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Abhay Almal
Contributor on The Bipartisan Press
Andrew Yang, dubbed a “random, opinionated person” by The Washington Post, has made waves on both sides of the political aisle with his 2020 presidential campaign. Running as a Democrat, Yang has appeared in interviews with hosts such as Joe Rogan, Sam Harris, and Dave Rubin, all of who are popular in conservative circles. He has been refreshing to political discourse with his detailed and quirky proposal and believes that the American economy is in the midst of a seismic shift, mainly due to rampant automation. To counter the loss of jobs, he has pushed for a $1,000-a-month, universal basic income scheme that would help citizens adjust to technologically evolving industries. But do his economic plans hold merit?
Giving every citizen above the age of 18 $12,000 a year would cost the government around $2.8 trillion. To fund this massive bill, Yang has suggested a 10 percent Value Added Tax on all transactions, at every level of production. This supposedly puts pressure on Silicon Valley companies like Amazon and Google, who are known to avoid taxes. The VAT is expected to generate around $800 million a year, with additional income over time since Yang has claimed that the VAT will help the US economy grow by around 13 percent.
However, a value-added tax will just make businesses pass the cost onto their customers. Costs will rise, and consumers–not companies–will be the most impacted by the tax. Yang’s claim that the tax will help growth reach 13 percent is also exaggerated, and reports show that the actual number is somewhere half that. In a recent interview, Yang has admitted to the regressive nature of the VAT, but stated in an interview that he is optimistic that the progressiveness of the UBI can tip the scales in his favor.
Yang’s UBI also comes with a catch. To opt into his $12,000 a year scheme, one will have to opt-out of some welfare benefits that the citizen receives if it adds up to over a $1,000 a month. This will reduce the burden on the government to provide these services, generating additional revenue for his UBI scheme.
Keeping aside the enormous improbability that Yang’s math will add up, his economic policies are based on a misguided fear. Yes, automation is swiftly taking over key industries, but simply giving people money is bound to exacerbate dependence on welfare rather than solving the issue. It is also important to note that trading other welfare benefits for $1,000 a month is unlikely to be beneficial to a significant minority of Americans, given that many of them are dependent on social security for their subsistence. The amount isn’t enough, and though Yang expects the money to return into circulation through spending, its unclear how this is beneficial from a long-term perspective. His 10 percent VAT is another contestable policy.
Andrew Yang brings an exciting, albeit unrealistic, solution to the table. While he deserves praise for his creativity, ideas can only be taken so far. His UBI is doubtless well-intentioned, but in all likelihood, it will result in massive deficits for the government with no real return besides a decrease in some welfare costs. Yang’s policies treat technological advance as a threat, but they have consistently resulted in economic benefits and will continue to do so.
Correction: We previously stated that the freedom dividend would reduce social security and disability. This was incorrect and we apologise for the error and have corrected it.
COMMENTS (17)
Well I disagree with a number of points in this article. Even if all of the VAT gets passed down to consumers, you’d have to be spending over 10 thousand dollars a month per adult before the VAT tax is more than the $1,000/month UBI. If it is a couple, then it is $2,000/ month, and you’d have to spend 20 grand a month before the VAT tax hurts more than helps.
Actual economic analysis of a $1,000 UBI says it would stimulate growth quite a bit: https://rooseveltinstitute.org/modeling-macroeconomic-effects-ubi/
The Roosevelt study is based on a debt funded UBI program. A tax funded one, like he proposes would be almost 60% less growth
1000 a month is a game changer for everyone. Students, single women, those who are held back from limitations on disabilities. Not to mention the mental affect it has on those being able to get off of welfare and going towards the program.
There is a lot of underlying data that you are skimming through that will all add up.
This isn’t a welfare supplement, it’s an owed dividend as being part of the most lucrative country in the world.
Hearing that in compared to receiving money because you’re disabled is mentally shifting enough.
If you write about politicans, you should research them first. UBI doesn’t deprive you of SS or disbality insurance, that takes no time to find out. All taxes on businesses or goods are passed on to the consumer, businesses don’t just eat fees up depending on where they come from. Andrew admitted to VAT being regressive WITHOUT EXEMPTIONS like are conducted on every country on Earth with a VAT.
You should seriously just re-write this article. You could do an actually job and still be against Andrew, but it wouldn’t impact your dignity so much. Good luck!
This is an obvious hit piece. You intentionally cherry pick from another smear article by WA Post calling Yang a “random opinionated person”, but omit the fact Yang created thousands of jobs around the country through his non-profit Venture for America (which was featured in a Netflix documentary Generation Startup), and the fact the Obama administration selected him in 2012 as a “Champion of Change” and in 2015 as a “Presidential Ambassador for Global Entrepreneurship”. Not to mention he made the Fast Company list of the “100 most creative people in business.”
The people who condemn Yang’s UBI have never done the math on it. It is intellectually dishonest to claim the funding is not possible without demonstrating complete understanding of Yang’s plan. Here is an independent analysis: This distributional analysis of Yang’s UBI by a medium.com article (https://medium.com/ubicenter/distributional-analysis-of-andrew-yangs-freedom-dividend-d8dab818bf1b) assumes ALL of the VAT is passed on to consumers, which is not probable. In Europe, it’s often only about half at most. Yet it finds **everyone increases their disposable income** except for the top 6% earners. Therefore, it is misleading and incorrect to state the VAT tax will be passed on to consumers as if it is not ultimately beneficial. This graph from the article demonstrates income decile x change in disposable income, showing a curves that drops steeply and flattens toward higher income brackets, meaning when it’s all said and done due to VAT, other taxes, and UBI those with less money GET MORE; and 94% of people gain on average. https://imgur.com/a/W3ejyUw Therefore, it is NOT regressive, and quite favorable to those with less money. You can play with this UBI calculator to see for yourself. https://www.ubicenter.org/plans
This analysis doesn’t take into account those with more money will pay more VAT due to more luxury spending. This means it underestimates how beneficial it is for those with less money compared to more. Again, it also underestimates the improvement it brings to disposable income because it assumes 100% of the VAT is passed to consumers, which is unlikely.
“It is also important to note that trading other welfare benefits for $1000 a month is unlikely to be beneficial to a significant minority of Americans, given that many of them are dependent on social security for their subsistence. “ <- This is ignorant of the state of welfare. 18 states out of 50 provide cash assistance to the poor that's less than $200/mo, and 16 states exclude more than 90% of those living under the poverty line from cash assistance. https://twitter.com/scottsantens/status/1112374102847905794?s=15 48% of TANF cases end because of non-compliance, sanctions, or just quitting. Only 16% get off because of employment, and only 1.3% reach the time limit. 2/5 never even apply. https://twitter.com/scottsantens/status/1149475697607340033 A social worker did a poll of 33 people, finding 31 would choose UBI over welfare. https://twitter.com/RogueSocialWrkr/status/1150886499627524097 On the other hand, a $1,000/mo UBI would lift 100% of every state to 100% of the poverty line.
“It is also important to note that trading other welfare benefits for $1000 a month is unlikely to be beneficial to a significant minority of Americans, given that many of them are dependent on social security for their subsistence. “ <- This is ignorant of the state of welfare. 18 states out of 50 provide cash assistance to the poor that's less than $200/mo, and 16 states exclude more than 90% of those living under the poverty line from cash assistance. https://twitter.com/scottsantens/status/1112374102847905794?s=15 48% of TANF cases end because of non-compliance, sanctions, or just quitting. Only 16% get off because of employment, and only 1.3% reach the time limit. 2/5 never even apply. https://twitter.com/scottsantens/status/1149475697607340033 A social worker did a poll of 33 people, finding 31 would choose UBI over welfare. https://twitter.com/RogueSocialWrkr/status/1150886499627524097 On the other hand, a $1,000/mo UBI would lift 100% of every state to 100% of the poverty line.
https://twitter.com/scottsantens/status/1149475697607340033 A social worker did a poll of 33 people, finding 31 would choose UBI over welfare. https://twitter.com/RogueSocialWrkr/status/1150886499627524097 On the other hand, a $1,000/mo UBI would lift 100% of every state to 100% of the poverty line. p2
This is an obvious hit piece. You intentionally cherry pick from another smear article by WA Post calling Yang a “random opinionated person”, but omit the fact Yang created thousands of jobs around the country through his non-profit Venture for America (which was featured in a Netflix documentary Generation Startup), and the fact the Obama administration selected him in 2012 as a “Champion of Change” and in 2015 as a “Presidential Ambassador for Global Entrepreneurship”. Not to mention he made the Fast Company list of the “100 most creative people in business.” p1
The people who condemn Yang’s UBI have never done the math on it. It is intellectually dishonest to claim the funding is not possible without demonstrating complete understanding of Yang’s plan. Here is an independent analysis: This distributional analysis of Yang’s UBI by a medium.com article (https://medium.com/ubicenter/distributional-analysis-of-andrew-yangs-freedom-dividend-d8dab818bf1b) assumes ALL of the VAT is passed on to consumers, which is not probable. In Europe, it’s often only about half at most. Yet it finds **everyone increases their disposable income** except for the top 6% earners. Therefore, it is misleading and incorrect to state the VAT tax will be passed on to consumers as if it is not ultimately beneficial. p2
This graph from the article demonstrates income decile x change in disposable income, showing a curves that drops steeply and flattens toward higher income brackets, meaning when it’s all said and done due to VAT, other taxes, and UBI those with less money GET MORE; and 94% of people gain on average. https://imgur.com/a/W3ejyUw Therefore, it is NOT regressive, and quite favorable to those with less money. You can play with this UBI calculator to see for yourself. https://www.ubicenter.org/plans
This analysis doesn’t take into account those with more money will pay more VAT due to more luxury spending. This means it underestimates how beneficial it is for those with less money compared to more. Again, it also underestimates the improvement it brings to disposable income because it assumes 100% of the VAT is passed to consumers, which is unlikely. p3
The mental efect of a UBI is gonna be enormous. This can not just be expressed in numbers and graphics.
Every healthy person will want to make something out of their lives and talents. This will get a lot easier if the question about having enough or not enough money to barely survive is always in the way of expressing those talents.
We want great products and they are not necessarily better produced under the pressure of coercion.
UBI will certainly mean a boom for start ups, which is a side of America which is much admired in the rest of the world. And the more start ups, the more money will come to the US.
I am a regular reader but this time, I am disappointed that the Bipartisan Press didn’t do its research. As pointed out in other comments, the VAT proposed by Yang is NOT regressive, AND staples are exempted. Please at least read Yang’s policies before writing such a piece.
“It is also important to note that trading other welfare benefits for $1000 a month is unlikely to be beneficial to a significant minority of Americans, given that many of them are dependent on social security for their subsistence. “ <- This is ignorant of the state of welfare. 18 states out of 50 provide cash assistance to the poor that's less than $200/mo, and 16 states exclude more than 90% of those living under the poverty line from cash assistance. https://twitter.com/scottsantens/status/1112374102847905794?s=15 48% of TANF cases end because of non-compliance, sanctions, or just quitting. Only 16% get off because of employment, and only 1.3% reach the time limit. 2/5 never even apply. https://twitter.com/scottsantens/status/1149475697607340033 A social worker did a poll of 33 people, finding 31 would choose UBI over welfare. https://twitter.com/RogueSocialWrkr/status/1150886499627524097 On the other hand, a $1,000/mo UBI would lift 100% of every state to 100% of the poverty line.
“It is also important to note that trading other welfare benefits for $1000 a month is unlikely to be beneficial to a significant minority of Americans, given that many of them are dependent on social security for their subsistence. “ <- This is ignorant of the state of welfare. 18 states out of 50 provide cash assistance to the poor that's less than $200/mo, and 16 states exclude more than 90% of those living under the poverty line from cash assistance. https://twitter.com/scottsantens/status/1112374102847905794?s=15 48% of TANF cases end because of non-compliance, sanctions, or just quitting. Only 16% get off because of employment, and only 1.3% reach the time limit. 2/5 never even apply. 1 of 2
This article is a mashup of talking points critical of UBI without any assessment of alternatives (or even the status quo).
Why did you fail to mention that people have a choice whether to take the UBI or stay with their current support? How is that nefarious or harmful to people if they are able to make their decisions about what to do?
If you are stating that UBI will make people dependent on welfare, are you admitting that means-tested programs, while well-intentioned, promote welfare dependency as well? That’s the biggest criticism of social welfare programs, and you haven’t said a word about why they are preferable to UBI. UBI would be cash-based, which means (1) recipients exercise independent agency in how to spend it, (2) government doesn’t need to monitor or track disbursements or utilization, and can focus solely on outcomes if they have to track anything at all, and (3) we eliminate the “giver” and “taker” distinction in our society that has become so divisive and corrosive.
You should really research your topics a little better before you start throwing stones. I don’t find this publication very credible.
No UBI supporters that I talk to ever address the issue of human desire for more. Set the UBI at X and it doesn’t take long for someone to want X+1 with no additional input.
They also don’t address the use of funds in harmful ways. For all the issues in SNAP, at least there’s a modicum of control that it be spent on calories and not on non-food substances.