The US poverty line for a single person is $11k. For simplicity, let's say BI gives everyone in the US $10k per year. Times 313.9 million, that's $3.1 trillion per year. The US government spent, overall, $3.45 trillion in 2013. How would we be able to afford basic income?
According to Wikipedia, only the bottom quartile of the US population earns less than $22500 per household; if you assume that BI isn't simply added on tax-free to higher-earning households' net income, that makes it more like 1/4 of the 80% of the population over age 14 would be eligible for full BI benefits. So, call it 20% of your original population estimate.
That makes it roughly $600 billion, with the potential chance of largely replacing welfare ($532 billion* in 2013) and federal disability ($166 billion), not to mention some portion of Social Security and other programs.
Sounds like a reasonable idea to at least explore IMHO.
* per charts at usgovernmentspending.com
- Can you really exclude kids? They still need someone to support them. They may not get their 10k, but their parents need extra (presumably around 10k for each child) to support them.
- If you switch to a means-tested system (the article actually advocates for everyone gets 10k, not just the poor), don’t you lose many of the benefits the article advocates? Eg, you go back to the complexity of having to determine who’s eligible, rather than gaining the efficiency of just saying “everyone”.
- A means-tested system also creates the perverse incentive that the article’s BI would bypass: people near the threshold for BI have a weakened incentive to work extra for fear of losing or lessening their BI.
Edit: Actually, a comment lower down points out that our social security expenditures were $1.3 trillion in 2013, so that's our lower bound. "Income derived from Social Security is currently estimated to keep roughly 20% of all Americans, age 65 or older, above the Federally defined poverty level." Since BI would replace SS, we'll be paying at least that amount to start with.
Take income taxes (I like that model for its simplicity because both sides are income):
You get your $10k, but there's a progressive income tax. To invent some random figures: for the first $10k (on top of BI) you pay nothing, at $50k you pay $10k, at $100k you pay $30k. For example: for every dollar between $10k and $50k: $0.25, for every dollar beyond $50k: $0.40.
Once you earn $50k, your BI cancels out, anything higher and you contribute to the BI of others. (simplifying some more: income tax contributes to BI, all other public expenditures are paid through other taxes, like land or consumption).
Progressive taxes are well understood, relatively abuse-free (it can only be gamed by not declaring income), and at no point create a >100% marginal tax rate: tax grows faster than before, but never faster than your income.
That way the complexity of welfare, its abuse and people falling through its cracks is eliminated (or so proponents hope), while still "effectively paying" the $10k in BI only to those who really need them.
(Disclaimer: the tax brackets above probably break down easily when applied to reality, so only use them to discuss the model ;-) )
So taxes on the top brackets pay for basic income on the lowest brackets, with the understanding that the impact isn't changing much for most people because we already have a progressive tax system and this is just a simpler/more efficient way to distribute.
I'm of the opinion that a negative income tax is a bad idea simply because it really does create the situation where the next dollar you earn on the low end can make things worse for you (or at least not improve them). Why even bother working at a low level job if what they pay you just comes out of your stipend? This is a problem mentioned with the current programs as well, where getting a job can get you cut off from the things that were saving your life, even if the job pays shit.
Pure basic income, on the other hand, means that every dollar you earn increases your income.
Isn't that directly contradicting the point you made earlier? If every cent counts at the lower level, then even earning 90 cents on the dollar extra is still plenty incentive to attempt to earn more.
People under 18, 25%
Felons/criminals, probably 3%
Removing social security, medicare, and most other government social welfare programs should remove a giant chunk of the federal budget. I think if you re-do these numbers that will appear a lot more affordable.
Proponents of BI say it can't exclude anyone. That is silly. Things we consider the most basic fundamental rights: voting, free speech, are restricted for large groups such as convicted felons. It would be reasonable that anyone who fails to conform with government rules of accepted social behavior should also be excluded from BI.
The more serious problem with BI is how the dollars flow toward prices. If you make a blanket distribution of money to a large group of money the end result may just be price inflation in the goods that exist in a limited quantity, most specifically real estate.
I think BI is a fairly poor idea. But, being realistic I am trying to imagine what it would look like in use. All I see is a tool for governments to control large segments of lower middle class citizens. That may well be the goal.
Land may exist in reasonably fixed quality, but real estate in the relevant sense (e.g., housing units) do not exist "in fixed quantity", and more money chasing them around causes more of them to be available, just like most goods. You'd expect some increase in market clearing price, sure, but also an increase in units of housing "sold" in the market (including rentals). Which is rather the point.
You imply that they shouldn't get BI. Perhaps, though, the incentive for criminality would be less with BI? Especially if good drugs (particularly pot) are legal and cheap.
Society has to make a fundamental choice about whether they want shelter to be primarily shelter or primarily an asset for speculation.
(2) The full single-person household federal poverty line is a very high target to aim for per person for BI in an initial implementation. Half of the two-person household FPL per adult citizen and permanent resident (about $7500/each), and, if BI is going to paid to children (or, rather, guardians on their behalf) the full marginal amount for an additional family member (about $4000/each) per child (again citizens and permanent residents) is probably a more reasonable target to aim for, but I'd expect an initial implementation to start out below that and work up.
but ideally the middle class breaks even on the idea, they pay $10K to the basic income fund and get about $10K at the start of the year as a prebate on the next year's basic income tax
That's called a "means-tested social benefit program", and is one of the thing BI advocates see it as replacing (we have plenty of those now) -- one of the main problems they see is that such programs create perverse incentives, since they reduce the marginal value of additional income to the poor, since the additional income reduces the benefit from the social benefit program. That perverse incentive is one of the things BI is proposed to cure.
It may be that getting everyone above the poverty line is infeasible. It may be that the poverty line may be sidestepped, say, by relocating to a poorer (less costly) region of the country.
Food for thought. I haven't really formed an opinion on it, really. The numbers don't look that off, at first inspection.
(1) eliminate separate SS tax when you establish BI (probably keep a tax of about the same level overall rolled into general income tax, you probably need it to fund BI, but you no longer have dedicated SS contributions)
(2) The SS eligibility you have earned from your past contributions remains, except any time when you would get SS, your BI is deducted from your SS benefits (so you never get less benefits from BI+SS than you would have gotten from the worst of the two, but also never more than you would get from the best of the two.)
So, over time SS withers, and to the extent its duplicative its effectively eliminated immediately, but no one loses the minimum guarantee they had already secured from SS.
Social security, unemployment, food stamps, etc seem to account for 1/3rd of the total federal budget in 2013 .