The Anti-Manichaeist

There is a paper written by a Christian Institutional Economist, Charley Clark, I know that calculates the cost of a Basic Income Guarantee program. I thought I’d share some of the stats.

The hypothetical plan is for 1999, using Census information.

It assumes a fixed population. Those under 18 would get 3,500 a year. Those over 18 and less than 65 would get 8667 a year. Those over 65 would get 7990. When these payment values are determined, the cost of the transfers totals to just shy of 2 trillion dollars.

But, holding all other non-affected expenditures and alternative forms of tax revenue constant, one can pay for this with a flat-tax of .358. This means that everyone, regardless of income, pays only 36 cents of every dollar that they earn in income taxes.

The model predicts, in thousands of 1999 dollars, that the bottom quintile of household income would rise from 7.1 to 16.7, the 2nd quintile would rise from 17.6 to 24.8, the third quintile would rise from 30.2 to 34.4, the 4th quintile would drop from 48.6 to 47.5, and the top quintile would drop from 99.7 to 79.6.

My concerns with the model is that it does put the majority of fed’l revenue due to the flat-tax and it doesn’t consider the extent the behavioral effect of the elimination of all of the tax-exemptions would have on the behavior of the wealthy. But, to tell you the truth, I don’t think that sort of thing can be simulated easily, you need to phase in changes so as to empirically observe how behavior tends to change.

I myself would prefer to shift tax-burden from income to more taxes on oil/gas, taxes on campaign contributions, and advertisements, pollution taxes. I also am very open to Land Value taxes that tend to encourage land value improvement.

All of this is apart from the debate over from what level of expenditures should we have in our gov’t, but I think a good case can be made so that the marginal income taxes were lowered, perhaps to within the range of 20-25%. I think one can also pass a constitutional amendment so that we would have severe restrictions on exemptions and the marginal tax-rates for higher incomes could not be raised. I think that would reduce waste from people gaming the system and keep incentives for people to work high. It would also constrain class warfare.

One consequence of this would be that Churches would lose the ability of their members to use their giving as a tax-exemption. But with the higher incomes for naturally-lower income people, church giving is likely to go up and churches wouldn’t need to cater so much to those members with higher incomes. And with the higher incomes, there should be less crime, better homogeneity in schooling quality, more people could afford health-care.

As such, while there may still be some problems, I think it would be a change that is worth discussing more.

dlw
I also posted this at Theologyweb, where I’ve gotten some good and some idiotic feedback. It’s truly amazing how some people see red when they see anything that resembles “socialism” in their minds.
dlw