A new study shows Stockton, California’s universal basic income experiment resulted in more people paying off debt, getting full-time jobs, and it improved mental health. To critics of UBI who claim people would spend the money wastefully, or it would discourage work, 28 percent of the recipients had full time work prior to the program but 40 percent did a year after it began. Furthermore, only 1% was spent on alcohol or tobacco. Most of it was spent on food, merchandise, and utilities.
Another argument in favor of a universal basic income is that, as of December 2019, a Brookings Institution study found nearly half of Americans between the ages of 18 — 64 are in low wage jobs which pay an annual median wage of $18,000. And as more jobs go by the wayside due to automation in the coming years, it would be smart to have a guaranteed income to support low-income, working people or people who aren’t able to work through no fault of their own.
Besides eliminating current government programs to pay for a universal basic income system, the other way to pay for it would likely be tax increases on wealthy individuals and/or implementing a Value Added Tax, like 160 countries already have. America has tried tax cuts for the rich and trickle down economics for decades, which has failed. This would be a solid start to tackle income inequality.
Sen. Romney’s Family Security Act is smart, generous and deficit-neutral without eliminating popular and easy programs. His proposal would give a monthly allowance of $350 to children ages 0–5 and $250 to kids ages 6–17. The Earned Income Tax Credit would be reformed and under Romney’s plan, most families would receive less from it but his child monthly benefit would be significantly more than the current Child Tax Credit.
The simplicity of Sen. Romney’s proposal is highly attractive. It would be administered through the Social Security Administration so busy parents do not need to wait until tax season and jump through bureaucratic hoops to receive benefits. President Biden’s plan is a little more generous than Romney’s but would be just as complicated as government programs are currently constructed. It would be wise to not involve the tax code at all.
The Niskanen Center estimates his proposal would cut child poverty by one-third and deep child poverty by half which is very appealing to progressives. It could be appealing to conservatives because it eliminates the State and Local Tax Deduction, — a regressive tax that mostly benefits the top 20 percent of Americans — axes the Temporary Assistance for Needed Families (TANF) program, and as Lyman Stone posits, Romney’s proposal could reduce abortions.
Liberals bemoan eliminating government services but the truth is, TANF is an ineffective program with racial disparities. According to the Center on Budget and Policy Priorities, it has done less to decrease poverty than the Aid to Families with Dependent Children (AFDC), the program it replaced. Furthermore, there’s scant evidence that its work requirements provision actually lifted families out of poverty. States invested little in work programs and a study showed only modest increases in employment and many parents subjected to work requirements were still poor. Work requirements do not promote or incentivize work; it is just a way to penalize poor people.
Because TANF is distributed via block grants to the states, they have flexibility to determine benefit levels and who is eligible for benefits. With the large discretion states have, states have implemented racist policies to harm TANF for people of color. The CBPP report shows 55 percent of Black children in the country live in a state with benefits at or below 20 percent of the poverty line, compared to 41 percent of Latino children and 40 percent of white children.
It is time to improve and streamline America’s social safety net so we can make a big reduction in poverty, programs are more generous, and so it is simple. After all, Mahatma Ghandi once aid, “The true measure of any society can be found in how it treats its most vulnerable members.”