Wednesday, February 12, 2014

Living up to the promise of America by establishing a Guaranteed Basic Income

The birth of the United States was built on the concept of meritocracy where if an individual worked hard he/she could carve out a comfortable existence and if that individual worked smart he/she could become wealthy regardless of position of birth. This feature is one of the major reasons the United States rose from a fledgling nation into the most powerful nation in the world. Unfortunately the inherent nature of this meritocracy has been systematically diminished to the point where at least 46.2 million people (15% of the population) are currently living in poverty (a single individual less than 65 living on less than $12,119 per year or an individual 65 or older living on less than $11,173) in addition to 16.1 million children (21.9% of the demographic).1 However, on their face while these numbers are troubling understand that an individual does not simply move from “difficult life due to lack of financial resources” to “normal life with sufficient financial resources” if that individual earns $12,500 instead of $11,500; therefore, many more people suffer from a version of quasi-poverty that is not encompassed by simple statistics.

Some may attempt to explain this new reality by portraying modern individuals who are impoverished as lazy or not as smart as those in the past, but those holding this belief would be wrong. To even suggest that 15% of the population does not have an effective skill set that can benefit society is amazingly foolish. Instead certain individuals and groups, in order to consolidate money and with it power, have hijacked the structure of society. Sadly manipulating this meritocracy aspect of society has diminished the quality of the United States so far that now it typically only rests on the laurels and momentum of yesterday, remaining a world power solely due to the inability of other nations to take the title.

In the past education was the most reliable way for an individual to rise above his/her birth station and when augmented with hard work become wealthy. While education is still important, the certainty of its value has ebbed significantly because of higher secondary education costs paired with a reduced number of quality jobs that demand such an education due to technology advancement and company outsourcing in effort to increase profits. This reality has been exasperated by numerous high wealth individuals gaming the system and lobbying for legislation that helps them gain even more wealth limiting the amount that those below them can acquire. Poverty in the United States has become the equivalent of a lobster trap, much easier to fall into versus escaping.

Poverty among senior citizens was once rampant, but the creation of Social Security provided an effective strategy to manage it dramatically reducing senior citizen poverty. Unfortunately and somewhat peculiarly while Social Security manages senior citizen poverty, Americans under the age of 65 utilize a patchwork of programs including unemployment insurance, welfare, food stamps, housing allowances, training programs, etc that clearly have not done the job of reducing poverty. This inability to reduce poverty occurs in part because of the high entry costs into the job market for those with low sets of skills or those who have been unemployed for a significant period of time because typically these individuals cannot acquire jobs that have benefits and wages that of significant size in absolute terms or even relative to the benefits currently provided by government. Basically the effective marginal tax rate for taking these jobs is too high. Sadly most of these jobs also have very little room for advancement, thus they become what is commonly regarded as “dead-end jobs”.

Clearly for the United States to revive its superiority something needs to change with regards to how it treats its poor. The major reason why the poor struggle is not a lack of commitment, effort, gumption or intelligence, simply examining the lives of most working poor reveals these obvious conclusions, the chief problem is a lack of opportunity. This lack of opportunity is largely created by a lack of money. A pure no-strings monetary payment to individuals, commonly referred to as a guaranteed basic income (GBI) or simply basic income (BI), can reopen the door of opportunity for the poor allowing them to tap into their creativity and intelligence instead of burying it in a “dead-end job”. It is unclear exactly how many technological, societal and/or economic advances have not been made because a creative individual had to put food on the table versus cultivating a natural talent, but whatever the number it is higher than it should be.

The chief advantage of the BI is how it directly addresses the disadvantages of poverty. One of the problems with discussing poverty is that most of the discussion is conducted by individuals who have never experienced it. A number of people who are impoverished do not start that way, but instead experience a dynamic income shock that cannot be managed effectively due to a lack of savings. Most of these people have jobs, but the wages are so low that they are unable to save effectively because their funds go towards elements critical for survival. Eventually something goes wrong, the individual gets fired, gets sick, has a large single fixed negative monetary event like his car breaking down, etc. creating a financial hole.

While most are able to recover from this initial setback, similar events typically occur again and again deepening the hole ultimately leading the individual into poverty due to existing debt. Basically the individual never has the ability to climb out of the hole because his/her wages are not large enough to overcome these periodic unforeseen payment events, most of which are not the fault of the individual. This is the dynamic nature of poverty where in most situations it is a gradual descent, individuals initially falling then climbing up a little then falling a little more, versus a catastrophic fall. The incorporation of a BI would give these individuals an effective means to climb out of these dynamically formed holes.

One of the more popular advantages of a BI is that it would increase functional mobility allowing people to move to where specific jobs are available without fear and uncertainty. Any person in business would report that an important element for success is eliminating, or at least limiting, uncertainty; a BI would allow an individual the ability to think ahead and create a strategic plan without having to make risky assumptions. It would also allow people to work in jobs that positively influence society, but are not recognized as important by society, especially in terms of salary, like working at nursing homes, teaching special needs children, working as a lab tech trying to cure cancer, etc.

Another advantage of a BI is a possible reduction in criminal recidivism and initial criminal behavior. Most individuals who are not born rich can attest that the current job environment is one of the most difficult in U.S. history; however, for individuals who have some form of criminal record and are not celebrities the market is even more difficult. This difficulty creates a negative feedback loop where a number of individuals have no other recourse for survival than to commit more crimes creating a “revolving door” relationship with prisons. A BI would eliminate this negative feedback loop and if engaging in criminal activity could result in the loss of the BI it would reduce the probability that individuals who lack a criminal history become criminals out of financial necessity.

An indirect environmental and economical advantage of incorporating a BI is a dramatic reduction in homelessness, which will increases property and home values throughout the country. Additionally a consistent income will allow everyone the opportunity to eat and exercise properly as well as have general medical checkups, which will be one element in the puzzle to reducing medical costs among the poor and further reduce emergency room visits and crowding. In fact these outcomes have already been supported by past small scale BI experiments.2 This savings could even transfer over to reduced insurance premiums due to an overall healthier candidate pool.

However, despite all of these side advantages to a BI, including bolstering a social and moral sense of justice that is supposed to be defining characteristics of the U.S., the overall purpose of a national BI is to address the basic needs of an individual without requiring that individual to work. Therefore, it is important to establish an effective range of costs that a BI must encompass to achieve such a goal over simply establishing a BI at some arbitrary number like $6,000, $10,000, $15,000 or $25,000. So what are basic needs and how much would they cost?

Food and water costs are the most essential elements that must be included in the BI. While food is essential, gourmet food is not. Normally food stamp benefits average to approximately $2-$3 an individual a day.3 This amount is currently sufficient for survival, but no rational person can conclude that this amount allows an individual to optimize his/her potential or even remain reasonably healthy. Therefore, increasing this “amount per day” allotment for a BI is imperative.

Some estimate that for individuals at and below the poverty line 1/3 of their income should go towards food. Taking an income at the poverty line this “rule-of-thumb” would develop a food allotment at $10.49 - $11.07 per day. This value is ridiculously high in the context of reasonable health survival, which is the intent of a BI, thus this value cannot be utilized. Suppose the BI assumed food costs at $5 per day. Alone such a quota heavily restricts individuals from eating at restaurants that are not defined as “fast food” and it also slightly compromises the ability to consume significant quantities of daily meat. The biggest problem with this dollar amount is the consistent purchase and consumption of fresh fruits and vegetables. However, despite these restrictions $5 per day should be sufficient for proper health for individuals who have access to supermarkets and shop wisely making sure to take advantage of sales. At $5 a day the food portion of the BI would total $1,825 per year.

Clearly a BI needs to include shelter costs and essential elements within that shelter including heating and cooling. Note that some individuals use cheaper geothermal/solar heaters in their homes, but these are rare nationally leaving the chief method of heating as electric, natural gas, oil or propane furnaces. Among these heating mediums, both oil and propane are overpriced, so individuals with these types of centralized heating systems should instead utilize electrical space heaters for warmth. While natural gas can be price comparably to electricity, natural gas is not as price stable as electricity complicating the estimation and overall budgetary issue for a BI. Therefore, calculations for heating/cooling for a BI will utilize an electric furnace as standard.

For a standard 2,000 sq ft space in a climate encompassing the state of Indiana electric heating and cooling costs can be estimated at $2,332 for a year.4 Clearly there is some standard deviation in this number based on regional climate; an individual living in Western Washington State is going to have lower heating and cooling costs than someone living in North Dakota; also electricity prices vary depending on where one lives; however, the number above is regionally average enough to provide an accurate assessment for a fixed BI. While a 2,000 sq ft living space is nice, the purpose of the BI is to address a minimum healthy standard of living, thus it is not reasonable to expect an individual on the BI to live alone in a residence of 2,000 sq ft; 700 sq ft is a more appropriate space. While it may be questionable to make a direct proportional comparison between size occupancies, it is the strategy that will be used here. Based on this information the BI should assign $816 for yearly heating and cooling costs. Also most communities charge their residence for sewage, water and trash removal with a national average for these services totaling $900 in a given year ($75 a month).

Clearly not all individuals can live in environments where all necessary amenities (jobs and food) are within walking distance or have available public transportation, thus there must be a BI allotment for travel. Assuming that an individual travels 40 miles a day with a vehicle that gets an average of 30 mpg then using the national average gas price of $3.25 per gallon yields a BI travel allotment of approximately $1,580 per year.

One of the biggest questions is how the Affordable Care Act (ACA) subsidy system would change in an environment with individuals receiving a BI. While this interaction is unknown, regardless of any influence there are certain preventative healthcare elements that could be viewed as necessary such as dental visits, basic medical check-ups and the occasional over the counter purchase of some regulated treatment for a random ailment. Based on current costs a medical allotment of $75 a month ($900 a year) should be a reasonable inclusion in any BI package.

The final and most complicated element of a BI is shelter. It is not the responsibility of a BI to allow an individual to reside in any city in any state in the country; however, it is reasonable that an individual should be able to select from numerous living environments and have the possibility to live alone, not be forced to live with roommates due solely to financial necessity. For the moment the more complicated nature of home ownership will be excluded from influencing a BI because owning a home should not be expected as a valid element in calculating what is necessary for survival, thus focus will only be placed on rental properties.

Average U.S. rental costs total approximately $819 per month, but this number has a significant standard deviation between the five most expensive rental states: Hawaii ($1,235), California ($1,118), New Jersey ($1,058), Maryland ($1,044) and Massachusetts ($987) and the five least expensive rental states: West Virginia ($532), South Dakota ($558), Arkansas ($601), Iowa ($607) and Montana ($613).5 Based on this standard deviation difference utilizing just the average may not be appropriate because of a smaller number high value states like Hawaii and California bumping up the average. Basically if $819 used for the BI instead of that average representing conditions where about half the states are below and half are above this housing allotment, the standard deviation value of the expensive states create a situation where 32 states are below the line and 18 are above it creating an allotment that is too high. Therefore, for the purpose of this analysis the BI will allot $750 a month for housing (26 below and 24 above). Also recall that these values represent averages not minimums, an individual could live in certain areas in expensive states like California or Hawaii, thus there is no state exclusion.

The following table summarizes the total cost of providing an appropriate BI package to a given individual:

Table 1 – Minimum Costs Associated with Healthy Living in U.S. Society

Food = $1,825
Heating, Cooling, Sewage, etc = $1,716
Travel = $1,580
Self Reliant Healthcare = $900
Housing = $9,000

Total = $15,021


There is a concern about the BI value calculated above in the context of building the economy. Proponents of the BI frequently cite that one of the important advantages of the BI is that individuals will be able to invest their time in endeavors that he/she are unable to because that time is needed to work in order to acquire money to survive. However, the above number could restrict this new financial freedom. The question is while from a living necessity standpoint Internet access is not a required element, for individuals who want to invest time in endeavors that they may want to later turn into a career will money have to be given for their occupational necessities? If so then at least another additional $500-600 will need to be added to the BI. Despite this concern this analysis will categorize personal at home Internet access as a luxury similar to television largely because most libraries have sufficient Internet access.

With a logically produced number to represent the BI, analysis pertaining to the viability of such a program can commence. In the rational idealist proposal the BI is given to all citizens of the U.S. regardless of age, income or other demographic similar to how Alaska’s Permanent Fund Dividend is given to Alaskan residents. Some would argue that a BI should be extended to all individuals living in the U.S. regardless of citizenry, but this idea politically is almost an immediate non-starter and is morally and practically questionable. Unfortunately this rational idealist position immediately runs into a problem regarding costs.

Taking current population data there are approximately 317.5 million individuals living in the United States. In 2011 it was estimated that there are approximately 11.7 million illegal aliens and an additional 28.7 million legal aliens (individuals who are legal residents, but not citizens or are on some form of visa),6 this value should still be reasonably accurate. After these eliminations the remaining population that would receive a BI is approximately 277.1 million. Taking the BI calculated above the federal government would be responsible for paying out approximately 4.16 trillion dollars to support this BI every year. Unfortunately in 2013 the revenue of the federal government totaled 2.774 trillion dollars and federal expenditures totaled 3.454 trillion dollars in 2013, this additional cost is not viable even with major changes to both revenue and spending streams. Note that this cost only eliminates the simplest BI, one with only a citizenry restriction; it does not eliminate the idea of a BI itself.

So what restrictions would be necessary and fair to create a cost structure that is viable? The first logical place to apply a restriction is on income. The purpose of a BI is to help support those individuals who have low to no incomes because for some reason they were unable to acquire sufficient opportunities to acquire wealth or failed in those opportunities. Assigning an appropriate income ceiling for eligibility is tricky because one must exclude a sufficient amount of individuals who do not need the BI. Based on the premise of the BI it stands to reason that eliminating 15% of the population, representative of the top 15% in total assets, would be an appropriate restriction. Assuming that 98% of this 15% are citizens that would eliminate slightly more than 40.7 million (277.1 million * 0.147) leaving approximately 236.4 million eligible for a BI.

Some critics may argue that this income cutoff is inappropriate because there is an income “cliff” that exists just above the cutoff similar to the welfare “trap” that currently exists. Basically suppose the income cutoff was $150,000 then an individual earning $149,800 would receive the $15,000 BI giving them additional disposal income whereas an individual making $150,050 dollars would not receive the $15,000 BI. While this criticism is valid it misses the point. Recall that the purpose of the BI is two-fold: eliminate poverty and increase economic growth by reducing market inefficiency by increasing the spending ratio of existing capital. If the income cutoff were $50,000 instead of $150,000 then this “cliff” issue would be a significantly greater matter in the efficiency and general nature of the BI. However, despite what some believe individuals making $150,050 a year are not poor or middle-class in any respect, remember the cutoff is at the top 15%, thus an increase of 10% in that pre-tax income for individuals in the bracket will not produce significant increases in spending efficiency in the whole marketplace. Also because the BI is based on individual earnings there is no penalty for a rich spouse further limiting any perceived unfairness.

The second restriction should be based on age. Children are less able to take advantage of the direct and indirect benefits associated with the BI. For example upward mobility for children is limited by their lack of skills and desired occupational goals. Additionally most travel options for children are limited to being chauffeured by parents, riding a bike or other self-powered wheeled device or moving on foot, thus any travel allotment is unnecessary. Overall age eligibility at 18 appears most viable because it is the age that society typically recognizes an individual as an adult. Based on general demographical information from the 2010 census this restriction would elimination another 28% of the population, but one must avoid double counting (counting non-citizens under the age of 18 twice once as non-citizens and again as under 18), thus a 1.1 to 1 birth ratio will be applied between non-citizens and citizens. After taking this step to avoid double counting the age restriction eliminates 76.5 million (instead of 88.9 million), thus leaving 159.9 million eligible for a BI.

A third restriction could be assigned regarding an individual’s criminal standing. There are two sub-restrictions that could comprise this criminal history restriction. First, any individual committing a violent felony would be ineligible for a BI for a number of years equal to the time served in prison for the given felony. Second, any individual committing two misdemeanors would be disqualified from the BI for the next calendar year following a two strikes and you’re out type scenario. Non-violent felonies or violent felonies that result in no jail time could count equal to two misdemeanors. It is unclear how many individuals this restriction would eliminate, but the general idea behind it is not financial conservation, but creating a greater moral and community standing for the BI itself. While the moral ramifications of what one does with a BI are typically not the concern of society, it is the concern of society when individuals would use a BI to directly engage in criminal activity. Note that under this scheme no individual would be penalized for previous transgressions, i.e. their criminal history before implementation of a BI would be irrelevant.

Estimating the number of individuals that would be eliminated by this condition is difficult because there is limited information regarding what could be termed “Jean Valjean” criminal activity, i.e. how many people commit crimes for the sole purpose of survival? What is also unknown is how many individuals will stop committing crimes when $15,000 is at stake? Most individuals would argue successfully that most inmates in U.S. prisons could be classified economically as middle class or lower. While some are clearly violent individuals who deserve to be in jail, others allow their boredom (lack of money for opportunities) to put them in situations and/or environments that result in a higher probability of committing low-grade misdemeanors that eventually land them in prison. Others would argue that a $15,000 BI would disincentivize small time drug dealing in urban environments because such behavior is commonly born from the lack of other legal means to acquire funds, thereby further reducing the prison population.

Unfortunately as stated above these possible behavioral changes and others are difficult to quantify, thus for the purposes of this analysis it will be estimated that of the current approximately 7 million individuals on parole7 that half of them (3.5 million), with an additional 1.5 million of the 2.267 million currently incarcerated,7 will fail to maintain a “clean nose” and thus fail to qualify for the BI. Finally about 5% of these individual are non-citizens who would not receive the BI anyways, thus based on these assumptions another 4.75 million individuals would be eliminated from the BI leaving the total number of individuals receiving the BI slightly more than 155 million costing a grand total of around $2.33 trillion.

2.33 trillion dollars is a lot of money, but is significantly less than the previous citizenry estimate of 4.16 trillion dollars and more importantly is low enough that it could still produce a viable BI methodology. However, this methodology will require changes to the current federal government revenue and spending strategies. For starters the most important point when investigating the incorporation of a BI is producing budgetary changes that will create a net gain, not simply create an equal substitution. Currently the federal government is running a deficit both yearly and overall with the overall actual national debt exceeding 16.7 trillion dollars (obviously a general guidepost number is used here because the debt increases daily). While certain individuals heavily overreact to the urgency in which the national debt needs to be addressed, only a fool would suggest that it be ignored completely largely because of lingering interest payments that will increase with time and make stabilizing a BI incredibly difficult. Therefore, incorporating a BI, especially one that will float in value from year to year, needs budgetary changes that will produce net revenue higher than the current budget.

One of the most common points made in favor of a BI is its simplicity and transparency allowing for the consolidation of government “safety net” programs eliminating their cost and associated bureaucracy. These programs include: unemployment insurance, general welfare, supplemental nutrition assistance program (SNAP a.k.a. food stamps), school meal programs, low-income housing assistance, home energy bill assistance, refundable portions of the Earned Income Tax Credit and Child Tax Credit, supplemental security income, etc. All of these programs together generally cost the federal government between $410 billion and $450 billion per year, thus completely eliminating them after the incorporation of a BI will result in equal savings.8,9

Inherently separate from the BI issue itself, additional funds can be cleared by reducing the budget assigned to the Defense Department. Currently their budget slightly exceeds $900 billion, which is estimated to fall to slightly over $800 billion over the next 5 years due to the conclusion of military operations in Afghanistan,9 but even if that $100 billion reduction is accurate $800 billion is still an inflated amount for what it buys and is necessity. Without cutting funding for veterans and current staff/soldiers, at least $300 billion could be removed from the Defense Department’s budget without any reduction in U.S. safety.

As discussed briefly above it is unclear how a BI and the ACA will interact. It is also unclear how a BI and Medicaid will interact. While there should be no interaction between BI and Medicare, Medicaid is built around helping the poor afford health insurance and may no longer be necessary in a BI environment. Currently the federal government spends approximately $324 billion on Medicaid8 and this value is projected to increase significantly in the future, in part due to the subsidies paid out through the ACA. There will have to be significant study regarding who would qualify for Medicaid in a BI active environment. The chief issue in this debate would be hospitalization because as mentioned above the BI will support preventative action; however, the major costs associated with healthcare in the U.S. with younger individuals are dynamic spontaneous events, which frequently require short-term hospitalization that can run into thousands of dollars in costs. For the purpose of this analysis no funds will be transferred from Medicaid to support the BI.

With the administration of a BI it stands to reason that portions of Social Security (SS) will be terminated for it is unreasonable to expect the government to fund a BI and continue to fund SS as it is currently structured. Note that expenditures in SS are broken down into four major categories: the old age and survivors insurance (OASI), disability insurance (DI), Medicare hospital insurance (HI; a.k.a. Medicare Part A) and Supplementary Medical Insurance (SMI; a.k.a. Medicare Part B & D). The OASI is the component most people associate with SS. With respect to establishing a BI it stands to reason that both the OASI and DI components would be eliminated with HI and SMI components remaining, but there could be some possible restructuring depending on how the BI compliments these Medicare programs. Overall the elimination of the OASI and DI programs will free up between $785 billion to $820 billion that can be utilized for a BI.8,10 Note that for now on references to SS will now only entail the OASI and DI, not the Medicare portions.

There are two important points that must be addressed about ceasing SS under a BI program. First, there is the question regarding whether or not a BI is a sufficient replacement for Social Security? Average SS payouts in 2011 ranged from $11,080 to $12,000 and have not changed much since whereas the BI will be almost exactly $15,000; therefore there should be no trouble for most senior citizens moving from their Social Security benefits to a BI. Note that this is a general average that does not include any special considerations for early retirement at reduced benefits or increased benefits from full payments. Clearly there will be a negative shift in benefits for some individuals, but a switch from SS to BI should not adversely affect a vast majority of SS recipients and not grievously affect any current SS recipients.

Second, recall that SS is funded by a tax, thus that tax will have to remain in place so funds can be diverted to the new BI system. However, up for discussion is whether or not the ceiling for this tax should be lifted. While the payroll tax of 12.4% is split evenly between employers and employees at 6.2% each with payment based on the wage of the employee, only a specific amount of that wage is taxed. In 2013 this ceiling was $113,700 meaning that all wages above this value are not subjected to the payroll tax. Due to the fact that the percentage of earnings has risen faster among the rich versus the middle class and the poor this ceiling exempts at least 14% of existing wages from the payroll tax.11

The origin of the ceiling is unclear. Originally SS was supposed to have a wage exemption for non-manual workers with monthly earnings of $250 or more. Therefore, from the beginning the general idea was to exempt richer individuals that held jobs in finance and management. During negotiations this exemption was replaced by the income ceiling because of valid concerns for the exemption creating unreliable coverage for beneficiaries due to monthly income fluctuations.12

One argument for “protecting” the income of the rich is that SS is really nothing but a government run savings program because history has demonstrated that many individuals are incapable of saving for their own retirement even if they have jobs. If this characterization is used then it makes sense that there should be a ceiling of sorts, which would symbolically designate those individuals who have significant amounts of money in that even if they mismanage it they should still have enough left to save for retirement. Also viewing SS through this lens should justify the ceiling because SS is not a progressive program (income transfer), but a savings account where each person gets out of it generally what they pay into it. Therefore, some would argue that eliminating the ceiling is not appropriate.

Unfortunately those who would argue this point, even if correct which is debatable, fail to acknowledge the changing economic environment with the dramatic expansion of wealth for the super rich, especially in correlation to the dramatically increased U.S. population. This change makes using past intentions inappropriate for such an income disparity in a nation with a population of 127 million is explainable on moralistic grounds whereas that same disparity in a nation with a population of 317+ million is not.

Previous estimates have concluded that at least $219 billion can be recovered from lifting the ceiling.13 Note that this estimate was produced in 2022 using IRS data that calculated approximately 1.77 trillion dollars in earnings that were above the current $90,000 dollar cap.13 The increase in the payroll ceiling ($113,700 in 2013) is tied to inflation and other small factors, but wages for the highest earners have increased the fastest among all earners and outpaced these changes; therefore, the ceiling increase has increased at a slower pace than wages for the highest earners. With this trend it stands to reason that a smaller ratio of earnings is falling under the ceiling. Also with the highest earners least affected by the Great Recession this $219 billion estimate should be regarded as a minimum amount that could be acquired by eliminating the payroll tax ceiling. Finally from a fairness standpoint eliminating the ceiling is much more appropriate than increasing the payroll tax percentage.

Although it will be demonstrated later that a BI will not stimulate any significant disincentive to work, another possible change in the payroll tax that could aid workers is change the weight of the tax burden. For example it may help low wage jobs at large corporations if instead of a 50/50 split of the payroll tax the percentage was modified to approximate 33/67 split between the worker and the company (the worker pays 4.2% and the company pays 8.2% of the existing 12.4% tax). This strategy may also limit the illogically high wages and bonuses paid out to CEOs and upper management at higher value corporations. There are some who would portray this strategy as bad for business under the belief that all taxes are bad for business. However, in a consumer driven economy it stands to reason that most, if not all, negatives produced by this change in tax policy would be offset by the positives of increased spending by consumers due to increased revenue both from the BI and from a smaller payroll tax.

Another change to the tax code involves reverting the long-term capital gains tax back to its progressive mirror in the past where capital gains and income were treated identically. Note that a “capital gain” is defined as an increase in the price of a financial asset between when it is purchased and when it is sold where such assets include stock, real estate, collectibles, precious metals, etc, versus a dividend which is a portion of company profits that are paid to shareholders. There are two types capital gains based on the length of time the investment was held before sale: short-term and long-term. Currently short-term capital gains, investments held for a year or less, are taxed at a rate identical to the holder’s income rate whereas long-term capital gains were once similar before being reduced to 0% for the lower two brackets and 15% for all other brackets as part of the Economic Growth and Tax Relief Reconciliation Act of 2001 (popularly known as the Bush tax cuts). This rate remained constant until 2012-2013 when the rate for the highest bracket was raised to 20%.14 Note that there are certain exemptions on certain types of capital gains like collectables and some types of property that are calculated differently.

Some argue that increasing the capital gains tax is not appropriate because it discourages investment, thus reducing the growth probability of the overall economy. Basically a lower capital gains tax encourages investment and creates jobs leading to greater economic growth. However, this argument is old hat because no statistical significant correlation has been demonstrated between economic growth and capital gains tax rates between 1950 and 2011.15 In fact there is greater evidence of a negative correlation between capital gains tax rate reduction and rates of saving and investment than a positive one.16,17 Basically there appears to be no legitimate empirical evidence supporting an argument to maintain a low capital gains tax relative to associated income tax only soft theory and weak anecdotal evidence that does not hold up under empirical scrutiny. The sole point of keeping the long-term capital gains tax lower than income taxes is to provide a tax shelter for individuals who want to neglect their responsibilities as citizens.

Another problem with maintaining non-income equivalent capital gains tax rates is that a vast majority of rich people are able to use certain tax loophole tricks to portray income as capital gains, thus most of the highest 1% actually pay an effective tax rate that is typically 50% less than the rate they would pay if all of their earnings were income like most middle class and poor individuals. For example in 2007 the richest 400 U.S. taxpayers paid an effective rate of just 16.6 percent, far below the 35% rate (under the Bush tax cuts) that they should have paid if their earnings were income.18 In addition to increasing the long-term capital gains tax government must close the “stepped-up basis” rule governing property bequeathed to heirs, which is another common tax dodge by the rich that costs the government hundreds of millions to billions of dollars. Of course if this loophole is closed then there must be appropriate association with the estate tax to avoid any type of double taxation.

Another common argument against increasing the long-term capital gains tax is to encourage individuals to actually sell their assets, basically to avoid what some call the “lock-in” incentive. This argument is nonsensical because no rational individual will fail to sell an asset once it reaches the appropriate value relative to the psychological conditions of the owner and the environmental conditions of the economy that induce sale. If an individual never sells assets due to fear of getting taxed then said individual would never receive any actual benefit from the asset.

This logic suffers from the same flaw as those who claim that people avoid working hard and making lots of money because of high tax rates. So an individual would rather make a gross of $30,000 a year paying about $4,054 in taxes yielding a net of $25,946 a year than make a gross of $80,000 paying about $15,929 in taxes yielding a net of $64,071 a year? Such rationality is completely foolish and unsupported by basic human psychology, existing empirical evidence and general logic. The idea of “lock-in” is just a boogieman that people use to manipulate the situation to get their way, thus it should not be given any credence. There is also evidence that supports the non-existence of “lock-in” in long-term trading.19

Overall increasing the capital gains tax and closing all of the associated loopholes are important steps for increasing government revenue because as discussed above the more money an individual makes the higher likelihood that a higher percentage of that money comes from capital gains not from a wage. Therefore, a low long-term capital gains tax creates market inefficiencies by further enhancing the funneling of money to the wealthiest individuals while similarly removing money from the consumer marketplace. The CBO estimates that more than 90% of the benefits of reduced tax rates on capital gains and dividends will go to households in the highest income quintile with 70% of that going to households in the top percentile.20 Establishing a higher capital gains tax and using those funds to support a BI dramatically reduces those inefficiencies and should be supported by any legitimate capitalist. Overall changing the long-term capital gains tax to the fair and appropriate values reflecting income similarity would increase federal revenues between $134 and $161 billion per year.20

Another strategy to increase revenue is to simplify the tax code by eliminating all of the different filling methods sans single and head of household. The general reasoning behind other methods like joint and married filling separately have become outdated and merely complicate filling in addition to providing unnecessary benefits, especially in an environment with a BI. In addition the elimination of the standard deduction and personal exemption should also help streamline the tax code and increase revenue that can then be more efficiently transferred to the BI program. Finally as mentioned earlier establishing a BI would limit the usefulness of the Earned Income Tax Credit, thus allowing for its elimination. In the recent past it was estimated that making these changes could increase federal revenues by $304 billion ($60 billion from limiting filing options, $99 billion from eliminating the standard deduction and $145 billion from eliminating the personal exemption).13

While these above eliminations are straightforward and make sense, important study should be reserved to identify if eliminating other tax exemptions like “Interest on public-purpose State and local bonds”, “Step-up basis of capital gains at death”, “Capital gains on home sales” “Accelerated depreciation of machinery and equipment” “Employer contributions for medical insurance premiums and care” and/or “Interest on life insurance savings” would be appropriate. Depending on the conclusions reached the elimination of these tax deductions and others could increase federal revenues between $247.85 billion to $740.810 billion.13

Another means to increase revenue for a BI is apply a financial transaction tax (FTT) to stock purchase and/or sale. A stock-based FTT is easy to implement and adds no significant bureaucracy or cost structure to the existing tax system thereby maximizing the net revenue acquired from such a system. In addition to its general simplicity FTTs are currently administered without issue in 40 countries including 16 G20 nations as well as the U.S. itself. While the FTT was larger when it was initially administered between 1916 and 1966, the U.S. currently still incorporates a 0.0034% tax on stock transactions that funds the Security Exchange Commission.

There are two major types of FTT: those based on a flat rate per stock action and those based on a percentage of stock value. The first type involves incorporating a flat additional fee whenever a stock is sold. This fee is not influenced by the value of the stock at sale. For example if a 50 cent FTT existed and an individual purchased 1,000 shares of stock A at $50.00 and then later sold all of those shares at $57.00 that individual would make a gross of $7,000 and have to pay $500 in FTT fees.

Percentage of stock value is exactly as it sounds. Returning to the above example for a 0.05% FTT (a typically value) the individual would make a gross of $7,000 and have to pay $3.50 in FTT tax. Not surprisingly the higher the value and volume of stock the more tax is collected via the second type of FTT versus the first. Typically the second option is favored by a vast majority of individuals because it has the potential to raise significantly more revenue and primarily focuses on individuals that buy and sell stocks at large volume and value (i.e. focuses more on rich traders rather than middle class traders).

An FTT could be applied to other financial transactions as well like bonds, futures, options and swaps. While there is some hope that an FTT could also reduce high frequency trading, which is thought to have a negative influence on market stability, any reduction would be born from a general reduction in trading period because there is no time variance in the tax. Truly reducing high frequency trading would involve incorporating a FTT that was initially high and reduced in size depending on how long the stock is held; i.e. for stocks sold less than 24 hours after purchase the FTT would be 5% versus for stocks sold at least one week after purchase the FTT would be 0.05%. Overall a 2008 report conducted by the G20 concluded that a global FTT could result in an additional $176.9 to $353.8 billion in annual revenue for the U.S.21 This analysis should still be regarded as valid because the U.S. stock market has recovered the value lost from the Great Recession.

Some proponents of the BI would argue that creating an additional surcharge tax on the rich or increasing the highest bracket of the income tax rate should occur for further funding. While understandable this line of thinking may be inappropriate on the same prescript of fairness and morality that one would argue for the BI. A progressive tax system on both the income and capital gains level is appropriate and fair to ensure maintenance of market efficiency, but gouging the rich at rates that exceed 50% solely because they are rich in some name of “public welfare” is questionable. One could argue that the rich have been gaming the system for so long in their favor that applying a surcharge rate over a fixed period of time, not indefinitely, would be justified in correcting the imbalance created by the subversion of the progressive tax system. However, in this particular analysis no such surcharge will be included.

The overall changes in revenue and spending streams proposed above produce the following result shown in table 2 (note that when appropriate certain values were rounded).

Table 2 – Increases in Federal Revenue due to Changes in Revenue and Spending

Action

Eliminating Existing Welfare Programs = $410 billion to $450 billion
Decreasing Defense Budget = $300 billion
Ending SS Retirement and Disability Payments = $785 billion to $820 billion
Eliminating Payroll Ceiling = $219 billion
Increasing Capital Gains Tax to Mirror Income Tax = $134 billion to $161 billion
Eliminating various filing elements = $304 billion
Elimination of various tax loopholes = $248 billion to $741 billion
Addition of a Financial Transaction Tax = $177 billion to $354 billion

Total Monetary Gain = $2.57 trillion to $3.35 trillion

With the total cost of a restricted BI estimated above at approximately $2.33 trillion, the proposed changes cover this cost at minimum estimation clearing an additional 10%, which meets the secondary objective of a positive increase in the balance sheet versus a near equal substitution. The maximum estimation easily exceeds cost clearing an additional 50%. Note that these estimations attempted to be as conservative as possible relative to the real world, thus it is more likely that more money can be made/saved versus less if these elements were put into practice. Therefore, cost of the currently proposed BI should not be an issue.

Eligibility for the BI can be confirmed through filing an individual tax return. Some have argued that the BI should be electronically deposited into each individual’s bank account, but such a strategy seems na├»ve due to the threat of cyber crime and the questionable belief that everyone thinks that all individuals in society have a bank account and Internet access, which is obviously not the case. Therefore, a check similar to a tax refund sent by mail seems to be the most fair and all-encompassing strategy. Individuals without bank accounts could then use this check to create one with a stable foothold. Later if security concerns are managed the system could move from paper check to electronic deposit. For individuals without a permanent residence they could petition that the check to be delivered to certain federal buildings like post offices where identification would be confirmed through SSNs and/or valid photo identification. Note that this described proposal is not a negative tax that correlates with tax obligations, but is an additional payment based on the above eligibility restrictions. Negative tax methodologies are typically more difficult to administer because of more “moving” parts.

An additional question is whether to distribute the BI on a monthly basis or in one lump sum. A lump sum payment has the power of scale advantage allowing individuals to act immediately on their ideas. For example suppose an individual wants to become a chef, the purchase of a van for a catering service can be made immediately with a lump sum payment versus waiting four to six months if payments are made monthly. Homeless individuals could immediately search for and acquire places of residence with a lump sum payment (deal with security deposits and first month rent) versus waiting multiple months. Also one check over multiple checks will limit overhead costs before any type of transfer to an electrical system, if one even occurs.

However, the disadvantage of a lump sum payment is that it can result in a greater chance of a negative impulse purchase that could result in a financial setback for the individual. Some individuals, especially those living paycheck to paycheck, may not know how to manage “large” sums of money at one time. Overall one could argue that the important question on this issue is does government have a responsibility to place individuals in low risk decision-making environments? Perhaps it would be in the best interest of all parties for government to provide instruction (maybe via pamphlet) regarding budgeting and proper money management with each check.

Outside of cost, the only significant detraction that can be brought against a BI is that it will create a disincentive for poorer individuals receiving the BI to seek work. Not surprisingly this is the same criticism that is used of current welfare programs that created the “force” people to seek work mindset that largely drove welfare reform in 1996 as well as some strange concerns about the ACA; work disincentive arguments involving the ACA are strange because one cannot feed, cloth and shelter oneself on healthcare subsidies. Unfortunately for opponents of a BI this criticism is unfounded on at least two levels.

In the late 1960s and 70s both the United States and Canada embarked on various small-scale experiments with negative income taxes (a program very similar to the BI proposed here). Hum and Simpson along with Levine and Widerquist have conducted analyses of the conclusions drawn from these experiments and overall very little statistically significant disincentive to work was seen in any of the experiments.22-24 In addition none of the disincentive resulted from individuals simply staying at home and eating bon-bons on the couch while watching television.

Some of the change in work response involved individuals taking more time to look for work; basically instead of taking the first job available due to financial necessity individuals looked for a job that better fit their educational background and general interest. Other changes involved reducing work hours from generally larger than average amounts like 60 hours to 50 hours because the additional money from those hours was no longer worth the opportunity costs, clearly something no rational person would find inappropriate. Even if this behavior was problematic in the past in the current economy workers are fighting for every paid hour they can get, thus the environment eliminates this result as a potential problem.

The demographics that had the greatest influence on the “disincentive” were young individuals who normally expanded their education versus working and secondary earners (mostly females with young children). Note that while female reentered the workforce less quickly one could take it as a sign of the times in that in the late 60s early 70s it was more difficult for females to acquire work, thus frequently requiring numerous attempts to get a job. Also one could argue that these changes actually helped the economy by increasing the quality of available human capital, i.e. better rested and educated work candidates.

An important distinction that must be made in the disincentive to work discussion is with regards to the definition of what exactly is a job? One could argue that a job is a task/role that an individual engages in to produce a positive benefit for society. If that is the case then income derived from the task is not relevant to its validity as a job; or is it that if one does not receive some form of monetary capital from performing an action then it is not a job? If the latter is the case then what is the difference between an individual who works with disadvantaged children helping them gain the skills to better interact with society and gets paid $20,000 versus one who does the exact same thing and gets paid nothing? As stated above almost all individuals want to engage in positive tasks both to enhance the meaning of their existence and to avoid boredom, thus individuals will not simply sit on the couch in a BI program. In fact because the BI only covers need it is unlikely that individuals who do not have another means of income will have the funds to partake in leisure activities even the mundane ones like watching television.

One important limitation of the past studies is that the participants were aware that the BI payments were part of a temporary experiment. Therefore, acknowledgement of this short-term viability may have influenced behavior. One possible negative outcome is that these individuals did not permanently leave work because they knew that the BI payments would end after a set period of time and they did not want to lose their means of financial support after that point. However, while such a mindset is possible for the reasons stated above it probably was not a significant influencing factor in their employment behavior.

Realistically one could expect some disincentive to work from a BI only in the low-income (minimum wage) jobs; for example it is incredibly unlikely that an individual leaves a $50,000 a year job simply because they are now receiving $15,000 a year from the government. Also from a logical perspective general human behavior and ambition reduces the viability of any disincentive to work because of the new growth potential created by the BI. The reason for this rationality is that the BI will supplement the low wage allowing individuals in these positions to save creating what could be regarded as a “dream” fund. After an intermediate time using both the low wage and parts of the BI to build the “dream” fund the individual could leave the low-wage job using those saved funds to drive their change of career.

Ironically this departure is not a bad thing because when the departing individual seeks to advance their career in some form it will create a job opening giving a younger individual, more than likely a teenager who is not eligible for the BI, an opportunity to start his/her “dream” fund. With the advancement of technology and the overzealous attitude of business to outsource certain jobs, the number of qualified job openings is the limiting factor for the general occupational marketplace versus available labor as the limiting factor like it was in the 50-80s; therefore, this behavior would actually drive the economy in a positive fashion versus the current environment.

To expand on the above point, in the past (50s and 60s) the qualified laborer was the limiting factor for most occupations. Basically if an individual had the proper qualifications he could get almost any job that fit those qualifications. However, in the current environment the number of available job openings is the limiting factor, thus numerous people even though they have the proper qualifications to work in field x their probability of doing so is low because of fewer openings in the field. Looking at this concept numerically in the past there would be 500 job openings and 473 people available to fill them. In such an environment disincentive to work could be a problem because the labor pool is the limiting factor. Now there are 400 job openings and 1,187 people available to fill them. In this environment disincentive to work is not a problem because not enough of these candidates will remove themselves from the job market to create a labor pool shortage. Overall there is no logical or empirical backing to oppose a BI on the grounds of it producing societal significant disincentive to work.

Another possible question is what are the moral obligations of society regarding how the BI money is utilized and the outcome of that utilization. Basically some would object to the BI because it would be handing over money to individuals who would use it for various vices like alcohol and inappropriate drugs. However, it would be hypocritical to morally judge the decision-making of these individuals for few people judge the moral choices made by various corporations regarding how they spend money allocated from government tax breaks. Overall it stands to reason that some individuals would spend BI money to feed certain negative habits, but most would not and to invalidate the morality of a program based on the actions of a very small percentage of the affected population would be inappropriate. Or do objectors on these limited moral grounds believe that gun ownership should be heavily restricted on all U.S. citizens because of the poor choices made by a select few?

The other question regarding utilization is how to manage those individuals who squander their BI and are left without capital? Are these individuals left to their own devices or should another strategy be incorporated? It is difficult to argue in favor of secondary assistance when the purpose of the BI is clear and its funding will require the elimination of the existing federal safety nets. Therefore, there are two options: one have individuals accept responsibility for their actions in how they spend their BI and if spent improperly deny any additional governmental assistance or two have states provide some level of temporary support for residents. The chief problem with the second option is that individuals may be unjustifiably risky with their BI if they realize that there is a secondary safety net that can protect them. Therefore, unfortunately those individuals who squander the BI should have no general secondary safety net.

Some would ask what would society do about the lost jobs stemming from the proposed cuts to the military, the welfare system and some other government. Of course jobs would be lost because that is how a consumer based economic system operates, when spending and/or need in a particular field decreases the size and structure of organizations providing goods and services to that particular field decreases. It is completely irrational to continue spending money on elements in an environment that are either unnecessary or redundant. Jobs that exist in such an environment based on this irrational spending can be regarded as purely inefficient government subsidized jobs because the defense contractor or government agency that employs person A in that particular job is creating inefficiency in the transaction by siphoning off a portion of the money for itself which then leaves the economy versus that money going directly to the employee.

Any free-market capitalist should be in favor of eliminating such inefficient transactions. For any argument of sympathy for these individuals losing their jobs, why is it that these individuals, most who have had significant yearly salaries and should have large savings accounts, receive sympathy yet there is no sympathy towards thousands of lower paid, but more essential teachers and/or police officers when they are fired? Yes, it will be problematic for those who lose their jobs, but is it better to provide an anti-poverty subsidy for the country or to subsidize a very small number of individuals? The correct answer is rather obvious.

One of the unforeseen concerns from the experiments in the 60s and 70s was that families receiving the BI seemed to have higher dissolution (separation and divorce) rates. The initial analysis of the results showed that black families had a 57% higher divorce rate and white families had a 53% higher rate.25,26 Interestingly enough this outcome may have been the principle reason that a BI was not incorporated in some manner during the Carter administration as strong previous backers, like Senator Moynihan, ended their support because of these supposed increases in marriage instability.

Interestingly further more stringent analysis of this dissolution data in 1990 identified statistical errors that hurt the credibility of these dissolution conclusions.27 Other studies have reported no increase in dissolution rates in separate studies.2 Overall there is still some question regarding the validity of this increase, thus it should not be viewed as an obstacle for incorporating a BI. One thing to note is that some of the increase may have been a positive thing because the BI would increase the probability for abused spouses to leave the relationship, an action that would commonly result in a divorce, but a divorce that no rational individual should oppose.

A secondary side issue is how will charitable giving change in a BI environment? There appear to be two principle motives behind charitable giving: a compassionate action for helping individuals who need assistance (with some having an ulterior motive of demonstrating their superiority to those individuals through that assistance) and a tax write-off. When a BI is administered it stands to reason that there will be less giving inspired by the first motivation because the need to help individuals who have been dealt a negative hand in life will be significantly reduced. Giving inspired by the second motivation will depend on how the tax code changes to encompass the BI; it makes sense to expect the elimination of most of the charitable deductions, thus significantly reducing tax write-off motivations for charitable giving.

Overall it is important to note that the BI will more than likely shift charitable giving from domestic action to international action for as the less fortunate in the U.S. will have a new BI to help them become more productive members of society, individuals in other countries will not have this benefit and some will still require aid because of their circumstance. Therefore, most domestic-based general need charities will see a loss in donations damaging their infrastructure while international-based general need charities should see an increase in donations. It is unclear what will happen to specific target charities like the “Make a Wish” foundation, which does not support general needs, but specific single events.

One concern opponents might have against a BI is there could be a dramatic “rush to citizenship” by legal residents. Some critics may view this behavior as disingenuous because these individuals did not care to become citizens until the BI was administered. It is difficult to argue against this attitude because such action would characterize an individual as someone who only cares about the money provided by a BI. Such a rush of new eligible individuals in the initial stage of the BI could also create a destabilizing influence because of estimations made on the BI receiving population. Therefore, one option to address this behavior would be to initiate a waiting period of two years before one was eligible to receive the BI for any legal resident becoming a citizen after official passage of any legislation that establishes a BI.

Another advantage to establishing a BI is a slight spin-off of the ability of the individual to establish their own business in that groups of middle-income individuals can start their own businesses together instead of relying on venture capitalists and other investors. While most high value investors do bring useful tools and experience, especially connections, to certain investments they also demand an understandable higher return on their investment, which directs more money away from the standard consumer economy creating market inefficiencies. Middle-class investment groups supported by the BI will keep more of this money in the consumer marketplace, which should accelerate economic growth. These groups would also increase credit flow from lending institutions due to increased confidence in repayment. Finally a federal BI can further support economic growth by allowing states to reduce their welfare programs allowing diversion of those funds to build new or reconstruct existing infrastructure or increase salaries for state employees.

One of the lingering issues is what role children should have in the BI. Earlier one of the restrictions for the proposed BI was an age limit eliminating children from receiving any funds, a condition that is in contrast to most BI proposals which award children some funds. The chief concern with giving funds directly to children is that their parents or primary caregivers will have to manage the money and could misappropriate those funds. Another concern would be individuals having children for the purpose of collecting additional capital from government for those children and in order to maximize those returns these “parents” would neglect those children. However, this is only a minor concern because the number of individuals undertaking this strategy should be small.

Realistically if one wanted to include children one strategy would be to pay each child $2,000 per year until the age of 18 when he/she becomes eligible for the BI. This $2,000 would not be given in direct cash form, but instead be placed in a trust for the child so that upon turning the age of 18 that individual would receive a check equal to the given amount (i.e. for anyone born after the incorporation of such a system within the BI would receive $34,000; upon turning 18 they would receive the full BI). If this strategy were incorporated it would add an additional $153 billion per year to the total cost (76.5 million * $2,000).

Overall there are numerous potential advantages provided by a BI, elimination of hunger and poverty, increased economic mobility/freedom, increased economic efficiency, increased economic growth, increased societal creativity, increased societal physical, mental and emotional well-being, reduce criminal activity, etc,. Against all of these advantages there are only three arguments that can be made against the BI. The first opposition is the overall cost of the program and is far and away the most relevant. While the cost of the BI is substantial it has been demonstrated above that if the government is willing to make intelligent and appropriate changes in its spending and revenue streams the costs can be managed rather easily. Even the proposed increases in revenue do not involve unfair and unreasonable tax increases for the wealthy. In fact one could successfully argue that the increases are fair and should be administered with or without a BI.

The second opposition is the belief that establishing a BI will provide a significant disincentive for individuals to work, so much so that gaps will appear in the workforce due to labor shortages creating economic inefficiency and reducing economic growth. However, as demonstrated above this belief is misinformed based more on the blind hope of individuals who do not want a BI versus valid empirical evidence and logic. Maintaining this opposition is foolish for a BI is not a policy that involves “paying people not to work” despite the lies its opponents wish to continually repeat.

The final opposition is the most unfortunate one, based on the belief of unfairness. Basically there are individuals who believe that individuals who would benefit from a BI do not deserve it because they are poor due to their own choices, thus it is not fair for society to “punish” the successful to help the unsuccessful. The moral problem with this belief is obvious and the logical problem is that it assumes that every individual is born under similar circumstance and success is entirely dependent on the choices and actions of an individual. Of course no rational person would agree with this assumption; people are born into radically different circumstances for example some may have poor parents, some rich parents, some one parent, some soon after birth no parents, so in one vein is society to say that the current generation is to bear the mistakes of their past generations? If so, then how is it fair that the “meritocracy” these individuals envision in the U.S. is defined not by the skills of the current individual, but that of their lineage? The simple reality is that anyone who opposes a BI on the notion that in general poor people deserve to be poor then that individual is a selfish, delusional, irrational fool.

The BI should been supported across political spectrums in that Democrats should support it because it addresses poverty in an effective and decisive manner, Republicans should support it because it significantly limits existing market and government operating inefficiencies making the general system more fair and more in line with objectives of capitalism and Libertarians should support a BI because it shrinks the overall size of government and it greatly enhances individual freedom and opportunity. All parties should support a BI because it reduces the influence of past generations on the present limiting the importance of uneven resource distribution created by predecessors, thus creating a more fair playing field where an individual’s success is more dependent on his/her actions not on the actions made by their parents and other parties of the past.

Finally the administration of a BI should not be taken as the first step to entirely privatized world where government stops providing medical, educational, research funding, etc. services. Once again the point of the BI is two-fold: eliminate poverty and increase economic growth by reducing market inefficiency by increasing the spending ratio of existing capital. No one should take it as an invitation to strip government of any power on the notion of “the private market does it better” because despite what some want to believe the private sector and public/government sector need each other to ensure their optimal function and efficiency.

Overall there is little reason to object to a BI as long as it is operated transparently and is cost effective for a BI benefits everyone in society even if some individuals may not immediately realize it.



Citations –

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