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UNITED STATES: Trust fund approach to basic income aims to take edge off political culture war

 

Lawyer Joseph Chloupek has put forward a proposal for a US sovereign wealth fund that would provide a basic income of US$25,000 a year. The proposed approach aims to establish a political-economic modus vivendi between liberals and conservatives by giving each side something “they say they desire”.

The proposal’s starting point would be to “eliminate all tax exemptions secretly written into the tax code” whereupon the proceeds would be invested into a national trust account paying out an inflation-adjusted $25,000 a year at intervals chosen by the recipient. Alternatively, new legislation could direct the Fed to deposit US$10 trillion directly into the fund, according to Chloupek.

Chloupek also advocates that all income-based taxes for individuals and organizations are replaced with a 5% tax on all transactions cleared through the banking system, echoing the automated payment transaction tax advocated by Wisconsin professor Edgar Feige. Chloupek argues that this would help the supply of products and services match the increased demand generated by the BIG. This in turn mitigates inflationary and business-cycle pressures, both sources of current economic problems in the United States.

In this way, Chloupek’s plan explicitly aims to provide “non-paternalistic help for people’s income fluctuations for liberals, and real incentives to invest and work for conservatives.”

The mechanism of Chloupek’s trust-fund proposal is based on Alaska’s permanent fund dividend program, where state-owned oil revenue is invested in a diversified worldwide portfolio.

Chloupek’s proposal also shares characteristics with the theoretical pragmatic market socialism analysis put forward by Professor James A. Yunker in 1993. Last year, the trust fund approach joined the intellectual mainstream when Foreign Affairs ran an essay entitled “Print less but transfer more”.

Chloupek also references British economist James E. Meade’s “topsy-turvy nationalization” idea whereby government takes a 50% share of all publicly traded stocks and pays a social dividend from earnings to all citizens. The “pension-fund socialism” feared by corporate thinker Peter Drucker can be avoided by “the government being prohibited from exercising voting rights control of the businesses invested in, similar to the Federal Reserve’s employee pension fund,” according to Chloupek.
For further reading on this topic see:

Mark Blyth and Eric Lonergan, “Print less but transfer more,” Foreign Affairs, September-October 2014

James A. Yunker, “Capitalism versus Pragmatic Market Socialism,” Springer Science+Business Media New York , 1993

About Will Wachtmeister

Will Wachtmeister has written 32 articles.

Will is a journalist, writer and translator based in Malmö, Sweden.

The views expressed in this Op-Ed piece are solely those of the author and do not necessarily represent the view of Basic Income News or BIEN. BIEN and Basic Income News do not endorse any particular policy, but Basic Income News welcomes discussion from all points of view in its Op-Ed section.

7 comments

  • Russ morris

    Im glad we have started to use a figure for the basic income which is not so low as in just above poverty level. We need to feel good to be “able” to do good work.
    With $480.00per week I would wake up and walk out the door and just start helping anybody that needs help. And I would help put togeather community gardens. And I would start a “bar lounge” for use as a platform to research and present the consequences (news) of basic income on “our” life and “our” planet and I would employ young people to manage and run the business.
    In fact I am reminding my self ,I am able to pursue these ideas now, because my brother allows me to live in nice very simple house for free. So I do not have a rent each month. Because of this form of what could be considered a basic income (in a way), I was ABLE to study what is happening in “our” world and discover the basic income concept (through destini and the equal money, living income research) a few years ago. Since my brother has allowed me this very special opportunity my life has become very different. I have just finished a children’s’ book about the shift of perception from me-ness to we-ness. How to “see” things in terms of what is best for all life regarding the decisions that I make each day.
    I believe in people now. Again.

    • Stephen Stillwell

      Though you can clearly see how just having ones rent paid can make a tremendous difference, and that can be accomplished with much less than $25,000/yr.

    • Stephen Stillwell

      Any system that does not include all the people of earth, will necessarily increase the problems of those not enfranchised, and in turn, those who are.

      While I whole heartedly support the use of sovereign debt to provide funding for a BI, I believe that can be accomplished much more simply.

      If sovereign debt is required to be backed with Commons shares, and each adult human may claim exactly one, held in trust in his or her bank, to disintegrate at death, then a BI would be simply distributed from the interest on sovereign debt.

      Providing the level of return suggested here would require sovereign entities to increase their level of debt. If each human is considered a sovereign entity, he or she should have access to secured loans against some potion of their share, for secure investment in a home, farm, or workplace. If corporate governments are also considered sovereign, then secure corporate paper could also borrow from the Commons.

      Tying all fiat currencies to one base will stabilize exchange, while distributing $6.25 Trillion annually in the U.S. could be destabilizing, and also demonstrate the disregard for humans outside our borders, when a simple global system could be manifest.

      The current level of sovereign debt would return $10 or $20/month, if corporate bonds are included, which would have a tremendous impact on destitution worldwide, and is easily expanded.

      The Chloupek proposal would obligate the U.S. to pay out $6.25 T/yr, and find the taxes to cover that, while doing nothing for the world, and likely exacerbating existing animosity.

      Using Commons shares would obligate the U.S. and it’s subordinate sovereigns, to pay out $6.25 T/yr against a $250 T debt, with $230 T in cash reserves, and find the income to cover that, while enabling each other country to do the same.

      I hope all will consider this notion, as the possibilities presented by this structure would be transformative

      Thanks so much for your kind indulgence…

    • Sadly, the authors do not understand Monetary Sovereignty, so they wrongly believe federal taxes pay for federal spending.

      While state and local taxed do pay for state and local spending, federal taxes do not. That is the fundamental difference between Monetary Sovereignty and monetary non-sovereignty.

  • Russ morris

    I would focus on finding or creating meaningful work that has a helpful effect for all life, and I might even do it for free because your proposal is so generous.
    I can imagine that many workers might decide to do things for free, and somehow do things for the benefit of “showing” ( as in actions and speech) something special for our young people to see.
    Maybe this could have an effect of actually lowering the cost of goods (the focus being on meaningful sustainable goods)
    And $450.00 per week could “enable” our youth to actually take the leadership for our future. They are very special. And wise.

  • Here is what the plan proposes:

    “Eliminate all tax exemptions secretly written into the tax code” whereupon the proceeds would be invested into a national trust account paying out an inflation-adjusted $25,000 a year at intervals chosen by the recipient.
    The plan is based on the erroneous belief that federal taxes pay for federal spending.

    “All income-based taxes for individuals and organizations are replaced with a 5% tax on all transactions cleared through the banking system.”

    Not sure what “all transactions” includes. If it’s a form of sales tax or a European-style VAT, it punishes the 99% far more than the upper 1%. It would widen the Gap between the rich and the rest.

    If it also includes purchases and sales of stocks and commodity futures, it would wreck those markets.

    And if it includes borrowing and debt payments, it would be a financial disaster.

    I like the proposal for the federal government to pay a “bonus” to each American (see Step #3 in the Ten Steps to Prosperity — @ http://www.nofica.com).

    A version of this was used at the beginning of the Great Recession, though it was too little and too late to have enough effect.

    But no federal tax increase is necessary or desirable to accomplish this.

  • John Chloupek

    Basic Income, or Basic Guaranteed Income is nothing but a pipe dream. The problem we have with society today is that more and more people are doing nothing and being rewarded for it. Everyone who is able must work and contribute. Get the loafing class schooled that the free ride is over. Eliminate the ‘safe zones’, put away the coloring books for adults, no hot chocolate unless you earn it, and cuddle dogs are for your own purchase and on your own time. Grow up people! We live in a real world where not everything can be done for you or handed to you. Become individually responsible and you will start taking pride in what you do and will stop feeling like everything is owed to you.. And, if you insist on the Basic Income concept, start a non-profit and you and your friends can contribute any amount you want to realize this dream. Stop asking me to fund your dreams. Oh yes, I am Joseph’s uncle.

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