Is the Universal Basic Dividend model truly Universal?
Challenge the system:
“You do not rise to the level of your goals, you fall to the level of your systems,” James Clear, Atomic Habits. While this might have originally been written for those with lofty goals of waking up at 4 am every morning and not so much about income distribution in the United States, I still believe it is pertinent to evaluate the current and historical systems we have in place in order to truly understand the pitfalls of society that this plan seeks to reconcile. I do believe in giving credit where credit is due and applaud this plan for seeking to serve the common interests of our population by minimizing the federal tax burden and providing assistance to all U.S. citizens helping ease the cost of living. However, just as James Clear demonstrates, having goals does not mean achieving them especially when the systems we have in place have a historical legacy of excluding significant portions of the population.
Argue all you want against this belief but there is much to be said about the powerful connections that wealth brings you. Life is all about networking so much so that, “the power of personal,” is one of the foundations of the very business school we attend. Of course there are dozens of success stories of those who have built themselves up with no connections and no born inheritance but there are a dozen more cases of the direct effects of nepotism and the influence of, “old boy networks,” networks made with specific exclusions in mind. Even if you start on a seemingly level playing field with another individual, discrepancy could still lie in the gap in generational wealth. White citizens were able to own property and accrue wealth for a lot longer that citizens who are a racial minority, this ability to build generational wealth for longer allows white families more of a safety net than other ethnicities as they had the potential to inherit much more wealth. Over time this led to more economic freedom in white communities allowing them to seek higher education and attend prominent universities well before racial minorities could financially or even legally. This gap in education then led to a gap in job qualifications as it became much harder to obtain a job with no degree, continuing to further the economic discrepancies in this nation.
The reason I address these systematic discrepancies is to question the outright support for the Universal Basic Dividend plan. In an ideal world giving all families a financial leg up in this world would allow for more mobilization and a higher potential to escape from the situations that some have been generationally trapped in. However, without fixing the systems that will continue to hold us back we will only continue to support poorly funded schools and continue to trap those in poverty giving them a blanket of $9,000 to make us feel better about it.
Money, money, money:
For a system centered around easing the financial burdens of the common citizen this plan also conveniently provides a significant tax cut plus additional funds for the wealthier population. Now, you can not argue that this system does not help those living below the federal poverty line as even with increasing the tax rate from 10% to 25% the lowest end of our current tax bracket still comes out ahead due to the additional $9,000 a person. Yet, it is hard to say that this system is truly for the common good as giving everyone the same or “equal” treatment, only works to further the dividing line between those living well above the federal poverty line and those living well below. If this system truly seeks to make a change in the way we assist all citizens then why is it continuing to uphold the social class system that is so clearly emulated in our society?
My main issue begins with the introduction of “flat tax” in this plan; to break down my issues in regards to a flat tax rate I will use examples of the bottom end of the U.S. federal income tax bracket and the top end. On the bottom end of the 2024 tax bracket people making $11,600 a year and less only pay 10% income tax, under this new plan they will suffer a 15% increase in income taxes. On the upper end of the 2024 tax bracket people making $609,350 and higher pay 37% income tax meaning they benefit from a 12% tax cut. Now, if you do the math, those who suffer from a 15% increase in their taxes do not end up losing money due to the $9,000 they earn from the UBD payments. If they were to receive $9,000 in UBD and still make $11,600, even with being taxed at 25% they would be $7,260 ahead of where they started due to the $9,000 offsetting the increased tax. However, because of this it's improper to say that an individual well below the federal poverty line would be earning the same $9,000 that an individual well above the federal poverty line earns because over $1,500 of that money goes to offsetting the increased taxes. On the other hand those that exist in the upper end of the tax bracket currently pay 37% income tax, this plan decreases their taxes by 12% and then hands them $9,000 on top of their tax cut. Currently, those that pay 37% income tax make $609,350 or more, with this plan those at the lowest end of the top of the tax bracket will be put $59,000 ahead of where they are today.
Hopefully after clearly spelling out the large financial discrepancy that is at play here one might see how this system only continues to etch the line in the sand between the social classes in our economy. If we continue to hand out advantages to the advantages and set back those who need a hand up will our society ever really reach the so-called “increased individual freedom,” this plan so wishes to achieve? My answer is no, greedy corporations will only see the fact that now everyone is $9,000 wealthier thus raising the costs of living in all regards making the $9,000 we shell out largely inconsequential. To add on to that, since this plan chooses to eliminate minimum wage restrictions corporations can charge more and pay their employees much less, leading to more people leaning on their UBD payments as they watch the cost of living skyrocket. My prediction is that this will become a political tactic to silence those who need financial help saying they are already given handouts, and continue to trap those who are impoverished in poverty as they can now be paid less and charged more.