they're getting $12k/yr.
So, if CA food stamps + local housing assistance = $12k, then UBI would also be $12k. Otherwise, as you say, UBI isn't enough.
If this were part of a broader plan to consolidate benefits into a single program, it would make more sense. Give everybody the $1000 (or whatever amount) and if they qualify, bump that $1000 to $2000 (or whatever amount works out).
The whole point of UBI is to get out of managing many programs, with the overhead those entail. And if you have a libertarian tilt, it also gets us out of dictating morals to the poor.
This is surprising to me. Which recent california laws are you referring to that have done this?
Health care spending can and has bankrupted many people with private insurance who are very well off compared to Medi-Cal recipients, so if the poor were forced to give up Medi-Cal to get $12k of UBI per year, and then spend that money on private health insurance, and spend even more of that money on food (since they'd also have to give up food stamps), it makes absolutely no economic sense for them to do that.
As far as the poor are concerned, this is an attempt to get rid of Medi-Cal and substitute it with private health insurance, and same with the other state-funded programs that help the poor.
The way it stands now this is an awful idea, and I'd only support it if it was truly universal and did not require the poor to give up the state support they have now.
If this proposed program doesn't actually help the poor then what is the fucking point?
So then they wouldn't do that. It says you can't get the UBI if you get Medi-Cal, it doesn't say you can't decline the UBI and continue to get Medi-Cal, right?
The entire point of a UBI is that it replaces all of these hacked together assistance programs with something with less overhead (no eligibility testing bureaucracy) and less economic distortion (giving restaurant workers food assistance when they already have access to food and could better use the money for transportation or education etc.)
If you like Medi-Cal, propose it as a "public option" -- instead of getting it if you're poor, you get it if you pay $6000/year or whatever it actually costs the state. Then people can take their $12,000 UBI, use $6000 to buy Medi-Cal and have $6000 left over. But then it lets people to choose not to, e.g. because their spouse's employer-subsidized private insurance would cover them for an additional $4000/year and they'd rather come out ahead by $2000.
Having both is silly because it doesn't get rid of that inefficiency. If you instead wanted people to have a $12,000 UBI and $6000 in medical coverage then just give them $18,000 and let them decide whether they want to buy $6000 in medical coverage or something else. You can debate the amount of assistance but it still makes no sense to force people to buy specific things.
then attracting as many warm bodies as possible to these "centers of productivity" will result in an explosion of wealth production