Finding the maximum sustainable UBI (new numbers)

 So I recently did something like this, but with my old numbers. I want to look at what the maximum possible UBI is with my new numbers.

I'll be looking at various scenarios in this article. First I'll start out realistically, given the assumptions I operate off of now, but then I will switch to more and more zany and outlandish ones.

Maximum sustainable UBI with Medicare for All

First, I'll look at the maximum sustainable UBI given my own plan, and combining that with a medicare for all plan. Keep in mind, the biggest limitation of UBI is how much we can tax the rich. Anything over 70% is technically over the laffer curve peak, and while 70-75% may be sustainable, I'm going to keep it at 70% to be cautious. Given the rich pay about 47% now between federal and local taxes, and medicare for all would raise this by 4%, the maximum sustainable UBI would tax at 19%, plus the spending cuts that I have proposed.

Given my UBI already taxes for 18.3% to fund my UBI at revenue neutral levels, we don't have a lot of breathing room for higher levels of UBI. This would raise $3.666 trillion, while $3.565 trillion is needed to fund my UBI as is. This is a 2.8% increase in UBI, meaning we could fund a UBI at $13,570 a year for adults, and $4,934 for children. 

What about if we get rid of Medicare for all?

Admittedly my medicare for all plan is extremely expensive and severely hampers our ability to properly fund a UBI. This is why, for a brief period of time, I gave up my medicare for all aspirations and talked myself down to a public option in order to properly fund a UBI. I came to the conclusion last time we could only fund like a $9k UBI with M4A, but after a lot of numbers tweaking and designing a M4A funding scheme specifically to get around the limitations of traditional M4A schemes that conflict with my UBI plans, I was able to make the numbers work. But just barely, as you can tell. My standard UBI plan is very close to the maximum sustainable UBI in my estimation with an M4A plan. So what if we got rid of it? Well, we could transfer the M4A tax to UBI, raising the limit of taxation up to 23%. Assuming we also raise corporate taxes and implement a wealth tax, we could raise $515 billion from that as well. Eliminating the overseas operations contingency fund from that plan gives us $80 billion per year, and the estate tax changes increases the budget by an additional $34 billion.

That said, by this point we would have:

$669 billion from spending cuts

$187 billion from a carbon tax

$240 billion from a corporate tax increase

$275 billion from a wealth tax increase

$80 billion from eliminating the overseas contingency operations fund

$34 billion from estate tax reform

$3.401 trillion from a 23% flat tax

+                                                                         

$4.886 trillion

This is a 37% increase from my main UBI plan, which means the maximum UBI would be $18,084 for adults, and $6,576 for children. This would eliminate any ability to do healthcare reform, however, even a public option.

If we stuck to my old plan, discounting the new additional taxes except for raising the flat tax to 23%, we would instead have $4.257 trillion to spend on a UBI. This would be a 19.4% increase from my main plan, allowing a UBI of $15,761 for adults and $5,731 for children. At least with this we could likely fund a robust public option and perhaps some free college and student debt forgiveness too.

What if we went all out?

So, the amounts above are assuming we stick to some variation of plans I already support. We tax at the maximum possible amounts, we eliminate other reforms I support. But let's say we decided to go all out. We destroyed the entire welfare state, including medicaid, medicare, social security, section 8, and we reduced the military down to 2% of GDP. Moreover, we eliminate the standard deduction, and cut bureaucracy as per Andrew Yang's plan. What can we raise, if we do all of that, on top of my maximal tax increases?

Well, spending cuts would be raised to $3.487 trillion (going by FY2019 because 2020 and 2021 are weird with COVID and spending is way higher than "normal"). This includes, social security ($1.107 trillion), medicare/medicaid ($1.236 trillion), all welfare ($362 billion), all the tax credits from my original plan ($238 billion), the standard deduction ($207 billion), and $337 billion in defense cuts. 

Then we can raise $187 billion from a carbon tax, $300 billion from a corporate tax increase, $275 billion from a wealth tax, $80 billion from the contingency fund, and $34 billion from estate tax reform.

My tax base for my flat tax shrinks as social security and unemployment are gone, reducing it to $13.113 billion, meaning a 23% flat tax would raise $3.016 trillion. 

All of this gives us a grand spending amount of $7.192 trillion. This is 2.017x what my current UBI plan is, yielding a $26,624 UBI for adults, and $9,682 for children. This is an extremely high UBI, but there would be no other safety nets, none, and the tax scheme would be very oppressive.

What if we funded a UBI purely from spending cuts and eliminating tax credits and deductions?

Speaking of which, if we wanted to fund a UBI purely from spending cuts like conservatives want, without raising taxes, we could. $3.487 trillion is just short of what would be needed to fund my initial UBI plan ($12,909 for adults and $4,694 for children). We could have a UBI without raising taxes if we eliminated social security, medicare, medicare, and all welfare, tax credits, and a significant amount of defense spending, but that would leave many people, especially seniors, vulnerable people relying on healthcare, etc. extremely vulnerable. We can do it, I just would not want to. 

Conclusion

That said, what the maximum UBI is depends purely on what you're willing to spend and cut. If you're looking at the maximum sustainable UBI given other progressive priorities like medicare for all, something just north of my $13,200 UBI is about it (around $13,570). If we want to give up on medicare for all and pursue a smaller healthcare plan like a public option, something around $15,761 would be feasible. If we abandoned any and all healthcare reform, $18,084 is possible. And if we eliminated all welfare and cut the government to the bone, in combination with my spending increases, we could raise enough for a $26,624 UBI.

Of course, if we're reasonable and support other priorities, the maximum sustainable UBI is going to be around $13-16k or so. Any more than that and it severely hamstrings our abilities to fund other things like healthcare, education, or infrastructure. Still, if we really wanted to, we could theoretically fund a UBI of around $27k. I would not recommend that though. It would combine an oppressive tax scheme with an insane amount of austerity in other forms of government. Moderation is better.