Universal basic income is a necessary step the United States must take to maintain the middle class and is overall beneficial to the economy of the United States. What is a universal basic income? Universal basic income is the idea that the government will supply citizens when an “x” amount of income on a scheduled basis to help all citizens in an equal way with “no strings attached” (“Universal Basic Income Explained – Free Money for everybody? UBI” 2:20-2:25). Now, how might this idea work? By taxing large corporations that benefit by using machines rather than hiring people, we could create a universal basic income that could support the lower class and create a larger middle class, not to mention some of the most influential people of our time and the past support the idea. We will also discuss what we could expect from implementing this idea.
When it comes to taxing large corporations, we should start by looking at how much these corporations who benefit from machinery rather than human labor. For example, Amazon paid a total of 0 dollars in taxes in 2018 who had a profit of 10.8 billion dollars. Just by taxing amazon 30% of their profits we can supply US citizens 3.24 billion dollars equally. Amazon in the past 10 years has only paid 3% of its total profit in taxes. Amazon is not the only fortune 500 company not paying its fair share in taxes, an analysis of Fortune 500 companies shows that at least 60 of the nation’s largest corporations were not paying a dollar in taxes last year. You might be wondering how is this possible? Well, because of legal loopholes Amazon and other companies can put their profits towards “research and development and giving employees stock-based employee compensation” (Davis). By eliminating these loopholes, we can implement universal basic income by taking the tax revenue earned by the government and distribute it to the people.
But wait, if you know anything about economics you might be thinking “Won’t this cause a large amount of inflation with prices rising and nothing changing to combat all this money coming in?”. In short, no. Because we aren’t just printing more money and just distributing it equally among all adult citizens there will be no inflation. Universal basic income will only be distributing already existing money from a variety of sources. These sources could include but aren’t limited to; taxing large corporations, cutting the military budget, getting rid of welfare programs, etc.
Now, back to the topic of why universal basic income should be implemented in the United States. With automation rapidly growing larger more and more jobs will be lost. So at some point, some sort of system must be put in place to make sure the lower and upper class don’t grow exceedingly large, there have been multiple theoretical solutions to this including such as universal basic income, larger minimum wage, and larger welfare systems, the last two options are significantly flawed. Universal basic income can provide many citizens with a way to get back on their feet, be a fallback in case of emergency, and get out of abusive situations.
![](https://english1105class.wordpress.com/wp-content/uploads/2019/11/figure-a.png?w=318)
Let’s start with the flaws with raising the minimum wage, according to a study published by the Obama administration. This study shows that 83% of current jobs that pay less than $20 in 2010, as shown in Figure 3a, “will be under pressure from automation” (Furman, 14) and possibly gone in the coming decades. Not to mention that 31% of jobs that pay 20 to 40 dollars an hour will also be gone. However, raising the minimum wage is a short-term fix and won’t ultimately fix the pay disparity between the lower and upper class. The other issue of increasing the minimum wage is the issue of small businesses. Large companies may be able to deal with being forced to pay their employees higher levels of pay, but small businesses may not be able to afford these costs making less incentive for entrepreneurs to take the risk of starting up a business. With a universal basic income, you could use this guaranteed income as a bargaining tool to get employers to pay you more for minimum wage jobs just by being able to say no to work that you might not think is worth it.
On to the issues of welfare systems, welfare can be argued it does more bad than good. It tends to keep people in their economic situations rather than get them out. Welfare just has to strings attached to people that limit them such as, “taking classes, applying to certain jobs a month, and accepting any job you get no matter if it’s a good fit or what it pays” (Kurzgesagt, 2:25-2:38). The time spent having to deal with all these requirements could be spent finding the right well paying job that will last for you. Welfare tends to keep people in poverty rather than taking them out of it, with many welfare programs if you make more than the welfare program provides it will be taken away. For example, if the program you are aligned with gives you 1000 dollars a month and you end up making around 1200 dollars from this new before taxes your program will probably be taken away. At first sight, this might seem right but if you look further into it after taxes you will probably end up having less money than you had before which will then incentivize laziness and lead to no motivation to better your given situation, therefore, trapping you in the “welfare ceiling” (Kurzgesagt, 3:40-3:50). So not only by taxing companies that benefit from automation we could also end up closing welfare programs to an extent and taking the money in those programs and shifting them to a universal basic income program. Nobel Prize winner in Economic Science, Milton Friedman, agreed with the idea of getting rid of welfare systems saying that “we should replace the ragbag of specific welfare programs with a single comprehensive program of income supplements in cash—a negative income tax which would do more efficiently and humanely what our present welfare systems does so inefficiently and inhumanely” (Friedman).
![Text Box: Timeline A: Shows keys influential people of the United States supporting the idea of a basic Income.](https://english1105class.wordpress.com/wp-content/uploads/2019/11/timeline-a.png?w=447)
Milton Friedman isn’t the only influential person who supports a change towards universal basic income; from famed publicist Thomas Paine to Elon Musk, one of the greatest entrepreneurs of our times, who supports Presidental Candidate Andrew Yang who is bringing the idea of a universal basic income to reality with his “Freedom Dividend”. As shown in Timeline A, even someone who is considered the greatest mind of time and one of the greatest social rights activists in the United States supporting the idea of some kind of basic guaranteed income, Martin Luther King Jr. went so far to say that “ The solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income” (King).
Democratic Presidential Candidate, Andrew Yang, plans to implement a form of this idea called the “Freedom Dividend”. The Freedom Dividend would supply all Americans 1000 dollars a month and adds up to be 12,000 dollars annually. Andrew Yang believes that this idea is in the best interest of the American people and illustrates why he believes so. “With 4 million jobs being taken by automation by 2015, many people predict that one-third of all working Americans will lose their job to automation in the next 12 years” (Yang). If you think about it, this is a scary statistic and something must be done about it. The Freedom Dividend would make sure that everyone is just above the poverty line, but with more and more jobs being taken by automation the Freedom Dividend will only grow larger and give people more and more money to do what they please with it. To do this Andrew Yang plans to “implement a Value added Tax of 10 percent and consolidate some welfare programs” (Yang) to reach that 1000 dollars a month.
Universal basic income takes people out of many bad situations including the “welfare ceiling” (Kurzgesagt, 3:40-3:50). Universal basic income can allow people to pay off debts that would continue to grow and always leave a looming cloud of stress over their heads to worry about. Instead, this money could be put towards furthering your education to get a better paying job and live better a lifestyle. Aside from universal basic income helping with the obvious instances it could also help people in some of the worst situations. Abusive relationships, these situations can be one of the toughest things to separate from especially when the one being abusive is the one with the money, leading to the person getting abused forced to stay with them and possible keeping their child in this situation with them. “Between 94%-99% of domestic violence survivors survived some form of economic abuse” (“Quick Guide: Economic and Financial Abuse”). With a basic guaranteed income, these people who were being abused could have the chance to get out of these situations and find a new place to live or travel to get away from the relationship and begin a new life.
In the paper you might have thought wouldn’t it just be easier to make companies higher workers rather than using machinery, the answer is no, we shouldn’t. Automation is not a bad thing its what make human civilization to continue forward and motivate us to reach places we have never been before. By letting labor jobs be taken over by automation we can let humans do what they do best, think. People can spend their time thinking on how to do something more efficiently, better their lives, and better everyone’s lives around them and take an approach to life they would never have been able to do without automation and an implemented universal basic income.
With all these influential people supporting it, the statistics backing it up, and just the all-around benefits of a universal basic income there is no question this should and will be implemented into many countries including the United States in the coming decades. Automation is not something you can stop, it is inevitable. With that just being how it is, we should find ways to work around this to make our society not only continue to work, but to make it better than it ever has before.
References
Caputo, Richard K. “Hopes and Realities of Adopting Unconditional Basic Income Guarantee Schemes.” Caputo, Richard K. Basic Income Guarantee and Politics. New York: Palgrave Macmillan, 2012. 3-17. Book.
Gardner, Matthew. “Amazon in Its Prime: Doubles Profits, Pays $0 in Federal Income Taxes.” ITEP, 13 Feb. 2019, itep.org/amazon-in-its-prime-doubles-profits-pays-0-in-federal-income-taxes/.
Johnston, Matthew. “How Fortune 500 Companies Avoid Paying Income Tax.” Investopedia, Investopedia, 18 Nov. 2019, http://www.investopedia.com/news/how-fortune-500-companies-avoid-paying-income-tax/.
US Census Bureau. “Search Results.” US Population, US Census Bureau, 4 Apr. 2019, http://www.census.gov/search-results.html?searchType=web&cssp=SERP&q=population.
“Quick Guide: Economic and Financial Abuse.” NCADV: National Coalition Against Domestic Violence, NCADV, 12 Apr. 2017, ncadv.org/blog/posts/quick-guide-economic-and-financial-abuse.
“Why Do People Stay in Abusive Relationships? – The Hotline.” The National Domestic Violence Hotline, National Domestic Violence Hotline, 12 Apr. 2019, http://www.thehotline.org/is-this-abuse/why-do-people-stay-in-abusive-relationships/.
“Milton Friedman.” Econlib, The Library of Economics and Liberty, http://www.econlib.org/library/Enc/bios/Friedman.html.
“Universal Basic Income Explained – Free Money for Everybody? UBI.” Performance by Steve Taylor, YouTube, Kurzgesagt – In a Nutshell, 7 Dec. 2017, http://www.youtube.com/watch?v=kl39KHS07Xc.
“The Freedom Dividend – Yang2020 – Andrew Yang for President.” Yang2020, Andrew Yang Campaign, 2019, http://www.yang2020.com/policies/the-freedom-dividend/.
Davis, Andrew. “Why Amazon Paid No 2018 US Federal Income Tax.” CNBC, CNBC, 4 Apr. 2019, www.cnbc.com/2019/04/03/why-amazon-paid-no-federal-income-tax.html.
United States, Congress, Executive , et al. “Artificial Intellegence, Automation, and The Econonmy.” Artificial Intellegence, Automation, and The Econonmy, Executive Office of the Presidency , 2016, pp. 14–15.
@AndrewYang “Supporting Universal Basic Income and championing the #FreedomDividend puts you in very good company throughout history.” Twitter, 30 May 2019 10:01 a.m., https://twitter.com/AndrewYang/status/1134142762381692929