Perspectives on the Guaranteed Income, Part I

Abstract

The article focuses on the concept of "Guaranteed Income." The idea of a guaranteed income has been around in one form or another since Thomas Paine proposed a version of it in 1796. Except for a brief period in the 1960s and 1970s, it has not been a significant part of the public debate in the United States. A guaranteed income is a policy that unconditionally guarantees that no one's income falls below a certain level. There are many ways to accomplish this goal, but much of the recent literature focuses on a version called the basic income, which is an income paid by the government to every citizen regardless of private income, wealth, employment, or marital status. For example, Charles Clark estimated that a flat tax of 36 percent on all income would support a basic income of just under S 8,000 for each adult and $2,000 for each child. Under this plan, the government would pay every individual a basic grant and would withhold 36 percent of income from all other sources. A person with no private income would receive only the $8,000 basic grant. A person with $8,000 in private income would pay $2,880 in taxes and receive the $8,000 basic income grant for an after-tax, after-transfer income of about $13,220. An individual with a private income of $40,000 would pay $14,400 in taxes, receive the basic income of $8,000, for an after-tax, after-transfer income of about $33,600. Most citizens would be net taxpayers, but the system would be structured so that all individuals could count on a guaranteed minimum grant. Most of the authors discussed here have not put an exact dollar figure on the minimum income, but most favor a grant at least large enough to eliminate all poverty even among those who do not work.