Have you been paying attention to the 2020 election? There was a Democratic debate last week, but I didn’t watch it or the previous ones. There were too many candidates on the board. Who can keep up with all the names? I just checked the polls and the field seems to have narrowed. Now, the top 3 are Joe Biden, Bernie Sanders, and Elizabeth Warren. Unfortunately, my choice, Andrew Yang, is way down on the list. Normally, I don’t pay attention to politics until it’s closer to the voting date, but I heard about Andrew Yang on NPR a few times. He has an intriguing idea that I can fully support. He wants to give $1,000 every month to every adult American! I can get behind that 100%. Let’s take a closer look at this idea and see how you can get $1,000 extra per month for a year. Yes, you can get in on the action, so don’t leave until the end.
Freedom Dividend
Andrew Yang has some very good points. Automation is a big issue for everyone. Huge corporations are replacing workers with automation and AI. Amazon and other companies are making money hands over fist and they pay very little tax. Andrew Yang wants to redistribute the wealth back to the people by taxing the corporations and giving $1,000/month back to the people. He calls this the “Freedom Dividend”, but it’s an old idea. This is universal basic income.
I love it! Every American adult over 18 will receive $1,000/month. This is independent of your work status or any other factor. If you’re breathing, you’ll get the freedom dividend. This extra income would benefit struggling low-wage workers, retirees, and homemakers the most. Stay-at-home parents do a lot of work at home, but they don’t get paid. This extra $1,000/month would help a lot and probably will encourage many new parents to take time off to care for their children. This would also help workers who lost their job get back on their feet. They will have more time to train in a different field and get a new job.
*For an example, we can look at the Alaska Permanent Fund. They pay every resident $1,600 in 2018. This is mostly funded by oil revenue.
More tax?
The freedom dividend will cost $3 trillion dollars per year. Where will we get the money to pay for this? Will we have to pay more taxes? Andrew Yang suggests a 10% VAT among other measures. You can read more at his faq – what is freedom dividend. If you ever visit Europe or Asia, you’re probably familiar with the value-added tax. Basically, you pay a tax every time you spend money. Andrew Yang thinks the corporations will absorb the bulk of the VAT, but I’m doubtful. Whenever there is a cost increase, it seems to get passed on to the consumers. *cough* tariff.
The VAT doesn’t sound good, but I’m pretty sure the average family will come out ahead. Even if everything is VATed, you’d need to spend over $10,000 per month to lose out. We spend about $4,000 per month so I’m not worried at all. Furthermore, housing, utilities, and groceries probably won’t get taxed. I’m sure the 10% VAT will cost us much than $1,000/month. We’ll benefit from a policy change like this.
Andrew Yang for president!
Anyway, I think the freedom dividend is a great idea. Our current capitalist economic system is starting to show some cracks. Corporations and top 1% are sucking up all the money from the regular people. More automation and AI will only speed up this process. Inequality will keep growing and the 99% will continue to lose out. The freedom dividend isn’t going to fix all that, but it’s a step in the right direction. Regular people will have more money in their pocket. And we all know what normal American adults will do with an extra $1,000/month. They’ll spend it all and the economy will improve. This will help poor people the most. That’s why Andrew Yang has my vote.
What would you do with $1,000 per month?
At the last debate, Andrew Yang announced he’ll give away ten Freedom Dividends! You can sign up at yang2020.com for a chance to win. Wow! What a great way to get some votes. I like how he thinks. (Warning, he’ll ask for a donation.)
$1,000 per month really isn’t a lot of money. It will help, but it probably won’t change your life. Although, this is a better deal for married couples. $2,000 per month is enough to pay rent and grocery for many families.
Here is what I’ll do with my freedom dividend.
- Save 50%. Since I don’t really need this money, I’ll save 50% for the rainy days.
- Allocate some money for the VAT.
- Spend and donate the rest!
This has been my blueprint for a long time. First, pay yourself by saving and investing. Second, pay the bills. Lastly, spend and donate the rest. It worked out very well for us so we’ll keep doing it.
As for spending, we’ll go out more often to support the local restaurants. There are so many restaurants in Portland. We haven’t eaten at the same place for years now. I’ll also use part of it as a donation fund. Extra money is perfect for that.
All in all, I think the freedom dividend is a great idea. I don’t see any downside to it. It isn’t a huge amount so most people will still have to work. The poor and stay-at-home parents will benefit from having some extra income. People will have more choices. They can downshift and work on something they like because they’ll have a little cushion.
Get out and vote
Unfortunately, Andrew Yang seems to be the only candidate pushing the universal basic income. Other candidates laughed when he mentioned it at the debate. The audience loves it, though. The leading candidates should pick up this idea and run with it. We have to get ahead of the problem. It’s not going to end well if we continue to let corporations and rich people suck up all the money. Take a trip to LA, Seattle, San Francisco, and Portland for a preview of the coming dystopia. It’s going to keep getting worse if we do nothing. Alright, get out and vote Andrew Yang! He also has positions on many more policies ranging from Medicare for all to making Puerto Rico a state. He’s a pretty good candidate if you give him a chance.
Until September, you can enter to win $1,000 per month for a year. Ten winners will be randomly selected. Good luck!
Here is a bit more about Andrew Yang.
Passive income is the key to early retirement. This year, Joe is investing in commercial real estate with CrowdStreet. They have many projects across the USA so check them out!
Joe also highly recommends Personal Capital for DIY investors. They have many useful tools that will help you reach financial independence.
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I just read Yang’s book “The War on Normal People”. If you wanted more insight about his thoughts on UBI, it is worth a read.
His thoughts on automation and AI and displacement of workers in the coming decade are rather terrifying. His premise is that the employment sectors that employ millions of low-skilled Americans (think retail, food service and transportation/trucking) are also prime targets for automation innovation. These workers are going to find jobs disappearing and most of them are not realistic candidates for returning to school or retraining for other positions. UBI is a way of replacing at least a subsistence income for those who are going to be searching for work unsuccessfully as their job pool shrinks. As a gesture to decrease social unrest, it is a start. Sadly, the MANY other things that government needs to be doing now to address this coming problem are not even being talked about.
Give the book a read. He is a thoughtful guy. I hope he finds a place in policy making even if his presidential aspirations don’t pan out.
I’m not instinctively convinced that the universal payment sounds right but, on the other hand, could it be used to somehow eliminate some other support schemes that probably cost a ton of taxpayer money to run and administrate? If it could streamline things then it might be interesting.
As to what I’d do with the money, that seems to be a harder question than I want it to me. I don’t really need the money, so should I therefore give it all to good causes? I would definitely give some, but to give all seems to be a harder choice to make and I’m not sure why. Hopefully that doesn’t make me a bad person!
I love the topic, and I see it’s getting a lot of comments. I’m more of a Warren fan, but Yang is growing on me. I hope he gets more screen time.
I’ve been trying to create my own freedom dividend with my blog and savings. I recently bought a significant portion of a company with a very big profit sharing plan, almost like a REIT or a crowdfunded real estate. It actually should be like it’s own freedom dividend, but I’ll happily take another ;-).
I’m not used to VAT, so I’m not sure how it would work in balancing the budget. We might need something like Warren’s rich tax to fund Yang’s freedom dividend. For now, I want to see Warren and Bernie on the same ticket. Yang can be secretary of commerce or something like that.
Thank you for having the huevos to talk about something controversial! UBI is an intriguing idea. Automation and AI is coming for blue collar AND white collar jobs, no doubt. It’s unfortunate, as you said, that this topic is often derided immediately without any nuanced debate. I don’t think it would be a panacea, as some have suggested though. For a real mind bender, read Vonnegut’s “Player Piano.” He explores (and satirizes of course) this topic. It was published 67 years ago.
The nature of work is changing. Life is going to be harder for our kids, for sure. They’ll have to get into a lucrative field or else they’ll be left behind. Truck drivers and other driving jobs will be gone soon. Hopefully, they’ll get retrained, but the track record for retraining is not good at all. Thanks for your input.
Regarding the Alaska Permanent Fund and it’s “free” dividend to the locals. A buddy living and working in Alaska says that one can always tell when people received their checks, since there are much bigger lines at the liquor stores — that being said, he did not deny being one of those in line. :0
There is a study that shows the fund doesn’t affect employment much. The income is nowhere near enough to live on. I’m sure it helps a lot of families, though.
Andrew Yang????
I would take that $1000 a month towards mutual funds. Should that UBI ever get revoked, that way I would have prepared by having other incomes coming into my pocket. Perhaps this would be a useful way to utilize that money.
Everything will start from $1000 instead of Zero. You will get unneeded inflation. I think the president candidate must be brave to increase the corporate tax then only the country will have enough money to even contemplate any crazy ideas like this
I’m not sure about the inflation. We got a big tax cut recently and inflation didn’t move. Of course, $1,000/month is much more than the tax cut. More research needed.
” Take a trip to LA, Seattle, San Francisco, and Portland for a preview of the coming dystopia.”
What? dystopia ? ? ?
3.x% unemployment rates, high household incomes, expensive housing and a few too many homeless people is not exactly Mad Max Beyond Thunderdome.
I’m sensationalizing it. Lots of people are struggling. Homelessness is a big problem. It’ll only get worse with widening inequity. IMO, it’s hard to get back up once you fell through the crack.
I’m actually surprised you’re in favorite of this, but it’s a really intriguing concept. UBI could lift so many families out of poverty.
I’m left-leaning, but I’m a realist too. I know this probably won’t become a reality anytime soon.
For now, I mainly support Medicare for all. That’s much more urgent.
Interesting platform! $1000 a month is a lot of money. That’s more than I’m getting in my own “freedom dividends”. I also like that he calls UBI a freedom dividend.
I like the rebranding too. UBI is too boring. 🙂
I think it’s definitely an interesting proposal. As long as it didn’t replace Social Security, anyway. Otherwise a lot of retirees would see their income drop and a lot of them can’t afford that.
I don’t love the idea of a VAT, but on the other hand, I do want people to get lifted up out of poverty and an extra $1k a month could do wonders for that. It’d be nice if there were an income cap for recipients, of course, but as another commenter pointed out, administration is costly. It might be cheaper in the long run to simply give it to everyone.
I think the government will guarantee at least $1,000/year for Social Security. So the UBI will only be for 18 to 64 year old.
The VAT is not great because consumers will absorb most of it. Can we force the corporations to pay it somehow?
I disagree that this is a good idea. This, among many of the very left leaning ideas being thrown out by desperate democrats recently, is simply an attempt to get votes. People need to add value to their lives by finding purpose. This does not give the incentive to do so.
What will happen exactly state to state? Will Hawaii for example shut down all their social programs (Equivalent of $65,000 for a single mom) and replace it with a $1000.00 UBI monthly payout program? I severely doubt that. This is a “feel good” idea that will be a disaster to implement and just be used as a talking point then die on the house or senate floor. The people suggesting this know that will happen so it’s an easy promise.
Hawaii does not spend $65,000 per single mother.
That # is one of those bogus worst case scenario figures that adds up every possible form of aid.
The Cato institute is Bogus ? Really?
http://www.hawaiireporter.com/it-pays-not-to-work-hawaiian-residents-receive-highest-welfare-benefits-in-us/
The average is $50K which means quite a few are in that high range. Assistance is something that is supposed to be TEMPORARY to give people opportunity to improve their situations. Unfortunately many of the people using it “generationally” IMO are abusing it. UBI is the wrong approach. Getting people employed and contributing to society is the right approach.
Yeah thats pretty much all twisted biased half truth BS.
a) they didn’t figure the current values, in 2013 they took figures from 1995 and then inflation adjusted them. Thats bs. Yet welfare reform was in 1996 …
b) TANF benefits have not kept pace with inflation. Todays benefits are 20% lower than 1995 when taking inflation into account. And see point a)
c) there is absolutely no way at all that the ‘average’ benefit is $65k. Only way they might get to a figure that high is to look at an imaginary worst case scenario for someone getting every benefit possible and accounting for the dollar value of health insurance and housing assistance. Thats 100% the same as saying someone gets $65k. My health insurance is allegedly worth $24k but I’m not getting paid $24k.
d) was it 65k or 50k ? When you say 65k and I say thats bogus then a link to a claim that its 50k isn’t proving your point. Oh but taxes?? OK do the taxes on $50k of housing and medicine and a $700 monthly check for a single mom with kids and show me where that cost $15k in taxes.
e) saying “$65,000 for a single mom” sounds like any / all single moms get $65k.
Thats 100% false thing to imply.
d) show me where and how a single mom signs up for this imaginary $50-65k payout. (pro tip to get close to that you have to have section 8 housing and thats closed)
Oops, I was wrong about point a). My mistake.
point b) still stands though and actually for Hawaii they’re down 46% real value from 1995 to 2018
Thanks for the link to the Hawaii article. $65,000/year is ridiculous.
That’s too much incentive to not work. But a single mom with 3 kids is a special case.
I would struggle as well in that position. What happens after the kids age out?
Joe, see like i said… they don’t get $65k a year. Thats BS
I don’t get into politics too much, but I will say the whole idea of a universal basic income fascinates me. The idea of being able to eliminate a lot of government programs and give everyone a baseline to start with is very interesting.
I’ve dug into it somewhat over the past year or so and there are a lot of pros and cons to it. But I remember reading that there were a couple of countries experimenting with it (Finland?). I’m curious to see what they determine from this.
In the meantime, I’d be thrilled to be a candidate for testing it out on! 😛
— Jim
It would work beautifully in a perfect utopia like the Star Trek universe. However, I’m sure there are a lot of flaws in real life. Human will create all sort of problems with any system.
Personally, I think work will be better. You have a safety net so you can find the work that you like instead of suffering through the job you hate. Maybe I’m too idealistic.
Do you remember back when Bush sent everyone a few hundred bucks to “stimulate the economy”? I put that money straight into the bank. Maybe $1000/month would magnify our spending/saving habits as we already have now (i.e. spenders would spend more, savers would save the money). It’s interesting how Yang is such a stand-out candidate among the others, I enjoy listening to him on podcasts too.
I don’t remember that at all. I must have spent it on beer and going out. 🙂
Yang is great, but I doubt he’ll get far. The established candidates are too entrenched.
oh, boy. rb40 gets into the political realm! changing the y intercept for income is an interesting idea. you’ll have individual taxpayers (most of whom really don’t fund that big a % of government) whining about taking “their” dollars and handing them out some somebody else. what do they all think, that their effective tax rate of 14% in their 100k income just paid to fix up that highway? 14 grand would barely pay for a weekend of overtime shifts to cover plowing after a snow storm.
Interesting article, and fun to dream about! Three municipalities in Ontario experimented with a UBI for a short while. But the new premier decided to shut down the experiment before the originally-planned end date. Too bad, as it was costly to set up, and he shut it down before anyone could make any conclusions from the experiment.
I’d personally love to see a UBI—the FIRE community would definitely put it to good use! But as other commenters have said, it’s highly unlikely to happen. Still, it’s an interesting debate. Thanks for sharing!
Really? I’ll read up on the Ontario experiment. Why did he shut it down? It was probably too costly.
Apparently, he felt it wasn’t money well-spent. His thinking is that it disincentivises people from working. But the researchers on the project said it was far too early to have made that determination.
Such a shame. It would’ve been interesting to see the end results.
You should read some of the studies concerning Alaska. They basically have something very similar with their oil fund endowment, the PFD. It has been noted to cause other political problems. Senator Mike Dunleavy ran on the premise that he would increase the annual payout to $6500 a year after a couple of years where the annual payout was cut due to low performance. He got voted in because who doesn’t want more money? However, once elected he tried to gut every other government program to get enough money to pay out the $6500 to each person including programs on education, infrastructure, ferries, healthcare, etc… I hate how the Democrats are now running on promises of free handouts while the Republican run on cutting safety net programs. I’m in the middle not really represented by either side.
I will read up on the Alaska permanent fund. I didn’t know about Mike Dunleavy. Increasing it to $6,500 is a big jump. It’ll deplete the fund.
The only program I fully support is Medicare for All. UBI sounds okay too, but it’s too farfetched for our culture right now. Republican is not the same conservative party anymore. The budget deficit is going through the roof. President Dunning-Kruger is going to bankrupt the country like his companies.
$2,000 per month is enough to pay rent and grocery for many families.
——————————-
I’m not sure about that.
If you give away $1000 to everyone, wouldn’t that automatically pump up inflation?
Everything is likely to cost much more. The real value of that $1000 would get reduced significantly. No?
I think you’re right about inflation. I didn’t even think about that. Maybe it will increase a bit, but it will only be a one time bump, right? Inflation didn’t increase that much from the 2017 tax cut. It might be okay.
Hmmm. Not a big fan. I do not want any handouts and also do not want my money (agree with you that the consumer will ultimately pay the tax) distributed to others anymore than it already is through the current tax and spend policies. Interesting discussion and everyone is entitled to their views, but it seems like a polarizing topic. Perfect for politics. Tom
The moment someone offers to give me “something for nothing” in exchange for voting for them I’m out.
There are lots of challenges in this country, and some very large problems (one includes $23T of debt). I don’t think the problem is “There’s not enough money being taken from these guys and given to these guys.”
I’ve been privy to many peoples finances, and it’s extremely rare for “more money” to fix someone’s problems. It’s a tempting solution, but it just wouldn’t help much.
What about the corporations? Amazon pays $0 tax. That’s unfair. They are destroying local jobs and not giving anything back. They need to pay some tax. All the profits are going to the elites. The inequity gap will keep widening if we don’t make any change. UBI might not be the right solution, but what are some alternatives? Maybe a small VAT will make sure these corporations contribute a bit to our society. Free shipping isn’t enough.
Amazon has actually made very little net income, at least until recently. Which is one reason they pay very little in taxes. Amazon has no obligation to give back. I do agree thar they are bad in some respect, Amazon along with Walmart may eventually control the entire market for all consumable goods. On the other hand they have done something amazing and we can buy almost anything and have it the next day. The free market will reward this type of ingenuity. VAT or corporate taxes will be passed along to the consumer, taxing people rarely works efficiently. I dont think complaining about being unfair will lift anyone out of poverty nor will it send the next generation a positive message.
What can we do to help corporations become better for regular people? Inequality will keep widening if we don’t change anything. Amazon, Facebook, Google, and other behemoth corporations will continue to enrich the wealthiest people.
I think UBI would help a bit, but it’s not a complete solution.
“Free shipping isn’t enough.” – Haha, true. I’ll try to respond while keeping emotion and politics aside.
Companies pay the amount that’s required. Amazon every year pays what’s required. Fair or not, it wasn’t their decision, it was the lawmakers. And the lawmakers, while they can be effected by lobbyists etc, make that decision. The direct outcome of a decision is the responsibility of the decision maker.
A VAT, just like any other tax, will be passed directly onto the consumer. Maybe even -more- will be passed on. Many business will likely increase their prices -more- than the tax to maintain their profit margins. I have seen this happen firsthand. A VAT will only make everyone pay more for what they’re buying. That will, indeed, hit the people that spend more harder. But I’m guessing Amazon will absorb zero of that.
As for the destroying of local jobs, we can all look in the mirror for that source. Every time you and me decide to buy from Amazon vs a local place, we made that happen. Amazon, just sitting there, did almost none of it. You and me. The decision makers. Amazon could come, and go, and if we chose not to do business with them they’d be gone. But despite our griping and complaining and fist shaking, they’re giving us what we want and we’re deciding to buy it.
Thanks for your input. You’re right about the man in the mirror. Regular people are perfectly happy with Amazon until they lose their job.
If you want an example of how it works/doesnt work have a look at South Africa… We have 5m taxpayers, 30m social grant recipients (who only get $70 per month but the principle is the same) and 30% unemployment, which is similar to what automation will likely do to the US. This is out of a population of 55m.
Guess what, I dont think social grant/ubi is working very well, since the higher taxes are making a lot of people leave, leaving a shrinking tax base to support the grants. We have c. 150k taxpayers that pay half of all taxes now, who are also the most mobile.
The government cant remove the social grants either, because the majority of people are social grant recipients, thus they would lose the next election to those that promise to keep it. The taxpayers are too few to vote out the social grant.
I’d be very careful about giving everyone a UBI, you cannot take it back and eventually you run out of other people’s money.
Thank you for telling me about South Africa. I will read up on it. 30% unemployment is so high.
What about the corporations? Amazon pays $0 tax. That’s unfair. They are destroying local jobs and not giving anything back.
Amazon is tricky. They undercut everyone to put them out of business, pay no tax… they do employ a lot of people though, for now. Maybe you just start taxing dividends more and that way the shareholders of Amazon still get to pay tax, even if the corporation is able to defer it. Let Amazon get to re-invest proceeds for growth internally but tax it as dividends when it’s real profits.
Amazon doesn’t pay dividend so taxing dividend won’t work. These big corporations are very tricky.
This is my fantasy. It would allow me to retire years earlier.
$400 extra to debt. $400 extra to the retirement savings accounts in Canada. $100 to a house savings account for maintenance. $100 extra per month to spend. Some months it is tiring to budget every single penny so a little extra cash there would make things easier.
$1,000/month would help those who need it the most. That’s why I think it’s a good idea.
My province of Ontario started a trial of a universal basic income supplement. I thought it was a great idea but a new provincial government, who models himself on your orange leader, stopped it.
In LA the overwhelming majority of homeless are drug addicts/mentally ill (per medical professionals that have worked with them). $1000/mo would do nothing to help these people and would also inflate prices. Most people aren’t responsible enough to manage money they didnt earn. A person could easily make an extra $500-$1000 in Los Angeles baby sitting, mowing lawns or walking dogs…nah, that sounds too much like work.
I’m not going to touch the political side of this, but my main side hustle is now netting me about $700-$800 a month consistently. What have I done with it? I’m simply socking it away in my high-yield savings account to balance out my mostly stock portfolio. Things could be worse 🙂
The UBI won’t affect any of that. You probably will earn more because people will have more money to spend. 😉
I think Andrew Yang is on the right track with his ideas. And with his background he seems quite an original candidate for the Democrats (probably too original :-)). What I found really smart in his argument is focusing on the truck drivers as an example (at least that was the group I heard him talk about) – long-haul trucking is probably not the first sector that springs to mind for most when thinking about digitization. But I think it’s very relatable for the broad majority of people who don’t all work in Silicon Valley or on the east coast. Expecting companies to completely absorb the VAT might be a bit unrealistic. That’s really going to depend on the competitive environment (we have a rate of usually 19%, exceptionally 7%, VAT in Germany on almost all goods and services).
There’s been quite a bit of debate going on in Europe about Universal Basic Income in the past years. Finland carried out an experiment with 2,000 people receiving UBI for two years for example, Switzerland voted it down in a national referendum, but it’s being tested locally. And in Germany a smaller-scale start-up entrepreneur launched a non-profit UBI lottery funded by donations. The winners receive 1,000 EUR/month for one year, no strings attached whatsoever.
In Germany there’s people both on the progressive, and on the conservative end of the political spectrum arguing for UBI: Independent groups of citizens, business owners, politicians, economists, philosophers… For different reasons, obviously, and not necessarily all good for the current low-/non-earners. I think it’s a good idea to start discussions in this direction across society. You always have to make changes along the way with any new idea or process. But I prefer getting started and being able to influence change to being in a position where you can only react to what’s already happened. Good luck with your support for Andrew, maybe there’s some more bloggers in the US-FIRE-community he could get on board.
I agree about the truck drivers. There are huge disruptions coming down the pipeline. Life is going to be a lot different in 20 years. The inequity will keep widening unless we do something about it soon. Thanks for sharing about Finland and Switzerland. I heard about the study in Finland, but didn’t find the result yet.
Unfortunately, I think UBI is too radical for the US. There are other bigger problems like Medicare. I guess we’ll have to tackle one problem at a time. Andrew Yang probably won’t get far this time.
Interesting idea. It is something we hear a lot here in Sweden, and in Finland they are also looking closer at distributing “helicopter-money” to every citizen no matter if you need it.
It is interesting because a few benefits here in Sweden, you get it without applying. One of those are the 120 USD you get for every child you get. Doesn’t matter if you are Warren Buffet, you still get these 120 USD every month until the child is 18 (I think). Administration cost a lot, and it is cheaper to just give it to everyone. And the more children you get, the more money you get, I think the maximum you can get is 1200 USD/month. Here we also pay VAT for almost everything you buy, usually it is 25%. The government controls this, so “good” things like books or going to restaurants have lesser VAT, 0 or 15%.
In Sweden, lots of companies move when they simply can’t get enough profit from their business, mostly because of the taxes (even though the corporate taxes are quite low in Sweden).
The taxes are causing lots of problems for fast growing companies that need skilled labour from abroad. The can’t find an apartment for them, cause theose are all reserved for refugees, and who wants to work in a country where the governemt takes about 60-70% of what you earn in taxes and VAT?
Maybe the “free money” idea sounds good in USA where you haven’t experienced socialism like we have, and I know that there are a lot of positive factors from erradicating poverty, but I am not so sure that handing out “free money” is the solution. Surely there must be better ways to spend it that would benefit the people better?
Thanks for sharing. How does moving to a different country help with the VAT? You pay when there is a transaction, right? Is there some kind of exemption for foreign companies? 60-70% is huge. I wouldn’t vote for that. I wouldn’t mind paying 10-20% more for medical care and a social safety net. More than that would be a hard sell.
Hi, I posted a pretty long reply on this but maybe you did not get it?
Also as I understand it, they tested UBI in Finland but it did not work out as they wanted, so it is put on hold/cancelled. And further, i think it is to support people that do not have a job, not for everyone as a monthly bonus for just living here. A huge difference.
Regarding the 60-70% is questionable at best. Currently the “tax pressure” here is 43,8% (according to swedish site ekonomifakta.se). Compare it on the same site to USA that has 27,1%. Source in Swedish, but the numbers are easy enough to understand: https://www.ekonomifakta.se/fakta/skatter/skattetryck/skattetryck-i-sverige-och-internationellt/
It is also importan to understand som differences here, in Sweden (and more countries in the EU) we have strong security system, almost free medical care and free education. Compare just these things to the USA where you have to pay out of your own pocket, or by insurance every mont. A couple of hundred dollars at least is not uncommon as I understand it. As a Swede I don´t have to pay this separate but it is included in my monthly taxes. And currently I pay about 32% in taxes, then we can of course ad stuff like VAT on what I consume and that will increase the total tax.
Buut, it is not as easy as saying “Stupid Sweden, 70% of my income is taxed” since that is not how it works IRL. We also have more buying power for our cash that ever before, actually getting more for every dollar spent.
We also have high standards for housing, infastructure etc etc. Any swede who has actually been abroad except for some all inclusive luxury resort would appreciate this.
And also, not all apartments are “reserved” for refugees…..*sigh*. Our system is much better than CheapPig is making it sound like.
Oh yes also childcare is more or less free, about 100dollars a month, for full time childcare inculding meals etc.
All things considered I am pretty pleased with the system. Always room for improvements of course, and it is no utopia but still..
Besides theoretical studies has this monetary policy been tested in a large and diverse country the size of USA?
And then I wonder why restrict to $1K and not make it $5K or based on COL?
And wouldn’t it be simpler to just reduce the tax rate instead of taxing and giving the money back?
No, the USA is huge. There is the Alaska Permanent Fund. They invest the money from the mineral right income and pay each resident a certain amount each year. In 2018, every adult got $1,600.
$5K is too much, IMO. $1,000 is just about right. If you want to live a more comfortable lifestyle, you’ll have to work.
Reduce tax wouldn’t work. 50% of all American already isn’t paying any federal tax. It’s already broken…
$1000 a month wouldn’t suck, but I’m extremely skeptical that such a plan would work. Corporations aren’t stupid. If we tax them more, they’ll just move somewhere else where they won’t need to pay as high of taxes.
This is exactly what happened recently when the Seattle city council tried to tax Amazon more. The company shutdown all construction of new buildings and threatened to leave the city. The “new tax” only lasted about a week.
That’s exactly what would happen if a freedom dividend tax was implemented. The companies would just move. So I really doubt a plan like this could work.
Yang’s proposal is a value-added tax, which pretty much every advanced nation in the world already has. It’s not a radical proposal by any means and corps wouldn’t be able to just “leave” to avoid it.
https://www.investopedia.com/terms/v/valueaddedtax.asp
Right. The VAT is added at the point of sale. If the company wants to sell stuff in the US, they would have to pay it. Moving away wouldn’t work.
The consumer pays the VAT, not the corporation in my scenario. Remember, in economics higher taxes means lower amount of consumption, which is a net negative for the consumer.
Thus corporations will always win in situations like this and the consumer loses due a higher tax burden, complexity, and added inefficiency due bureaucracy.
Why do you guys think Toyota moved their U.S. headquarters to Texas of all places, leaving California? It wasn’t because they loved brisket.
In economics the inelastic party bears the incidence of the tax no matter who it is nominally placed on.
Yes, it would work, and it does work. This is exactly why Microsoft funnels all their EU sales through Ireland — Lower taxes. And why a huge number of global insurance companies are domiciled in Bermuda. Taxes.
Seattles tax was a completely different matter. They were trying to institute a “head” tax which would charge companies a flat $ amount for every employee. TO avoid that tax Amazon could carry on business as usual and just to add and/or move more employees anywhere outside Seattle city limits. It was easily avoidable by Amazon and would move jobs outside the city. Sales taxes absolutely don’t work like that. WA already has a very high sales tax and is home to Amazon…
My point wasn’t about the head tax being similar or different VAT. Not even close.
Amazon is one of the best tax avoiders in the world. Just take a look at how much they pay in taxes sometime. Large corporations are clearly more than willing to move operations for a few extra billion a year. No problem.
If you enact a VAT, it’s not the corporations that’ll suffer.