by Karl Widerquist | Jan 31, 2018 | Opinion, The Indepentarian
This essay was originally published in the USBIG NewsFlash in February 2008.
The unexpected success of Mike Huckabee in the Republican primaries has given a substantial boost to the small movement to replace all federal taxes with a national sales tax with an accompanying tax rebate in the form of a partial basic income (see story above). The basic income movement has been almost an entirely left-of-center movement since the 1980s, made up of mostly of people who want an equal society with much better, freer lives for the poor. I believe that most basic income supporters would like to have an ally on the other side of the political divide. Is the sales tax movement such an ally? Although I have no doubt that a basic income as small as the one proposed by the sales tax movement would be better than no basic income at all, there are two main reasons why the sales tax movement promotes something that is very difficult for most basic income supporters to endorse.
First, the stress of the sales tax movement is almost entirely on the benefits of income tax relief to try and discover if there is anything that could be done to help them. The tax rebate is included almost as an afterthought to cushion the blow on the poor, who currently pay little or no income taxes and would stand to lose significantly by a shift to sales taxes. Any motivation to help provide basic economic security is left out of the movement’s literature. The poor are expected to work, and adequate work is assumed to be available in the job market. As the sales tax movement sees it, the poor only have one problem-the government makes them pay taxes. If the government rebates their taxes, private employment provides everything they need. Even if we disagree with the motives of sales tax advocates, and even if their basic income is far too small, it is better to get some of what we want than nothing. That is, as long as the cost is not too high, which brings me to the next reason.
Second, sales tax advocates would only support a small basic income as part of a shift to the national sales tax, which supporters call “the fair tax.” But the sales tax has significant problems. The three most obvious measures of an individual’s economic standing are income, wealth, and consumption. Any one of these measures could provide a base for taxation: an income tax is obviously a tax on income; capital gains, wealth, and inheritance taxes fall on wealth; and a sales tax falls on consumption. What difference would it make to base federal taxation on sales? Savings (i.e. the accumulation of wealth) is the difference between income and consumption. If you make $30,000 and save $3,000, you spend $27,000. An income tax would tax you based on how much money you make; a sales tax would tax you based on the portion of that money you spend that year. Sales tax advocates call this fair because it encourages savings and because it supposedly taxes people how what they actually consume rather than on what they are able to consume. If someone is self-employed, paying their taxes can be a stressful thing when the tax month comes, and with the new changes, they may find themselves confused about how to do this if they sort their own taxes out, that is why the use of resources like Golden Apple Agency accounting services or services closer to their location, are used to support them during this time with any tax changes.
For most of us, there is no a big difference between income and savings. The poorest people tend to spend all of their income, and members of the middle class are lucky if they can put away 10 percent. But at higher levels of economic well-being, there is an enormous difference. The richer one is; the less one spends as a percentage of income. Therefore, the “fair” tax is regressive, making after tax incomes between the middle class and the wealthy less equal than before tax incomes. Supporters argue (fairly) that it will be no more regressive than the current system with all of its exemptions, but the sale tax is simply not a mechanism capable of making the system progressive. A government financed by a national sales tax will allow families to accumulate more and more wealth and the power that goes with it. They will be able to pass that wealth down for generations and generations with no interference from income or wealth taxation.
Sales tax advocates say that it is fair to tax people on what they actually consume rather than their potential to consume. Yet, the holding of wealth takes up resources that other people might as much as consumption does. If my family holds land as wealth, we block anyone else from using that land, but we would pay no sales tax on it. Under a sales tax, if a middle class man spends $50 to buy his son a baseball glove, he pays tax. But if a wealthy man spends $50 million to buy his son a professional baseball team-that’s investment spending, not consumption-he pays no tax. This is the “fair tax” in name only.
Even so, a national sales tax could be part of an overall progressive system if it was accompanied by a substantial basic income and some kind of tax that hits large dynastic family accumulations of wealth. Inheritance taxes and capital gains taxes don’t actually do that job very well, but there are two taxes that could, a tax on land value or a tax directly on wealth holdings (see Top Heavy by Ed Wolff). However, I fear that sales tax advocates would resist any changes in their preferred system that would make it progressive.
-Karl Widerquist, Oxford UK, February 2008
If you are due to be audited and are not sure how to ensure you have met all of the criteria, we would recommend you look to use a law firm to help you through your audit. Visit https://taxlawcanada.com/income-tax-audit/ to see what different tax law firms can offer you and how they can help and support you through your audit period.
by Michael Lewis | Jan 31, 2018 | Opinion
On the evening of Sunday January 7, 2018, The Golden Globes Awards program aired. For those who may not know, this is a U.S. television program which airs each year and highlights the accomplishments of actors, directors, and others in the TV and movie industries. This year’s awards program was the first to be aired since the revelations about movie producer Harvey Weinstein surfaced.
For those who may not follow events in U.S. popular culture to the extent I do, Harvey Weinstein was a major Hollywood movie producer. It was revealed that he sexually harassed a number of women or engaged in other sexual transgressions. After it was revealed that he’d engaged in such behaviors, a number of other women came out to accuse other powerful men of sexually inappropriate behaviors of various kinds. In fact, a few of these revelations have had political ramifications.
In one case, they led to the resignation of U.S. Senator Al Franken, a Democrat from Minnesota. In another, they resulted in Doug Jones being the first Democrat the state of Alabama has sent to the U.S. Senate in 25 years. This cascade of revelations, following upon those about Harvey Weinstein, has been dubbed the “me too moment.”
Initially, much of the attention paid to the “me too moment” or, as some would argue, “me to movement” was focused on relatively privileged actors in Hollywood, although they weren’t necessarily that privileged when the sexual transgressions occurred. But eventually someone pointed out that movie stars or would-be stars aren’t the only working women who deal with sexual harassment and assault. Those working in restaurants, hotels, and other low wage industries do so on a daily basis, and whilst some can find a sexual harassment attorney, it can be difficult on their income to do so.
In fact, I’ve heard it said that women in low wage industries suffer the most. That’s because they can’t challenge those men they work with who engage in sexually inappropriate behaviors. Such challenges might result in these women losing their jobs. While listening to a discussion about the “me too movement” on the British Broadcasting Service (BBC), I heard a guest say that the way to empower women on the job is to pay them higher wages. Now I support paying women higher wages, but that might not be the best way to empower them to challenge sexually abusive men they work with. In fact, paying women more, although helpful in other respects, might make it harder for them to challenge such men.
As Bowles, Gintis, and Osborne point out in this paper, the cost of losing one’s job increases with one’s wage. Think about it. Suppose someone is volunteering their services. A volunteer is effectively working for a wage of 0 cents per hour. If this person decides not to volunteer, there is no pecuniary cost of doing so because they don’t forgo any money by ceasing to volunteer. The more money one makes from selling their labor, the more they give up if they quit their job. This is what I meant when I said “the cost of losing one’s job increases with one’s wage.” Quitting one’s job is, of course, one way of losing it.
Now suppose a woman is being sexually harassed on the job. There are a few of ways she might challenge this behavior. She could directly confront the person, she could report them to her boss, she could quit, or she could even contact some Colorado labor lawyers to get their opinion on the matter. Employment law is a tricky business but if a woman is being sexually harassed, something needs to be done. Some of these interventions on her part might get her fired. But is that morally correct? Should someone be fired if they are merely just bringing up the fact that they are being sexually abused? Quite a lot of people would argue this, and with the help and expertise of Employment Solicitors, the correct decision on whether this could be an “unfair dismissal” will soon be known. Of course, that’s if the woman wants to keep her job in the first place. If she quits, she’d lose her income just as she would if she were fired. And the bigger her income or wage was, the bigger the loss from being fired or quitting.
I think that if we want to empower women in their dealings with abusive employers, a way to do so is to provide them with a source of income they don’t have to sell their labor to receive. And the bigger we could get this non-wage income, the more we could empower them. This is because the income loss from quitting or being fired for challenging sexual abuse at work, would be made up to some extent by the non-wage income. Knowing this is the case might embolden women in their dealings with sexually abusive employers and co-workers. A generous BIG, assuming we could afford it, could serve this function well.
by Faun Rice | Jan 26, 2018 | News
In a July 2017 televised Town Hall with KCET, Economic Security Project co-chairs Chris Hughes and Natalie Foster were asked about the principles of a Universal Basic Income. Public questions from Facebook were delivered by the moderator, the first common concern of which was: should we “give everybody a Basic Income,” even the lazy and wealthy?
Foster took the question and responded with a “yes,” commenting that a universal policy “had more political resiliency” (programs with universal access would attract more support), and that shifting economic situations for the American middle class suggested that support for everyone was logical. She clarified that a Basic Income, whatever the size, is intended to be delivered to everyone with “no strings attached.”
Hughes followed up during a second question on the affordability of Basic Income. He commented that a program could be made more affordable by starting small and scaling up, by, for example, beginning with small monthly payments of $200 to American adults (not quite universal, but not means tested), between the ages of 18 and 64, placing the brunt of the tax burden for this measure on wealthy Americans or in a carbon tax. Hughes also compared Basic Income’s feasibility to existing social security programs.
More recently, Hughes’ new book, Fair Shot: Rethinking Inequality and How We Earn (February 2018), will propose a guaranteed income of $500 per month for working adults whose households earn less than $50,000 annually, with the same provided for students and unpaid caregivers.
Hughes’ book is promoted by but independent of the Economic Security Project, “a network committed to advancing the debate on unconditional cash and basic income in the United States.” Their purview includes, but is not limited to, a Universal Basic Income (UBI), as defined by BIEN: “a periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement.”
Chris Hughes. Credit to: SpeakerHub
The version of guaranteed income that Hughes promotes is very different from that espoused by others at ESP, such as senior fellow Andy Stern, whose 2016 book Raising The Floor makes a case for UBI, because a test based on household income and employment is not the same as giving every individual an unconditional Basic Income. Ongoing coverage of guaranteed income experiments has shown that many governments and organizations follow the same trend as Hughes, pursuing studies that offer cash payments that are means-tested, based on employment status, or revoked when income or employment status exceed minimum limits. Several Dutch experiments encountered obstacles to implementing a UBI pilot not just in public opinion but also in federal compliance issues. UBI proponents may face pressure to give money only to the worthy, and to define that worthiness socioeconomically.
The idea that a guaranteed income is best directed at the poor (and more specifically the working poor) is reiterated in Hughes’ press release email for Fair Shot:
As I write in the book, I’m the first to recognize how lucky I got early in life, but I’ve come to believe this luck doesn’t come from nowhere. We’ve created an economy that creates a small set of fortunate one percenters while making it harder and harder for poor and middle-class people to make ends meet. But we also have a proven tool to beat back against economic injustice—recurring cash payments, directly to the people who need them most. A guaranteed income for working people would provide financial security to all Americans and lift 20 million people out of poverty overnight. It would cost less than half of what we spend on defense a year.
The question raised by the KCET Facebook commentators about ESP’s proposal to give money to “everyone” reflects the same ongoing public concerns that some have about welfare and social programs. It asks for beneficiaries to prove that they are worthy in order to receive public money, and it raises the suspicion that recipients will be lazy or will not attempt to re-enter the workforce. Hughes’ new message in Fair Shot attempts to counteract this by arguing that the beneficiaries are worthy: they are employed, hard working, and “need it most.” He thus reassures the reader that the recipients are deserving.
In contrast, the answer given by Foster in the July 2017 town hall promoted a “no strings attached” UBI. The Economic Security project and associated individuals encourage research and debate around Basic Income and guaranteed incomes; the parameters of upcoming affiliated projects like the Stockton Demonstration (yet to be fully released at this time) suggest an interest both in UBI and in guaranteed income systems.
More information at:
KCET Facebook feed, ‘Town Hall Los Angeles: Q&A with Chris Hughes and Natalie Foster’, KCET Broadcast and Media Production Company, 26th July 2017
Chris Hughes , ‘Fair Shot: Rethinking Inequality and How We Earn’, FairShotBook.com (‘Amazon Review: Fair Shot: Rethinking Inequality and How We Earn’, Amazon.com)
‘Kirkus Review’, KirkusReviews.com, 24th December 2017
Kate McFarland, ‘NEW BOOK: Raising the Floor by Andy Stern’, Basic Income News, 11th June 2016
Andy Stern, ‘Moving towards a universal basic income’, The World Bank.org Jobs and Development Blog, 4th December 2016
Kate McFarland, ‘Overview of Current Basic Income Related Experiments (October 2017)’, Basic Income News, 19th October 2017
by Karl Widerquist | Jan 17, 2018 | Opinion, The Indepentarian
This essay was originally published in the USBIG NewsFlash in April 2007.
Republican Presidential Candidate Tommy Thompson has endorsed BIG—at least in a foreign country. On his campaign website, the former Wisconsin Governor calls himself “the reliable conservative in the 2008 presidential race.” The first reason he gives is, “Tommy Thompson is the father of welfare reform.” Thompson has a good claim to that title. Since 1996, welfare reform, also known as “workfare,” replaced conditional cash support for single mothers with work requirements, sometimes for less than minimum wage, without providing daycare. The plan was modeled on an earlier Wisconsin program initiated by then-governor Thompson. Workfare is usually motivated by the belief that poor people have a responsibility to take whatever jobs are offered, even if they have substantial childcare responsibilities.
Thompson is literally the last America one might expect to endorse BIG—a plan to provide unconditional cash benefits to every citizen. But Thompson has not only endorsed BIG, he has made it a major initiative in his campaign. He has discussed it in numerous interviews and speeches and at the Republican presidential debates. He hasn’t endorsed BIG for the United States but as part of his strategy to win the war in Iraq. The BIG element in Thompson’s Iraq strategy is that one-third of Iraqi government oil revenues will be reserved for a fund to provide every Iraqi with a small income guarantee modeled after the Alaska Permanent Fund (APF). USBIG Newsletter readers will recall that the APF was the initiative of another Republican Governor, Jay Hammond. It provides a small but significant income guarantee to every Alaskan resident.
Of course, both the APF and any likely Iraq proposal fall short of the goals of most BIG supporters because they are not large enough to cover the recipient’s needs—a “partial BIG” rather than a “full BIG.” But Alaska experience has show that even a partial BIG can make a great difference to the needy and sets the right precedent.
Thompson’s plan is rather far from implementation, however. To introduce it, the U.S. would have to be continuing its involvement in Iraq two years from now, when a president Thompson would take office. At that point the U.S. will have been at war for nearly six years. Even then, Thompson could only recommend the plan to the Iraqi Parliament, which is formally recognized by the U.S. government as the sovereign government of an independent country. If the whole of Thompson’s plan is adopted, United States would likely remain at war in Iraq for four more years while we find out whether the military elements of his plan work.
Thompson has not discussed extending the Alaska-style plan closer to home, nor does he seem aware of the possible conflict between the goals of an APF-style BIG and his pedigree, Workfare.
What’s the big deal if a politician in one country supports BIG in another country where he may have little influence even if elected? It show that framed in the right context, BIG can have a great appeal even to work-ethic conservatives, and it demonstrates the growing appeal of the APF precedent. The APF is so obviously successful, so popular, and so cost-effective that it appeals even to the father of workfare. Much of the motivation for workfare has been popular American resentment against people who receive direct government payments. But there is little resentment in America for people who receive property income whether or not they work and whether or not they received their property through work. The APF makes some part of Alaska’s oil revenues into part of the personal property of every Alaskan. It’s theirs; they own it. It is quite natural to infer that if it is right for every Alaskan to own a share of their oil, then perhaps every Iraqi should own a share of their oil too. But once you have endorsed that principle it is quite natural to infer that every South African should own a share of their gold. Every Botswanan should own a share of their diamonds. Every Welshman should own a share of their coal. Every Bolivian should own a share of their tin. And the full inference is that everyone should own a share of all natural resources. If we put that principle into practice, single mothers would not need workfare at all.
-Karl Widerquist (Michael Lewis contributing), New Orleans, LA, April 2007
by Micah Kaats | Jan 16, 2018 | News
As many as 375 million people may have to switch jobs as a result of automation by 2030. This is according to a new report published by the McKinsey Global Institute (MGI), a private sector think tank and the business and economics research arm of McKinsey & Company.
According to MGI researchers, “the transitions will be very challenging – matching or even exceeding the scale of shifts of agriculture and manufacturing we have seen in the past.” Such dramatic shifts in the global labor market will demand proportionately dramatic responses from governments, businesses, and individuals. Specifically, the MGI report emphasizes the importance of providing transition and income support to workers.
The report, entitled “Jobs Lost, Jobs Gained: Workforce Transitions in a Time of Automation”, builds on previous MGI research suggesting that 50% of global work activities could theoretically be automated by modifying existing technologies. While only 5% of jobs are at risk of disappearing entirely, 6 in 10 of jobs have 30% of constituent work activities that could be automated. According to MGI researchers, the question is not whether or not automation will alter the nature of work, but how long it will take.
Their analysis model potential net employment changes over 12 years for more than 800 occupations in 46 countries, focusing particularly on China, Germany, India, Japan, Mexico, and the USA. The report also accounts for several factors that could affect the pace of automation including technological and financial feasibility, demographic changes to labor markets, wage dynamics, regulatory responses, and social acceptance.
The report finds that 75 million to 375 million workers, or 3 – 14% of the global workforce, may be displaced by automation by 2030. These effects will be particularly felt in high income countries. In the most extreme scenario, 32% of American workers (166 million people), 33% of German workers (59 million people), and 46% of Japanese workers (37 million people) will be forced out of their jobs by 2030.
However, there may not be any shortage of new jobs available. MGI’s researchers note that new jobs will need to be created to care for aging societies, raise energy efficiency, address challenges posed by climate change, provide goods and services to the growing global middle class, and build new infrastructure.
Automation itself may also have the potential to create at least as many jobs as it destroys. Historically, transformative technological advancements have often led to significant jobs growth across industries.
The real challenge will be to ensure a smooth and stable transition between jobs. According to MGI research, automation is likely to disproportionately affect workers over 40, and sustained investments in retraining programs will be necessary to prepare midcareer workers for new employment opportunities. The report notes that this will require “an initiative on the scale of the Marshall Plan…involving collaboration between the public and private sectors.”
The MGI researchers also emphasize the need for increased financial support during transitions. Workers will need unemployment insurance to compensate for lost wages, as well as supplemental income to offset wage depressions typical in transitioning economies. A universal basic income (UBI) may be capable of satisfying both needs.
The report points to completed UBI trials in Canada and India, which showed no significant reduction in work hours and demonstrated increases in quality of life, healthcare, parental leave, entrepreneurialism, education, and female empowerment. The report also references ongoing and planned UBI experiments in the United States, Uganda, Kenya, Spain, the United Kingdom, and the Netherlands as programs to watch in the years to come.
The worldwide spread of automation may be inevitable, but according to researchers at the McKinsey Global Institute, the demise of human labor is not. Whether or not we can respond effectively to the needs of a changing economy will depend largely on our ability to ensure a secure and stable transition for displaced workers.
More information at:
James Manyika, Susan Lund, Michael Chui, Jacques Bughin, Jonathan Woetzel, Parul Batra, Ryan Ko, and Saurabh Sanghvi, “What the future of work will mean for jobs, skills, and wages”, McKinsey Global Institute, November 2017
