With the 2020 election drawing nearer, Andrew Yang has been steadily gaining popularity and recognition among first-time voters. His major issue? Ensuring $1,000 for every single adult monthly from the federal coffers. This concept of universal basic income (UBI) is not something Yang invented; has been highly debated over the past few decades. That being said, it’s worth it to find out what UBI really means for America — and how Yang plans to implement it — before casting your vote.
What is UBI?
The concept of universal basic income is simply that a minimum income is guaranteed to every American over the age of 18 — no strings attached, no requirements and no cutoffs. This is to say that Bill Gates would get the same $1,000 a month as you and — so would your parents, Mark Cuban, Jeff Bezos, your cousins from out-of-state, and so on — each person earning $1,000 simply for living.
Yang hopes that instating a nationwide UBI, his so-called Freedom Dividend, will lift low-income families above the poverty line, allowing them to focus on getting higher paying jobs rather than working low paying jobs and living paycheck to paycheck. Yang also predicts a reduction of crime, a growth in the national economy and a reform to the current welfare system to make it more efficient.
Studies show that the extra pocket change encourages healthy risk taking, entrepreneurship and market efficiency. Additionally, workers are able to bargain for better benefits without worrying about their only source of income being lost. This flexibility also allows for better interpersonal relationships due to decreased stress about money.
Although UBI has been labeled as being a socialist program, accused of making people lazy and ambitionless and raising concerns about the money being used for drugs and alcohol, it should create a happier, healthier America if it’s instituted.
So, UBI seems like a slam dunk! After all, who wouldn’t want an extra $1,000 a month? But, economists and political scientists have concerns about Yang’s proposal to implement this system, which could cause detriment to our existing welfare and low-income programs.
The main issue with UBI is its compatibility with current welfare systems. Under Yang’s proposal, welfare funding would be funneled into the UBIs, meaning existing programs could be dissolved. Even a generous $12,000 a year is not enough to live on, especially if one is already below the poverty line. Eliminating things like food stamps or subsidized housing could hurt rather than help those in need.
Even if everyone in low-income brackets could live off of UBI alone, those in the middle and upper classes will be earning money — in part from the existing welfare pot — which allows the better off to benefit more than the needy.
Funding for the Freedom Dividend will come from four primary sources: current welfare spending, new revenue, taxes on pollution and the wealthy and, finally, a value added tax (VAT) of 10%. Essentially, a VAT is a tax on the supply-chain. Instead of having a sales tax only on the good, a VAT applies sales tax to all the steps of production. Yang hopes to generate up to $800 billion off of this tax, but the money might be coming from the citizens rather than large corporations.
The burden of the tax actually tends to be passed off to the consumer rather than falling on the producer throughout the process. Since lower income families are more likely to buy staple goods than wealthy families, they might be footing the bill for UBI funding. Although no one’s VAT purchases will ever outweigh their UBI, the original promise of $1,000 could come out being much less.
Overall, if Yang can ease some of these funding concerns, it would be much easier to trust the implementation of UBI. Of course, we’re still a long way off from a Yang presidency, as he is polling at 3% nationwide and is far more progressive than the current front runner, Joe Biden, who is polling at a whopping 27%. Information on Yang’s other policies can be found on his website, and I strongly encourage every single potential voter to read up and be well informed before you enter the booth next November. For now, Yang is definitely a candidate to watch.
Sources:
https://theweek.com/articles/858097/andrew-yangs-ubi-problem