A More Ideal Arrangement: An Immediate Guaranteed End to Poverty

basic income ends poverty

Usually, I prefer to talk about the Universal Basic Income as it exists a single, practical step from where we are today. Merely changing the method by which we pay out what we already pay out for means tested welfare is a practical way to improve the lives of the American people and our economy. But it is not the ideal way to organize a Universal Basic Income.

A more ideal way is to use taxation to make the Universal Basic Income progressive. That is, to use it in such a way as to withdraw more funds form the wealthy than they receive from the Universal Basic Income. Existing taxation does this, indirectly, but it could be done more perfectly.

A very straightforward way is to replace all Payroll and Income Taxes (which between them are over eighty percent of all taxation levied by the Federal Government in the United States) with a 25% flat tax on income regardless of source, then pay that money out to all Americans equally. This would have come to $10,673.25 in 2012. Any household making less than $10,673.25 per member including children would receive as much or more from the Universal Basic Income than they paid in taxes for that year. Anyone making more would have paid more in taxes than they received in benefits. And families in poverty, throughout the entirety of the United States, would not longer exist by Federal definition. Poverty would end immediately.

What are the costs of this? To the economy, nothing. Every cent brought in would be paid back out. This would be a net increase in economic productivity, because the service of social welfare would be provided more efficiently and effectively, requiring fewer workers and far less compliance and paperwork costs on the part of needy citizens. This solution would respond to economic conditions, because increases in economic output would increase the average payout while decreases in economic output would decrease the average payout.

But what about the other functions of government? In 2012, the United States Federal Government ran a deficit of over a trillion dollars. After counting corporate, excise, and the other minor taxes that make up the last twenty percent of Federal Taxation, under this plan, the United States government will run a deficit of a little over a trillion dollars. In that regard, nothing would change. All this proposal accomplishes is the instant and everlasting end of poverty at no additional cost but with considerable gains in efficiency.