Apr 3, 2016

A tax funded universal basic income will be an annual problem

A tax funded universal basic income (UBI) will be an annual problem, just the same as the current tax funded welfare. Every year, the government budget will get debated and the government will look for places to cut. Will a universal basic income be safe under the annual scrutiny? How long can a tax funded universal basic income last? Until the following year? Until the next general election?

The rich and the middle class will not like it if they get less universal basic income than the additional tax that they have to pay. They will certainly support cuts to the UBI.

A tax funded universal basic income also suffers from a cap. How much tax can a government impose to support a big universal basic income?

So what is the better solution?

A citizen ownership democracy!

In a citizen ownership democracy, the government will set up a huge (eventually) sovereign wealth fund that will generate a big citizen dividend for everyone. The fund, carefully managed, will grow and grow. AND there will be laws to protect the citizen dividend fund.

In this way, the rich and not so rich will not think they are burdened to support the citizen dividend. And there is no limit to how much the sovereign wealth fund can grow. People dream of a livable level of basic income. This is the way to go. The citizen dividend may grow to way above livable level.

That said, it is still worthwhile to consider a tax based universal basic income as a temporary measure, to give time for a huge sovereign wealth fund and a big citizen dividend to be accumulated.

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