This may sound rude, but I literally do not care about any response that does include napkin math. The concept of basic income has been quite popular on HN and elsewhere for the past 6-12 months. I have asked for napkin math probably two dozen times. No one has ever been able to provide it.
I love the concept of basic income. I've played with the numbers quite a bit myself. I've tried to make it work. I can't do it. Not even close for the US. I'm desperate for someone to post some basic of basic back of the napkin level math. So far no one has done it. I do not consider that a good sign.
US GDP ~16 trillion. Government social spending 20% of GDP[1]
or about 3.2 trillion dollars. US population about 320 million.
That's right at about $10k per year to every American if we capped it at current government social spending.
So a family of 4 would get $40k a year.
You could make that 3.2 trillion go a lot further by raising taxes gradually so that when you reach say $75k you're paying as much extra taxes are you receive in Basic Income.
I'm pretty sure [1] includes state and local spending as well so this would be tricky.
I'm curious what that 20% of social spending covers. It certainly includes health so we can't say "eliminate medicare/medicaid, but you get a yearly check for $10,000!". That's not gonna cut it. Federal+State+Local welfare spending is only 8% of total gov. spend and only ~3.1% of GDP. A long, long, long ways from being able to cut a $10k check per person.
Edit: Why on earth would anyone downvote that? It boggles the mind.
>I'm curious what that 20% of social spending covers.
I'm sure there are plenty of things in that 20% that can't be replaced with $10k per person--things like extra equipment for poor schools. However this was just napkin math to show that it's within an order of magnitude of doable.
> "eliminate medicare/medicaid, but you get a yearly check for $10,000!".
For the vast majority of people that would be a huge net gain. The UK only spends about $3k per year on each person for health care, so I think the vast majority could get by on the insurance they could afford with $10k per person. You'd still have to account for the edge cases. This would probably work better in a country with a single payer system.
For the sake of argument, remove medicare/medicaid from the equation. That still leaves about 2.2 Trillion on other social spending. Let's subtract some other unknowns and leave it at just 1 trillion.
You can stretch that 1 trillion pretty far if you adjust it so that children don't get the full amount, and add extra graduated taxes so that households making over $45k (the national median) have a zero net benefit with only people making below the poverty line receiving the entire benefit.
I think it's very doable especially if you're willing to consider tax increases at the top. It's definitely not something outside the realm of possibility, and with demographic and labor changes in the United States over the next 50 years, I think something like a Basic Income is probable.
That's a good point that if you're giving everyone say $20,000 a year you could still set taxes such that for a majority of employed adults you're net zero. So for simplicity you could assume just paying welfare recipients.
The point of doing it this way vs current welfare would be increased transparency / reduced bureaucracy and providing more of a sliding scale of income classes rather than welfare / non-welfare buckets. In principle the costs could be made to be nearly equivalent.
Firstly, I'd like to say I prefer thinking of this as a "Citizen's Dividend" rather than a "Basic Income", as the latter suggests it's useless if it doesn't cover a persons cost of living. I think even a small start is better than nothing, and it can be increased up to become a Basic Income in time. I'll refer to it as BI (Basic Income) here though. So, let's see what we've got...
The UK government spends £732 billion. If we subtract £222 billion for Social Protection (we're replacing all of it with our BI), we get £510 billion required. If we add up all government income except Income Tax - Business Rates, Excise, etc - we get £481 billion.
That leaves us a shortfall of £29 billion. For the sake of simplicity, I'm going to assume that reductions in crime, the increase in VAT revenue, better health, etc are going to cover that. Let's call it close enough for government work. At the end of the day, we currently borrow £84 billion anyway, so at worst I've slashed the deficit :-)
Income Tax brings in £167 billion. UK population I'm going to take at 60 million. So, as a starting point, that gives us £2,783 annually, or £54 ($80) a week. Well, that's not a bad start! Let's consider what it means for actual people. Thus far:
Who loves me:
- Right-wingers. I've eliminated (or vastly reduced) the deficit, effectively increased the income tax allowance by £2,783 and given them this amount in cash, while reducing welfare payments to lazy, single-mother immigrants. I should be head of the Conservative party.
- Most people on Job Seekers Allowance (unemployment benefit). While I've cut the amount they actually get, I've also cut out all the paperwork, visits to the job centre, taking money off them if they happen to earn something that week, etc etc. Money without the hassle.
- Low wage workers. This is a big boost above Working Tax Credit and is hassle free (you don't lose it by earning more). It also allows some degree of security in the event of losing their job.
Who hates me:
- Left-wingers. While I've helped some low paid workers, I've also slashed benefits, there's no housing support...in short I've cut welfare while giving more money to wealthy people. I should be head of the Conservative party.
- People who're claiming several benefits. People who're on sickness benefit. Basically, all the folk who've had their income reduced below a living wage.
- Pensioners. The state pension has been cut significantly (and illegally).
Ok, I think I need to balance it a bit more. I'm going to reduce the Income Tax allowance from £10,000 (current) to £6,000. This should balance out at the end. I'm going to assume this increases income tax revenue by 25% (I've no idea if this is remotely close. If anyone can be bothered finding out, please let me know). More controversially, I'm also going to increase income tax by 25%, so the basic rate is now 25% rather than 20%.
That should give me a total revenue increase of 50% from Income Tax which gives me £4,175 annually or £80 ($120) per week.
And I think I'll leave it there. We'd need to borrow (or cut spending elsewhere) to make up other shortfalls (such as pension payments), but as long as it's less than £50 billion we still come out ahead. It might be more natural to cut the payment to £70 for everyone in order to free up some cash for other payments. In the real world, you wouldn't exclusively reserve Income Tax to one specific spending area anyway, but it makes things simple enough to get a rough measure.
I love the concept of basic income. I've played with the numbers quite a bit myself. I've tried to make it work. I can't do it. Not even close for the US. I'm desperate for someone to post some basic of basic back of the napkin level math. So far no one has done it. I do not consider that a good sign.