So what would an NDP government do?

[-1=e^ipi]

So far, it feels more like a math assignment than a tax policy, though, but I'm having some fun with it. I miss algebra.

As it should be. Finding the best tax policy should basically be a giant math problem.

[Evening Star]

I plotted curves for Euler's tax regime, assuming that the guaranteed minimum income is $25K (which seems reasonable to me):

https://graphsketch.com/?eqn1_color=1&eqn1_eqn=0.5+-+25%2Fx&eqn2_color=2&eqn2_eqn=0.78+-+25%2Fx&eqn3_color=3&eqn3_eqn=0.2+-+25%2Fx&eqn4_color=4&eqn4_eqn=1+-+25%2Fx&eqn5_color=5&eqn5_eqn=-25%2Fx&eqn6_color=6&eqn6_eqn=&x_min=-10&x_max=1000&y_min=-2&y_max=1&x_tick=25&y_tick=0.1&x_label_freq=2&y_label_freq=1&do_grid=0&do_grid=1&bold_labeled_lines=0&bold_labeled_lines=1&line_width=4&image_w=850&image_h=525

On the vertical (y) axis, you have the effective tax rate, with every tick representing 10%. On the horizontal axis, you have pre-GAI income in thousands of dollars.

Orange curve: 'flat tax rate' = 100%

Red curve: 'flat rate' = 78% (about what we would need if someone who makes $32K - the current median - were to neither gain nor lose in this system)

Blue curve: 'flat rate' = 50%

Green curve: 'flat rate' = 20%

Purple curve: 'flat rate' = 0%

Edited June 26, 2015 by Evening Star

[-1=e^ipi]

Well it still would probably be the same for most adults. Though with respect to children or disabled people, I'm a bit stuck on how to determine the value. I guess for disabled people, you could assume that they have a similar utility function but don't have the option to work (so a social welfare maximizing government would give disabled people more money). For children, maybe you look at the relationship between monetary support for children & their long run outcome and pick a value that optimizes steady-state social welfare.

I thought more about how to deal with disabled people, children, and people in remote areas.

For disabled people, being disabled not only generally reduces one's wage, but also reduces the utility one obtains from leisure. So one could try to find some optimal extra guaranteed income to give to disabled people (which will likely depend on the disability) by modifying the utility function of the disabled people to take this into account. Though you would have to find some empirical way of measuring the loss of usefulness of leisure time for different types of disabilities. Perhaps you could look at the willingness to pay of disabled people to reduce their disability (such as obtaining prosthetics, getting cochlear implants, etc.). I will point out that in order for the reduction of effectiveness of leisure time to justify a higher guaranteed income to disabled people then d^2U/dl/dc must be negative, where U is utility, l is leisure, and c is consumption (most of the functional forms I was considering did not have this property; so it could be a bit problematic).

For people in remote areas, if you simply index income with respect to price level then you can easily obtain how the guaranteed income should vary based upon location. Ultimately, what matters is consumption (which depends on both income and price level).

For children, maybe instead of what I suggested earlier, you take the same approach as people in remote areas and treat children as normal but with a lower price level (lower food expenditure, clothing expenditure, etc.). This would result in children obtaining a lower guaranteed income than adults.

I'm still a bit unsure how a logarithmic utility deals with the issue of dead people. For utility functions with constant relative risk aversion, dealing with people with 0 consumption gets difficult if the constant is 1 or greater. Though I guess if I look at consumption and leisure over a lifetime (perhaps discounted too) then perhaps this can be resolved (although that might result in no consumption smoothing behaviour).

[Evening Star]

On this graph, the x-axis represents someone's pre-GAI income in 10s of 1000s of $. The y-axis income represents their income after both the GAI and the tax (again in 10s of 1000s of $). If you can draw a square from the origin of the graph to any point on a curve, that is the income at which someone neither gains nor loses anything in Euler's system.

https://graphsketch.com/?eqn1_color=1&eqn1_eqn=0.5x+%2B+25&eqn2_color=2&eqn2_eqn=.22x+%2B+25&eqn3_color=3&eqn3_eqn=.8x+%2B+25&eqn4_color=4&eqn4_eqn=25&eqn5_color=5&eqn5_eqn=x%2B25&eqn6_color=6&eqn6_eqn=&x_min=0&x_max=300&y_min=0&y_max=200&x_tick=10&y_tick=10&x_label_freq=2&y_label_freq=2&do_grid=0&do_grid=1&bold_labeled_lines=0&bold_labeled_lines=1&line_width=4&image_w=850&image_h=525

[Evening Star]

I think those graphs help to clarify my issue with this system: the slope of the curve in the first graph (of effective tax rate) is steepest at the lowest income levels and approaches 0 as you get to extremely high income levels. A $5000 difference in income makes a huge difference in your effective tax rate between $25 000 and $50 000, and a significant difference between $50K and $100K, but makes very little difference above $250 000.

In order to pay for the GAI, it seems that the 'flat rate' would have to be set at such a high level that it would significantly slow the upward mobility of anyone who is in the lowest group of income earners just above the 'zero point'. Very high earners would probably also end up keeping significantly less than half of what they make in a year, which tends to make them unhappy.

Edited June 26, 2015 by Evening Star

[Evening Star]

dp

Edited June 26, 2015 by Evening Star

[-1=e^ipi]

In order to pay for the GAI, it seems that the 'flat rate' would have to be set at such a high level that it would significantly slow the upward mobility of anyone who is in the lowest group of income earners just above the 'zero point'.

Why would it slow upward mobility? With respect to how it taxes affect the labour-leisure decision, what matters is the marginal tax rate, not the effective tax rate.

differing conceptions of social justice (which cannot always be measured in strictly numeric terms)

Does the coefficient of relative risk aversion not capture this?

ways to promote economic growth (which, no, is not a mathematical formula - different economists have very different ideas as to the best way to do this)

People will make theories, and provided those theories are falsifiable, they can be tested against the empirical data. Theories that are falsified can be thrown out. With respect to competing theories that haven't been falsified, you should give preference to the simplest theories (i.e. follow Occam's razor). There are lots of economists, or people that aren't really economists but have the title of 'economist', who are just plain wrong and should be ignored.

encouragement of socially desirable behaviours and discouragement of undesirable behaviours, etc.

Pigouvian taxes/subsidies?

[Canada_First]

What he is implying would give a majority of the people more money, more than they currently have.

If people want more money they need to get better jobs or better education. Not take more of my tax dollars to give to people too lazy to work for a living.

[-1=e^ipi]

If people want more money they need to get better jobs or better education. Not take more of my tax dollars to give to people too lazy to work for a living.

So you are suggesting that differences in economic outcome are primarily the result of laziness? Can you prove this claim? Also, do you understand the concept of a poverty trap?

[Canada_First]

So you are suggesting that differences in economic outcome are primarily the result of laziness? Can you prove this claim? Also, do you understand the concept of a poverty trap?

Plenty if able bodied people on welfare. Look at those anti poverty activists. Many are able bodied and fat so they seem to have lots of free time and make use of our food banks.

Everyone not supposed to be exactly equal. Thats communism. You make your own way in this life. You get an education meet the right ppl and good things happen. If you sit around smoking pot philosophizing nothing happens.

[-1=e^ipi]

Plenty if able bodied people on welfare.

Yes. Are you trying to imply some sort of value judgement with this statement? Are you trying to say these able bodied people should not be on welfare?

Everyone not supposed to be exactly equal.

Was someone in this thread implying otherwise?

You make your own way in this life.

Could you define more clearly what you mean by this statement and how I can empirically validate it?

You get an education meet the right ppl and good things happen. If you sit around smoking pot philosophizing nothing happens.

I don't think everyone fits into one of these 2 categories.

[PrimeNumber]

If people want more money they need to get better jobs or better education. Not take more of my tax dollars to give to people too lazy to work for a living.

Well without those "lazy" people your capitalist society can't function. You see not everyone can be at the top for capitalism to work. There must be more at the bottom. Realistically making more money, doesn't mean you work harder. I've worked plenty of jobs for terrible pay that were much harder than the career I currently work with little education.

[Canada_First]

People are in control of their own destinies. Some people get degrees in stupid things that they can never hope to work in. Fluff degrees. I don't know why people take them as majors.

So you guys are telling us that the rest of have us have to finance those people who made poor choices in life. I say too bad. Only the strong survive and the meek shall inherit nothing.

People have choices to make. Go to higher education. Go into trades. Become an entrepreneur or prepare for a life of poverty. We shouldn't guarantee any yearly wage to those who wish to sit on their asses doing nothing. They get whatever scraps I see fit to give them. Nothing more.

[PrimeNumber]

People are in control of their own destinies. Some people get degrees in stupid things that they can never hope to work in. Fluff degrees. I don't know why people take them as majors.

So you guys are telling us that the rest of have us have to finance those people who made poor choices in life. I say too bad. Only the strong survive and the meek shall inherit nothing.

People have choices to make. Go to higher education. Go into trades. Become an entrepreneur or prepare for a life of poverty. We shouldn't guarantee any yearly wage to those who wish to sit on their asses doing nothing. They get whatever scraps I see fit to give them. Nothing more.

Yours is unfortunately a minority view in this country. As we still have these systems in place. Sorry but we'll change the rules when we see fit.

Edited June 26, 2015 by PrimeNumber

[Canada_First]

Yours is unfortunately a minority view in this country. As we still have these systems in place. Sorry but we'll change the rules when we see fit.

isn't it quite arrogant of you to assume YOU can change anything? What's your name in real life? Are you someone with political power?

I'm pretty much the bad guy. I'd scare the shit out of most normal people. ..lol.

Edited June 26, 2015 by Canada_First

[PrimeNumber]

isn't it quite arrogant of you to assume YOU can change anything? What's your name in real life? Are you someone with political power?

I'm pretty much the bad guy. I'd scare the shit out of most normal people. ..lol.

Maybe, maybe not, you'll never know.

[Canada_First]

Maybe, maybe not, you'll never know.

So what are you going to change exactly? I'm going to write it down and compare to things that actually change once the socialists gain control if Canada.

[PrimeNumber]

So what are you going to change exactly? I'm going to write it down and compare to things that actually change once the socialists gain control if Canada.

Not much really, we already have most of the things we want.

[Canada_First]

Not much really, we already have most of the things we want.

You want more free stuff for those that refuse to work right? Like higher welfare rates? You want to give welfare recipients 25k a year you said right?

[Canada_First]

So what else will they do to take from the middle class and give to the poor? Free national daycare? Double immigration. Reduce jail time. Legalize all drugs. Anything else I left out?

[PrimeNumber]

You want more free stuff for those that refuse to work right? Like higher welfare rates? You want to give welfare recipients 25k a year you said right?

That wasn't my idea, but I was willing to hear it out.

Technically everyone would get it, so we would all effectively be welfare recipients. Though I don't think children should be entitled. Probably a cut off of 18 years or possibly only recieved if you pay some form of taxes. There would be no other welfare, pension or old age securities as this would effectively cover them all. The rest of what you save for retirement would be up to you.

I'm not sure I understand what a "welfare rate" is.

[Canada_First]

That wasn't my idea, but I was willing to hear it out.

Technically everyone would get it, so we would all effectively be welfare recipients. Though I don't think children should be entitled. Probably a cut off of 18 years or possibly only recieved if you pay some form of taxes. There would be no other welfare, pension or old age securities as this would effectively cover them all. The rest of what you save for retirement would be up to you.

I'm not sure I understand what a "welfare rate" is.

and you call yourself a socialist. ...tsk tsk...lol jk.

A welfare rate is the rate of money that a recipient receives each month. Currently it's about 600 a month. Disability is quite a bit more like double that amount.

[PrimeNumber]

and you call yourself a socialist. ...tsk tsk...lol jk.

A welfare rate is the rate of money that a recipient receives each month. Currently it's about 600 a month. Disability is quite a bit more like double that amount.

Well with this everyone would recieve about $2083/month.

[Canada_First]

Well with this everyone would recieve about $2083/month.

What incentive would they have to work at all?

[-1=e^ipi]

People are in control of their own destinies.

Proof? This completely ignores other factors in that affect people's outcomes. Did the soldier on parliament hill choose to be shot by an Islamist sympathizer? Was that his control over his own destiny?