The United States Carbon Tax Center (CTC) has just released a new report, showing that eight USA states are ready to implement a carbon tax, and twelve others are building towards it. This comes in a time when the Trump Administration unwinds recent progresses related to climate change policy in the USA.
The CTC has prepared a toolkit, designed to help advocates for carbon taxes win support in their respective states. CTC’s director Charles Komanoff sets the tone of urgency: “now we need to get it to as many people as possible in the states where we have the greatest chance of victory, and fast”.
The report examines the economic, political and environmental situation in all 50 USA states, in an attempt to determine the regions where the best possibilities are to enable policies that can dramatically reduce carbon emissions. In the report and elsewhere, serious consideration is being given to turn this carbon tax revenue into a social dividend, or a kind of basic income.
Already in the Canadian province of British Columbia a carbon tax policy is in place since 2008, and has been very successful at cutting carbon emissions. According to another CTC report, released in 2015, the British Columbia region has seen per capita carbon emissions decrease 3.5 times faster than the rest of Canada, while still growing in an economic sense. Based on this successful implementation, Prime Minister Justin Trudeau progressive government is determined to take carbon taxation onto the national level. In October 16th 2016, Trudeau boldly told MPs in the Canadian House of Commons (as reported in the CPC website) : “If neither price nor cap and trade is in place by 2018, the government of Canada will implement a price in that jurisdiction”. The idea is to start at 10 CAN$/tonne CO2 in 2018, gradually increasing up to 50 CAN$/tonne CO2 in 2022.
Though Socialist candidate Benoît Hamon did not make it to the second round of the French presidential election, he has attracted attention through his proposal for a version of universal basic income (UBI).
An article by the French Economic Observatory (OFCE) explores the way Hamon’s UBI proposal might be implemented into an existing French system that already has redistributive programs such as the RSA (Revenu de Solidarité Active), which provides a level of income for households without a source of it. Hamon’s proposal for basic income may effectively supplant these programs, but it does not describe how a basic income will interact with them. Nonetheless, with certain conditions applied, the plan should give benefits to 11.6 million people, or 17.5% of the French population. The amount paid will adjust to various conditions such as marital status and dependency on parents.
The version of the plan as described by the OFCE describes a basic income of 600 euros per month, starting for those with no income, and then gradually tapering the payments off to incomes 1.9 times the French minimum wage, which is 9.76 euros per hour as of 2017. The base system will taper off payments by using a formula, which subtracts 27.4% of the total income of a taxable household from the monthly payment of 600 euros. Because the payments are adjusted and distributed in a single step, this system more resembles a negative income tax than a universal basic income, where a UBI system would pay an equal amount to everyone first and then take taxes out. This system is not automatically individualized for everyone either, as married couples can choose to file their taxes jointly or individually depending on their financial situation. The implementation of this proposal will also matter greatly, specifically as it is overlaid onto the existing French system or proposed in addition to it.
Using a micro-simulation model (see OFCE article for details), the authors provide estimates of the net benefits to tax households composed of one adult, using the latest available data (2015).
They use a model which assumes that the UBI will overlay the existing French system, and therefore subtracts benefits already provided by the state. This model also excludes individuals aged 18-24, who still report under their parents’ tax household.
Given the model’s parameters, households within the first decile of living standards would see a rise of 38%, or 257 euros/month, to their income. The second decile would increase 13%, or 137 euros/month, and so forth until it expires for those making about 2,800 euros/month, or 1.9 times the French minimum wage. As a result, the poverty rate, as defined by the share of French households who live on about 1,000 euros per month, is projected to drop 4.9% down to 8.5%. The Gini coefficient would also drop by 0.04 points to 0.26, and would put France from an average level to one of the least unequal nations in the European Union.
Average monthly gains by consumption unit and livings standards decile
Much still depends on the implementation of the program. As it stands, the OFCE model projects total expenditures of 30 billion euros; close to Hamon’s projection. However, if young adults ages 18-24 who still report under their parents’ tax household are given a basic income, expenditures would rise to 49 billion. These features suggest that certain groups will be given new incentives within this system, such as individuals within the age range of 18-25 and married couples who can choose to file jointly or individually.
To finance this UBI program, the authors make clear that hikes in tax rates for the highest incomes would be necessary. Personal work income taxes alone bring 74 billion euros annually, but France’s state expenditures are already quite large. New tax bases, like France’s ISF wealth tax which draws revenue from assets like real estate, may be needed to help finance this proposal.
Back in 2014, Johan Bollen and four other colleagues published an EMBO report, presenting a new and radical approach to scientific funding. Since then, Johan has paired with Marten Scheffer so as to develop and communicate further the notion of SOFA – Self Organized Fund Allocation. Scheffer has recently led the Dutch parliament to ask the Netherlands Organization for Scientific Research (NWO) to start a SOFA test pilot.
But what is a SOFA? It is a new way to allocate funds for scientific research. The traditional approach usually means a funding agency receiving many applications, which entail a time-consuming process in itself. Plus, it costs a large percentage of the funding amount to run and manage this top-down driven system. According to a recent article on the issue, by Jop de Vrize, that percentage can be as high as 25%. On top of that, it has been proven highly inefficient, since the success rate of these application is usually below 20% (19.1% in 2016 according to the US National Institutes of Health, and 11.3% at the European Research Council Starting Grants for the same year). The result is that some scientists get lots of money, while a lot of others get a fraction of that money, or even nothing.
The new SOFA funding scheme is, at its core, a distributed, self-allocating system. The funding agency still attributes a certain amount of money to a research community, but then, instead of going through a cumbersome, time-consuming, unfair and inefficient process of distribution, the idea is to get the researchers themselves to allocate funds to other researchers. Specifically, the SOFA system would attribute an equal, unconditional amount of money to each researcher – a certain earmarked value by the agency, divided by all researchers in the community – and then each one would donate 50% of their present and past funding [1] to other scientists, trusting their best judgment.
Proposed funding system (Johan Bollen et al.)
Of course, this new system is not devoid of problems, or potential challenges. Freed to allocate 50% of their research income to other scientists, researchers could choose to give money only to their friends, collaborators or mentors. Also, the problem of the money not reaching those who are needing it the most may still arise, only partially offset by the unconditional amount that will be equally distributed (50% of each year’s grant). However, Bollen and Scheffer are confident, after running many simulations, that “rather than converging on a stationary distribution, the system will dynamically adjust funding levels to where they are most needed as scientists assess and re-assess each other’s merits”. They also agree that the system would have to be include programmed features to avoid self-attribution and hide funding decisions (to keep decisions unbiased), for instance. An important feature of the SOFA system is that no one individual researcher has access to enough information so as to try and influence the attribution mechanism (contrary to the present system, which is more easily politically malleable).
The unconditionality associated with the SOFA scheme, plus its widely-distributed nature draws some similarities with the basic income concept. Basic income, as defined at the Basic Income Earth Network (BIEN), rests on the independence of income and work-status, or even willingness to work. Granted, the SOFA scheme implies that the money is distributed among scientists, devoted and committed to scientific work, with clear and established study plans. However, it is also clear that some of the previous conditions associated with funding decisions – mainly a discussable notion of merit coming from a very small group of peer-reviewers who end up allocating the grants – will collapse if SOFA is introduced. Another similarity with basic income proposals has to do with de-complexification of the attribution system, also reducing its overhead costs, as a function of both distributing 50% of the grants unconditionally and putting in the hands of the researchers themselves the responsibility of distributing the other half of each grant. In the basic income arena, that advantage usually takes the form of reduced costs with social security management, and lowering complexity through existing program’s extinction and remodeling. A third similarity has to do with trust. Unlike the present system, SOFA inherently trusts researchers to allocate 50% of their grants to others. This trust is also present in most basic income proposals, which allow recipients to spend their basic income as they see fit, hence furthering their personal freedom and capacity to more efficiently solve problems in their own lives.
The SOFA scheme has been presented to Eppo Bruins, a member of the Dutch House of Representatives, who proposed a call for a SOFA test pilot in June 2016, which was approved by the parliament. However, the NWO, the agency which would start and manage the experiment, has resisted the initiative. According to Scheffer, that is understandable, since “if applied universally, the novel system would make the agency redundant”.
Notes:
[1] – Management of past funding options is still not included in the proposed model, but is considered important by the authors, to better use of unused funds.
Zoltan Istvan is running for governor of California in 2018 and has made headlines for his proposal to develop California lands and use the revenue to form a Universal Basic Income for all California households.
Istvan, who is running as a Libertarian and also ran for president in 2016, recently spoke to the UBI Podcast to discuss his proposal and why he believes it is the surest path to a basic income.
By monetizing federal lands in California, Istvan said he wants to “kill two birds with one stone” by eliminating poverty and pushing economic development in the state. Based on his research, Istvan said each California household could receive over $50,000 annually if the 45 million acres of unused land were developed.
“If we developed land and resources in California, we would be able to afford a basic income,” he said. “I’ve promised to do all of this without raising taxes.”
This plan, he said, would “lift 19 million Californians out of poverty.”
“It doesn’t matter what party you are running for, that is totally unacceptable,” Istvan said.
“With this large of a basic income, the welfare system would naturally go away because they would not have to rely on the state,” Istvan said. He expressed that this form of basic income will also “avoid the traditional opposition from business interests because it would open new development opportunity.”
“Implementing the basic income this way would attract support from both sides,” Istvan said, “because it would develop the economy and help the poor.”
Some of the primary criticisms of this plan are likely to come from environmentalists. But Istvan, who once worked for Wild Aid and National Geographic, said that environmentalists should not be worried, and eliminating poverty should be a high priority for the left.
“We can make all the arguments we want for why preserving the environment is good, but for me feeding people, giving them the right education, these are things that matter more,” Istvan said.
To ensure that the land was preserved, Istvan said the land would be “leased, not sold”, and the land will have to be returned to the state in its previous condition or better. The plan will not involve national parks.
“The environment can be preserved through radical green technologies that are just on our front door,” he said.
If Istvan is elected, he said he would immediately begin pushing this proposal. Once the revenue starts coming in from the development, Istvan said he could begin handing out a partial basic income.
“I want to transform poverty. It is just insane to me as somebody who loves technology and science that in the Twenty First Century we have a system where 40 percent of Californians are at the poverty line,” Istvan said. “This is something that does not just sound wrong to me, it sounds outright insane.”
Rutger Bregman’s Utopia for Realists is translated to Japanese. Marking the publication, Bregman is coming to Japan and giving a talk. He will speak in English with a simultaneous translation to Japanese.
