My Case for Universal Basic Income (i.e. The Andrew Yang Plan)

Andrew Yang is proposing providing a Universal Basic Income funded primarily by a value added tax (i.e. a tax that makes everything more expensive). For an average earner with average spending, the increase in prices will roughly offset the amount of money received. For a high earner with high spending, the increase in prices will cost them more money than what they will receive from the government. And for low earners with low spending, they will receive more money from the government than they will have to pay through increased prices. Note that even though the 2018 median per capita income was $33706, mean was $50,413, so if you make less than $50k a year you will probably see financial benefit from the Yang plan.

Aside from that, my #1 favorite reason for this plan is that it creates a “rock bottom” that is still livable. Mentally ill homeless people generally do not receive social security disability checks from the government because of the bureaucracy which intentionally makes it difficult to get said checks. There is a process where a psychiatrist has to convince a disability determination officer that the person in question is totally disabled (i.e. not able to do any job in the economy) due to mental illness. It’s actually a fairly difficult process – there is a severe lack of psychiatrists, many mentally ill people (especially those exhibiting manic symptoms) don’t believe that they are crazy, the process is slow and beauraucratic, and the majority of applications are rejected. The crazy homeless people you see on the street generally aren’t receiving any money from the government (with the exception of possibly food stamps, but in some areas it’s impossible to get food stamps without working, and mentally ill homeless people generally fall into the crack where they can’t work and also can’t get disability checks). Basically the current “rock bottom” that exists is sleeping on a bench begging on the street for money to buy food. A universal basic income will provide a rock bottom that is a little higher than that, reducing human suffering. Even a small universal basic income (too small to cover the cost of rent) would allow people to live more comfortably, for example by allowing them to get a rain proof tent, decent food (most grocery store food requires cooking and homeless people don’t have a kitchen), a gym membership which they can use to shower in the locker rooms, etc.

My #2 reason for the Yang plan is that it would ever so slightly deter illegal immigration. Illegal immigrants wouldn’t have the documentation necessary to get government benefits, so they wouldn’t receive UBI checks. What they would get if the came over illegally is higher prices through the value added tax which is necessary to raise money for universal basic income. Basically, the UBI with the accompanying VAT would make it less desirable for people from poor countries to come here illegally because it wouldn’t be as much of an improvement for them in terms of quality of life.

My #3 reason is the practicality of this progressive tax (as opposed to the impracticality of the wealth tax that Bernie Sanders and Elizabeth Warren are proposing). The VAT with UBI will cause high spenders to pay more in taxes, while giving more money to people who spend less. In that sense it is a progressive tax. In addition, as has been shown through Alaska’s “oil checks“, repealing cash that people expect to receive from the government is “politically suicidal”, so politicians don’t do it. In contrast, Bernie Sanders and Elizabeth Warren have proposed an annual wealth tax on total wealth, which in the majority of cases does get repealed and also has serious problems. A wealth tax is basically an estate tax, but broken up into annual chunks and applied to people who are still alive. The estate tax has been a total failure – “the estate tax raised $8.5 billion in 2012 — less than 1% of the $1.2 trillion inherited that year. Only 1 out of every 700 deaths results in paying the federal estate tax today.” In addition it’s not uncommon for rich people to take measures to avoid the estate tax, as they will do with the wealth tax. History has shown that the wealth tax raises far less money than expected, causes a “capital flight” (where people leave the country to avoid it or cancel plans to become citizens so they will never have to pay it), it usually gets repealed, and is messy to implement due to the speculative and rough values of certain forms of wealth like certain businesses. For this reason the VAT which Andrew Yang is proposing (along with ending the favorable tax treatment for capital gains/carried interest) is a more practical tax plan than the wealth tax that Bernie and Warren are proposing.

Some conservatives think that a Universal Basic Income will disincentivize people from working, but in practice “universal income study finds money for nothing won’t make us work less“. People will still work if they get checks from the government. All in all the positives outweigh the benefits and I am in favor of the Universal Basic Income plan.

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