by Andre Coelho | Apr 8, 2017 | News
Event room at Coolabora. Credit to: Graça Rojão.
On the 25th of March 2017, a meeting of the Fórum Cidadania & Território (link) took place in Covilhã, a mountain city in Serra da Estrela, Portugal. This regular gathering of individuals and institutions was at Coolabora, a local non-governmental organization (NGO), and apart from particular issues related to citizenship and territory, it was also dedicated to presenting and discussing basic income.
Fórum Cidadania & Território is a formal network of NGO’s and individuals concerned with social issues, development and non-discrimination in Portugal. Hence it represents a larger universe of activity than the strict number of people attending these meetings allows for. In this 14th meeting, organized and hosted by Coolabora, activists promoting basic income in Portugal were invited, in this case André Barata, André Coelho and Pedro Ferrão.
André Barata presented basic income as a natural outgrowth of social democracy, nowadays very much torn apart and distorted. According to him, basic income is justified not so much because automation in upon us, but mainly as a right of citizenship. Countless generations of human beings have created everything upon which we live today, and so a basic income is a way for every person to get a fair share of that heritage. André Coelho exhibited a few slides to explain how a basic income could be financed in Portugal, referring to a study offered by Miguel Horta. He also reviewed what he considers to be the advantages of basic income, over our current social welfare systems. Paulo Ferrão spoke of the next BIEN Congress, taking place in Lisbon, and called for participation in the basic income week taking place while the Congress is ongoing (25th through 27th of September, 2017).
After these points, the debate was opened to the audience, who took the opportunity to pose questions and discuss the traditional arguments against basic income (e.g.: disincentive to work, difficulty in paying for a basic income).
by Guest Contributor | Apr 7, 2017 | Opinion
Written by: Thomas Clarkson
This opinion solely represents the view of the author and is not necessarily the view of Basic Income News or BIEN. BI News does not endorse any particular petition or policy.
A Problem
One of the difficulties in talking about universal income is that the arguments lack punch because we discuss them in the abstract. The “People’s Dividend” (PD) petition on Change.org tries to correct that problem by asking people to sign a petition and call Congress to take action. The PD petition is different because it uses real numbers:
- $27 trillion, the personal net worth of the one percent wealthiest (PNW1). Naturally, high net worth individuals have very different needs to low-income individuals which is why insurers like Jeff Bernard might be better equipped to assist them when it comes to insurance.
- $1.5 trillion per year, the annual growth of the personal net worth of that same one percent
- $4,500 per person, if the $1.5 trillion was re-distributed to all 333 million people in the U.S.
The PD petition proposes that the IRS annually harvest the growth of the wealth of the one percent and distribute it every year to every adult and child in the U.S. without conditions. It also urges people to take two specific actions to make that happen: 1) sign the petition and 2) call Congress.
Please Sign the Petition
If you read the petition first, or watch the video that introduces it, you will have a sufficient background for this article. Here is a link for the People’s Dividend Petition. Feel free to sign the petition while you are there.
Fun with Numbers
Before we go into the details of the proposal, it may be enlightening to compare some of the numbers given above to other things.
$27 trillion (PNW1) is:
- about 686 percent of the Federal Budget ($3.9 trillion)
- about 136 percent of the federal debt ($19.8 trillion)
- about 143 percent of GDP ($18.9 trillion)
- $81,000 per person in the U.S.
$1.5 trillion (the annual growth of PNW1) is:
- 38 percent of the Federal Budget ($3.9 trillion)
- 256 percent of the U.S. Defense budget ($585 billion)
- 253 percent of the annual Federal deficit ($592 billion)
- $4,500 per person in the U.S.
$4,500 per person is:
- one-third of the poverty level for 1 person, which is $11,880
- $18,000 or three-fourths of the poverty level for a family of 4 persons, which is $24,300
- one-seventh of the median wage for workers in the U.S.
- $450 million of added income for the population of Flint, MI, a city of 100,000 people
- $3 billion of added income for the population of Washington, DC, a city of 675,000 people
- $36 million of added income to the 8,000 homeless people in Washington, D.C., which is equal to one-third of Washington, D.C.’s 2017 affordable housing budget of $100 million
Are These Numbers Reliable?
The Forbes list of U.S. billionaires, as of March 21, 2017, identified 565 U.S. billionaires with a combined net worth of $2.8 trillion. This contradicts the established fact that “the personal net worth of the one percent wealthiest (PNW1) is actually $27 trillion. A lot of what is written in the popular press about wealth and income grossly understates PNW1. Fortunately, the World Wealth and Income database (located here) is pulling back the covers on this issue. WID.world has authoritative statistics on wealth and income going back 100 years. That is where the data that supports the People’s Dividend came from. Online access to the WID.world database has been available since 2011. However, economists have been laboring on it for thirty years or more and they deserve great credit for their results. This resource makes it possible for a non-economist like me to grasp wealth inequality trends.
With WID.world data, we can avoid erroneously limiting the wealthiest one percent of U.S. citizens to those found on the Forbes billionaires list. For example, an extrapolation of WID.world data from 2013 to 2017, indicates that the one percent includes all households with over $5 million in net worth. There are about 1,670,000 such households. I estimate that their total wealth in 2017 is $27 trillion, with an annual increase of $1.5 trillion projected. The important result that follows from getting the numbers right is that the size of the People’s Dividend payment gets large enough for people to notice. $4,500 per person is significant. That is the result when you divide the growth of $1.5 trillion by the entire U.S. population. The proposal takes data seriously and the petition includes a link, also given here, to all of my calculations and sources here.
Making It Real
Because the People’s Dividend idea is formulated as an actionable petition with known dollar results for individuals, it makes the numbers behind the universal income/wealth inequality discussion more real. For example, a person knows that their payment would be $4,500, with 99 percent paying no wealth tax. They also know whether their household net worth is above $5 million and, therefore, they know if they are in the 99%.
It is also immediately apparent to many that $27 trillion is simply too much money for one percent of the population to have when 50 percent of the population has so little. For those less easily convinced that that is too much inequity, consider the fact that the one percent’s share of total U.S. wealth has grown from 25 percent in 1982 to 40 percent in 2017. If the one percent’s share keeps growing one point every 2.3 years, then in 23 years it will grow 10 more points to 50 percent of total U.S. wealth. By 2040, the one percent would have as much wealth, 50 percent, as everyone else in the U.S. put together. I think, at that amount, almost everyone would agree that would be much too much.
The purpose of asking people to sign the petition and contact their one Congressional Representative and their two Senators is to encourage them to think about this data, and, in the process, have it become more real for them.
High Points of the People’s Dividend
The $4,500 PD Payment
- The $4,500 per person goes to everyone in the U.S., but only households with PNW greater than $5 million pay the tax. A household of 2 people worth $5.1 million would pay $7,800 and receive $9,000. This means that slightly more than 99 percent of the people would be better off financially. This should make it easier to get a majority of voters in favor of PD.
- The PD goes on year after year.
- The $4,500 is tax-free, so a dollar of the People’s Dividend is worth more to people who pay income taxes than a dollar of ordinary income.
- $4,500 is equal to about one-third of the poverty level for 1 person, which is $11,880. However, for a family of 4, $18,000 in PD payments is about three-quarters of the poverty level for a family of 4 persons, which is $24,300. Therefore, it would be a significant poverty fighter.
- The PD potentially adds a big boost to local economies. In Washington, DC, for example, a city of 675,000, the total PD payments to the population would equal $3 billion per year. This is equal to about 24 percent of the city’s 2017 budget of $13.8 billion.
- The PD is paid to everyone, including the one percent. Therefore, no apparatus for measuring need is needed, and virtually all the $1.5 trillion collected can go to the people.
- The PD would be paid out monthly like a social security check to provide a steady flow of income year around.
- The PD amount would vary up or down, depending on how fast the PNW1 is growing or decreasing, as it might if stock markets decline. Therefore, the PD amount is not guaranteed to be the same from year to year. This feature helps avoid deficit spending because the PD is always equal to the amount of wealth tax collected. To smooth the change in the PD amounts from year to year a moving average of collections might be used.
Alaska’s permanent fund dividend in 2016 was $1,022 per person. The PD would be more than four times that. See here.
The Wealth Tax
- The wealth tax is calculated so that it is equal to the year to year growth in the PNW1, estimated to be $1.5 trillion. Therefore, it represents the increase in PNW1 after the one percent has spent all they want to and paid all their taxes.
- The intention is to keep the wealth tax equal to the growth so that the amount of wealth does not decrease and kill the goose (PNW1) that lays the golden egg (PD).
- A good part of PNW1 is composed of stocks and bonds whose value can decrease in a market slump. If that happens, then the wealth tax rate would be reduced for a few years, but not eliminated, in order to allow the wealth to recover. You can see from the green and orange chart in the video that the 2008 recession caused everyone’s PNW to decrease. However, by 2013, everyone except the 50 percent least wealthy had recovered.
- The wealth tax applies only to every dollar over the household wealth threshold necessary to be part of the one percent. This is $5 million in 2017. A household with PNW of $5,000,001 would pay 7.8 cents in wealth tax. A household with PNW of $6,000,000 would pay $78,000 tax on the $1,000,000 of wealth over and above $5,000,000.
- The $5 million threshold amounts to about $500 billion leaving only $1 trillion to tax. The $1 trillion is taxed at 7.8 percent but the overall tax is 5.5 percent of PNW1. PNW1 grows on average 5.5 percent a year so the tax is equal to the growth.
The Amount of PNW1
- It is better to tax wealth than income because only “realized” income counts for income taxes, but increase in asset values results in increased wealth tax revenues whether the gain is “realized” through a sale or not.
- Capital gains are taxed at a lower rate when it comes to income taxes. Consequently, a lot of big earners take their compensation in the form of shares of stock. In this way, they reduce their income taxes, but a wealth tax would neutralize this tax avoidance strategy.
- The PNW1 amount is a comprehensive measure of the wealth inequality and considers: the effects of all other tax laws; economic forces, such as automation and globalization that reduce the share of profits going to labor; changes in government expenditures for health care and other social programs; right to work laws that weaken labor’s position; and all of the other factors that increase or reduce the concentration of wealth in the one percent. As such, it is an easy litmus test for inequality and a measure we should all watch carefully.
- Because the WID.world data only went until 2013, I estimated the 2017 amounts using the historical compounded growth rate of 5.5 percent.
- But it should not be necessary to estimate wealth amounts. Therefore, an important feature of the PD petition is that it would direct the U.S. Treasury to collect wealth data promptly and directly from banks, brokerage services and other wealth depositories, so that the public could see the PNW1 amount and other wealth distribution amounts shortly after the end of the calendar year.
- The petition requests Congress to appropriate extra money to the Treasury to create a wealth reporting system and a reliable means to track down wealth hidden in various tax havens.
- Not mentioned in the petition, but a necessary addition, would be for Congress to provide funds to Treasury to negotiate tax treaties with other countries to prevent other countries from giving our one percent a better tax deal than the U.S. This is necessary to prevent all of our “one percenters” from fleeing to other countries to avoid the wealth tax.
- By taxing personal wealth, the PD proposal avoids interfering in the taxation of corporations. If they become more profitable, then the shares owned by the one percent increase in value and the wealth tax harvests more.
Obstacles
There are several possible obstacles that might undermine a campaign for getting this petition signed. First, the ideas of universal income and the magnitude of wealth inequality are not well-known by the general public. Second, it might seem too “pie in the sky”, at least initially. Third, many might buy into the common belief that any “giveaway” will ruin the moral fiber of the country and encourage laziness. I am convinced, however, that with enough support, especially from individuals widely admired and trusted such as the Pope, Oprah or Bono, momentum could be achieved. Anyone reading this article with good ideas for getting people on board, please contact me at toclarkson@gmail.com.
Please Sign the Petition
Meanwhile, be sure to sign the petition, if you agree with it, and get one or two others to do the same – People’s Dividend Petition. Once people realize that they have skin in this game and that change is possible we may see some of these proposals become a reality.
by Andre Coelho | Mar 29, 2017 | News
RTP3: Fronteiras XXI (debate panelists)
On the past Thursday, 15th of March 2017, basic income was discussed for the first time on a prime-time television program in Portugal, through the recently created channel RTP3.
The program, which ran for 1hr 30 min, was framed as a group interview and debate, moderated by journalist Carlos Daniel. The program included some related reporting and excerpts from other interviews. Four participants made up the panel, and the main theme of the discussion was automation and its societal consequences.
Manuela Veloso, a robotics researcher in the United States and head the Machine Learning department of the Carnegie Mellon University, was one of the panelists. Asked if automation will be good or bad, she first pointed out its inevitability. Machines are capable of capturing much more data than human minds cannot possibly manage to cope with in order to make decisions: people will have to rely on machines for support in decision making. She also argued that although machines will naturally replace some human work, other human tasks will be created with the increasing use of automation in industry and services.
Another participant was Carvalho da Silva, a lifetime syndicalist and researcher in sociology. Carvalho da Silva pointed out certain caveats when facing what many are calling a “technological revolution”. He said that we should not be deterministic about it (casting doubts about its impact on jobs), since ultimately decisions are political. He underlined that the entire situation must be contextualized and inserted into a crisis framework, where many more jobs have been lost than those estimated to be lost to automation. Like Manuela, he also highlighted the job creation potential of these new technologies.
António Moniz, a sociologist specializing in work and enterprises, and a researcher on the impact of automation in society was also invited. António pointed out that machines are demanding higher professional standards from people tasked to handle them. He relativized the question of job destruction due to automation, believing that there is no direct relationship between introduction of machinery and loss of jobs (although the numbers shown during the program clearly depicted elimination of jobs in large swathes due to automation).
Finally, João Paulo Oliveira, an executive manager of a large paper production company in Portugal, was also present. He alerted the audience to the fact that the adoption of automation is extremely fast these days, so that all politicians must be made aware of its effects on society. According to him, an important aspect of this transformation is education, which must be more in tune with demand. According to him, the marketplace will determine what the “jobs of the future” will be, and the education system must follow suit.
The program included short pieces and interviews, inserted between presentations by the panel. One of those segments was with Gabriele Bischoff, a long time syndicalist and president of the Workers’ Group of the European Economic and Social Committee. Shocked to learn that a company in Belgium already uses chip implants in its employees, she highlighted the importance of respecting workers’ fundamental rights and the need to provide them – especially young workers – with good quality, stable jobs, which can give them, dignified life standards.
Another segment featured Guy Standing, a lifetime researcher of economic and social issues; a professor and activist defending the basic income concept. He summarized the basic income principle and, when questioned as to how the Portuguese people can finance it, he clearly stated that “It’s a matter of fiscal priorities”. According to him, if, for example, such regressive practices as the systematic saving of banks in the past decade were eliminated and the money used for the benefit of all citizens, a basic income could have been already administered in Portugal. Standing also predicted that within the next five years some country will implement the basic income concept, which will lead other countries to gradually follow suit.
Guy Standing. Credit to: RTP3
During the program, simple graphics were shown, both for briefly explaining what basic income is and to report on the estimated number of jobs likely to be lost (and gained) to automation in the next 15 years. Notably, the next Basic Income Earth Network (BIEN) Congress, happening in Lisbon on September this year, was also cited.
The conversation about the future of work naturally led into a debate about basic income. Each of the participants was directly asked what they thought about the idea and its anticipated consequences. Maria Veloso was quick to support it, although questioning its feasibility. She regards the idea as a freedom gaining instrument, in an age of relentless automation and ever-expanding learning opportunities. She also referred to its role as a secure financial platform that allows people to engage in activities not bound by economic viability, in such a way that work is aligned with what each person wants to do in life. Clearly against was Carvalho da Silva, despite his past as a syndicalist. According to him, basic income is against the work ethic, and he assumes that people will lose their motivation to work under that regime, hence also losing a great deal of their meaning in life. He also thinks that basic income is the perfect instrument for the far right political branch to push in neo-liberal agendas slashing the welfare state. On the other hand, António Moniz was more cautious, supporting the basic income idea in general but warning that its effects on the marketplace and especially on companies must be well understood. João Paulo Oliveira was not convinced by the basic income concept or its rationale, as presented by Guy Standing or his fellow panelists. According to him, basic income will just kill competitiveness as more and more people move away from work.
by Tyler Prochazka | Mar 27, 2017 | News
The Universal Basic Income in the Asia Pacific international conference was held at National Chengchi University (NCCU) on March 18. This was the first conference dedicated to universal basic income (UBI) focused on the Asia Pacific region. Scholars, activists, officials, and guests traveled from all over the world to participate in the event.
All livestream videos are available on the UBI Taiwan Facebook page, and a HD version will be available shortly on UBI Taiwan’s YouTube page.
Around 100 people participated in the event in person, including participants who flew from America, Switzerland, Australia, South Korea, Singapore, and mainland China. There were nearly 1,000 streams of the Chinese-translation broadcast of the event, and there were over 1,200 views of the livestream videos on Facebook. A total of 16 different sessions were held, with over 100 questions posed to the UBI experts in-person and online. Furthermore, the event page has reached 35,000 unique viewers to date.
Enno Schmidt, leader of the Swiss referendum campaign, gave the keynote speech for the event: “Basic Income and Democracy.”
“The Asia Pacific UBI conference undoubtedly has been one of the historical steps in furthering the worldwide UBI movement, focused on the recognition of Asia Pacific, as well as unity and collaboration,” Schmidt said.
The event has been in preparation since November, when organizer Tyler Prochazka, an NCCU International Master’s Program in Asia-Pacific Studies (IMAS) student and features editor of Basic Income News, received a grant from the US State Department’s Critical Language Scholarship Alumni Development Fund along with James Davis, a junior from Columbia University. NCCU’s College of Social Sciences (CSS) later agreed to sponsor the event, and NCCU’s IMAS department provided additional assistance.
NCCU CSS Professor Ping-Yin Kuan provided the welcome speech for the event, where he discussed how he first learned about the idea of UBI while he was studying in the United States. His master’s thesis advisor was involved in the “Income Maintenance Experiment” in New Jersey, which tested a form of negative income tax in the 1960s and 1970s.
“As a student who came from Taiwan – at that time Taiwan was a relatively poor country – I was amazed by such a crazy idea. And I thought that only the US, a rich country, would come up with such a scheme,” Kuan said.
“After I became more familiar with issues of social inequality, I could see that it was not a crazy idea at all. The question that should have been asked then, and I believe should still be asked now, is why a country as rich as the US allows a significant proportion of its people to live below a basic decent condition,” Kuan expanded.
“Now Taiwan is considered a rich county, and we can certainly ask the same question here.”
Conference co-organizer James Davis prepared a documentary for the conference, meeting with prominent figures in finance, technology, and politics to discuss basic income.
“Universal basic income is the future of redistribution and welfare policy. It has the potential to alleviate global poverty and unleash an entrepreneurial spirit unlike anything we’ve seen before. These interviews explore the practical and ideological grounds of universal basic income, debunking the critics, and anticipating its challenges,” Davis said.
Sarath Davala, a researcher on the Indian basic income trial, presented on the “Transformative Power of Basic Income for India” via Skype.
“Universal basic income is the most radical idea of our contemporary times. It takes the discourses of democracy and poverty to the next level,” Davala said. He noted that UBI Taiwan “has created history by organizing the first regional activity in Taipei.”
“This conference is the foundation for future cooperation at the regional level, which is very much needed to take forward the basic income movement in each of the countries in the Asia Pacific region,” Davala said.
Ping Xu, coordinator for UBI Taiwan and co-organizer of the conference, presented on the feasibility of basic income for Taiwan.
“This is the first step for basic income in the Asia Pacific. It represents an awakening of human evolution toward traditional Asian culture and away from our current inhumane working standards,” Xu said.
Joffre Balce, secretary of the Association for Good Government in Australia, presented on “Rewriting the Textbook to Deliver Universal Human Dignity.”
“The first Asia Pacific Conference on Basic Income was a glimpse of how society can work together for a common vision — bold, innovative, diverse yet respectful of each other’s noble intentions, united in efforts and determined to realize each other’s vision for a society of equality in rights, the self-determination of the individual and the freedom to cooperate for a better society,” said Balce.
Ted Tan, the coordinator for research and information for UNI Asia and Pacific Regional, flew from Singapore to attend the event. He said he “hopes there will be another conference next year.”
“The conference was very interesting and it could have easily been extended for another half or one day. There is still much to discuss on the possibility of a universal basic income in this region, so I appreciate the inputs and sharing of all the experts in the same room,” Tan said.
Chung Yuan Christian University provided simultaneous Chinese translation for the event. Enzo Guo, a Taiwanese senior at Chung Yuan, led the group of translators.
“I felt so honored to interpret for those brilliant scholars with their ideas and findings. I benefited greatly by their talks. These are important matters that people living in Asia Pacific should know,” Guo said.
Musician Brandy Moore also provided her song “Just Because I’m Alive” for the conference and its promotional videos. Moore wrote the song after hearing about basic income in 2015 and performed it at a basic income conference in 2016 for the first time. In June, Moore will perform the song at NABIG 2017 in New York City.
“Being invited to put my song forward to be part of this recent basic income conference held in Taiwan was a wonderful additional surprise,” she said.
“Music reaches people on a heart level and it’s going to take both heads and hearts to make basic income a reality,” Moore said.
Purchases of Moore’s song will help fund basic income organizations after she recoups the funding to produce it.
Julio Linares, an NCCU student from Guatemala, had met many of the presenters at the BIEN Congress in South Korea, where he also presented.
“I argued how a Basic Income Fund (BIF) could work as a way of creating long-term investments whose profits are redirected back to people in the form of a monthly basic income while at the same time making the fund financially sustainable over time,” Linares said. “The attendees were not only from Taiwan but from different countries and they all showed great interest in the topic as it raised quite a lot of discussion.”
Petra Sevcikova, an NCCU IMAS student from the Czech Republic, organized the NCCU volunteers for the conference.
“After working in event management in Europe, helping to organize the UBI Conference in NCCU in Taipei was a new and extraordinary experience. I believe that the conference was unique and quite important for people interested in the basic income,” Sevcikova said.
Speakers included Gary Flomenhoft (University of Vermont, USA), Sarath Davala (India), Julio Linares (NCCU), Gregory Marston (University of Queensland, Australia), Joffre Balce (Australia), Munly Leong (Australia), Toru Yamamori (Doshisha University, Japan), Ping Xu (Taiwan), Enno Schmidt (Switzerland), Hyosang Ahn (Basic Income Korea Network), Cheng Furui (Chinese Academy of Social Sciences), and Tyler Prochazka (NCCU). The abstracts for each presentation can be found here. A compilation of the research will soon be published online.
For Kuan, bringing these scholars to Taiwan will help to highlight the important issue of inequality, as many social welfare systems in the Asia Pacific are “not working effectively.”
“It is important to bring regional scholars to share knowledge about basic income and spark new ways to think about social security. This is particularly important, not just in Taiwan, but the Asia Pacific in general,” Kuan said.
Yamamori presented on “What Can We Learn From a Grassroots Feminist UBI Movement?: Revisiting Keynes’s Prophecy” via Skype.
“While I was able to attend only via Skype, I could still feel positive vibes and energy from the venue. I know Tyler, Ping and others made a huge effort to make this conference successful,” he said.
“Let me show my gratitude to them and participants, and let us go forward for an unconditional basic income together,” Yamamori said.
Guo said he is optimistic that the conference will have a big impact on Taiwanese society.
“By gathering the elites and people from different fields together and discussing with each other, I believe this conference has undoubtedly paved the way for the popularization of UBI in Taiwan,” he said.
When reflecting on the potential of the UBI in the Asia Pacific, Schmidt said it can bring together all people from all backgrounds, both in the Asia Pacific and beyond.
“The idea of an unconditional basic income for everyone must remain clear, which is regardless of any life circumstances, rich or poor, beautiful or ugly. This idea does not exclude anybody, it does not fight against anything. The idea of UBI unites and connects people and restores our forgotten values,” Schmidt said.
by Michael Howard | Feb 11, 2017 | Opinion
The Climate Leadership Council just put forth a proposal for a carbon fee and dividend, as a key policy to combat climate change. The authors are conservatives, including Republican former Secretaries of State James Baker and George Schultz, Treasury Secretary Henry Paulson, and two Chairs from the Council of Economic Advisors in the Reagan and George W. Bush administrations. While there are some aspects of the proposal to question, progressives should get behind the main idea: a steadily rising carbon fee and dividend.
First, the proposal is a very welcome development for the effort to fight climate change, and for the introduction of a partial basic income. At a time when the President and many Republicans in Congress make light of or outright deny the problem of anthropogenic climate change, it is encouraging to see such concerted effort by people with impeccable conservative credentials proposing a policy that is also favored by many progressive Democrats and environmentalists like Bill McKibben. The dividend would be a significant benefit especially to poor and working class families, and, if revenue-neutral, would more than compensate for the regressive income distribution effects of a carbon tax.
How effective this particular carbon tax and dividend proposal will work depends on details not spelled out in the proposal. The proponents propose starting at $40 per ton of CO2, and a lot depends on how quickly the tax rises. They claim that a commission will decide after five years whether to raise the tax, and if it is flat for five years, that would not be adequate. One analysis of the proposal assumes that if the tax rose by $5/year, it would reduce US carbon emissions 40 percent below 2005 levels by 2030. While not as much as we need, it would be a big step beyond the status quo, and could be strengthened as the political will rises to do so.
The authors propose a tradeoff between the carbon tax and regulation. The authors claim, “To build and sustain a bipartisan consensus for a regulatory rollback of this magnitude, the initial carbon tax rate should be set to exceed the emissions reductions of current regulations.”
If this is indeed the effect, the tradeoff might be worth it with respect to the EPA’s Clean Power Plan. According to Charles Komanoff of the Carbon Tax Center, “well over 80 percent of the plan’s targeted reduction in electricity-sector emissions for 2030 had already been achieved by the end of 2016,” so an economy-wide carbon tax is the logical next step. But worrisome is the Climate Leadership Council’s apparently wider scope of reduction of regulatory power of the government, which serves many other purposes unrelated to climate change. And unless the carbon tax is set high enough and is assured of rising regularly, to give away the EPA’s authority to regulate carbon emissions might be a fool’s bargain. The challenge for progressives and environmentalists is making sure that any tradeoff gives us a robust climate fee and dividend.
A deeper question is whether a carbon fee and dividend will stimulate growth. The model suggested here does not give us enough detail, but a similar proposal by Citizens’ Climate Lobby is projected to create millions of new jobs in clean energy, and not inhibit growth. However, as we steadily use up our carbon budget, the level and pace of reduction in greenhouse gases necessary to avert catastrophic climate change may not be compatible with sustained economic growth.
This leads me to question whether the challenge of climate change — more than two decades after the international community became aware of the problem and initiated treaties to address it — can now be addressed through a carbon tax alone. We may also need direct investment in research and development of alternative technologies. We need to make good on our promise in the Paris Agreement to aid poor countries in the transition to a non-carbon future, so that they do not face an intolerable dilemma between economic development and environmental safety. And we may need to manage a scaling down of our consumption in a manner that does not cause widespread misery.
But there should be little doubt that a carbon tax is a key pillar in the battle against climate change, and using the revenue for dividends is an equitable and politically prudent policy. For basic income supporters, it is the closest analogue on the national scale to Alaska’s Permanent Fund Dividend that we can hope for in the near term.
Reviewed by Kate McFarland
Photo: CC BY-NC-ND 2.0 macwagen
