Unconditional Basic Income

UBI (Unconditional Basic Income) is an answer too simple, to a problem (social security) too isolated. The debate on UBI should be broadened. UBI must be connected to labor-reform, must be connected to tax-reform and most of all must be connected to state- and market-reform. Our present time has three major problems: inequality of income, more important, inequality of labor-chances and lack of work, and most important, the environmental issue: our present economic behavior will destroy our living environment. Reforms should address all these problems. I am aware that is a big story to tell but it is really important the story is told before you take any steps.  Otherwise things will get worse instead of better. This small story has three chapters.

First chapter: Introducing an UBI in a society as unequal as we live in, will enlarge inequalities of income and labor. When new economic headwinds appear (which will come surely) companies will ask their workers to work unpaid, because they already have UBI. As a consequence, labor forces will do worse. Shareholders and an elite working group will do better because they have capital and knowledge and can make demands. The net effect of a UBI will be a sharp dichotomy between the 'winners' (with paid work and high income) and the 'losers' (with a UBI, no work or unpaid work). I find this unacceptable. Risks however, can be eliminated by introducing a Conditional Basic Income (CBI). The condition is very simple: everyone must work. Thus, basic income and labor should remain linked, but not on an individual level but on a macroeconomic level. My suggestion: everyone receives a guaranteed basic income for life (from birth to death) provided that he or she will work a certain amount of hours (for example 1000 hours a year, during 40 years) which will be normally paid and registered(!) work. I want a CBI connecting to labor time-rights. The state does not only provide a basic income, it also periodically distributes to everyone an equal amount of tradable labor time rights. It is important labor time rights are tradable. People who want to work more than the hours they have received can buy labor time from people who just want to work less. It assures a flexible labor-market. Note: Labor time rights have a double face. They represent a right and a duty to work. If necessary the state will help you to effect your right/to perform your obligation. Second note: anyone can still make unregistered working hours as much as he or she wants, but (as I will show) these hours are rather expensive to a company.

Chapter 2. Tax reform should ‘back up’ CBI and labor time rights. First, we abolish direct taxation of labor. This is necessary to create one labor-market. Black labor and unpaid labor can convert into normal paid labor. Next, CBI and the abolished labor-taxation have to be financed by a new taxation of companies (VAT-increase is not suitable). To ensure the success of this huge operation, it is advisable to minimize net income shifts of workers and companies while implementing these reforms. CBI and tax-reform can be best implemented rearranging current laws. Firstly, all current transfers of income of our social security system is converted into a basic income for children, the elderly and non-workers with income (unemployed, sick, handicapped). Pocket-pocket! No net changes of income. Secondly, net income of workers and companies will be the same when we reduce the salary of employees by the amount of CBI and tax companies by that same amount. For this purpose I will introduce a new kind of tax, a profile tax which will be sector-dependent. The next step is ordering companies to pay CBI of the state to their workers. They can deduct the sum of the CBI they pay to employees. When we tax  and deduce companies the amount of CBI, the net effect on company income will be zero. Pocket-Pocket. Note, this deduction is directly related to registered working hours, i.e. the labor time rights of employees. As unregistered work can not be deducted, this kind of work will be expensive. As for the abolished labor taxation, we reduce the wages of employees with the paid labor-tax and we increase the tax-amount companies have to pay in their profile tax. Again Pocket-pocket. The real financial pain of a basic income are the citizens which are dependent of others which have no income and no work (in the Netherlands around 1/5 of the labor force). We have to pay them CBI and distribute labor-time rights to them. We cannot ‘burden’ companies with this his group, because it would have a too big effect on economic stability. It would be fair to tax the rich (which mostly are supporting the dependent no-worker) in order to ‘free’ the dependent. Because I have abolished labor-taxation this new tax should be a progressive tax on (growth of) individual capital. We are taxing individual capital at the top, in order to lay a solid foundation for incomes at the bottom. This leveling between rich and poor is justified, logical and desirable.

Chapter three:  When CBI, labor time rights, profile tax and progressive tax on individual capital growth are in place we can start the real thing: reforming our market. Our world is in real danger by the market system. Neoliberal politicians think growth is needed to make things better. I believe it will make things worse. Growth will increase the destruction of our environment, which in turn will create new economic crises. The EU will tell us that it will focus on growth by green technology and new (IT) technologies. This will create new jobs and helps the environment, so we are told. I am not convinced measures taken so far will do the job. But I am pretty sure that (in a worldwide perspective) new technologies will destroy more jobs than it will create. That is the reason this trajectory will fail without labor time rights being in place! I believe, we are in need of a completely different kind of growth. I want to use the profile tax which can be adjusted and differentiated to any economic environment to unleash this new growth. Important structural economic adjustments (greening, redistribution, and liberalization) should be accompanied by more taxation of capital, use of raw materials, loss of environment (CO2 taxation) and less taxation of labor. The profile tax stimulates participation. In the future services, education, art and culture, welfare, care, housing, justice, law and order, the main sectors of human participation will become the main source of economic growth!