Universal basic income in the United States

Last updated January 01, 2024

Universal basic income and negative income tax, which is a related system, has been debated in the United States since the 1960s, and to a smaller extent also before that. During the 1960s and 1970s a number of experiments with negative income tax were conducted in United States and Canada. In the 1970s another and somewhat related welfare system was introduced instead, the Earned Income Tax Credit. The next big development in the history of basic income in the United States came in 1982, when the Alaska Permanent Fund was established. It has delivered some kind of basic income, financed from the state's oil and gas revenues, ever since.

Older history (from Paine and Spence to 1900)

Arguably the first to propose a system with great similarities to a national basic income in the United States was Thomas Paine, in Agrarian Justice, 1796/1797. His idea was that a few "basic incomes" to young people, in their 20s, financed by tax on heritage, was highly needed and also a matter of justice. Shortly after that, in 1797, Thomas Spence outlined a complete basic income proposal.^[1]

1900–1960

In the first half of the 20th century various people in the United States advocated some kind of basic income. There were for example the Louisiana Governor Huey Long who called it "Share Our Wealth" and also some followers of Henry George.

1960s and 1970s

In the 1960s and the 1970s the debate around, and support for, basic income and the related system negative income tax, rose substantially. This debate and interest was highly linked to general debate on poverty and how to deal with it. In 1968, James Tobin, Paul Samuelson, John Kenneth Galbraith and another 1,200 economists signed a document calling for the US Congress to introduce in that year a system of income guarantees and supplements.^[2] Milton Friedman endorsed the negative income tax in 1962 and again in 1980,^[3] and he connected his support for the negative income tax to support for basic income in an interview with Eduardo Suplicy in 2000.^[4]

Martin Luther King, a famous civil rights activist and politician, also gave his support for the idea in his book Where Do We Go From Here: Chaos or Community? , published in 1967.^[5]^[6] In 1969, Richard Nixon proposed a "Family Assistance Program" which resembled guaranteed income, in that benefits did not rapidly taper with additional earnings by the beneficiaries. Nixon's proposal only applied to families, but extended previous welfare by benefiting more than those without a 'father'.^[7] Other advocates from the 1960s and 1970s include Senator George McGovern who called for a 'demogrant' that was similar to a basic income, although a plank calling for a guaranteed income of $6,500 was defeated at the 1972 Democratic National Convention.^[8]^[9]

From 1968 to 1982, the US and Canadian governments conducted a total of five negative income tax experiments. They were the first major social science experiments in the world. The first experiment was the New Jersey Income Maintenance Experiment, proposed by MIT Economics graduate student Heather Ross in 1967 in a proposal to the U.S. Office of Economic Opportunity.^[10] The four experiments were in:^[11]

The New Jersey Income Maintenance Experiment: Trenton, Passaic, Paterson, and Jersey City, New Jersey with Scranton, Pennsylvania added to increase the number of white families, 1968–1972 (1357 families)^[12]
The Rural Income Maintenance Experiment: Rural areas in Iowa and North Carolina, 1969–1973 (809 families)
Gary, Indiana, 1971–1974 (1800 families)
Seattle (SIME) and Denver (DIME), 1971–1982 (4800 families)
Manitoba, Canada ("Mincome"), 1974-1979

In general they found that workers would decrease labor supply (employment) by two to four weeks per year because of the guarantee of income equal to the poverty threshold.^[13]

The 1980s, 1990s and early 2000

The Permanent Fund of Alaska

The Alaska Permanent Fund is often mentioned as one of the few existing basic income systems in the world. Since 1982, the Fund has paid a partial basic income to all (permanent) residents averaging approximately $1,600 annually per resident (adjusted to 2019 dollars) from the state's oil production revenues.^[14] A prominent figure in the history of the fund is Jay Hammond. He was the Republican Governor of Alaska in the 1970s and as such he was concerned that the huge wealth generated by oil mining in Prudhoe Bay, the largest oilfield in North America, would only benefit the current population of the state. Therefore, he suggested setting up a fund to ensure that this wealth would be preserved, through investment of part of the revenue from oil.^[15]

2010–2018

The Green Party of the United States since its 2010 platform advocates for a universal basic income to "every adult regardless of health, employment, or marital status, in order to minimize government bureaucracy and intrusiveness into people's lives."^[16]

The debate about basic income, according to Guy Standing, has gone in two directions in the United States in recent years. On the one hand is the introduction of basic income as an alternative to existing social policies, paid from direct taxation, and on the other hand is a discussion about capital funds with basic income-style dividends.^[17]

In July 2017, Hawaii State Rep. Chris Lee published a bill to investigate basic income for his state.^[18]

American Democratic Politician John Moser ran on a Universal Citizens Dividend as the core focus of his 2018 Congressional campaign.

In April 2021, a bill to send unconditional monthly cash payments of $1,000 to California residents passed committee, though with no funding mechanism.^[19]

Andrew Yang and the emergency-basic income of 2020

Andrew Yang was a presidential candidate for the 2020 Democratic Party presidential primaries. He was running against more well-known candidates such as Joe Biden, Bernie Sanders, and Elizabeth Warren to get the Democratic Party-ticket to run against the Republican candidate in 2020. His flagship proposal was a basic income, which he labels "Freedom Dividend" of 1000 dollars per month to each American citizen over the age of 18. He also had several other proposals, regarding democracy, health and medicine, international affairs and so on, but the focal point of his campaign was basic income. That, in turn, is a proposal which he outlines with the background of the fourth industrial revolution. In other words, the development of automation and artificial intelligence, and how these factors change the job market. According to Yang, the Freedom Dividend's benefits include "healthier people, less stressed-out people, better-educated people, stronger communities, more volunteerism, [and] more civic participation. There's zero bureaucracy associated with it [because there is no] need to verify whether [people's] circumstances change."^[20]

Yang argues that automation-driven job displacement was the main reason Donald Trump won the 2016 presidential election, saying that based on data, "There's a straight line up between the adoption of industrial robots in a community and the movement towards Donald Trump."^[21] Yang has said that he became a UBI advocate after reading American futurist Martin Ford's book Rise of the Robots: Technology and the Threat of a Jobless Future , which deals with the impact of automation and artificial intelligence on the job market and economy.^[22] He believes UBI is a more viable policy than job retraining programs, citing studies that job retraining of displaced manufacturing workers in the Midwest had success rates of 0–15%.^[23]

On March 5, 2020 Andrew Yang started the Humanity Forward ^[24] movement, a non-profit with the goal of introducing the core ideas that Yang ran on during his 2020 presidential campaign such as Universal Basic Income, human-centered capitalism, and data as a property right. Andrew Yang has already received three million dollars^[25] in donations for use in this organization. Humanity Forward will endorse and provide resources to political candidates who champion Universal Basic Income, human-centered capitalism and similar policies. HF will help launch and support projects to display the power and practicality of UBI in real life. Yang intends to push these ideas to the mainstream through podcasts, traditional media, and high-impact events.

Related Research Articles

Citizen's dividend is a proposed policy based upon the Georgist principle that the natural world is the common property of all people. It is proposed that all citizens receive regular payments (dividends) from revenue raised by leasing or taxing the monopoly of valuable land and other natural resources.

The Alaska Permanent Fund (APF) is a constitutionally established permanent fund managed by a state-owned corporation, the Alaska Permanent Fund Corporation (APFC). It was established in Alaska in 1976 by Article 9, Section 15 of the Alaska State Constitution under Governor Jay Hammond and Attorney General Avrum Gross. From February 1976 until April 1980, the Department of Revenue Treasury Division managed the state's Permanent Fund assets, until, in 1980, the Alaska State Legislature created the APFC.

Guaranteed minimum income (GMI), also called minimum income, is a social-welfare system that guarantees all citizens or families an income sufficient to live on, provided that certain eligibility conditions are met, typically: citizenship and that the person in question does not already receive a minimum level of income to live on.

Mincome, the "Manitoba Basic Annual Income Experiment", was a Canadian guaranteed annual income (GAI) social experiment conducted in Manitoba in the 1970s. The project was funded jointly by the Manitoba provincial government and the Canadian federal government under Prime Minister Pierre Trudeau. It was launched with a news release on February 22, 1974, under the New Democratic Party of Manitoba government of Edward Schreyer, and was closed down in 1979 under the Progressive Conservative of Manitoba government of Sterling Lyon and the federal Progressive Conservative Party of Joe Clark. The purpose of the experiment was to assess the social impact of a guaranteed, unconditional annual income, UBI, including whether a program of this nature would create disincentives to work for the recipients and, if so, to what extent.

Humanistic capitalism is a concept that seeks to unite humanism, specifically the safety and health needs of people and the environment, with market forces and a market-based economy. It is often seen as a middle ground between the ideas of modern capitalism and democratic socialism.

In economics, a negative income tax (NIT) is a system which reverses the direction in which tax is paid for incomes below a certain level; in other words, earners above that level pay money to the state while earners below it receive money, as shown by the blue arrows in the diagram. NIT was proposed by Juliet Rhys-Williams while working on the Beveridge Report in the early 1940s and popularized by Milton Friedman in the 1960s as a system in which the state makes payments to the poor when their income falls below a threshold, while taxing them on income above that threshold. Together with Friedman, supporters of NIT also included James Tobin, Joseph A. Pechman, and Peter M. Mieszkowski, and even then-President Richard Nixon, who suggested implementation of modified NIT in his Family Assistance Plan. After the increase in popularity of NIT, an experiment sponsored by the US government was conducted between 1968 and 1982 on effects of NIT on labour supply, income, and substitution effects.

The social dividend is the return on the natural resources and capital assets owned by society in a socialist economy. The concept notably appears as a key characteristic of market socialism, where it takes the form of a dividend payment to each citizen derived from the property income generated by publicly owned enterprises, representing the individual's share of the capital and natural resources owned by society.

Universal basic income (UBI) is a social welfare proposal in which all citizens of a given population regularly receive a minimum income in the form of an unconditional transfer payment, i.e., without a means test or need to work. In contrast a guaranteed minimum income is paid only to those who do not already receive an income that is enough to live on. A UBI would be received independently of any other income. If the level is sufficient to meet a person's basic needs, it is sometimes called a full basic income; if it is less than that amount, it may be called a partial basic income. No country has yet introduced either, although there have been numerous pilot projects and the idea is discussed in many countries. Some have labelled UBI as utopian due to its historical origin.

In Brazil, universal basic income has been discussed at least since the 1980s. In 2001 a law was introduced by Senator Eduardo Suplicy of the Brazilian Workers Party which mandated the progressive institution of such a welfare system. By this move Brazil became the first country in the world to pass such a law. Suplicy had previously introduced a bill to create a negative income tax, but that bill failed to pass. The new bill called for a national and universal basic income to be instituted, beginning with those most in need. The bill was approved by the Senate in 2002 and by the Chamber of Deputies in 2003. President Lula da Silva signed it into law in 2004, and according to the bill it is the president's responsibility to gradually implement the reform. Since then Brazil has started to implement the bill through the Bolsa Família program, which was a centerpiece of President Luiz Inácio Lula da Silva's social policy, and is reputed to have played a role in his victory in the Brazilian presidential election, 2006.

Universal basic income in India refers to the debate and practical experiments with universal basic income (UBI) in India. The greatest impetus has come from the 40-page chapter on UBI that the Economic Survey of India published in January 2017. It outlined the three themes of a proposed UBI programme:

Universal basic income in Canada refers to the debate and trials with basic income, negative income and related welfare systems in Canada. The debate goes back to the 1930s when the social credit movement had ideas around those lines. Two major basic income experiments have been conducted in Canada. Firstly the Mincome experiment in Manitoba 1974–1979, and secondly the Ontario Basic Income Pilot Project in 2017. The latter was intended to last for three years but only lasted a few months due to its subsequent cancellation by the then newly-elected Conservative government.

Universal basic income is a subject of much interest in the United Kingdom. There is a long history of discussion yet it has not been implemented to date. Interest in and support for universal basic income has increased substantially amongst the public and politicians in recent years.

Universal basic income (UBI) is discussed in many countries. This article summarizes the national and regional debates, where it takes place, and is a complement to the main article on the subject: universal basic income.

Universal basic income pilots are smaller-scale preliminary experiments which are carried out on selected members of the relevant population to assess the feasibility, costs and effects of the full-scale implementation of universal basic income, or the related concept of negative income tax, including partial universal basic income and similar programs. The following list provides an overview of the most famous universal basic income pilots, including projects which have not been launched yet but have been already approved by the respective political bodies or for the negotiations are in process.

Karl Widerquist is an American political philosopher and economist at Georgetown University on its campus in Qatar. He is best known as an advocate of basic income, but is also an interdisciplinary academic writer who has published in journals in fields as diverse as economics, politics, philosophy, and anthropology. He is a consistent critic of propertarianism, right-libertarianism, social contract theory, and the belief that modern societies fulfill the Lockean proviso.

Andrew Yang is an American businessman, attorney, lobbyist, and politician. Yang was a candidate in the 2020 Democratic Party presidential primaries and the 2021 New York City Democratic mayoral primary. He is the co-chair of the Forward Party, alongside former New Jersey Governor Christine Todd Whitman.

The 2020 presidential campaign of Andrew Yang, an attorney, entrepreneur, and the founder of Venture for America, began on November 6, 2017, when Yang filed with the Federal Election Commission to participate in the Democratic primaries. Yang suspended his campaign on February 11, 2020, the night of the New Hampshire primary. On March 10, 2020, Yang endorsed Joe Biden for president.

<i>The War on Normal People</i> 2018 book by Andrew Yang

The War on Normal People: The Truth About America's Disappearing Jobs and Why Universal Basic Income Is Our Future is a 2018 book written by Andrew Yang, an American entrepreneur and Venture for America founder, who would later run as a 2020 Democratic presidential candidate on policy strategies discussed in the book. It was published by Hachette Books in the United States on April 3, 2018. A paperback edition was released on April 2, 2019. Yang narrated an audiobook version released on YouTube in September 2018.

References

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↑ DeMarban, Alex (2019-09-28). "This year's Alaska Permanent Fund dividend: $1,606". Anchorage Daily News . Retrieved 2020-09-24. [See graphs] The annual check this year will be delivered to 631,000 Alaskans, most of the state population, and come largely from earnings of the state's $64 billion fund that for decades has been seeded with income from oil-production revenue. ... This year's dividend amount, similar to last year's, is in line with the average annual payment since they began at $1,000 in 1982 when inflation is taken into account, said Mouhcine Guettabi, an economist with the University of Alaska Anchorage Institute of Social and Economic Research.
↑ "History of basic income | BIEN". BIEN. Archived from the original on 2008-06-21. Retrieved 2017-05-27.
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↑ Murphy, Jason Burke (July 16, 2018). "Interview: Presidential campaign brings 'new crowds' to basic income". Basic Income Network. Archived from the original on March 21, 2019. Retrieved March 15, 2019.
↑ Lea, Brittany De (July 11, 2019). "You can't turn truck drivers into coders, Andrew Yang says of job retraining". FOXBusiness. Archived from the original on August 3, 2019. Retrieved August 3, 2019.
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