Funding a universal basic income (UBI) is straightforward when using a payments tax to generate revenue. By raising a payments tax from one tenth of one percent (0.1%) to two tenths of one percent (0.2%), enough revenue is generated to fund a substantial UBI in addition to a slew of other benefits.
Under this financing schedule, a UBI of $24,000 per year could be paid to all adult citizens. This adds up to a $5.5 trillion bill. One benefit of a UBI is that it replaces the current welfare system and social security that currently costs nearly $2 trillion. It also eliminates the steep overhead costs of implementing these programs- because social security and welfare are given on an individual basis, they are both time consuming and costly. When coupled with Banking 2.0 proposals, distribution of a UBI is both cost- and time- efficient.
The US economy is reliant on both the ability for producers to produce goods and services, and the ability for consumers to consume goods and services. The U.S. economy has the capability to produce far more than it is producing right now, but is limited by demand. During the last recession, for example, many auto manufacturers almost went out of business because not enough people were purchasing cars. Auto manufacturers had the capability to produce more cars- the issue was from consumer limitations. This lack of demand is compounded by job loss to automation and is hindering the productive capabilities of the economy. Providing citizens with a Universal Basic Income (UBI) creates a counterbalance the economy’s ability to produce. it is not a government handout, but rather a means to allow citizens to enjoy progress instead of becoming its victim.
Distributing a UBI unconditionally eliminates stigma associated with receiving welfare, and creates enough support for Americans to escape the cyclical poverty trap created by the current welfare system. It also allows individuals more time for activities that benefit society, like volunteering and innovating.
Automation and Work Incentives
Automation threatens middle-to-low income jobs, and a UBI creates support for these individuals. A UBI would need to be coupled with an Earned Income Credit (work incentivised welfare) program initially to encourage work while jobs are still available. The following earned income credits could be given in the following manner:
Income Bracket Earned Income Credit
Given this, someone who earns $10,000 would take home $15,000. An earned income credit paired with a UBI allows minimum wage earners to live comfortably.
Putting more money in the pockets of citizens will increase spending in the economy, and will undoubtedly lead to long-run economic growth. A UBI benefits individuals, and it benefits the economy as a whole.
In addition to giving all adult citizens a UBI of $24,000 per year, a payments tax of two tenths of a percent could fund an expanded social security program, giving all Americans 70 and over $30,000 per year. The Social Security Administration’s 2015 report stated that social security will begin depleting in 2034, and even the current social security system doesn’t comfortably provide retirement- most retirees need to use their private savings as well. When social security depletes, this will mean that payments to retirees will be cut, and/or the FICA tax will need to be expanded. When Social Security was created, there were 41 workers per retiree, compared to 2.9 workers per retiree in 2010 . Retirees are likely to spend most of their guaranteed retirement money, and this will feed economic growth.