For the last week or so, I’ve been preparing to speak against a Universal Basic Income (UBI) motion at a debate club. Here’s the Motion:
The Motion: This House Supports a Basic Income for All US Residents
Motion Summary: Basic income recipients would include children and adults; the employed and unemployed; and citizens, permanent residents, and all other residents who could prove a residency duration of at least three years. The amount given would start at $1,000 per person per month and be pegged to GDP growth going forward. No programs in the existing social safety would be replaced by this policy.
This is the third in a series of posts laying out my case against the above UBI proposal. Per previous posts, this particular UBI scheme would cost about $4.1 trillion a year in new taxes. Let’s have the business community pay $500 billion of that. That leaves a $3.6 trillion tax tab for US households. That's on top of the taxes they're already paying. Remember: these are all additional taxes that would be necessary to fund the UBI.
To get a sense of just how feasible this UBI might be, I’m going to put together a possible tax scenario. This isn't necessarily the best way to divide up the tax bill, but it's a useful exercise to get a better grasp of what we're dealing with. The scenario assumes half the US household tax bill will be paid in income taxes and half paid through other taxes and sources of revenue (mainly sales/consumption tax, property tax, and fees). We’ll ignore (for now) that higher corporate and business taxes would be passed on to household in the form of higher prices for goods and services.
Here's the household tax breakdown:
Source for Deciles: https://dqydj.com/household-income-percentile-calculator-2016/
Take-away: most American households would give back in taxes what they receive in a Basic Income. Many – especially the 50% of US households that are single individuals or childless couples - would actually pay a lot more in taxes than they receive in Basic Income, essentially to subsidize the Basic Income of families with children. Plus consumer goods and services would be a lot more expensive for everyone.
Next: Looking more closely at what families with children would be getting with this UBI.