Wednesday, February 13, 2013

Feasibility of the Guaranteed Minimum Income

A guaranteed minimum income (GMI) is a tax scheme designed to replace welfare, social security, and other poverty-support systems with a single unified system that ... guarantees a minimum income to everyone. In the future times, I'll post about why such a system is manifestly a great idea. For now, I want to examine its feasibility. This calculator inputs the proposed guaranteed minimum income and a marginal tax rate schedule, and uses census data to estimate total expenditures, total receipts, and net tax revenue.

A couple of quick notes. First, units are percentages of GDP/capita. Second, the census data are for individuals age 15 or higher; this should result in a significant positive bias, since the distribution does not account for children. Third, I make no estimates about the impact of tax changes on revenues; one should bear the concavity of the Laffer curve in mind.
Update: According to the CIA world factbook, roughly 20% of the US population is less than 15 years old. I therefore added 22% to the lowest income bracket in order to account for this.
Graphs Pre-tax/post-tax curve:
Income distribution:
Net receipts in each tax bracket:

1 comment:

  1. Hi Contrary Neal
    Really liked you post on "Feasibility of the Guaranteed Minimum Income".
    Was hoping I could get the original spreadsheet (charts, formulas...etc...). Could you email or share it with me via my google account?
    Sorry for contacting you via the comments, but I could not see another way.