Why Universal Basic Income Is Needed & How To Pay For It
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After our previous post on Ilhan Omar Introduces Guaranteed Income Bill Of $1,200 Monthly (For Most Americans) & GDP Alternative Legislation was published, responses I received were varied: some people were happy, some were upset. More importantly, Theresa Schretzmann-Myers asked a really good question, “And how in the world will the US government pay for this? The money has to be taken from someone’s pocket to give to another. There is no such thing as free lunch. I am sure you have noticed the hyperinflation of our currency with what they are printing out of thin air. My same basket of groceries has tripled in price. This plan is not sustainable.”
My response to her question, addressing: 1. Why we need UBI. 2. What is UBI? 3. How UBI will be paid. 4. Current grocery prices, below:
1. Why we need UBI (Universal Basic Income):
As automation-robotics-AI continue to take up more shares of the products and services traditionally provided by human, our government needs to learn to tax products and services generated by automation-robotics-AI and redistribute these revenues to human whose jobs have been and will continue to be displaced. According to a paper by University of Oxford, The Future of Employment: How Susceptible Are Jobs to Computerisation? 47% of U.S. jobs are at risk of automation. Many of all current jobs will disappear in the coming decades, with some of them will be completely automated or upgraded to the point that only a fraction of the work force will be needed. It will not be a question of whether or not people will be willing to work, but a question of whether or not human will be able to compete with machines/computers. From drivers, cashiers, to doctors and lawyers, all human jobs will be at risk of being replaced. We are living in the transitional period. There will be a learning curve. But in time, there will be sufficient revenues to help pay for the guaranteed income for all adult Americans to ensure the flexibility, freedom, and a basic level of standard of living for all adult Americans.
To see some examples of products and services generated by automation-robotics-AI and will be replacing human jobs, below:
15 Jobs That Will Disappear In The Next 20 Years Due To Automation & Artificial Intelligence, in the video published on Oct. 5, 2017, “15 Jobs That Will Disappear In The Next 20 Years Due To AI“, below:
While Tesla and others already offer assisted-driving features, startups Waymo, Cruise, TuSimple and Aurora are betting their autonomous vehicles will make driving a thing of the past, in the video published on May 20, 2021, “Beyond Tesla: Driverless Startups Promise Next-Level Autonomous Vehicles | WSJ“, below:
Artificial Intelligence and automation are already starting to replace many jobs across many fields. Are doctors next? It’s already starting, in the video published on Jan.23, 2018, “Will Artificial Intelligence Replace Doctors?” below:
No one is immune from the risk of being replaced. The way to get ahead of the situation is to look ahead and prepare with technology in mind and be ready to be a life-time learner. While the paper by University of Oxford predicted that 47% of the current jobs will be automated, it did not try to predict what types or how many new jobs will be created from automation-robotics-AI. While many people will be learning and retooling, our government needs to be in the position of helping these people to transition and learn. UBI is a good way to help provide a cushion for citizens whenever they need to transition into a different field. But some economists feel that this time, the Fourth Technological Revolution, will be a very different story. Why economists and futurists disagree about the future of the labor market, in the video published on Nov.13, 2017, “The bid debate about the future of work, explained“, below:
Andrew Yang has succeeded in raising the visibility of issues like universal basic income even as he trails front-running candidates like Joe Biden, Elizabeth Warren, and Bernie Sanders in polls for the 2020 Democratic presidential nomination. According to Yang, technology has eroded fundamental American assumptions about capitalism and government needs to set a new direction, in the video published on Oct. 4, 2019, “Andrew Yang On UBI And Human-Centered Capitalism“, below:
2. What is UBI:
As long as good percentage of the human jobs will be displaced while automation-robotics-AI will generate much revenues, it does make sense that a portion of the tax revenues generated from products and services produced by automation-robotics-AI should be distributed to human. So, it is important that our government learns how to tax these products and services and distribute the revenue in the form of guaranteed income (aka UBI, universal basic income) to adult Americans. But how much the UBI should be in order to be optimal for the society as a whole needs to be carefully investigated, experimented or tested before being implemented on a large scale.
What is UBI? How would free money change our lives, in the video published on Dec.7, 2017, “Universal Basic Income Explained – Free Money for Everybody? UBI“, below:
This talk was given at a local TEDx event, produced independently of the TED Conferences. Rutger Bregman (1988) studied at Utrecht University and the University of California in Los Angeles, majoring in History. In September 2013 Bregman joined the online journalism platform De Correspondent. His article on basic income was nominated for the European Press Prize and was published by The Washington Post. In September 2013 Bregman joined the online journalism platform ‘De Correspondent’. His article on basic income was nominated for the European Press Prize and was subsequently also published by the American newspaper The Washington Post. In September 2014 his newest book ‘Gratis geld voor iedereen En nog vijf grote ideeën die de wereld kunnen veranderen’ came out, in the video published on Oct.21, 2014, “Why we should give everyone a basic income| Rutger Bregman | TEDxMaastricht“, below:
UBI is an old idea, stretched as far back from time of Thomas Paine, Napoleon, to Martin Luther King Jr. and Richard Nixon. The TEDx talk above cited many experiments with guaranteed income throughout the world and showed us that we need to rethink what poverty actually is; poverty is simply lack of money. Mr. Bregman believes that UBI or guaranteed income is a better alternative to the current welfare system. He points out usual argument against UBI may be three fold:
- Too expensive. This may had been true 200 years ago, during the time of Thomas Paine, but it is no longer the case. Our society now is so much more richer than ever. Eradicating poverty is a form of investment in our society because it would help our government to save billions in lower healthcare cost, less crime, and more productive citizens.
- People would stop working. But the worldwide experimental results showed that poor people actually worked more when being given money.
- It’s never going to happen. Former President Richard Nixon almost implemented a modest basic income at the beginning of the 70’s in the USA.
Mr. Bregman points out that many of the historical “impossible” Utopian ideals have come true: end of slavery, equal rights for men and women, democracy. So why can’t poverty reach its end here in USA?
3. How UBI will be paid?
Mr. Andrew Yang had been campaigning for Universal Basic Income (UBI), aka Freedom Dividend during his 2020 Presidential election campaign. Let’s hear what he has to say about how this type of guaranteed income or UBI can be paid for, below:
Andrew Yang, a candidate for the 2020 U.S. Presidential Election, describes way to offset the cost of a universal basic income, which he calls a “true dividend” for Americans, in the video published on March 28, 2018, “Andrew Yang: Paying for a Universal Basic Income“, below:
As more Americans pursue patchwork jobs and part time work, should the government provide everyone with a monthly stipend? Andrew Yang, Presidential Candidate (D); Founder, Venture for America With Derek Thompson, The Atlantic, in the video published on Nov. 5, 2018, “Running for president on a universal basic income platform“, below:
Andrew Yang’s Freedom Dividend would put $1,000 a month into the hands of every adult American, creating a “trickle up” economy from our people, our families, and our community. Andrew plans on paying for the dividend by joining every other industrialized economy by having a Value Added Tax where the American public would receive a tiny slice of every profit from the biggest winners of artificial intelligence and new technologies like Amazon, Google, and Facebook, that are robbing millions of Americans of their jobs through automation, in the video published on Sep.12, 2019, “UBI FAQ – How Do You Pay for a Universal Basic Income?” below:
Universal Basic Income: Elon Musk, Andrew Yang, Ben Shapiro, Jordan Peterson on UBI [FREE MONEY], in the video published on April 9, 2019, “Universal Basic Income: Elon Musk, Andrew Yang, Ben Shapiro, Jordan Peterson on UBI [FREE MONEY]“, below:
To stimulate its pandemic-hit economy, a province in South Korea has been experimenting with universal basic income programs by regularly giving out cash, no questions asked. Now, some politicians want to go national with the concept, in the video published on Oct.9, 2020, “How South Korea Experiments With Universal Basic Income | WSJ“, below:
Nearly 200,000 South Koreans in the Gyeonggi Province are part of a radical experiment. They receive about $220-250 every three months no questions asked. Gyeonggi Pay is a cash pay-out based on the concept of UBI (Universal Basic Income) where citizens, regardless of employment or income level, are indefinitely given a sum of money to help reduce inequality and poverty. During pandemic, Gyeonggi Pay is expanded to thirteen million people in the province, including newborns, to help them to ride out the economic slowdown. There is only one catch: people have to spend the money in their neighborhood to help stimulate the local economy. South Korea is one of the most automated countries in the world and about 15% of South Korean jobs are expected to be automated by 2024. Some politicians in the manufacturing hub of Gyeonggi want to give every citizen about $430 per month to help prepare a future with robots. Gyeonggi Pay helped local businesses tremendously.
Many countries have already begun their experimentation with Universal Basic Income:
- Kenya’s GiveDirectly
- Finland’s UBI
- Canadian’s UBI pilot in Ontario
- Spain’s UBI Program
- American UBI Experiment took place in Alaska, North Carolina, New Jersey, Pennsylvania, Washington (Seattle), Colorado (Denver), Indiana (Gary), California (Stockton), California (Oakland)
- Scotland’s UBI Experiment
- South Korean Experiment
In addition to our government learning to tax products and services generated by automation-robotics-AI, another potential source of revenue that may help to pay for the UBI is value-added tax (VAT).
VAT is a relatively new tax, enacted in 1960s by many European countries and independently designed by two people in the early 20th century: German businessman Wilhelm Von Siemens (to solve problems arose in implementing gross turnover taxes and sales taxes) and American Thomas S. Adams, who considered VAT a better version of the corporate income tax. Leading VAT expert of Netherlands, Sijbren Cnossen considered the spread of VAT as “the most important event in the evolution of tax structure in the last half of the 20th century.”
In general, consumption taxes are an economically efficient way of raising tax revenue. As of 2020, value-added tax (VAT) has been successfully adopted in 116 countries because it provides an incentive for businesses to both register and keep invoices, and it does this in the form of zero rated goods and VAT exemption on goods not sold. A business essentially through registration, is waived VAT on goods purchased for its own use. Let’s take a look at what wikipedia has to say about value-added tax (VAT), in italics, below:
A value-added tax (VAT), known in some countries as a goods and services tax (GST), is a type of tax that is assessed incrementally. It is levied on the price of a product or service at each stage of production, distribution, or sale to the end consumer. If the ultimate consumer is a business that collects and pays to the government VAT on its products or services, it can reclaim the tax paid. It is similar to, and is often compared with, a sales tax.
VAT essentially compensates for the shared service and infrastructure provided in a certain locality by a state and funded by its taxpayers that were used in the provision of that product or service.[citation needed] Not all localities require VAT to be charged, and exports are often exempt. VAT is usually implemented as a destination-based tax, where the tax rate is based on the location of the consumer and applied to the sales price. The terms VAT, GST, and the more general consumption tax are sometimes used interchangeably. VAT raises about a fifth of total tax revenues both worldwide and among the members of the Organisation for Economic Co-operation and Development (OECD).[1]:14 As of 2018, 166 of the 193 countries with full UN membership employ a VAT, including all OECD members except the United States,[1]:14 where many states use a sales tax system instead.
In the video published on May 12, 2017, “How a Value Added Tax could spark economic growth“, below:
In the video published on April 9, 2019, “Andrew Yang on Value Added Tax, Potential Exemptions, and Arguments Against (April 7, 2019)“, below:
Entrepreneur Andrew Yang answers questions from two undecided Democratic voters. NPR’s Noel King hosts, in the video published on Oct. 23, 2019, “Andrew Yang Talks Universal Basic Income, Climate Change, With Undecided Voters | Off Script|NPR“, below:
There are two main methods of calculating VAT: the credit-invoice or invoice-based method, and the subtraction or accounts-based method. Using the credit-invoice method, sales transactions are taxed, with the customer informed of the VAT on the transaction, and businesses may receive a credit for VAT paid on input materials and services. The credit-invoice method is the most widely employed method, used by all national VATs except for Japan. Using the subtraction method, at the end of a reporting period, a business calculates the value of all taxable sales then subtracts the sum of all taxable purchases and the VAT rate is applied to the difference. The subtraction method VAT is currently only used by Japan, although subtraction method VATs, often using the name “flat tax,” have been part of many recent tax reform proposals by US politicians.[2][3][4] With both methods, there are exceptions in the calculation method for certain goods and transactions, created for either pragmatic collection reasons or to counter tax fraud and evasion.
To see 2021 VAT Rates in Europe, please click HERE. Andrew Yang proposed that U.S. only needs to have VAT rate around 10% (rather than the 20+% VAT rates of most European countries). Keep in mind that VAT can be tailored to exempt certain items (such as food, shelter, diapers, etc.)
4. Current grocery prices: Finally, Theresa’s concern regarding the rising costs of grocery has more to do with: people’s way of purchasing food (Americans purchase a lot of highly processed and prepared food), people’s attempt at stockpiling as a result of pandemic, and availability of supply. USDA experts recommend ways in reducing the cost of food by:
- buying in bulk
- cutting out prepped food
- setting a budget
- look for coupons
In the video published on March 15, 2020, “Grocery prices soar the most in a decade in 2020“, below:
From fruits and vegetables, to milk and lobster, find out how much extra you should expect to pay within the coming months. Business Editor Richard Southern reports, in the video published on June 9, 2021, “Business Report: Food prices on the rise“, below:
Part of the rising cost of food is due to increased shipping cost. For this, I’d highly recommend people to try to visit their farmer’s markets (buy locally), look for locally grown food source, or grow their own food/vegetables/fruits.
Gathered, written, and posted by Windermere Sun-Susan Sun Nunamaker
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