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When UBI comes up lot of people on HN ferociously debate the merits of UBI vs. negative income tax, but they are mathematically equivalent.

For example, a UBI of $1000 and 25% tax is the same as a (possibly negative) income tax of 25% above $4000. That's because:

    (1-0.25)*x+1000 = x+0.25*(4000-x)
You can convert from one to the other.


They are equivalent under certain assumptions, but there are still differences (assuming negative income tax would operationally work in the same manner as current tax systems), e.g.:

1) UBI is targeted to citizens, while income tax affect tax residents, these may be different groups of people.

2) tax refund is paid once a year, which would be problematic for people with bad money management abilities.


2) Taxes are already being deducted from your paycheck every month. Negative taxes would instead increase your monthly paycheck.


Ok, then let's go with a negative income tax instead. Other than avoiding welfare traps there is not much merit to the idea of a UBI anyway. People have always worked, the only ones that really need a UBI are those that cannot do work or are in the process of seeking better work but are trapped in their existing one. A negative income tax serves them just as well but people won't associate it with "free money for everyone".

I know a friend who would love to work as a software developer but can't afford even the relatively small tuition that a German university charges its students with his current job. A negative income tax would help him out.




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