Reimagining Universal Basic Income

A universal basic income (UBI) is a revolutionary government initiative that aims to provide every citizen or eligible resident with a fixed monthly payment. The concept behind this welfare program is to alleviate financial pressures on individuals, enabling them to focus on personal development, enhancing their skills, or addressing personal matters, all while ensuring a steady income to cover basic living expenses. As these programs are still in the experimental or developmental stages, the criteria for determining who receives the income remains unclear. Some advocate for all citizens to receive it regardless of income, while others suggest limiting it to those below a certain income threshold. However, there are also critics who argue against the necessity or fairness of a government-funded income for all.

How Universal Basic Income Functions

The fundamental premise of UBI is to utilize government tax revenues to establish programs that disburse payments to all individuals within the government's jurisdiction. Economists like Kalle Moene and Debraj Ray propose a payment structure linked to a country's economic performance, with a percentage of the gross national income allocated to universal income payments. Alternatively, economist Milton Friedman introduced the concept of a negative income tax in 1962, which aligns more with guaranteed basic income by targeting specific individuals based on their income levels. The funds for this tax credit would come from taxes collected from families exceeding a certain income threshold.

Purposes of UBI

A universal basic income serves to provide individuals with a secure income level to meet their basic needs, such as food, shelter, and clothing, and offer additional support during challenging circumstances. For instance, during the COVID-19 pandemic, widespread income loss led the federal government to enhance unemployment benefits to aid those facing financial turmoil. Proponents of UBI argue that such a program could diminish the necessity for supplemental government support during crises, like pandemics, potentially replacing programs such as unemployment insurance, SNAP, federal housing assistance, and TANF.

Cost Implications of Universal Basic Income

Estimating the cost of implementing UBI involves considering the total number of individuals within a country. For instance, providing a GBI of $12,000 annually to each person in the American labor force could amount to nearly $2 trillion yearly. Advocates of UBI suggest that integrating it into existing welfare spending could lead to cost savings by eliminating redundant programs and reducing bureaucratic expenses. However, the widespread implementation of UBI for all Americans would escalate costs significantly, exceeding $3.6 trillion annually.

Challenges in Implementing UBI

Proposing and enacting a robust UBI plan faces considerable hurdles in the U.S., as evidenced by widespread opposition among the American public. Various funding mechanisms, such as increased taxes on tech companies or corporations, have been suggested to support UBI. However, gaining consensus on implementing such a program remains contentious, given existing challenges in raising the minimum wage and divergent views on funding sources for UBI.