So, recently, I came across an older basic income plan someone came up with that is fairly popular, and precedes my interest in basic income. It is written by Allan Sheahwn, a basic income activist. He made a plan for a basic income plan in 2006, which was featured in his 2012 book.
That said, let's get into it.
The amount
Allan Sheahen wrote a basic income plan for $10,000 per adult and $2,000 per child. This comes out to, $13,246.73 for adults and $2,649.35 for children today, accounting for inflation. This isn't bad as the adult basic income is literally just about on track for my basic income, although the childrens' basic income should be a bit higher. I mean, you really want the child benefit to be 30-40% of the adult benefit, not 20%.
Still, this is a solid amount and I would be happy with this.
The cost
In 2006, he argues this would cost around $1.9 trillion. This seems relatively cheap, but given the lower population and the fact that seniors who get social security wouldn't get it, which I kind of have problems with. Social security is NORMALLY more generous than BIG, but if you're not a decent earner in the work force or if you're tangentally attached to the labor market, you very well might get less. I believe BIG should be an option for those who BIG is would be more than social security.
How he pays for it
He comes up with $740.8 billion per year from eliminating tax loopholes. Looking at the appendix a lot of these deductions should go, but I'm not sure about including healthcare related ones here. Then again this is largely because I want to apply them to medicare for all. He also implements taxes on a lot of government benefits that do exist, like railroad retirement, worker's compensation, social security, etc. I do this too, but it's a slap in the face to cut benefits while not giving these guys a UBI. For me, those taxes are an alternative to spending cuts which would otherwise be more severe. I don't tax people who take social security benefits just because.
He raises $244.4 billion by "eliminating the standard deduction and personal exemption from the tax code." I already eliminated the standard deduction in my plan, but now I'm curious about the personal exemption. Could be another source of revenue for me to raise in my own plan. I'll need to look into this. EDIT: Done, Trump eliminated the personal exemption as part of his tax cuts, so I guess I can't cash in on that.
Next, he cuts over 100 programs from welfare, raising $375 billion. Some of these I've touched already in my own plan. EITC, child tax credit, and a lot of traditional welfare programs go bye bye here. However, he also touches stuff I wouldn't touch, like farm subsidies and section 8. Look, some stuff I leave in place specifically because I don't know if there are negative consequences to cutting it. I suspect a lot of farm subsidies exist to encourage food overproduction, for example. I trust the government to have a farm policy that makes sense and ensures we don't hit food shortages in a given year, so I don't support taking them away. I also don't like cutting ALL welfare programs. Some should clearly remain. He also cuts stuff like railroad retirement. I mean, dude, you don't want to screw people out of retirement money they worked hard for, do you? I can't say I agree with all of these changes.
From there, he basically sets his sights on reversing Bush's agenda. He would reduce the defense spending by $160.9 billion by reverting back to its 2000 levels. This is equivalent of around a 35% cut, so much deeper than my cuts. He does this, basically reversing Bush's defense increases and scaling down our war on terror, in effect. Keep in mind this is 2006, so the political climate is different then. I'm not sure such a proposal would be viable in 2006 without an exit plan from Iraq and Afghanistan (Iraq we should've gotten out of quickly, Afghanistan I would've been fine staying in until 2011 when we killed Bin Laden), but I respect the effort. For reference I'd love to cut our military more than I do. I've toyed with the idea of doing so. But I also tend to not like the idea of just radically cutting agencies without knowing exactly where the money is going and if we can do it without harming the functioning of those agencies. I don't want to cut military spending and then send our troops into battle without body armor, for example. I don't want to stiff veterans of their benefits and pay. I don't want to lose an arms race with China, for example. So, I admit, I'm far more conservative in my defense cuts. In principle, I'd love to cut the defense budget to around $420 billion these days (roughly 2% of GDP), which would be a similarly large cut. But at the same time, I don't like the idea of "just cutting things". So I tend to be like, let's reverse to the Obama era and if we can cut more, great. That said, I'm not sure how pragmatic this idea is.
Finally, Sheahen implements tax reforms, raising $639 billion and giving us a budget surplus. These improvements include reversing the Bush tax cuts (again, 2006), going back to 1994 levels of taxation, getting rid of separate tax rates for different categories, taxing the rich at higher levels, and expanding the social security payroll tax to all income levels. These are interesting. Given he is not funding this with a flat tax rate increase like I am, his payroll tax and income tax surcharges on the rich could work. He also does not seem to be the kind of guy who really invests much in other social programs, implementing a relatively "right wing" basic income (I'll explain this later), so I'm not sure he has other ambitious programs to fund. That said, these policies are viable, while under my plan they might have problems due to the sheer scope of my own agenda. Other aspects of these ideas don't work, because they involve rolling back Bush era plans, when Bush has been out of office for 12 years now. So contemporary solutions don't match modern needs. And sure, we have Trump tax cuts we can revert, but I assume Biden will be using those on other things.
That said, he comes up with $2.16 trillion in funding, far more than the $1.9 trillion he needed. Whatever else I think about this plan, it works.
Analysis
I have a mixed view on this plan. On the one hand, I find it amazing he found so much money in the existing tax code to raise to fund this UBI. He barely needed to actually "raise" taxes at all, outside of his last proposals to add surcharges on the rich and expand social security payroll tax to all incomes. Most of his other ideas were cutting stuff, reverting Bush era stuff, or removing tax deductions. I feel like I have a lot to learn from this plan.
At the same time there are a lot of things I don't like about this plan. As I implied above, this seems to be a "right wing" UBI. Right wing UBIs focus on consolidating all social safety nets into a UBI, regardless of whether this is a good idea. I think this is bad and would turn the left against UBI, while the right is already hostile to it and will continue to be because "hurr durr free money to those who don't want to work". This isn't the moderate conservative party of the pre Reagan generation. These guys hate social programs. They'll NEVER support a UBI worth supporting. And with this plan, you lose the left. It plays into fears that the goal of UBI is to destroy the safety net, and he does that. With me, I like to take a balanced approach. Cut redundant stuff, but also preserve social programs that help people more than the UBI itself. Stuff like section 8, and unemployment, and social security. And I do believe in maintaining obligations to existing retirement funds. I'm not for just raiding everything just to pay for a UBI while having nothing else. His UBI is fairly austere in nature, which is how he can get away with funding so much of it without tax increases.
Still, one thing I can say about this plan that I can't say about Yang's is that it actually adds up and works. He made the numbers work. It's a very well researched and thought out plan, even more thought out in a lot of ways than mine. Then again this seems to be a work of literal scholarship, so I would expect that. This is professionally done, and it shows. I just don't necessarily agree with how he did it.
Still, he does propose an alternative, for the detractors.
Plan 2 - the UBI-FIT model
Ah, now we get more into familiar territory. It's 2014 all over again, as this idea looks a lot more like my original UBI plans from that era. Here, he assumes a taxable income level of $6.2 trillion. He estimates being able to raise $2.17 trillion with a 35% tax. Adding that to other existing taxes, he raises $3.3 trillion. He continues to cut social programs here, and raises $536 billion in the process. He estimates essentially having a budget deficit the same as what existed in 2006 under this model.
This seems...viable. I mean, my original plans did something like this. He estimates that his plan has a break even point at $28,572, which is...low...very low. I mean, that seems like median income roughly at the time. Then again, he has a very high flat tax. Admittedly that's the entire tax code minus corporate, excise taxes, etc., so it ain't that bad, but yeah.
I mean for the record, given my UBI flat tax and removed deductions, I suspect the marginal tax rate on a lot of people would be around 35-40% so this isn't too out of the ballpark. And my original UBI-FIT model had a 45% tax, so this isn't that bad, but it does seem kind of harsh on the surface. Admittedly he's assuming one person. If you had a family of four, they would get $24,000 in UBI under this plan, and that means the break even for a family of four with be $68,571. And that's for all taxation from the feds. Translating this into 2021 dollars, this amounts to $37,849 for single adults, and $90,834 for a family of four.
Meanwhile, let's think of my own plan. You would have a 17% UBI tax, plus 10-12% in income tax due to elimination of the standard deduction, going up to 22% around the $40k mark. And then payroll taxes, which amount for almost 7.7%. I guess my plan comes out about the same in practice. Probably starting off around 39-43% at low incomes (this includes my M4A plan) and going up to 61% or so on the rich (keep in mind my 70% figure includes local taxes). Given my UBI-FIT model of 45% that sounds about right.
That said, assuming he's simplifying the entire federal government into a single tax, minus stuff like corporate and excise taxes, this seems like a solid plan. I can't complain too much.
Conclusion
This guy has some interesting ideas. However, I do think he's a bit harsh with cutting social services and tax exemptions at times. Sometimes things are there for good reason, and removing them could cause issues, so I'd be leery of doing so. As I like to always say with my own philosophy, we want to take a scalpel to the existing safety net, not a hacksaw. We want to carefully cut away the parts we don't need while leaving in place what we do need. My own plans rely on this scalpel philosophy and only cutting away redundant parts of the safety nets, while this guy tends to hacksaw everything away. Sometimes I wonder, given the sheer amount of stuff that exists for low income people, if a broad based cutting like this makes them worse off. I mean the tax exemptions I can understand, but cutting all the welfare seems like a bad move.
Still, his approach shows how much stuff can be cut if we really wanted to, and how we could fund a large portion of a UBI from spending cuts and getting rid of tax writeoffs alone. I have some stuff to learn from this. All in all, if I had to grade his proposals, I'd give them a B. Very well researched, but ultimately, do some things I don't approve of. Still, if this were a bill in congress with a real possibility of passing, I wouldn't complain too much, although I'd imagine some progressives would probably be livid.
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