Comment Re:We borrow money from China to fund corn... (Score 1) 586
"Guaranteed minimum income" is just another way of saying "subsidies that avoid the phase-out problem". And the thing is, supposed the GMI is $10k , and then a 20% (marginal) "tax" kicks in at $50k. At $100k income, you're still getting your "minimum income" , but you're also paying the same amount in "tax". Money's fungible, people should not get all hung up about the labels attached to it, just figure out subsidies and tax codes so you have a healthy economy, enough money to run the government, and you avoid pathologies like the way current subsidies getting turned off in a narrow income band provide such a disincentive to work.
There is another way to provide a "guaranteed minimum income" (though it is more of a Pigovian wage subsidy). The poverty line in 2008-9 for a single person was $10,830 per year. At 40 hours per week, 52 weeks per year, you have 2080 hours, which means the poverty line is about $5.21 per hour for full-time employment. If I remember correctly (it's been awhile since I scribbled out the numbers), that's about 28% of total wages and income in the United States.
If you have add a flat 28% rate to everyone's current tax rate, and give a wage subsidy of $5.21 an hour (up to 40 hours per week) for gainful employment to all American workers, you have a break-even point of roughly $38,700, or a bit below the median income. If you graph out the effective tax rate, it is a smoothly progressive curve. At no point along this curve is there any disincentive to to work* -- there isn't a higher tax bracket to be kicked into. With a such a work subsidy in place, you can remove Federal minimum wage laws and greatly reduce welfare and unemployment payments (remember, every American is guaranteed at least the poverty line for full-time employment, plus whatever wage they can negotiate with their employer).
* Well, okay, above $38,700, you have a higher effective tax rate than you have currently, which may be a disincentive. On the other hand, those earning below $38,700 are getting a lower effective tax rate, so they would have a greater incentive to work, and these are exactly the low-skilled, entry-level workers we want to bring into the labor market to gain marketable skills.