Mei Lamison/Achona Online
What would you do if the government gave you $1000 monthly? What would it enable you to do? While this idea may seem far-fetched, its implementation may soon become a reality. After all, the popularity of a Universal Basic Income, or UBI, has risen in the last few months.
A UBI defines the idea of periodic cash payments given to a population with minimal or no requirements to qualify for funding. Supporters of a UBI claim the money will then allow recipients to live above the poverty line and thus improve their standard of living.
In this article, we explain why we support the idea of a Partial Basic Income. With its implementation, we believe it will significantly decrease poverty levels across the United States. Before we dive into our proposal, however, it is important to first explain what a true Universal Basic Income is and the possible effects it may hold on our nation.
The idea of a basic income is not a new one; it has been around since the 1700’s and has resurfaced various times throughout history. Thomas Paine, Napoleon Bonaparte, and Dr. Martin Luther King, Jr. are some of the most famous supporters of a UBI. Over the past several decades, the idea has cropped up in various forms: as a citizen’s dividend, a social credit, a national dividend, a demogrant, a negative income tax, a guaranteed minimum income, and various other concepts.
The thought of a basic income, however, lost steam in the U.S. during Ronald Reagan’s presidency, as it was labeled as a far left proposal that undermined free markets.
Most UBI’s are characterized as periodic, individual, unconditional, and as the name entails, universal. The term “periodic” refers to the income’s recurrent payment. For example, the system would provide citizens with income each month, rather than just one time. “Individual” refers to the number of recipients per designated amount. Under our personal proposed plan, every person would be receiving a share, versus a couple or household. “Unconditional” implies the income would hold no bias or requirement. Citizens will receive the cash regardless of pre-existing conditions or circumstances. Lastly, the term “universal” implies the money is distributed to all. This point, however, is where we disagree.
“I think that a Universal Basic Income is a great idea. There should be a certain criteria of people that should get it. Obviously, there are some people who are more in need of it than others. Those people who are more in need should get the money,” said Crista Guevara (‘23).
Many proponents of a UBI agree the set amount of cash payments should hover around or above the poverty threshold. Currently in our nation over 38.1 million live in poverty, with these individuals making less than $11,770 in earned annual income. Thus, many supporters agree the set amount for a basic income should be $12,000 annually or $1,000 per month. We agree with payment range.
Recently, the idea of a UBI has gained traction due to former presidential hopeful Andrew Yang’s proposal. Yang’s Universal Basic Income, as he termed the Freedom Dividend, would give $1,000 per month, or $12,000 per year, to every American adult over the age of 18. The dividend would be a “no strings attached” approach to welfare, meaning everyone receives it regardless of any other external factors. According to Yang’s website, his proposal for a guaranteed income would allow all Americans to “pay their bills, educate themselves, start businesses, be more creative, stay healthy, relocate for work, spend time with their children, take care of loved ones, and have a real stake in the future.”
One of Yang’s prominent reasons for UBI is to combat the development automation. With the rise of advance technology, American jobs have fallen risk. Machines are cheaper and easier to use, therefore many businesses have started to shift towards machine labor. Because fewer workers are necessary to maintain automated industries, many jobs are at loss. A basic income could solve some of these issues and alleviate the transition from human to machine labor by providing income to workers and the families of workers who face possible displacement.
Many economists argue that an implementation of a UBI will boost the U.S. economy. A study by Bard College’s Levy Institute claims that $12,000 per year per adult would permanently grow the economy by 12.5 to 13 percent, or about $2.5 trillion come 2025. A UBI would also expand the American labor force by 4.5 to 4.7 million people. While this study does base its findings off of a true UBI, a partial basic income could still have similar effects.
We, however, feel that the most prominent reason for a UBI is to allow citizen to break out of the “welfare trap.” Many argue that our current welfare systems promotes passive behavior and trap citizens in a state of poverty. In simplified terms, under many current programs, citizens qualify for benefits by a set income level. If a family or individual were to earn above that level, their benefits would begin to immediately decrease. Therefore, there is no incentive to advance in socioeconomic status out of fear of welfare programs being taking away. Under a form of basic income, however, work is always rewarded because there is no minimum ceiling or harsh means test surrounding qualification. A form of UBI would ensure that all individuals are given the chance to better themselves without limitations.
Currently, 1.46 million US households, including 2.8 million children, now live on less than $2 per person per day. With guaranteed income, citizens are more likely to take risks, walk away from negative or discriminatory work environments, receive higher education, and better take care of their families since they have promised insurance.
While we do agree a UBI can solve issues of poverty, welfare and automation in the United States, we do not think a truly universal income is necessary to achieve these goals. A true UBI implies that everyone receives cash payments, including the wealthy and upper middle classes who may not need it. Instead of a truly universal basic income, we propose a partial basic income in addition to the tailoring of our current welfare systems. America’s welfare system should be geared towards helping the poor, sick, and vulnerable. After all, why would we give a recurring sum of money to wealthier Americans who do not necessarily need or rely on it.
“I think a UBI would be a great proposal as long as it’s limited to people of certain incomes, but you can’t deny there would be some problems with it. For example, who would pay for it? While it may be established and working well in other countries, I’m not sure a UBI would fare well in the US just because of the dramatic difference in population and in our economy types, like socialism or capitalism. It might be a possible option in the future as our economy continues to evolve, and I think it would be interesting to see who benefits from it and any possible issues that might arise,” said Asha Sneed (‘21).
How would we fund it?
There are several suggested methods for funding various basic incomes. The most popular proposal, Yang’s proposal, suggests funding a dividend by consolidating some welfare programs and implementing a Value Added Tax of 10 percent. A Value Added Tax, or VAT, is a tax on the production of goods and services a businesses produces. The idea behind this is that large corporations – who are notorious for evading fair taxes – would be forced to pay their fair share.
Another proposal for funding is by cutting almost all forms of means-tested welfare programs, such as Supplemental Security Income, SSI, Supplemental Nutrition Assistance Program, SNAP or food stamps, Medicaid, and Children’s Health Insurance Program, CHIP, all of which are vital to millions of Americans. This proposal for funding has been widely criticized as it would necessitate the removal of funding for crucial welfare programs. We consider the total removal of welfare programs counterintuitive as it would harm the people we aim to assist. Therefore, under our proposal, we refuse to cut services citizens rely upon.
A carbon tax is a fee imposed on the burning of carbon-based fuels such as coal, oil, and gas, which aims to reduce the amount of CO2 burned by taxing corporations on their emissions. A carbon tax could disincentivize the burning of fossil fuels while benefiting Americans by paying for a partial income.
A wealth tax could also provide funding for a basic income. Specifc tax on the fortunes of the richest 1 percent of Americans could raise millions for a basic income. Roughly 7 out of 10 Americans support the idea of taxing the wealthiest citizens for extra government funding. The idea of a wealth tax has also been supported by billionaires, including Chris Hughes, co-founder of Facebook, and could provide for much of the funding a partial income would necessitate.
Lastly, another proposal to fund a partial basic income could be a luxury goods tax. A luxury tax could be placed on goods considered expensive, unnecessary, and non-essential, such as expensive cars, private jets, and yachts. It would be an indirect form of taxation that would only increase the cost of certain expensive goods that wealthier people purchase.
“I don’t know if a universal basic income would ever work in the U.S. You would have to raise taxes to pay for it, and that’s always a big ‘no-no.’ People really don’t want their taxes raised, they want them cut. I’d think that would be a huge issue,” said History and Economics teacher Beth Chase.
Overall, a combination of any of the proposed methods could serve to fund the version of a universal basic income that we propose. Each proposal comes with its own ramifications, but if conducted properly, a basic income is not entirely unfeasible to fund out of our existing budget and other supplemental fundraising.
Critics of UBIs tend to claim recipients spend their given allowance on drugs and tobacco. This, however, has been proven wrong time and time again. Not only is this claim false, but the items bought by the given income promote businesses and boosts local economies. A study conducted by the University of Chicago, for example, points out lower and middle income populations allocate extra income on groceries, cleaning products, car and transportation services, and other household supplies.
“My concern would be that there wouldn’t be a motive to go out and look for a job, especially if you have been out of work for a long time depending on the amount of money they give you monthly. We give people unemployment, but those people have been in the workforce. You’d be giving a basic income to everyone regardless of whether they had been in the workforce or not,” said Chase.
Others, like Chase, argue a UBI will decrease the workforce by taking away citizen’s main incentive for having a job. However, Universal Basic Incomes implemented in Canada in the 1970s showed that only 1% of the recipients stopped working. Additionally, most of those who stopped did so to take care of young children or aging parents. On average, people reduced their working hours by less than 10 percent. The extra time gained was used by recipients to achieve goals, go back to school, and look for better jobs, which increased their standard of living.
As for the economic consequences of a partial income, it is important to note that the positive effect on production and growth caused by implementation means the elasticity of supply would offset inflationary pressure. A partial basic income would put money in the hands of the poor, which would ultimately increase demand in the market. This spurs higher consumption because those with lower incomes have a higher propensity to consume. On a macro basis, this would not necessarily create any inflation, as there is no new money entering the economy.
There are already working forms of basic incomes with positive benefits inside of the U.S. The Alaska Permanent Fund, for example, is a working basic income. The fund splits and distributes the state’s oil and gas revenues annually to nearly all of its population. It is heavily favored among the population. 90 percent of Alaskans support the Permanent Fund. 81 percent say that the PFDs helped improve their quality of life. 72 percent of residents say they use the allocated money for emergency, retirement, and education costs.
Similarly, the Eastern Cherokee Native American tribe provides another example of a working basic income within the United States. The tribe provides a grant to all its adult members from subsidies funded from casinos. The payments received have had positive impacts on children’s educational attainment, criminal arrests, and on children’s emotional and behavioral health.
Although we are not certain of the exact proposal or conditions that would best serve the United States, we are sure that a partial basic income would raise the quality of life for many. With an extra sum of money, citizens will be better able to care for themselves, their spouses, and their families. With insurance, Americans are better able to take risks, walk away from discriminatory environments, break out of welfare, go back to school, and gain a better life. This has proven positive the both the theoretical and real life examples provided above.
America has the resources to implement a form of basic income. Now is the time to do so.
This story was originally published on Achona Online on February 25, 2020.