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