That doesn't mean the cost goes away. You'll still have to increase marginal rates by at least 20% across the board, or if you have lower marginal rates for the poor, then even higher for the rich. ($12K is about 20% of the per-capita income in the US).
A 20% increase in marginal rates is definitely going to affect the incentive to work. Middle class wage earners will be paying 50% to 60% of their income.
If you want to save on the cost by scrapping existing benefits, the $12,000 a year would probably not fully replace the social security pension, disability benefits, or EITC/food stamp/TANF benefits people get, or at best be approximately the same. So you haven't changed things much for people at the bottom, in exchange for a massive tax hike.
> So you haven't changed things much for people at the bottom, in exchange for a massive tax hike.
A massive tax hike combined with a simplification in government should result in larger revenues. If things don't change for people at the bottom, who did they change for - all that extra money has to go somewhere, holding all other government spending constant. Presumably the lower middle classes ended up the recipients of this massive tax hike, in your perspective. But this is just a function of the progressive tax curve; it and the fixed payment can both be adjusted to achieve a particular redistribution.
The more interesting thing, to me, about an unconditional fixed income, is that it changes the nature of work at the margin. Benefits don't turn into poverty traps if they're unconditional. Incremental part-time work doesn't come hand in hand with the risk of losing your benefits. I think employment overall, and productivity, would increase.
Either you need to make a massive, basically unaffordable tax hike on middle-class and upper-middle class people, or make a decent size tax hike on everybody.
Pensioners/disabled/people receiving unemployment benefits would be worse off.
The big winners would be people who are not working and not receiving benefits today, and presumably the people who live in the same household as them.
A 20% increase in marginal rates is definitely going to affect the incentive to work. Middle class wage earners will be paying 50% to 60% of their income.
If you want to save on the cost by scrapping existing benefits, the $12,000 a year would probably not fully replace the social security pension, disability benefits, or EITC/food stamp/TANF benefits people get, or at best be approximately the same. So you haven't changed things much for people at the bottom, in exchange for a massive tax hike.