Politics. Economics. Morality. Religion. And Everything In Between.

Sunday, June 12, 2011

Why I Favor a Guaranteed Minimum Income

Ensuring that everyone receives a guaranteed minimum income from the government has been the left's pie-in-the-sky pipe dream for decades, just as flat taxes and "fair" (consumption-only) taxes have been the right's. As a humble blogger, I can take political risks far more cheaply than those who are trying to gain or hold political offices, editorships, professorships, and other positions of prominence. That's why I am going to propose a radical solution to America's social and fiscal problems. I think America should replace its entire taxing and spending apparatus with a flat tax, a fair tax, and a guaranteed minimum income.

Here's what I would do: first, eliminate Medicare, Medicaid, Social Security, FICA taxes, personal income taxes, corporate income taxes, payroll taxes, tax cuts and deductions for individuals, corporate tax cuts and tax breaks, and all that other taxing, spending, tax-cutting, and tax-incentivizing bullshit. Then, institute a 10% personal income tax. No ifs, ands, or buts. Every American pays ten cents of every single dollar they earn to the federal government. Then, have the government take the total revenues from this tax (roughly $1.5 trillion based on May 2011 GNP figures), divide it by the adult population of the United States, and give every American citizen 18 and up a check for their share of the cash pile every month. This would replace all federal entitlement and other benefits. (Revenues from the consumption tax would pay for discretionary spending and defense, the "hows" of which I will get into later.)

The annual value of these checks would be between $6600 and $7200, depending on how many legal and illegal non-citizen residents of the U.S. can fraudulently register for these benefits. The federal poverty line for an individual living in the contiguous 48 states is $10,890 for 2011, so even at the low end of my annual per person GMI estimate, a person working a minimum-wage job part time (about the lowest form of "employment" that exists) would have a total annual income of $13,125 a year and would be well above the poverty line. If you don't earn a dime of your own money, though, you'll still be poor, and I'm okay with that. The government shouldn't be responsible for keeping adults of sound mind and body afloat if they aren't willing to lift a finger for themselves.

Also note that the federal poverty line for a family of 2 is slightly over $14k a year, so if a woman pops out a kid and doesn't marry her baby daddy, she's in trouble. This, also, is an acceptable and even appropriate outcome. The current system, in which one who has more dependents gets more benefits, basically subsidizes unwed motherhood, which is often the number one factor that keeps both parent and child(ren) in poverty.

This system pays out cash instead of food stamps, housing vouchers, or whatever else other government programs used to disperse their conditional benefits. Folks may criticize me for coming up with a form of welfare that allows people to spend their entire allotment on booze if they so desire. My answer: if people are going to make life decisions that stupid, it's not the government's responsibility to protect them from themselves. As I stated before, it's relatively easy to use even food stamps and other conditional benefits to augment your capacity to purchase things like drugs and alcohol by reducing the amount of money you have to spend on necessities. Our current system is plagued by the same problem, only now, people live a lot longer and eat up a lot more taxpayer dollars before they drink themselves to death.

My proposed welfare state is WAY better for hardworking, productive citizens than what we have now. The fact that EVERY adult gets a $6600 annual payout would mean that anyone with an income of $66,000 or less has a negative net income tax rate, meaning that they get more money than they pay in. It's good to be lower-middle class. Those making above $66,000 a year would still have some of their taxes offset by the payout, with the highest earners only being taxed at a 10% marginal rate. That take the U.S. from having the 37th-highest top marginal tax rate (0r 20th, depending on whether or not you count payroll taxes and other "stealth" witholdings) to being tied for 86th with Bulgaria, Kazakhstan, Paraguay, and the Ivory Coast. That's a FANTASTIC incentive for a smart, enterprising person to start a new business in America.

Why have a social assistance program funded by income taxes at all? Well, contrary to what some folks may believe, I'm not a heartless bastard. I think everyone, no matter how "set," has a chance of falling on hard times and might need a little help to get by. Income taxes are harder to avoid and provide more stable revenues than consumption taxes, so they're the ideal choice for funding such a plan. We can, however, structure our "welfare" so that it doesn't reinforce the very poverty it's trying to alleviate. This brings me to my next point for consideration...

One question you may be askings is "why would EVERYONE, regardless of income or employment status, receive this payment?" The answer is simple: welfare that only poor people qualify for keeps them in poverty. If you pay people who are poor and then stop paying them when they reach a certain income level, and you will find that people who are already below that income level want to stay the hell down there or they might make $1 too many and be disqualified from receiving thousands of dollars of benefits. If you keep getting the checks no matter how much money you make, the incentive not to make money goes away. I'll give a more detailed explanation of how this works in later posts. Until then, this has been The Deal.

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