A democrat running for President of the United States is Andrew Yang. Yang is running on a platform of “Universal Basic Income” (UBI). Yang promises to give all Americans over 18, $1,000 a month for life, or $12,000 dollars a year. Yang calls this a “Freedom Dividend.”
Yang reasons that as automation and technology grows, it will eliminate millions of jobs from workers. Yang’s freedom dividend will be similar to a Social Security of a basic income. Yang proposes a 10 percent Value Added Tax (VAT) to penalize companies that benefit from automation.
Lets do the math: There are approximately 194.3 million American citizens,18 and over. Let’s start with these numbers.
194,300,000 X 12,000 = 2,331,600,000,000
This is 2 billion dollars on top of an already 20 trillion debt. It’s a tax which will be passed onto consumers as higher costs for goods and services. Comparing a VAT to Social Security is deceiving at best because people have already paid into Social Security system. Depending on your work history and contributions into Social Security determines what your supplement retirement income will be. Yang is proposing a tax on high income earners and ending favorable tax treatment for capitol gains and carried interest. That means if you have a 401K or some investment plan your rate of return will be less. On top of that, Yang proposes a “Carbon Fee” to supplement additional money needed to cover his plan. Notice that Yang calls a carbon tax a fee. Basically, more taxes.
Bottom line: Yang’s proposal of offering free money for nothing is highly deceptive. First, nothing is free except the air we breathe. There are hidden costs when new taxes are proposed. Those costs are always passed down to the consumer. Second, the math doesn’t add up. Yang says his plan will guarantee an unconditional income for everyone over 18 years of age. Does that include illegal aliens and other non-citizens living in the United States? Yang’s proposal says only US citizens, but we all know how entitlement programs are run by socialist leftist politicians. It will eventually lead to expansion of the program to include non-citizens. Fourth, it removes any incentives to work. It creates another entitlement program. All entitlement programs eventually cost more over time. Just look at the exploding costs of Social Security and Medicare/Medicaid.
Yang’s proposal is nothing more than a socialist gimmick for votes by promising “Free Money”. Just what we need another government run entitlement program. Government was never meant to dole out taxpayer money. Government doesn’t make any products. Government taxes products. The constitution does state the government responsibility to promote the general welfare of the nation. Nowhere in the Constitution does it say to provide welfare or a universal basic income. By taxing others to redistribute wealth is an age old socialist argument for income equality and not opportunity equality. That’s what the Constitution says in promoting the general welfare clause, providing opportunity equality.
Yang uses fear, uncertainty, and doubt (FUD) to offset his claim that technology and automation will eliminate jobs. On the contrary, technology will create new jobs. The claim that automation will create huge unemployment has been around since the industrial revolution. Technology actually creates new jobs, better paying jobs, and more leisure time. As our standard of living grows with automation, our lifestyles are made more comfortable, less toiling, and more free time to development more opportunities. As long as the government is confined to the bounds of the Constitution, taxes and regulations are kept low, then economic development flourishes. More government does the opposite, it suppresses economic development.
Final point: If a universal basic income actually worked, then why aren’t countries adopting this methodology? The answer is they have tried, and it failed. Like all socialist programs it caused higher unemployment, fewer jobs, and less opportunity. People want to work. They want the rewards of work. They like the freedom to work.
UBI has been tried in other States and cities in America. It’s been tried in other countries, and the results have been the same. UBI isn’t a new scheme that hasn’t been tried before, it has. There are documented studies on where UBI has been tried and failed. But the lure of free money is a powerful intoxicant. People need to do their homework whenever these schemes are proposed. If it sounds to good to be true, it probably is.