Who Pays?

Many critics of Universal Basic Income focus on the Gross rather than Net cost of proposed funding methods. Gross is simply the size of the population (since UBI is Universal) multiplied by the number of people in the community (since UBI is Universal). The Net cost subtracts the amount contributed in the form of contributions or tax. 

The point of a UBI relative to Welfare Payments is to shift the burden of proof. Welfare is often like the opposite of a job interview. We spend a lot of money on 'means testing' with paperwork and evidence to prove a negative. It is very difficult to prove something doesn't exist. It is also rather demeaning. In a world where we put a lot of emphasis on self-worth being determined by the 'ability to provide'.

Most proposals for a Universal Basic Income don't change the normal progressive tax system. Meaning, if you earn more than enough money, it is rather difficult to hide. If you buy anything, own anything, or earn anything... it is far cheaper to find that out, than to prove you don't. Tax could then remove the cost of providing you with a UBI.

Still, the idea is similar to Pension Funds. When they started, many were 'Pay as you Go', and much of the money paid in by workers was paid out immediately to people who were retiring. This was fine until the proportion of retirees started to grow, as workforces shrunk and people lived longer. This has lead to many large businesses having 'unfunded Pension liabilities'. When you buy a business, you also buy its promises. These can be scary. Most pension schemes have been shifting from Defined Benefit (saying what you will receive) to Defined Contribution (saying what you need to put in). Many airlines are described as Pension Liabilities with wings.

The UBI model I like still needs 'someone to pay'. It just contains the situation within much smaller boundaries. If a 150 person community was built, 75 people could be the 'Breadwinners'. Over the course of 15 years, they could (1) pay for their own UBI, (2) save for their own UBI, (3) pay for someone else's UBI, and (4) save for someone else's UBI.

So, for example, if 75 people paid $8 a day. (1) They would receive $2, (2) they would invest $2 to build an Engine for themselves, (3) they would pay as you go $2 to someone else, and (4) they would invest $2 a day to build an Engine for someone else. After 15 years, I believe they could have, with sound investing, built an Engine to sustain that $2 UBI for themselves and one other person.

The 'Gross Cost' to them is $8 a day. The 'Net Cost' is $6 (they receive the UBI too). $4 is not really a cost, given that it is invested. It grows. Managed sensibly, with good custodians, one day it could live for ever. A fully funded Community Wealth Fund could one day support a Universal Basic Income without any additional contributions.

In a world of hand-to-mouth, someone does need to pay. But we don't need to live hand-to-mouth. A Universal Basic Income doesn't have to be tax funded. It could be a dividend on our Community Wealth. One day. If we make good decisions today.