Universal basic income: a libertarian ideal.

By late 2011 I’d spent roughly a decade lamenting the waning influence of Jefferson, rolling my eyes at the half-assed political circus and endlessly baffled by its effectiveness, but despite it all I still felt that our system was healthy at the core. Years earlier I had concluded that public sentiment swings between extremes on a two-decade pendulum, as each generation rejects its parents’ advice. So I stood up for what I felt was right, but I never felt the sky was falling if things went the other way.

Occupy Wall Street happened. The 1% and 99% memes entered the public mind, and pundits fell over each other to emphasize that the 1% have their own 1%. XKCD drove the point home with a visual aid, and that’s when my foundation came loose. Something very wrong had happened to America, and neither democracy nor market action had stopped it. I had always believed — and still do — that human nature tends toward generosity and cooperation. The exceptions are obvious enough, but also obviously exceptions; a nuisance, but the majority keeps them in check. Yet a paltry handful of those exceptions had set themselves up as apex predators. Ignore the rotten apple at your own peril.

Central to my ideology is the principle of negative liberty, succinctly summarized by Zechariah Chafee: “Your right to swing your arms ends just where the other man’s nose begins.” Part and parcel with this is the notion that the first (perhaps only) duty of government is to protect us from each other. The use of wealth and position to deny others the opportunity to pursue their own is in flagrant violation, and this realization changed my thinking on social welfare: failure through poor choices is one thing, but sabotage is quite another.

In the 2012 election cycle, the perennial flat tax proposal came from Herman Cain. The counterargument is obvious and overwhelming: flat taxes are cripplingly regressive. If you need 80% of your income for a roof and full belly, losing 25% kills you. This is frequently true for the poor, and never for the rich: fixed costs don’t scale with income. This time around, though, other points of inequality were still fresh in my mind, and one day they all crashed into each other.

Negative liberty demands that social policies effect equal treatment, but a government is not necessarily forbidden from doing anything it would forbid its members to do, only from doing things in a way that hinders some more than others. What if redistribution conformed to equal treatment? If a flat tax disproportionately burdens the poor, then a flat tax refund — a fixed percentage of total tax revenue — disproportionately benefits them! I ran some numbers, and saw astonishing potential. Here, I’ll do it again with 2012 data.

US GDP was 15.68 trillion. Tax one third of that, yielding ~5.23 trillion: roughly double the actual Federal receipt, so one half of this covers the current Federal budget. The other half, ~2.61 trillion, is distributed to the American populace, which in 2012 was 313.9 million people. That’s every man, woman and child in America — not just taxpayers! Using this figure, everyone gets $8325. A family of three is brushing against $25k, from a tax rate still quite competitive with other developed nations.

Even with flat taxation, this works out to be a progressive model because the distribution to low earners is proportionally much larger. It’s roughly equivalent to a negative income tax: with these numbers, if your household makes under $24,975 per member, you’re receiving more than you pay. (This can be rolled into the system, to avoid shuffling lump sums around unnecessarily.)

Nobody is unduly burdened, no individual’s opportunity is reduced relative to that enjoyed by others. With no tiers or qualifications beyond citizenship, there is no disincentive to work; no point where a dollar earned turns into two dollars lost because you no longer fall under an arbitrary benefit limit. The sky remains the limit for the highly ambitious. And hell, most of that money finds its way back up the funnel anyway.

I believe it’s essential that the distribution pool be pegged to GDP. In my example above I stated it relative to tax revenue, but to be robust, it should be thought of as explicitly (e.g.) 1/6 of GDP. This keeps it functioning as intended regardless of future fluctuations in tax rates, the Federal budget, the wealth divide, or inflation.

In recent months, I’ve started hearing the term “Universal Basic Income,” and clearly this is an example of that. I find myself siding with Democrats on a fiscal policy for the first time since I started using the word ‘fiscal,’ and I’m not complaining — I don’t own a necktie or a bible, so the other side of the aisle was never comfortable.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>