We need a universal income, and, not only can we pay for it, it pays for itself. Seventy-five thousand dollars annually, from the federal government, for qualifying American citizens. Guaranteed.
This piece splits into two parts. Part one is all about how we pay for it. Though, in the process of having this discussion, we touch on more, here and now we’re about dollars and cents. Part two next week is about everything else: why we need a universal income and responses to counter-arguments, chief among them concerns about inflation, sloth among the populace, and harm to commerce.
The first thing to say is that the universal income is not tax-free. Let’s say each recipient pays 30% in federal income taxes. The federal government, then, gives out $52,500 per qualifying citizen who chooses to accept the universal income. So we need that much for everyone making less than $75k per year.
As for the states and municipalities, their coffers flood. First, they now have millions of citizens who previously did not pay income taxes doing so, and they have millions paying more than before because these people are making more than before. Even if the money in truth comes from the feds, rendering the citizen a middle-man, the fact is state income tax revenues shoot through the roof. Second, thanks to the universal income, there is a lot more money coming into locales from sales taxes, as the citizenry has more to spend. And third, as we soon see with respect to the feds, there is much less strain on state and local budgets, in a great many ways. All of this also has the added bonus of reducing the need for direct federal aid to states and locales.
OFF THE TOP
Next, the universal income replaces social security, Medicare, and Medicaid. Last year, the first cost $939 billion, the second $591 billion, and the third $375 billion (note that different sources report different figures for these three; I chose figures on the low end). No more taxes for these things coming out of your paycheck—only state and federal income taxes. Further, all welfare, unemployment, and public housing programs evaporate overnight, as do a host of organizations running the gamut from the National Endowment for the Arts to Meals on Wheels. Any artist will tell you they’ll take the steady $75k annually over shots at government grants. All the while, bureaucracy shrinks and becomes laser-focused; where once there were many, separate departments and initiatives, now there is one, devoted to administering the universal income. So we’re saving money across the board.
“QUALIFIED” INDIVIDUALS: REQUIREMENTS AND THEIR RIPPLE EFFECTS
There are basic requirements that limit the pool of qualified individuals. Only citizens over, let’s say, twenty-one years-old are eligible for the universal income. The citizenship requirement encourages legal immigration and naturalization in a profound manner; immigrants want to receive the income, so they follow the rules and diligently pursue citizenship. Indeed, overnight, employing illegal immigrants becomes infinitely more dangerous; how do you explain to the government that you have a bunch of employees making less than $75k who for some reason do not want to take the universal income? So we’re saving a ton of money in immigration enforcement by upending the incentive structure for employers and immigrants both. If there are no jobs for illegal immigrants, there is no reason to come here illegally, yet do so legally and the opportunities abound. As for the age requirement, that’s just good common sense.
Next, convicted felons are ineligible for life. This isn’t a cost-saving mechanism—well, it is, but not directly. How much harder would it be for gangs to recruit if everyone knew what a felony would cost them? How many people in the drug game do you think make more than $75k? I say less than 5%, based on my experiences working in Chicago government and watching The Wire. Kidding aside, the convicted felon prohibition points to something far greater: with a universal income, we have the potential to eliminate poverty and all its associated problems in a single stroke while creating the most effective crime deterrent yet. Take a second to truly appreciate the impact this would have on our society. We eliminate a huge societal cost and we need less in the way of policing and prisons, saving yet more money.
The last basic requirement for eligibility is that you have to work until a certain retirement age, any job. The world goes on, and people want things that require labor on the part of others, including labor that people making $75k annually may not want to provide—even as many of these very same people find themselves with more money to spend on the fruits of this very same labor, mind you. More on all this in Part Two.
Beyond the basic requirements, the number of people on the universal income is subject to another important limit. People will want to make more than $75,000 annually, there will of course still be positions that pay this much—indeed, a universal income makes the government a de-facto player in the labor market, another thing upended overnight—and everyone will need to work anyway. All this means that many Americans will opt out.
From here, the question of people opting out forces us to widen our lens. Thus far, we’ve danced around a simple truth. A universal income would be a revolutionary shift the likes of which this country has not seen since the Civil War. No aspect of our society would be untouched by its ripple effects.
This fact is relevant in countless ways. For now, we focus on how the universal income changes society in ways that help us pay for the thing itself. We’ve already seen a few: the universal income changing society in manners that (1) eliminate trillions in government spending right off the top while streamlining bureaucracy across the board, (2) flood state and local coffers while reducing their dependence on direct federal aid, (3) save a ton on law and immigration enforcement while alleviating the societal costs associated with both the crushing tides of poverty and the encompassing shadow of undocumented status. Riding the ripples caused by the universal income’s splash, we now move further from the point of impact.
EMPLOYERS AND CITIZENS PAY THEIR SHARE
You’re a business owner. You used to pay an employee $30,000 annually. Now, that employee takes the universal income. He or she stays at your company to maintain eligibility, so your labor needs remain satisfied. $30k windfall, right? Nope. That money goes from you to the feds, to help pay your employee’s $75k. No doubt this would be subject to abuse—businesses purposefully undervaluing certain positions, maintaining lean rosters, or paying people in cash. But that’s not anything that they’re not already doing. Further, both tax incentives and labor regulations can be used to promote hiring and to make sure that companies value positions in accord with the market. Finally, the main point here is that, no matter what games employers may play in order to keep their costs down, they are going to cover a large portion of the tab for the universal income.
Now consider a different scenario. You’re a photographer on the universal income. Over a year, you sell $30,000 worth of photographs. You’re paying 95%+ tax on that, towards your universal income. And say the next year you become famous and sell $90,000 worth. That year, you forego the universal income and pay a normal tax rate on your $90k. Again, this is subject to abuse; maybe you sell some photographs for cash and pocket it while on the universal. But if you’re an active photographer, you’re not exactly going to hide your efforts to sell and promote your work—that’s quite literally the opposite of what you do. Further, your photography is how you maintain eligibility for the universal income in the first place. So you’re going to have to report some income from it, which means you’ll be contributing towards your own universal one.
LABOR EQUALS REVENUE
As we continue to ripple away from the point of impact, three other things become clear. First, a universal income is going to drive wages up across the board. Companies will have to compete with the universal income to attract the talent they need. Second, positions that do not often attract top talent because they do not pay well, such as teachers, are suddenly competitive, thanks to the fact that the teachers don’t have to wait fifteen years to make a decent income. And third, this will create a ton of jobs, as there will be a huge demand for universal employment so that everyone can collect the income, people will have more resources to open businesses or pursue their callings, and everyone will have more money to buy stuff.
These three, together, have important meaning when we’re talking about how to pay for the universal income. The government is going to see a lot more revenue across the board. The primary beneficiary in this regard is the states, as they don’t have to pay for the universal income; instead, they sit back and watch their coffers fill, as we’ve seen. Of course, there are cost-sharing mechanisms Congress can use, forcing the states to pay for some of the universal income. But we don’t need them to, and I for one am of the mind that the money is better off in the states, for job creation, infrastructure, and above all education. Still, that’s a detail for another day. Further, the feds too will see a great deal more revenue, both through individual income taxes as wages increase and through taxes on the new businesses and the like that sprout up.
Now let’s hone in on the idea of creating new businesses, expand its definition, and use it to make a broader point. Think again about the example of the photographer. How many people are there struggling to get by with artistic talent locked away within them? With a universal income, they have a much greater chance of unlocking this talent, and of profiting from it, which means the government also profits, as we saw above. How many people want to teach—for how many is teaching the true calling—but simply cannot justify it financially? How many Einsteins and Da Vincis are born in abject poverty, from rural Appalachia to the inner cities? A universal income eliminates these barriers better than anything else does, and, through it, the world gets the most possible out of each and every person. Simply put, there is nothing better that the government can do to help people realize their full potential, and, in the process, we receive yet another example of the universal income paying for itself.
IT PAYS FOR ITSELF
And that’s just it. The universal income pays for itself. We’ve examined most the ways in which it does, and the ways in which the many pieces work together. And in the process of implementing it we build a society that does the best job yet at enabling people to both realize their full potential and pursue their true calling. A no-brainer, right?
I say again. The thing pays for itself—maybe not completely, but more than enough to make it feasible. It would take a lot of work and restructuring to implement, no doubt. But what do we get for our efforts? On the first day, 94% of American citizens over twenty-one make more money than before, and every single one of us sees our earning potential grow exponentially. We’ll talk about that % in Part Two.
And there’s one last indirect way in which a universal income saves the federal government money. I saved it until now for dramatic effect because this is my favorite topic.
There’s a lot of glut in defense spending. More than a lot. This is undeniable and well-documented, and I’ve tackled the issue myself, through President Trump’s first budget. Much if not most of this glut is justified by a simple reason: job creation. Enter the universal income, and that justification evaporates. People don’t need those jobs anymore because they’re making $75k annually and because the universal income itself creates so many new jobs and opportunities. So the federal government suddenly finds itself with hundreds of billions in wasteful defense spending deprived of its only redeeming quality, its only saving grace. For this reason, the spending fades and dies. Further, this means that these people are employed making and doing stuff we can actually use instead of military hardware and services that have no conceivable use, which is yet another example of the universal income maximizing society’s potential. When we as a species waste, we waste the fruits of our labor and slow our advancement; when we eliminate waste, we enjoy more of them and speed it.
So yeah, I saved that one for the end, rather than listing it with all the other ways in which the universal saves us money. Back up two paragraphs and remember where Part One ends. Our universal income pays for itself.
TO BE CONTINUED
Part Two comes next week. It starts with discussing why we need the universal income. Some of those reasons we’ve already touched on here. Then it moves to confronting the naysayers. The first issue in this regard is concern over inflation. Others include fears of promoting sloth among the populace and of doing harm to commerce.
Featured image by Jason Costanza — Flickr.