April 24, 2015


A bipartisan proposal to make a universal basic income a reality in America (Jeff Spross, April 23, 2015, The Week)

Over at Vox, Dylan Matthews recently laid out the start of such a strategy: Among portions of the GOP and the conservative movement there's been growing enthusiasm for the "FairTax" -- a 30 percent national sales tax to replace all other taxes. But sales taxes are regressive -- the poor spend more of their income on consumption and basic necessities, so the tax hits them comparatively harder. So the FairTax plan includes a check from the government that compensates every household for whatever sales tax they'd pay on consumption below the poverty threshold.

For example, based on federal poverty guidelines, the FairTax scheme calculates that a two-parent family of four at the poverty level would spend $31,020. Due to some complicated math, a 30 percent sales tax rate is equivalent to a 23 percent income tax rate, so the FairTax would send the family back 23 percent of that $31,020 -- $7,135.

The FairTax's fans insist on calling this a tax rebate (or "prebate") for rhetorical purposes. But as Matthews points out, it's literally a UBI as well. If you're compensating people for consumption spending, you might as well be compensating them for breathing. Everyone gets it, no one has to be employed to get it, and it comes in 12 monthly installments. It's a UBI by the backdoor.

Posted by at April 24, 2015 5:14 PM

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