What the spread of universal basic-income schemes says about Americas safety net
A while ago I wrote up what I think is the perfect UBI:<p>Summary<p>A new flat tax on all income, in addition to existing taxes.<p>Distributions are exactly equal to all people<p>Tax revenue is set aside for immediate redistribution. It never touches the general budget<p>Distributions are based exactly on the revenue from the tax. There is no commitment to any particular amount<p>Details<p>The tax would be a percentage of income that is the same for everybody. No brackets or exemptions. 10% might be a good place to start.<p>All Income must be included in the taxable amount, including payments from this program. No exceptions. It particular it would include capital gains, dividends and carried interest. ALL income from ALL sources.<p>The definition of ‘person’ who is eligible would require a bit of thought. At a minimum, all adult citizens should be included. Whether to include children or various types of non-citizens is debatable. In any case, anyone eligible for distribution must also pay the tax.<p>Tax is set aside for immediate redistribution (say, monthly). It never touches the general budget. It requires no ongoing authorization. It never gets invested in anything (definitely not government bonds) or held for any substantial length of time.<p>The calculations on which the payments are made might happen somewhat less frequently than the payments themselves, for example annual calculations but monthly payments. This probably makes things a bit more stable for people in the short-term.<p>Let’s not create a new administrative agency, let’s just use the Social Security Office. They’ve been doing a fine-enough job distributing cash to millions of Americans and have all the infrastructure in place. And this program is similar to SSI anyway.<p>Advantages:<p>The system is self-adjusting. Because there is no guaranteed payment amount and it’s based just on the amount collected from the tax, then as people work less, the payment will be lower and people at the margin will more likely choose to work, pushing the tax revenue back up. As more people work, the tax and corresponding payments go up. There will always be some free riders – but that’s a feature, not a bug. If you have enough money and don’t want to work anymore – then don’t. That’s okay. The important thing is that because this program wouldn’t be means-tested, then there is never a dis-incentive to working more if you want more money. This contrasts with something like unemployment insurance and all other means-tested government programs, which DO penalize you for working more, by reducing or eliminating your benefit.<p>Not subject to the whims of politicians. Because the revenue from the tax never enters the general budget or is invested in any way, there is no way for politicians to use it for their own ends, or to tie it up in political battles.<p>It preserves freedom and dignity. An important part of being a free person is the ability to choose for yourself. It’s something that many of us take for granted, but any program that comes with strings attached, vouchers, subsidies or earmarks is a way for politicians and bureaucrats to control what the beneficiaries do and thereby take away their freedoms, dignity and basic humanity. Distributions from this program will be made equally to all, with no strings. People have the dignity and responsibility to choose for themselves.