if this reduces supply of the necessities, there is a strong incentive for people on just UBI to start working again
Technically, there is a danger that the tax rate for the working people may become so high (imagine e.g. 99%) in order to support the UBI, that when a person finds out they are unable to survive on UBI alone, they are screwed anyway.
It may happen to some people sooner than to others because not everyone has the same expenses. For example people with health problems may need to pay extra for medicine. We can get situation where UBI allows you to survive without work if you are healthy, but if you are sick even UBI plus heavily taxed salary will not be enough to survive.
I am not sure how realistic this is... I am just trying to imagine the worst possible scenario (while aware that people are often insufficiently pessimistic at predicting what could go wrong).
EDIT:
It would also be better, I think, if the first dollar gained above UBI is more or less untaxed. Less incentives for gray market. (Otherwise I expect at least 5-10% of population living on UBI + some undocumented income.) Which implies some kind of progressive taxation. (Which has its own bad incentives.)
It would also be better, I think, if the first dollar gained above UBI is more or less untaxed. Less incentives for gray market. (Otherwise I expect at least 5-10% of population living on UBI + some undocumented income.) Which implies some kind of progressive taxation. (Which has its own bad incentives.)
The ideal, at least as I approach it, is the combination of the UBI with a flat tax, wherein the flat tax applies to the UBI as well as all additional income. You use the UBI to offset the flat tax's regressive tendencies.
This has an additional nicety i...
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