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Old 7th October 2013, 04:58 AM   #1
Eddie Dane
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A standard income for all citizens?

I first heard about this idea when I was a kid in the seventies.

What if the government gives a standard income to all citizens?
People who work get paid a salary on top of the standard, government-provided income.

Apparently the idea is being floated in Switzerland. (there is a petition to have it discussed in parliament)

What would be the effect of such a measure, and is it really so different from giving unemployment benefits to the jobless?

Some say our economic system needs to be revised as there might be less jobs available in the future due to globalisation and automation. Is this the way to go?

I read in Reddit that Norway has such a system. i realise thet Norway is unique in many ways, but still I wonder how it worked out there.

I have no opinion on this idea at this time. I'm interested whet JREF members with a background in economics think of it.
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Old 7th October 2013, 05:03 AM   #2
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How much of an income are we talking about? Is it enough to live on? Does it cover basics? Wouldn't it just be better to provide everyone with free basic preventative medical, pregnancy and dental care?
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Old 7th October 2013, 05:46 AM   #3
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My worry would be that prices would merely rise so the standard income would not provide any kind of lifestyle.
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Old 7th October 2013, 05:57 AM   #4
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Originally Posted by The Don View Post
My worry would be that prices would merely rise so the standard income would not provide any kind of lifestyle.

Not if that income led to an increase in productivity. That's why I would support free preventative health care, including free prescriptions of at least certain sorts. The increased wellness of the population would lead to increased time to work (years or decades more for some people). This would offset the cost of the program.

Free residential electric and water would also probably pay for themselves, as that money would go towards discretionary spending or, even better, investment that would boost the economy.


ETA: I'm assuming an economy with room for infinite expansion.
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Old 7th October 2013, 08:03 AM   #5
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We give people SNAP/Food Stamps, because if we gave them cash, some of them wouldn't spend it on food and their children would starve.
We give people Rent Subsidies, because if we gave them cash, some of them wouldn't spend it on rent and their children would be homeless.
We give people Utility Subsidies, because if we gave them cash, some of them wouldn't spend it on their utilities and their children would be out in the cold.
We give people Medicare/Medicaid/SCHIP/ObamaInsurance subsidies, because if we gave them cash, some of them wouldn't spend it on medical insurance or medical care and their children would be sick.
We give people Obamaphones, because if we gave them cash, some of them wouldn't spend it on their phone bills and their children would be out of touch.
Ditto for every other subsidy for the so-called poor ... it's all for the chiiiiiiildrens.
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Old 7th October 2013, 08:07 AM   #6
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We do give them cash, actually. EBT cards usually have a cash amount that can be withdrawn from an ATM each month. There have been media reports of cash being withdrawn with EBT cards in odd places.
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Old 7th October 2013, 08:08 AM   #7
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Originally Posted by The Don View Post
My worry would be that prices would merely rise so the standard income would not provide any kind of lifestyle.
Yet, presumably it's ok with you that central banks are already doing the same thing, except that the only prices that are rising so far are the prices of exclusive Manhattan condos and other assets traded exclusively among the super-rich.
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Old 7th October 2013, 08:13 AM   #8
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Originally Posted by Eddie Dane View Post
I first heard about this idea when I was a kid in the seventies.

What if the government gives a standard income to all citizens?
People who work get paid a salary on top of the standard, government-provided income.

Apparently the idea is being floated in Switzerland. (there is a petition to have it discussed in parliament)

What would be the effect of such a measure, and is it really so different from giving unemployment benefits to the jobless?

Some say our economic system needs to be revised as there might be less jobs available in the future due to globalisation and automation. Is this the way to go?

I read in Reddit that Norway has such a system. i realise thet Norway is unique in many ways, but still I wonder how it worked out there.

I have no opinion on this idea at this time. I'm interested whet JREF members with a background in economics think of it.
Google "social dividend". This concept has been around at least as long as socialism has. I suppose if you're going to put up with the evils of socialism, and having all of the means of production run by bureaucrats, the least they could do is throw the general population a bone by paying them a dividend. Of course, there will be nothing really stopping them from paying themselves more than everyone else.
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Old 7th October 2013, 09:11 AM   #9
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It’s a pretty simple idea that has big implications. You just give everyone free money.

You can still have a merit based economy on top of this however. If someone is getting $1k a month from the government, he can still make more money by getting a job. If he gets the $1k a month regardless, he might be more inclined to take risks and start up a business.

If everyone is getting a minimum income, you can also reduce or eliminate other portions of the safety net like minimum wage, food stamps, social security, etc. If everyone has a livable floor level income regardless, these programs become superfluous.

It’s a potential way out of the declining value of labor trap. The current "work/make money/trade money for food and shelter" system simply will not work once the financial value of of a day's labor drops below the value of a day's worth of food and shelter.
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Old 7th October 2013, 07:34 PM   #10
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Originally Posted by balrog666 View Post
We give people Obamaphones,
Wait, where are these "Obamaphones" and how do I get one?
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Old 7th October 2013, 08:55 PM   #11
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Technically, if you're naming them for the guy who was President when they started having them, they should be called Bushphones.
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Old 7th October 2013, 09:30 PM   #12
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Originally Posted by Random View Post
It’s a pretty simple idea that has big implications. You just give everyone free money.

You can still have a merit based economy on top of this however. If someone is getting $1k a month from the government, he can still make more money by getting a job. If he gets the $1k a month regardless, he might be more inclined to take risks and start up a business.

If everyone is getting a minimum income, you can also reduce or eliminate other portions of the safety net like minimum wage, food stamps, social security, etc. If everyone has a livable floor level income regardless, these programs become superfluous.

It’s a potential way out of the declining value of labor trap. The current "work/make money/trade money for food and shelter" system simply will not work once the financial value of of a day's labor drops below the value of a day's worth of food and shelter.
It is an interesting idea. However, I think a prerequisite is a very large surplus of production capacity that is not labor-intensive.

The problem is what if too many people decide that it's just too much hassle to work for a living, so why bother?
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Old 7th October 2013, 09:36 PM   #13
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Originally Posted by gnome View Post
Technically, if you're naming them for the guy who was President when they started having them, they should be called Bushphones.
Ah, found it:

Free phone distribution in Detroit continues despite federal government shutdown

Quote:
Correction: This story was updated to report the phone giveaway program was started under President George H. W. Bush. "Obama phones" is a common nickname given to the program, but President Barack Obama did not create and does not run the program.

DETROIT, MI — Beneath a pop-up tent and a banner reading, "Free phone, free talk or text," a steady stream of low-income residents waited for free phones in Detroit Friday.

They show their Bridge or Medicaid cards, ID and receive a free cell phone.

The reason the program is unaffected by the shutdown is that much of its funding comes from the telecommunication companies themselves and it is not administered by a federal agency.

The Lifeline program, as it is named, is administered by the FCC.

"Lifeline gives telecommunications providers a subsidy to offset the cost of phone service for customers with low income," Politico reported in April. "The program ensures everyone has access to emergency services and jobs."

Some call the phones "Obamaphones," but the nickname is misleading since the free phone program began under President George Bush.
(The original headline, still visible in the URL, said "Obamaphones.")
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Old 7th October 2013, 09:43 PM   #14
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Originally Posted by Puppycow View Post
Wait, where are these "Obamaphones" and how do I get one?
If you get SNAP you can get one - most cheap cell phone companies offer the program now. the program is called Lifeline. (Fcc.gov/lifeline)
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Old 7th October 2013, 09:46 PM   #15
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Originally Posted by Eddie Dane View Post
I first heard about this idea when I was a kid in the seventies.

What if the government gives a standard income to all citizens?
People who work get paid a salary on top of the standard, government-provided income.

Apparently the idea is being floated in Switzerland. (there is a petition to have it discussed in parliament)

What would be the effect of such a measure, and is it really so different from giving unemployment benefits to the jobless?

Some say our economic system needs to be revised as there might be less jobs available in the future due to globalisation and automation. Is this the way to go?

I read in Reddit that Norway has such a system. i realise thet Norway is unique in many ways, but still I wonder how it worked out there.

I have no opinion on this idea at this time. I'm interested whet JREF members with a background in economics think of it.
I don't see this being realistic until robots are doing all the **** jobs for us. Can you imagine what the toilets of the world would be like!!
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Old 7th October 2013, 10:15 PM   #16
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I'd like to see how it turns out. Our current system is overly complex anyway.
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Old 8th October 2013, 01:04 AM   #17
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Switzerland Will Vote to Give All Adults a Guaranteed $2,800 Monthly Income

Minimum wage Lidl Switzerland 4000 franc

Lidl is a budget supermarket.

I'm not sure what the idea is here. Looks like the proposal is to give a basic income to all citizens that is below the amount needed to survive long-term.
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Old 8th October 2013, 01:07 AM   #18
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Originally Posted by NewtonTrino View Post
I'd like to see how it turns out. Our current system is overly complex anyway.
That appears to be win for the alternative.
It greatly simplifies the system of handing out financial help.

It might greatly increase immigration, though.
I think Friedman said: you can have a welfare state or open borders. Pick one.
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Old 8th October 2013, 01:10 AM   #19
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Originally Posted by Smackety View Post
I don't see this being realistic until robots are doing all the **** jobs for us. Can you imagine what the toilets of the world would be like!!
I imagine that basic income will not be enough to buy nice things.
Having a small amount of money is OK, until the TV breaks.

So, people might still be motivated to do **** jobs. And employers might have to pay a bit more to those people.
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Old 8th October 2013, 01:28 AM   #20
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It seems like a fairly sensible measure. Classical economists should like it, since it is basically the same as current subsidies and benefits except in a single lump sum, which would normally be considered more efficient. However that assumes that people can most efficiently spend their own money, and with poor people especially I am not convinced of this. Specifically subsidizing those things people really need has its merits. On the other hand, this measure avoids the poverty trap, which is good, and it simplifies matters, which is also good. On the other other hand, if people are stupid and spend all their basic income on alcohol and such, hospitals will still take them in and treat them for free, so effectively the rest of the country would pay for them twice.

On the other other other hand, it could be noted that this measure could be seen as regressive, since rich people would now receive the same funding as poor people, and since money has to come from somewhere, this would effectively make poor people poorer (all things being equal).

It seems an interesting measure and I wonder how it will play out.
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Old 8th October 2013, 04:10 AM   #21
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Originally Posted by Sophronius View Post
It seems like a fairly sensible measure. Classical economists should like it, since it is basically the same as current subsidies and benefits except in a single lump sum, which would normally be considered more efficient. However that assumes that people can most efficiently spend their own money, and with poor people especially I am not convinced of this. Specifically subsidizing those things people really need has its merits. On the other hand, this measure avoids the poverty trap, which is good, and it simplifies matters, which is also good. On the other other hand, if people are stupid and spend all their basic income on alcohol and such, hospitals will still take them in and treat them for free, so effectively the rest of the country would pay for them twice.
Poor people are very good at managing their money on average. Their problem is that they don't have much money to manage in the first place.

Quote:
On the other other other hand, it could be noted that this measure could be seen as regressive, since rich people would now receive the same funding as poor people, and since money has to come from somewhere, this would effectively make poor people poorer (all things being equal).
You can compensate for that by raising taxes on the rich. This is probably why it is a political non-starter. But that's pretty much the whole reason for something like this. It is a redistribution scheme to insure that increasing productivity benefits society as a whole, not just the people who own the companies.

Quote:
It seems an interesting measure and I wonder how it will play out.
I hope it passes in Switzerland, so we can see the results. Our current economic models are breaking down, and we need a new way to deal with our changing economies.
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Old 8th October 2013, 06:25 AM   #22
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Originally Posted by Random View Post
Poor people are very good at managing their money on average. Their problem is that they don't have much money to manage in the first place.
This is not true in my experience. The poor people I've met tend to do stupid things like buy lottery tickets, take out lots of credit at high fees, splurge money on expensive clothing or a new couch/tv, or buy things they don't need and will never use on impulse.

Quote:
You can compensate for that by raising taxes on the rich. This is probably why it is a political non-starter. But that's pretty much the whole reason for something like this. It is a redistribution scheme to insure that increasing productivity benefits society as a whole, not just the people who own the companies.
I thought that the main attraction was to avoid the poverty trap. That wouldn't be about wealth redistribution at all.

Quote:
I hope it passes in Switzerland, so we can see the results. Our current economic models are breaking down, and we need a new way to deal with our changing economies.
That's probably expecting too much. This measure, even if passed, won't change the current economic system.
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Old 8th October 2013, 07:07 AM   #23
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Originally Posted by Eddie Dane View Post
I first heard about this idea when I was a kid in the seventies.

What if the government gives a standard income to all citizens?
People who work get paid a salary on top of the standard, government-provided income.

Apparently the idea is being floated in Switzerland. (there is a petition to have it discussed in parliament)

What would be the effect of such a measure, and is it really so different from giving unemployment benefits to the jobless?

Some say our economic system needs to be revised as there might be less jobs available in the future due to globalisation and automation. Is this the way to go?

I read in Reddit that Norway has such a system. i realise thet Norway is unique in many ways, but still I wonder how it worked out there.

I have no opinion on this idea at this time. I'm interested whet JREF members with a background in economics think of it.
This sounds like one of those schemes that won't accomplish what they think it will.
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Old 8th October 2013, 04:41 PM   #24
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Originally Posted by Eddie Dane View Post
Switzerland Will Vote to Give All Adults a Guaranteed $2,800 Monthly Income

Minimum wage Lidl Switzerland 4000 franc

Lidl is a budget supermarket.

I'm not sure what the idea is here. Looks like the proposal is to give a basic income to all citizens that is below the amount needed to survive long-term.
I think I could survive long-term on that. A lot of working people make a lot less than that.
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Old 8th October 2013, 05:16 PM   #25
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Is this the same as the "negative income tax" that I heard about a while ago, or different?
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Old 8th October 2013, 06:40 PM   #26
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Originally Posted by Tsukasa Buddha View Post
Is this the same as the "negative income tax" that I heard about a while ago, or different?
Similar, but I don't know the details. This made me look up the NIT and find some info on it:

http://en.wikipedia.org/wiki/Negative_income_tax

Quote:
Another criticism is that the NIT might reduce the incentive to work, since recipients of the NIT would receive a guaranteed minimum wage equal to the government payment in the absence of employment. A series of studies in the United States beginning in 1968 attempted to test for effects on work incentives. Jodie Allen summarizes the key studies:
The Stanford Research Institute (SRI), which analyzed the SIME/DIME findings, found stronger work disincentive effects, ranging from an average 9 percent work reduction for husbands to an average 18 percent reduction for wives. This was not as scary as some NIT opponents had predicted. But it was large enough to suggest that as much as 50 to 60 percent of the transfers paid to two-parent families under a NIT might go to replace lost earnings. They also found an unexpected result: instead of promoting family stability (the presumed result of extending benefits to two-parent working families on an equal basis), the NITs seemed to increase family breakup.[16]
I don't know if I buy the "family breakup" argument. Maybe, but I think that this is just a modern social trend that was happening at the time anyway, and they may have just picked up on that trend. It may be that economic independence allows more people to leave marriages that aren't working for them or are abusive, and that's not entirely a bad thing.
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Old 8th October 2013, 08:01 PM   #27
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Originally Posted by Random View Post
It’s a pretty simple idea that has big implications. You just give everyone free money.

You can still have a merit based economy on top of this however. If someone is getting $1k a month from the government, he can still make more money by getting a job. If he gets the $1k a month regardless, he might be more inclined to take risks and start up a business.

If everyone is getting a minimum income, you can also reduce or eliminate other portions of the safety net like minimum wage, food stamps, social security, etc. If everyone has a livable floor level income regardless, these programs become superfluous.

It’s a potential way out of the declining value of labor trap. The current "work/make money/trade money for food and shelter" system simply will not work once the financial value of of a day's labor drops below the value of a day's worth of food and shelter.
There is a potential trap in this too--with no social safety net AND without a minimum wage, full time employers have at least some limits on how little they can pay--after all, you can't get your guys to show up at the factory if they're passed out from starvation.

On the other hand, if the state houses and feeds you, and there is no minimum wage, businesses are free to give you pennies on the hour and you'd still be able to show up. In a sense, it could end up simply transferring the subsidy to employers.
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Old 8th October 2013, 08:56 PM   #28
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Originally Posted by gnome View Post
On the other hand, if the state houses and feeds you, and there is no minimum wage, businesses are free to give you pennies on the hour and you'd still be able to show up. In a sense, it could end up simply transferring the subsidy to employers.
Think about it. You are assuming that workers would meekly submit to this when, why should they?

Why bust your ass for a few extra pennies?
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Old 9th October 2013, 03:55 AM   #29
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Originally Posted by gnome View Post
There is a potential trap in this too--with no social safety net AND without a minimum wage, full time employers have at least some limits on how little they can pay--after all, you can't get your guys to show up at the factory if they're passed out from starvation.

On the other hand, if the state houses and feeds you, and there is no minimum wage, businesses are free to give you pennies on the hour and you'd still be able to show up. In a sense, it could end up simply transferring the subsidy to employers.
Yes, but employers would still have to make it worth the employees time. If I am making $12k a year doing nothing, I will be living a fairly marginal existence, but at least I don't have to work. If I wanted extra money and was willing to work, I would look for the best paying job possible.

Employers could pay much less than they do now, but they lose the "Work or Starve" leverage that they have against their employees now. People at the bottom would be looking for work to supplement their government income, not to eke out a living.
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Old 10th October 2013, 07:05 PM   #30
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The more I think about it the more I like this kind of plan. If we are required to have a social welfare system this seems about the best way to go about it. Minimal overhead in terms of administration, zero fraud, easy for everyone to calculate the costs and required taxes etc.
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Old 10th October 2013, 07:52 PM   #31
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Originally Posted by NewtonTrino View Post
The more I think about it the more I like this kind of plan. If we are required to have a social welfare system this seems about the best way to go about it. Minimal overhead in terms of administration, zero fraud, easy for everyone to calculate the costs and required taxes etc.
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Old 11th October 2013, 05:52 AM   #32
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Originally Posted by The Central Scrutinizer View Post
Originally Posted by NewtonTrino View Post
.... zero fraud ....
:dl:
It would be interesting to read where you think the "fraud" would come in with this scheme but I doubt that you could do that with a one-liner.
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Old 11th October 2013, 06:22 AM   #33
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Well, the way to commit fraud would be to pretend to be someone who is eligible for a check when you really are not. Of course, this is much easier to detect than people in a means-tested program hiding money.

Random record checks and home visits would be the way to do it. You only need to find out if they are a US citizen and if they are alive. Much less hassle than trying to get Cayman Island bank records or figuring out if their employer is paying them under the table.
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Old 11th October 2013, 08:23 AM   #34
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Most people or corporations qualify for some sort of government handout whether it be subsidies, tax breaks or welfare payments. To qualify for a particular brand of handout, you need to provide a lot of information and that is where the scope for fraud comes from (and you need a lot of bureaucrats to pick the porkies).

Originally Posted by Tsukasa Buddha View Post
Is this the same as the "negative income tax" that I heard about a while ago, or different?
If it were to be a negative income tax then the same rules would have to apply for taxation; every individual or corporation would have to pay the same rate of tax regardless of income level, type of individual, circumstances or how the money was made. More rortable than the handout situation for sure but if the rules are simple enough then it should not be too easy to evade your responsibilities.

Unfortunately, politics is all about rewarding your biggest backers so this scheme will never happen.
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Old 11th October 2013, 08:40 AM   #35
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Here's a nice swiss documentary about the topic which helped to pave the way for the initiative. English subtitles.

YouTube Video This video is not hosted by the ISF. The ISF can not be held responsible for the suitability or legality of this material. By clicking the link below you agree to view content from an external website.
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Old 11th October 2013, 08:48 AM   #36
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Originally Posted by The Central Scrutinizer View Post
Your laughing dog means you did not think it through.

Fraud means getting something you were not legally entitled to. A system which gives everyone (including millionaires) same amount of money, no questions asked, cannot be defrauded because there isn't anyone not entitled to it.
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Old 11th October 2013, 10:13 AM   #37
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Originally Posted by Mark6 View Post
Your laughing dog means you did not think it through.

Fraud means getting something you were not legally entitled to. A system which gives everyone (including millionaires) same amount of money, no questions asked, cannot be defrauded because there isn't anyone not entitled to it.
There are still opportunities for fraud, like collecting the benefit for people that have died or moved away. Some people can be incredibly clever when it comes to taking advantage.
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Old 11th October 2013, 10:14 AM   #38
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Originally Posted by Mark6 View Post
Your laughing dog means you did not think it through.

Fraud means getting something you were not legally entitled to. A system which gives everyone (including millionaires) same amount of money, no questions asked, cannot be defrauded because there isn't anyone not entitled to it.
I show up at the post office and collect my weekly benefit check, then leave.

Ten minutes after I leave, a man named Guy Incognito, a completely unrelated individual who just happens to look like me wearing a fake mustache arrives at the Post Office and collects his weekly benefit check…
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Old 11th October 2013, 12:20 PM   #39
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Originally Posted by psionl0 View Post
It would be interesting to read where you think the "fraud" would come in with this scheme but I doubt that you could do that with a one-liner.
Wow. You really can't figure out at least a couple of different ways? Come on. I'll give you some more time to try.
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Old 11th October 2013, 12:22 PM   #40
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Originally Posted by Mark6 View Post
Your laughing dog means you did not think it through.
No, it means it was so obviously not true that I was amazed anyone even posted it.

Originally Posted by Mark6 View Post
Fraud means getting something you were not legally entitled to. A system which gives everyone (including millionaires) same amount of money, no questions asked, cannot be defrauded because there isn't anyone not entitled to it.
So someone who figured out a way to get 2 checks would not be commiting fraud? Got it.
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