That is, according to Widerquist, the $2-3 trillion projections are just bad math. These simplistic calculations involve multiplying the number of people in America (roughly 330 million) by the average UBI output (approximately $10-12k). While they accurately assess the amount of money that would be involved in such a system, they aren’t accounting for the fact that most of that money will be exchanged via the tax system (many people will pay into it, but they will also get that money back, effectively nullifying the need to generate “new” revenue), meaning that the total amount of new revenue that the government actually needs to generate is only about $539 billion, or roughly 3 percent of GDP. That new revenue, according to Widerquist, could mostly be generated by taxing America’s richest families and would help pay for basic income for some 99 million people, or roughly a third of the U.S. population.
When looked at this way, Widerquist says that a national UBI system would be a relatively small part of federal spending. “The net cost of this UBI scheme is less than 25% of the cost of current U.S. entitlement spending, less than 15% of overall federal spending, and about 2.95% of Gross Domestic Product (GDP),” his 2015 article claims. “The average net beneficiary is a family of about two people making about $27,000 per year in market income.”
If you want to make the number a bit more palatable, look at Negative Income Tax. It’s basically UBI, but limited to those who make under a certain amount, so you have far fewer beneficiaries and you can phase it out as people earn more.
So let’s do a little math and see how it could work. The census bureau says 38M people are in poverty, and poverty is defined here based on family size (numbers are on page 19 of the PDF in that article). So, if we assume the typical family size of someone in poverty is four people, they’d need ~$30k to get out of poverty. If we assume everyone in poverty makes nothing, then that’s a cost of $1.1T. However, I think it’s more reasonable to think they’re making at least half that, so $500-600M seems like a reasonable estimate.
We pay ~$1.3T for Social Security right now. So we could replace Social Security with a guaranteed minimum income at the poverty level for at most our current SS tax revenue, and probably about half that. So if we merely changed Social Security from a retirement program to an actual safety net, we could lift everyone out of poverty and get a lot of people up to a living wage, without raising taxes at all. Oh, and it would also solve the SS funding issue since we’d be spending less than current revenues.
So my proposal is:
What would that amount be? I’m going to assume you’re talking 100’s of thousands. I’m for expanding, not limiting. Get more taxes from the uber wealthy like the corporations and billionaires that tax dodge.
Don’t sunset, do both, imo.
I see that you’re really trying to help the poor, but we need to do more, not stay even. The “poor” is at such a low level, you really have to be destitute to get any help. If you take away Social Security as a system, it will be chipped at behind the scenes until it’s even less. We have to raise minimum wage, give everyone money, and help people get jobs that are going to be available in the future if we want to keep this country going.
I think $100k is plenty high. If you’re getting more that in retirement, there’s no reason for you to be receiving Social Security, especially when the maximum possible payment is $58k/year (pay tax on $168,600 for 35 years). We can phase it out from $50k to $100k, so by $100k you’re getting nothing from SS. We could even make it not based on taxable income and include Roth IRA withdrawals to patch a loophole.
But this is a temporary measure while they age out. After that, everyone would just get the means-based safety net, so you’re guaranteed to at least be above the poverty line.
That requires significantly increasing taxes. You’re not going to get that much from the very wealthy, they are a powerful lobby in government and there aren’t that many of them.
That said, I do think we can do something about this. One of the big sources of compensation for the very wealthy is stock options, and they’re only taxed when they sell. I think we can tax stock options as income with small exemption (say, the first $20k of options don’t have this tax) to protect bonuses and whatnot for regular people. That’s what I mean by taxing outflows from the business, any time capital moves away from the business, it gets taxed based on the recipient (i.e. sales tax for purchases, income tax for payroll and options, capital gains tax for stock sale, etc).
But this is more, and it doesn’t require increasing taxes at all. I’m basically shifting tax dollars from the upper-middle class to the lower classes, raising the floor on their earning potential and making work optional for a huge number of people. That does a lot of awesome things:
This is a trap. As the minimum wage increases, so does the cost of basic goods, and people are still stuck working a 9/5 that they probably hate. You’ll probably increase standard of living a bit, but you’re doing nothing to help people achieve financial independence.
I think we should eliminate the minimum wage once we have this safety net in place. People will have basic necessities met, so they’re not going to take jobs that aren’t worth the pay, and they’ll probably care more about the jobs they do take. I think there’s a good chance more jobs will be paid based on their value to society and not the minimum they can get from desperate people. There may even be a greater push for unions, since the main risk of forming a union (mass firing) wouldn’t be nearly as bad since there would be a soft landing.
But the benefits need to be low enough so people are still motivated to work, but not so low that they need to work to meet basic needs. So if you want more from life than shelter and consistent meals, you’ll find a job you hate less than forgoing the increase in standard of living you’re getting. With this change, most people would make less from their jobs, but they’d net a little more and have a lot more confidence to leave their job. The main motivation is cutting the dependence on a job, not redistributing wealth (the wealth redistribution is the tool, not the goal).
Why are you deciding these things for all of Americans? Are corporations and billionaires paying their fair share? Why are we just accepting that billionaires can lobby politicians so we have to let them off the hook? Sorry man, I think you’re looking for status quo minus starving people. No thanks.
It’s called being realistic. You can push for a pipe dream, but your odds of actually getting anything done are next to nil. And the benefits if you somehow pull it off are also quite low. If we took all of the money from billionaires in the US, we’d get about $5.5T, which would fund the US government for about a year. Or if we spent $500B/year more on poverty, we’d fund it for ~10 years. And that’s assuming we take all of their assets, not just their income going forward, so it’s not sustainable.
Billionaires are a popular punching bag, but trying to get money from them is both really hard (due to lobbying) and not that lucrative (there’s not that many of them). Look at this article about who pays taxes, average income taxes paid scales with income, and the bottom 50% already pay almost nothing.
And I am proposing increasing taxes on the wealthy, that’s what targeting stock options would do. I’m also a fan of removing the income cap for Social Security taxes (would generate ~$100B/year). But if we try to solve problems like this mostly through income taxes, the top 50% are going to fight tooth and nail because they already pay like 98% of the taxes already. It’s just not happening. But restructuring Social Security like this disproportionately takes from the wealthy (who don’t need it anyway) and helps the poor, elevating pretty much everyone from poverty.
I’m looking to not shake up the tax code too much while disproportionately helping the poor become independent from a 9-5 job. This should create more entrepreneurs and thus more class mobility in the US. We’d need to pair it with loosening up our immigration policy to fill in the gaps in labor since Americans would be a lot less interested in taking those jobs.
The Secret IRS Files: Trove of Never-Before-Seen Records Reveal How the Wealthiest Avoid Income Tax
Exactly. That’s a big part of what I’m talking about w/ taxing stock options. That’s how most extremely wealthy people get compensated (most C-Suite level people), so attacking that is the best way to get revenue from them.
That doesn’t solve the “growth” problem, but they tend to donate a ton to charities (see Bill Gates and Warren Buffet for huge examples), so we’re still getting a public benefit from those shares. If we want to target property, we can look at increasing property taxes (e.g. Land Value Tax).
However, even if we took every penny from billionaires, we could fund our budget deficit for ~3 years, or everyone could not pay taxes for one year. Taxing the super wealthy isn’t going to solve our problems, and it’s going to be an uphill battle.
Instead of that, we can look at options that don’t change how much taxes they pay but instead make more efficient use of the taxes we do pay. So the options to me are:
The second option sounds a lot more attractive to me… We just need to convince the middle class that they’ll still be fine with the change.
I’m still on team tax the wealthy AND lift everyone out of poverty. It’s not an either or situation.