Sta Hungry Stay Foolish

Stay Hungry. Stay Foolish.

A blog by Leon Oudejans

Universal Basic Income and the Taxman

The left-wing idea of a Universal Basic Income is a perfect way for making the government more efficient and effective, a right-wing idea. A UBI should never be “free cash” but a taxable negative income tax, else the concern of economist and 2001 Nobel Prize winner Joseph Stiglitz would come true: UBI “risks diverting cash to the better off” (Times).

Most advocates of a UBI do not address the potential for – or risk of – streamlining the very many Federal, State, and local departments that deal with benefits to citizens.

Introducing a UBI should replace all existing benefits. Hence, all civil servants working for these existing benefits will become superfluous.

The Tax department will pay out the negative income tax (tax credits) and will tax them annually. In the absence of additional income, a UBI will be taxed at 0%.

Obtaining additional income will be encouraged by using incremental tax rates. The tax rate on a UBI should be (very) low for small additional incomes, and 100% for high incomes. Anything in between is the outcome of a political discussion, similar to defining “small” and “high”.

Implementation of a UBI could, theoretically, wait until human jobs have been taken over by Artificially Intelligent Robots (my blogs). However, while quoting John F. Kennedy, “the time to repair the roof is when the sun is shining”.

My main concern with a UBI is in implementing restrictions. Similar to Kuwait and Saudi-Arabia, a UBI should only apply to citizens and not to temporary foreign labour. Interestingly, the solution to (economic) refugees and/or labour migrants also lies in these countries. Like them, we should offer any (economic) refugee and/or labour migrant a temporary housing and working permit rather than free social benefits. Citizenship is not an option, just a (rare) exception.

The amount of a UBI should follow the human life cycle and is related to the cost of living: infant, student, worker, parent, and pensioner. The amounts of a UBI will be politically motivated and differ from country to country, and region to region.

Implementing a UBI allows for a general overhaul of our government model. Given the vast number of citizens and residents in any country, a UBI might decimate the number of civil servants, on any level of government. Considering this, timing would be crucial but not the Why.

Taxman (1966) by Joe Bonamassa – artist, lyrics, video, Wiki-1, Wiki-2


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