The universal basic income

When money drops down like rain it’s free. Companies for who the sky is the limit, can help to make it pour. Perhaps a universal basic income is closer than we think.

Full of enthusiasm, Rutger Bregman has been talking about his idea since 2014; the universal basic income. He effortlessly lists one successful example after another, such as the dividend paid to residents of Alaska from oil income, the casino revenues for Indians in America and the universal basic income experiment in Finland. His reasoning about the beneficial effect of a universal basic income for people on social cohesion is valid. Society becomes safer and more beautiful.

Who’s going to pay for it?

While the idea itself is widely embraced, it is this question that has provoked opposition. Taking a closer look at the successful examples, they all have the same similarity. The money goes from one group (A) to another group (B). The problem in our current tax system is that tax money is raised by people in the same group B, citizens. Taxes mainly brought up by citizens as income tax, social contributions, VAT, and duties, are impossible to give back to citizens for free. It’s already their money. That’s offering yourself one of your own cigars.

The other cigar

Another source of income is needed. Like oil in Alaska or even better, a bunch of multinational corporate funds loaded with profits. They now hardly pay taxes, arguing they provide jobs for citizens. Meanwhile shareholders fill their pockets. Although shareholders will not willingly cooperate to raise their taxes, we do not need to be gloomy about the future. Sooner or later the income tax system will make place for other forms of taxation. Just don’t count yourself rich yet because it will take several decades.

The end of income taxes

Looking back in history we can see that since the industrial revolution, working weeks have become longer. Now working weeks are slowly getting shorter due to digital automation. Most likely this trend will continue. In time this will undermine the foundation for income tax on wages. Governments impossible can keep national budgets up based on taxing wages when working hours are reduced. Labour would be completely price itself out of the market in a international context. Job promising multinationals will be the first to leave the country. In the long run switching to other forms of taxation will become unavoidable for governments.

Switch to environmental taxes

I can hear people thinking: ‘Tax consumption’. It’s better for the environment. True, only it’s citizens (group B) are consuming. Again, it is offering yourself one of your own cigars. Still, it is a good idea because it discourages the consumption of high-waste goods, encourages recycling, and can provide a compensation for the cleaning costs of polluting products. It is a good way to change behaviour.

Simplify the benefits system

Proponents of a universal basic income are eagerly reckoning on the savings that a universal basic income system can bring about if it replaces the bureaucracy of the current benefit system. True, handing out the same amount to all citizens requires less labour than calculating and controlling the right amount of benefit and bonusses per person based on their personal situation. However, reducing bureaucracy does not change the origin of tax money. At the most it is a positive side effect.

Dutch Disease

Norway has a state fund that manages the income from oil and gas revenues, which already contains more than 1,000 billion. They only spend the dividend on investments, which is about 40 billion a year. Isn’t that something the Netherlands can do with its gas revenues? The Dutch could have in the past, but not anymore. Gas is already 80% exhausted and in 2030 the production will stop completely.

Since the 1960s, Dutch gas has generated close to 420 billion euros. The money was spend immediately to create welfare. As a result the economy got lazy and growth stagnated in the ‘1970s and ‘1980s. The Dutch government spend her gas revenues generously on benefits for the unemployed. Norway found their gas in the ‘1990s and had learned valuable lessons from our Dutch Disease. If the Dutch had invested like Norway, every Dutch person could now have received about 1,000 euros a year. A nice pocket money, but no universal basic income yet.

Taxes for companies

In the end our eye is drawn to companies. Companies profit form digital automation. More work is done with fewer and fewer people. Indirectly it causes the current group of taxpayers to reduce unless of course more and more companies are added. Companies were always seen as means for investors and hard-working entrepreneurs to participate in the free economy at their own expense and risk. Then it is only natural that they can keep the profit. But don’t they have to share any of the fruits?

From a social perspective, a registration in the trade register can be seen as issuing a license to meet a social need. The rules mainly aim on regulating economic traffic and the impact on the environment. Taxes are mainly corporate income tax and taxes on dividend for shareholders. In most cases these taxes are a joke. On paper it look all right, but with all the backdoors to avoid taxes, companies and shareholders laugh their asses off.

Universal basic income as a backbone for society

If countries want to keep their national budgets on healthy levels in the distant future, they will one day have to shift taxes on the incomes of citizens to taxes on the incomes of companies and shareholders. And they will have to shut the back doors for good. When that time has come, Rutger’s dream can become true. Then group A (companies and shareholders) can raise the money to finance a universal basis income for group B (citizens). Then a universal basic income can become the backbone of a peaceful society in which people have more free time than working hours. A universal basic income may turn out to be the cheapest insurance policy against poverty, theft, and violence.

Camiel, 2023

Translation from ‘basisinkomen