The idea behind universal basic income is to provide economic security for every single resident in California. This is something we sorely need. One in five people here are below the poverty line and another one in five struggle to meet their basic needs. That’s 16 million people who are struggling to get by, plus millions of others who have little to no savings and could have their lives turned upside down by a job loss or an unrelated expense.
This has real consequences that we see play out in education, housing, healthcare and crime. But there’s good news here: by tackling economic insecurity head on, we cause positive ripples in all aspects of life.
We set an initial goal of $100 a month for every resident of California including children (the money would go to their parents or legal guardian) and the undocumented. From there we would raise this amount over time to $400 a month. We can certainly keep going from there, but I believe $400 a month for everyone in California is a worthy medium-term goal.
How do we pay for the basic income?
There are many ways, and the funding sources I identify are not the only ones out there. My plan is designed so that no one is asked to take on an outsized burden, and the system adjusts automatically according to the level of wealth inequality at any given point.
- A 2% income tax on all but the bottom two tax brackets, which goes up to 3% for income over a million dollars. This immediately creates a dividend of over $100 a month for every Californian. This can steadily increase on a predictable schedule.
- A carbon dividend, which we can grow over time to around $100 a month per resident. A carbon dividend imposes a fee on carbon extraction, and then distributes the revenue evenly. This helps fund the basic income while pricing the effects of climate change into the market.
- A California estate tax. We don't need dynastic wealth, we need community wealth. An estate tax could form the basis of a sovereign wealth fund, which we could invest, diversify and use to pay additional dividends to each person in the state.
A basic income would be transformative for millions in the state. It would immediately provide economic security for the millions of people who struggle to make ends meet, and provide a true safety net so that moments of need don’t become months or years of difficulty.
From research on basic income studies in the U.S. and Canada in the 1970s, as well as other trials around the world, and studies of the Earned Income Tax Credit and the Child Tax Credit in the U.S., we have learned that economic security creates positive ripple effects in every other aspect of life. These include:
-Students whose families benefit from a basic income stay in school longer, get better grades, are more likely to finish high school and attend college.
-Crime rates drop, because a lot of criminal activity is a response to economic despair.
-Physical and mental health incidences drop, because poverty is stressful and incentivizes people to push themselves to the limit.
Do people quit their jobs?
Basic income studies in the 1970s were focused on this question.
The answer: No significant change was seen in hours worked with two exceptions: students and new moms. What this means is that people who wanted to spend more time focusing on their studies or caring for their children now had the financial freedom to do so.
Why does income security have so many positive side effects?
Two reasons: poverty is not a lack of character, it is a lack of cash and it is expensive to be poor.
Why is it expensive to be poor? Here are just a few reasons:
-Housing: Options are limited for people who cannot afford a security deposit and first month’s rent on a new place. Soaring rent prices are pushing people further from economic hubs, which leads to increased transportation costs.
-Insurance: Those with less money to spare are more likely to forgo insurance, whether that’s health, dental, home or fire, leaving them more vulnerable to unfortunate events.
-Banking: Poor people have fewer banking options, making them targets for extractive industries such as payday lending.
-Education: Economic pressure forces many students to work while studying or even to quit school for a job. This makes the path to a degree longer and more easily derailed.
A universal basic income is not a panacea—we still have serious issues in housing, criminal justice, climate change and much more—however, a basic income makes many other problems much easier to handle for individuals and the state as a whole.
We can have this tomorrow. The only thing lacking is the political will.