Social Justice, Current Events

Future Prospects for a Basic Income Guarantee in the United States

In my previous post, I discussed the politics of BIG/NIT proposals in the United States, the reasons for pessimism about the future, and the reasons why I’m more optimistic. In this final post, I’ll discuss one possible strategy for expanding BIG/NIT programs to the US.

But first some honest pessimism: One of Zwolinski’s arguments for a BIG/NIT programs is that it is superior to the current mishmash of social programs which characterizes the American welfare state today. Proposals like the one outlined by Charles Murray see a BIG as a replacement for the entire welfare state.  Given the unique structure of the American state (multiple veto points, presidential system, weak parties, etc.), I have very little hope for an escape from our current Kludgeocracy. Any new program may slowly displace old ones but we will never see outright replacement in some “big bang” fashion. That said, I still see any new program that distributes more resources to the poor without the onerous moral regulation we find in TANF and SNAP as a net plus in my book.

According to my research, the best strategy for proponents of BIG/NIT is the expansion of the child tax credit (CTC) and the earned income tax credit (EITC) programs discussed in my first post. Of these two, the CTC is more important. When the CTC was first introduced in 1997, it was nonrefundable and worth only $500 per child. By 2003, it was worth $1,000 per child and partially refundable at 10% of income over $10,500. Currently, it is still worth $1,000 per child but refundable at 15% of income over a much lower threshold of $3,000. Given its current trajectory, one option would be to double the value of the CTC to $2,000 and make it fully refundable. This would extend the full benefit to families making less than $10,000 and provide a guaranteed minimum income of at least $2,000 to all families with children. Clearly, this is a very small amount but it necessary to enlarge the CTC’s constituency before increasing the absolutely value of the benefits. History is clear here. Part of the reason Nixon’s FAP proposal failed was because welfare rights groups overreached and demanded a much higher minimum than was politically feasible at the time.

How does this get around the obstacles I discussed in my previous post? First, the CTC provides the perfect “natural bridge” analogous to the bridge provided by family allowances in Canada. It is much easier to expand an already existing program than create one from scratch. Unlike other programs, the CTC isn’t tainted with the stigma of welfare. Moreover, this would enlarge the CTC constituency to include a broader coalition of poor, working, and middle class families who could then push for a larger credit in the future.

This still leaves the issue of deservingness. Won’t an expanded CTC include the same disproportionately nonwhite and unemployed population which helped derail previous BIG/NIT proposals? Yes, but this is where our third dimension of deservingness plays a crucial role. Previous accounts assume that race (identity) and work status (control) will automatically be the most salient features. Historically, the most salient feature of tax credits has been the deservingness of their beneficiaries based on reciprocity rather than identity or control.

David Schmidtz argues that we have two models of deservingness based on reciprocity – compensatory and promissory. Compensatory models are based on some past contribution. We have a right to certain resources because we paid into the system. Think Social Security or Medicare. From this perspective, “Keep your government hands off my Medicare” signs at Tea Party rallies make some sense because beneficiaries believe they have a right based on past FICA and Medicare taxes paid. Promissory models, on the other hand, are based on what we do after we receive the benefit. We have a right to certain resources because and to the extent that we make good use of the opportunities they represent. TANF and SNAP are governed by a promissory logic of deservingness. They are supposed to give you an opportunity to get back on your feet and become self-sufficient again. With the distinction between these two sorts of deservingness in hand, it shouldn’t be surprising that we see stringent moral regulation of beneficiaries because this is deemed necessary in order to ensure that resources are being utilized wisely (especially in light of stereotypes of the target population). Your Grandma, on the other hand, can spend her entire Social Security check on booze, porn, and lottery tickets because she earned it. The same goes for your tax refund check.

Tax credits adhere to the logic of the compensatory model of deservingness. Lawrence Zelenak argues this is because the “myth” of our right to our pre-tax income makes “everyday libertarianism” pervasive in tax politics. Unlike welfare beneficiaries, tax credit beneficiaries are perceived as getting some of their own money back rather than taking someone else’s money. This has important implications for the politics of tax credits.

Some will argue that it is not a true tax refund because beneficiaries can get back way more than they paid in taxes. This is irrelevant though. The average Social Security beneficiary also receives way more than they paid in contributions but try telling your Grandma she’s a welfare queen milking the system. It’s the perception that matters. Tax credits beneficiaries gain the identity of “taxpayer” which, much to the chagrin of some people, is a mighty powerful identity in the current political climate. The original rationale for the EITC was to offset growing payroll taxes on low income workers but it has already expanded far beyond its original intent. Despite its almost exponential growth, there has been little backlash against the EITC or fear that it is creating an underclass dependent on government welfare.

Policymakers and activists interested in BIG programs have historically focused on traditional social spending programs. When they have talked about tax policy, it is usually in reference to making the 1% pay their “fair share” in order to pay for such programs. If I’m right, perhaps it is time that we start thinking about tax policy with the poor in mind instead. Of course, this isn’t a new idea. The concept of a negative income tax was originally developed by Milton Friedman in the 1940s and put forth his 1962 classic Capitalism and Freedom. Through my discussion of the politics of BIG/NIT, perhaps we can move further toward Friedman’s ideal.

  • TheBrett

    While I like the Basic Income Grant, I don’t really like Friedman’s idea of a Negative Income Tax. The way it’s set up – you basically have the equivalent of a no-conditions EITC up to $10,000 – seems like the type of thing that would disincentivize work, since you lose the credit as you gain work income until you have no credit at all when you’re earning more than $10,000/year. Whereas if you get the BIG as a flat stipend every month, you have every incentive to earn more money on top of that.*

    * In fact, considering the history of how we’ve dealt with new income and productivity gains, I’m about 99% certain that with a BIG most people would keep on working. We could have reduced hours below 40/week and kept the same living standard in the past, but people apparently preferred to keep on working the same hours while consuming more.

    • Les Kyle Nearhood

      I agree. As I have stated before you have to have some incentives in place to go to work. I favor a 3 for 1 reduction in benefits to wages.

    • Josh McCabe

      I think they are more similar than they seem at first glance. Let’s assume a $10,000 benefit for those with no income at all. Under an NIT, your benefit would phase out at some steady rate (say 25%) as you earned more income versus a BIG where the benefit is technically untaxed but you would be taxed at a steady rate (say 25%) on any income you earn. For someone making work decisions, the implicit marginal tax rate is the same. In both cases, someone earning $40K would break even where the worker under the NIT would start paying a 25% rate and the worker under the BIG would continue paying a 25% rate. Does that make sense?

      • TheBrett

        Yes, I understand.

        I still think the psychology of it would be different and affect work incentives differently. The loss of benefits under the NIT would be more visible and noticeable to low-income workers than tax withheld on income earned on top of the BIG.

    • Jerome Bigge

      There are also employers who need part time, temporary workers. The security guard industry is one. Many such jobs are short term, and the company can’t keep people on payroll who aren’t working. The BIG would help considerably. Guard companies often hire people on Social Security because many such people aren’t looking for full time work, but part time on a short term basis.

  • martinbrock

    You seem more concerned about people’s freedom to spend their BIG on booze, porn, and lottery tickets than about any reciprocal obligation. I rather suppose that markets work precisely because they subject people to one another, not to a state handing out benefits with minimal strings attached.

    If Social Security beneficiaries “earn” their benefits in any meaningful sense, they earn them by raising the generation of FICA tax payers following them, not by supporting the aging generation preceding them. Far from wishing to free the following generation to spend freely on booze and porn, these beneficiaries thus care, or rationally ought to care, a great deal about how the following generation will return the favor.

    • Josh McCabe

      I am indeed more concerned about people’s freedom to spend their money as they see fit. I’m not sure markets work solely because they subject us to one another. The elderly and disabled both receive benefits with minimal strings attached and neither has degenerated into a class rife with social pathologies (except maybe Betty White and her gang?).
      Plus if social security benefits are earned by raising the next generation then maybe we need to punish the elderly for giving us the cast of Jersey Shore and 535 boneheads in Congress.

      • martinbrock

        The elderly and disabled do not receive benefits with minimal strings from the market. They receive these benefits from the state.

        I couldn’t care less how a privileged class spends the fruits of my labor without an obligation to produce fruits of their own labor in exchange. If they sing hymns all day, I’m no happier.

        You emphasized Grandma spending her Social Security check on booze, porn, and lottery tickets on the dubious grounds that she “earned” it, like some formula relating benefits to earlier taxes paid is equivalent to earning something in the market, like a check from the state with not strings attached is the epitome of “freedom”. Tragically, many people do understand “freedom” this way. They covet the “freedom” of a lord and master, not the freedom of a freeman.

        A Grandma who spends her life earning her way in the market likely learns other habits, and Grandma’s FICA taxes didn’t meaningfully contribute to her Social Security check at all. Her contributions to raising her children and grand children did.

        I wouldn’t punish “the elderly” for anything, because I resist political collectives, and the cast of the Jersey Shore is all the punishment that their parents merit,

      • Sean II

        “The elderly and disabled both receive benefits with minimal strings attached and neither has degenerated into a class rife with social pathologies”

        Have you considered the possibility that some people can handle string-free benefits while other people cannot…because of some difference nesting in the people themselves?

        Oh, wait…of course you haven’t!

      • j r

        What are you talking about? Old people have lots of social pathologies. They don’t work much. They don’t acquire new skills. They tend to be fairly intolerant, set in their ways and resistant to absorbing new information. They have an increasing rate of STDs. They eat terrible food and watch crappy TV shows. And perhaps worst of all, they vote more than anybody else.

        They’re just old so no one cares how terrible they are.


    You say: “The average Social Security beneficiary also receives way more than they paid in contributions but try telling your Grandma she’s a welfare queen milking the system.” Right, that’s why the national debt is $17 trillion, plus some $80 trillion in unfunded pledges that have to be satisfied or broken in the future. Perhaps it’s time to have a candid talk with Grandma, rather than run the national credit card still further, which I am afraid will be the effect of your proposal. If the country bellies-up, everyone will suffer, but the poor most of all. How do you think they are faring in Greece or Detroit?

    • Josh McCabe

      Comment #2 is a normative one (and a good one) but a bit off topic from the kind of questions I’m raising here so I’ll let the philosophers address it another time.
      In regard to the idea that making the CTC fully refundable and expanding would break the bank, I’m not sure Greece and Detroit are the best analogies. Canada, Australia, New Zealand, and the UK all have similar policies and they seem to be doing alright. Cross-nationally, there’s really little correlation between the total level of spending and the amount of government debt. Whether its a good thing or not, you can be a big-spending country without running chronic deficits.


        Right, you can spend lavishly on social engineering “without running chronic deficits,” and “do alright” (at least for a while). But, you are suggesting that we create an entitlement for the middle class who then (as you say) can “push for a larger credit in the future.” When your state is sporting a $17 trillion national debt (and $80+ trillion in unfunded liabilities), this would not be a formula for “doing alright.”

  • I haven’t had time to comment previously, and really don’t have time to do so now, so I’ll confine myself to noting that this was a great series of posts. As previously noted, the goal was not really to argue for or against a basic income scheme, but to explore the politics around how one might come to pass in the US. I think from that point of view the analysis was pretty much spot-on.

    • genemarsh

      If I may ask, sir, what’s a kind, generous, and humane person like you doing inside this nest of vipers?

      Shield your ankles!

      • “Nest of vipers”? BHL is a lovefest compared to most parts of the Internet.

    • Josh McCabe

      Thanks Frank, I appreciate the kind words.

  • Sean II

    “According to my research, the best strategy…is the expansion of the child tax credit (CTC) and the earned income tax credit (EITC)…Of these two, the CTC is more important.”

    All that fuss, and you end up proposing something that is not a basic income free from “onerous moral regulations”, but merely a further subsidy tied to the morally hazardous and onerous act of…HAVING KIDS!

    This is the point where I’d usually write some lengthy comment spelling out my objections in detail, but I’m afraid I have my standards.

    The anti-climax of this post speaks for itself.


      Perhaps it is time for the construction of a BHL “Hall of Shame.” My memory ain’t so good anymore, but I will start the nominating process by suggesting as a charter member Prof. Cohen’s proposal that the state license parents before they can make rug rats. I will also nominate this post, coincidentally also about parents, except now the state will pay them to make rug rats. Who knew?

      • genemarsh

        I nominate you for Assholishness in Screen Names for your
        incisively irritating portrayal of the lo-self esteem libertoonian ALL_CAPS GUY: SEE ME, HEAR ME, HUH ME?


          Please permit me to say that if I have irritated you, then…….GREAT!

  • JdL

    Once again this site proves that its name is a fraud and that it should be called “”.

  • John Partridge

    My thoughts on basic income illustrated.

    • John Partridge

      And if you need a caption.

      We’re nought but cattle, gelded, chipped like dogs, fenced in and enfanced . Basic income is the ever greatly divided output of our own and the state machinery’s labour that our necessarily centralised and computerised overlords see fit to pour into the trough.

  • John

    A negative tax is unconstitutional and you’re advocating that a big government bureaucracy make arbitrary rules about “deservingness” which must be a new socialist word.

  • John

    “Some will argue that it is not a true tax refund because beneficiaries can get back way more than they paid in taxes. This is irrelevant though.”

    It’s not irrelevant at all. It’s extraordinarily relevant because you’re advocating theft.

    “The average Social Security beneficiary also receives way more than they paid in contributions but try telling your Grandma she’s a welfare queen milking the system. ”

    So….two wrongs make a right?!? Grandma is a welfare queen milking the system, but it’s the system the politicians improperly and unconstitutionally set up. Rather than accepting it, it needs to be shut down.

    • John Partridge

      Basic income is a giant leap toward slavery. But what kind of a system can exist in the modern world where a man can support his entire life with the product of his working life? As much as I’d love to see it, I can’t see it right now.

      • John

        Well, it would be pretty easy to accomplish, I think, by giving every single government the agency the primary goal of eliminating itself or privatizing itself. And then actually stand up for private ownership by making zoning illegal and government licensing illegal. Switch to medical/retirement savings accounts to eliminate social security, unemployment, welfare, food stamps, etc. Eliminating minimum wages, the drug war, unconstitutional immigration laws etc. I think that could easily cause a major leap forward.

        The biggest problem we have is what happens if unintelligent people create dramatically more babies than intelligent people and therefore we simply run out of jobs for people who aren’t that intelligent. THAT is the real problem that we face as a society. As it is, there is a very high correlation between low IQ and prison. Eugenics? No, though science may unlock the answer in our DNA. But in the meantime, we need to absolutely stop subsidizing the uneducated and unintelligent from having babies.

        • Les Kyle Nearhood

          I agree with most of that, and yes even half of what you advocate would cause a huge boom to our growth and standard of living. But there would still be some who would not fit in. Private charity could help however we face a peculiar reality: There is NO modern industrialized nation in which the people themselves did not demand some sort of government social safety net.

          My argument is that if you do not have one. Preferably a very limited and controlled one, then human nature being what it is, in time you would have demogogues and compassion fascists rilling the people up, and before long you would get some real big time socialism.

          As a species we do well under free markets, but we have an enormous aversion to pure freedom. You must take this tendency in human nature into account.

        • John Partridge

          Read somewhere recently that before prohibition the US government was almost entirely funded by excise on alcohol. No one wastes money better than the government but god knows how it became so needy as to tax the equivalent of 18% of GDP, (not including borrowing) just to function.

          You’re dead right about population and immigration. All real wealth is derived from natural resources and the labour that goes into it. The wealth of a nation is that figure divided by the population. A man must be able to fund his entire life from it without borrowing a cent from his children or he is being unsustainable. But today the government has turned that equation on its head and the primary source of wealth we use to bridge the gap between our last day at work and our death has become money borrowed from
          the future in the form of loans backed by the promise of labour from the unborn or the as
          yet un-immigrated.

          The disconnect between a sustainable ideal and the real world is beyond government downsizing in the states that surpassed the decent ratio of real wealth / working population. I can only imagine a lot of hungry people eager for basic income and the statism that goes with it.

  • Randy Couture

    The mask has come off! Left “libertarians” are nothing more than uber-statists plants poised to infiltrate and destroy libertarianism from within.

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  • Gemsahl

    What about actually pooling the money and dividing equally every year, perhaps with a set minimum? Has there been any ideas in this direction? A simple concept would conclude the better the entire country does, the more people receive, the more money would circulate back into the economy, and become self-perpetuating. Then it means, the guy next to you can “contribute” just as much, if he spends or creates added value… Please send feedback and useful references.