Comment Re:Basic income methodology (Score 1) 474
You ought to click through and read the comments.
"This article has gone haywire in its estimation of the the supposed costs. Tobin's calculation is based on national income. The article's first mistake is confusing national income with average income. We read that "Paying for a basic income worth 20% of the average income requires average taxes to be 20 percentage points higher, at 45%." No, that's the effect of paying 20% of National Income. Think it through: even if all GNI is allocated equally to individuals, the median income must be less than 50% of income received and 20% of the average income must therefore be less than 10% of GNI. It is actually much less than 10% because (a) GNI is not held exclusively by individuals and (b) people in the top half get more income share than the bottom half. The income share of the bottom half in the UK is just under a quarter of personal income, which means that the cost of a Basic Income at 20% of median income would be about 5% of total personal income.
Then there is the assumption that paying 60% of median income is equivalent to paying 60% of GNI. As the median income level is close to 25% of all personal income, 60% of the median ought to be about 15% of total personal income, not 60%. The actual cost would depend on the design of the benefit. Costs should be offset against social security reductions (which is one of the key reservations to make about Basic Income schemes)and the abolition of tax allowances."
Or this one: "Yes, the analysis full of errors. Most significant: (1) assumes payment of full basic income amount to all, regardless of current income, (2) conflates median and average.
In 2010, US household income median was about $50K, average was about $70K. To top up low-income households to 60% of median income ($30K) would require additional tax averaging about $4200 per household (all households), or a little less than 6% of average household income. (Source: commenter's spreadsheet using 2010 US census data)
It's bewildering and dismaying that the Economist would print a piece of such obvious poor quality."
"This article has gone haywire in its estimation of the the supposed costs. Tobin's calculation is based on national income. The article's first mistake is confusing national income with average income. We read that "Paying for a basic income worth 20% of the average income requires average taxes to be 20 percentage points higher, at 45%." No, that's the effect of paying 20% of National Income. Think it through: even if all GNI is allocated equally to individuals, the median income must be less than 50% of income received and 20% of the average income must therefore be less than 10% of GNI. It is actually much less than 10% because (a) GNI is not held exclusively by individuals and (b) people in the top half get more income share than the bottom half. The income share of the bottom half in the UK is just under a quarter of personal income, which means that the cost of a Basic Income at 20% of median income would be about 5% of total personal income.
Then there is the assumption that paying 60% of median income is equivalent to paying 60% of GNI. As the median income level is close to 25% of all personal income, 60% of the median ought to be about 15% of total personal income, not 60%. The actual cost would depend on the design of the benefit. Costs should be offset against social security reductions (which is one of the key reservations to make about Basic Income schemes)and the abolition of tax allowances."
Or this one: "Yes, the analysis full of errors. Most significant: (1) assumes payment of full basic income amount to all, regardless of current income, (2) conflates median and average.
In 2010, US household income median was about $50K, average was about $70K. To top up low-income households to 60% of median income ($30K) would require additional tax averaging about $4200 per household (all households), or a little less than 6% of average household income. (Source: commenter's spreadsheet using 2010 US census data)
It's bewildering and dismaying that the Economist would print a piece of such obvious poor quality."