Saturday, May 1, 2021

What's the maximum UBI we can fund with other progressive proposals?

 I've done a few articles like this by now, but given medicare for all screwing everything up, I wanted to do it over again now that I have proposals set in stone. 

Assumptions

For simplicity, I'm going to assume the following things.

Current top federal tax rate in practice will be 37%, although it becomes 47% with local and state taxes included. 

I'm going to assume the top marginal "tax" rate will be 70% in terms of laffer curve. Although only taxes that tax the rich in a marginal way that causes potential disincentives will be included here.

Proposals to fund (other than UBI)

Medicare extra for all

The low end option for medicare extra for all costs $280 billion a year over 10 years, and will be funded almost entirely by a wealth tax, expected to bring in $275 billion a year.

There will be an option to potentially expand this to a more costly option of around $450 billion a year after 10 years, but there are going to be some more near term proposals I would like to fund on a more temporary basis, so I would like to keep taxes relatively low and be conservative here. Once we deal with other concerns like infrastructure and student debt, we can reconsider the costs.

Free college and cancelling student debt

Apparently free four year college and cancelling student debt will cost $220 billion a year over the next 10 years. It will be paid for by a financial transaction tax estimated to raise $240 billion a year. Given student debt is currently $1.6 trillion, 2/3 of the costs will be going to forgiving student debt, meaning free college actually only costs $60 billion a year. Assuming he can raise the revenue, after the 10 year mark, we can divert that extra $160 billion a year into medicare extra for all, allowing us to reduce out of pocket costs on people. 

Infrastructure/Climate change

I would go with Biden's infrastructure plan, which is estimated to cost $2 trillion over the next 15 years, or $133 billion a year. It would be paid for with changes to the corporate tax code. After 15 years, the money can be repurposed into building more affordable housing. Biden's infrastructure bill does this a little bit, but assuming we take care of other infrastructure, that's what we can do with this. That said I won't be pursuing Bernie's housing plan, which is expensive, and would be funded by the same wealth tax I'm already trying to use on healthcare.

Biden's American Families Plan

Biden proposes spending $65 billion a year for paid family leave, free/cheap childcare, and universal preK. While I will reject the free community college and tax credit parts of his proposal as I got those covered in other ways, I see no reason not to do such things given how affordable they are. This will be paid for with a slight marginal tax increase to 39.6%, from 37%. Which will also raise the rich's burden to 49.6%. We won't need to fund the entire $1.8 trillion proposal here so I would focus on this, and enforcing loopholes in the tax code.

So what UBI can we afford?

Well at this point, the rich are paying a top marginal rate of 49.6%, and being targetted in other ways that arguably wouldn't count toward this such as wealth taxes, financial transaction taxes, and corporate taxes. Most of these proposals avoid raising the marginal rate directly, and we have a full 20.4% to play with with funding UBI before we hit 70%. 

And given my own UBI plan of $13,200 a year for adults and $4,800 a year for children would cost about $3.565 trillion, with me raising the revenue from carbon taxes, spending cuts to welfare, social security (sounds worse than it is, read my plan), and military spending, and of course, well you look at that, a 20% flat tax on all income.

This plan fits like a glove. I just made all the tetris blocks fit. Boom. This is my plan for the future. Some of it being implemented now, some can be implemented down the road as by the time this is relevant we will have addressed a few points of this.

Worst case scenario, given the other funding mechanisms fail, I can always scale back to my old $12,000/$4,000 plan, which would save around $350 billion without having too much of a negative effect on UBI. 

Conclusion

Given the other progressive proposals I want to fund, my current UBI plan proposing $13,200 a year for adults and $4,800 a year for children fits like a glove at the rough laffer curve of 70% top marginal taxes on the rich. We can have healthcare, education, childcare, and infrastructure spending, along side a robust UBI. As some needs are met (such as infrastructure and student debt relief), we can shift the money to other needs to address those problems (healthcare and housing) more fully instead. It works. This is my ideal platform, this is what I am for, if I could do anything with the constraints we have to deal with.

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