Called a universal basic income by supporters, the idea has has attracted support throughout American history, from Thomas Paine to Martin Luther King Jr. But it has also faced unending criticism for one particular reason: the advocates of “austerity” say we simply can’t afford it – or any other dramatic spending on social security.
That argument dissolved this week with the release of the Panama Papers, which reveal the elaborate methods used by the wealthy to avoid paying back the societies that helped them to gain their wealth in the first place.
Sure, I support a universal basic income. But I am also able to do maths.
The Tax Justice Network estimates the global elite are sitting on $21–32tn of untaxed assets. Clearly, only a portion of that is owed to the US or any other nation in taxes – the highest tax bracket in the US is 39.6% of income. But consider that a small universal income of $2,000 a year to every adult in the US – enough to keep some people from missing a mortgage payment or skimping on food or medicine – would cost only around $563bn each year.
A larger income, to ensure that no American fell into absolute abject poverty – say, $12,000 a year – would cost around $3.6tn. That is a big number, but one that once again seems far more reasonable when considered through the lens of the Panama Papers and the scandal of global tax evasion.
The $20 trillion (rather an over estimate but still) is wealth, a stock. Let’s apply a 5% return to that, about right for capital these days. So, $1 trillion of income. A tax rate of 40%. $600 billion a year. The US is about 25% of global GDP, so allocate 25% to the US. $150 billion.
Lots of money, entirely true, but not going to pay for a ubi is it?