Negative Income Tax, the Social Dividend, and Universal Basic Income

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I am a fan of various basic income schemes, including negative income tax, the social dividend, and universal basic income. We often think of these as mutually exclusive schemes that are incompatible with one another but I donā€™t think that they actually are. We donā€™t necessarily have to pick between these proposals. In fact, one of the early proponents of the social dividend, James Meade, was also an early proponent of the negative income tax. (If you arenā€™t familiar with the negative income tax and universal basic income proposals, check out my article here.)

Suppose we were to do a negative income tax ā€” i.e. a tax scheme that imposes a negative tax rate (subsidy rate) on incomes below a certain level, resulting in a cash transfer to everyone below a certain income, creating a minimum income guarantee. Letā€™s suppose that we make the minimum income guarantee $1000 per month. Now, letā€™s suppose that we also implement various tax-and-dividend schemes alongside this. We could start with a COST or Harberger tax on intellectual property and distribute the revenue from that tax to all citizens as a dividend. We could also do a carbon fee-and-dividend or a cap-and-trade plus dividend scheme for reducing emissions. Letā€™s assume that the social dividend from such programs starts at around $200 per month. Eventually, the size of the dividend grows and maybe we even add additional dividends. Perhaps we decide to impose a 6% land value tax and then divide the revenue so that half of it goes to fund local government and half goes towards a citizensā€™ dividend. Suppose that we start transitioning towards a fully-automated economy too and maybe we even impose a robot tax or, better yet, a value-added tax plus a dividend from the revenue. Eventually, the social dividend will grow to the point that everyone will be receiving so much from the social dividend that no one will be below the taxable threshold for the negative income tax. In other words, the social dividend will eventually become a universal basic income and will supplant the minimum income guarantee scheme.

A minimum income guarantee, like a negative income tax or Ilhan Omarā€™s SUPPORT Act, could actually be a stepping-stone on the way to a generous universal basic income. We donā€™t necessarily have to choose one or the other. And the use of tax-and-dividend schemes could very easily serve as a means to both ease and accelerate our transition to a fully-automated economy. This is a very feasible path to a real utopia and itā€™s totally asinine that we arenā€™t doing it. Would it happen overnight? No. It would take place gradually over the course of decades. Would it solve all of our problems? No. People are still going to be victims of insatiable lust because thatā€™s just how evolution made us. But will it make existing in this horrible world much more bearable? Undoubtedly, yes.

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Radical centrist, functional finance, universal healthcare, social dividend, universal basic income, land value tax, nominal GDP targeting, social democracy

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Radical centrist, functional finance, universal healthcare, social dividend, universal basic income, land value tax, nominal GDP targeting, social democracy

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