Facebook CoFounder Wants $3 Trillion Tax On Rich To Fund Universal Basic Income

[Hydrogen]

Facebook co-founder Chris Hughes wants to tax anyone who makes over $250,000 to the tune of nearly $3 trillion over ten years, then use the proceeds to provide universal basic income (UBI) to every working American who makes under $50,000 a year, including those providing services such as child care and elder care.

Hughes, 34, now devotes his time to evangelizing for higher taxes on the rich, such as himself. He's proposing that the government give a guaranteed income of $500 a month to every working American earning less than $50,000 a year, at a total cost of $290 billion a year. This is a staggering number, but Hughes points out that it equals half the U.S. defense budget and would combat the inequality that he argues is destabilizing the nation. -Bloomberg

Hughes, who has a related book coming out, has made tackling income inequality his top priority by partnering with the Economic Security Project - a major recipient of his philanthropic efforts. The group is focused finding solutions to provide "unconditional cash and basic income" in the United States due to the effects of "automation, globalization, and financialization" forcing the discussion.

The plan would essentially be an expansion of the Earned Income Tax Credit (EITC) for low-to-moderate income individuals and families.

The Economic Security Project is a network committed to advancing the debate on unconditional cash and basic income in the United States. In a time of immense wealth, no one should live in poverty, nor should the middle class be consigned to a future of permanent stagnation or anxiety. Automation, globalization, and financialization are changing the nature of work, and these shifts require us to rethink how to create economic opportunity for all. -Economic Security Project

While Hughes notes that the annual $290 billion annual price tag is half the U.S. defense budget, he contends that income inequality is destabilizing the nation - and that there is a "very practical concern that, given that consumer spending is the biggest driver of economic growth in the United States and that median household incomes haven't meaningfully budged in 40 years," a Universal Basic Income is vital to maintaining economic national security.   

"Cash is just the simplest and most efficient thing to eradicate poverty and stabilize the middle class," Hughs told Bloomberg at the Economic Security Project's New York offices at Union Square.

There are many ways to pay for a guaranteed income. However, I do think that the resources can and should come from the people who most benefited from the structure of the economy. We had tax rates at 50 percent for several decades after [World War II]. In the same period, we had record economic growth and broad-based prosperity. I’m not making the case, in the book and in general, that we just need higher taxes. It matters what our tax dollars are going to. Cash is just the simplest and most efficient thing to eradicate poverty and stabilize the middle class. -Bloomberg

https://www.zerohedge.com/news/2018-05-04/facebook-co-founder-wants-slap-3-trillion-tax-rich-pay-universal-basic-income

There are a few good points made here.

This is one potential scenario under which universal basic income might have a hope of succeeding and balancing out global economies.

It could easily turn into a disaster like social security where excess collected taxes are consistently spent on things which have absolutely nothing to do with social security. Many taxes like road taxes, which are supposed to be utilized towards maintaining roads. And telecom taxes which in theory, are supposed to be spent on maintaining or upgrading internet or telecom infrastructure are often spent on war in the middle east / programs which are 100% unrelated to those things.

The potential for disaster or misuse of funds is very high. But there is a slim chance the program could be successful and achieve its intended end goal of redistributing wealth from the rich to the poor, like robin hood, in an effort to stabilize economies and prevent societies and civilization from ultimately collapsing. And things like that. Whatever the worst case, scorched earth, scenario is here in regard to things like UBI.   

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[vit05]

  "The arrangement that recommends itself on purely mechanical grounds is a negative income tax. […] The advantages of this arrangement are clear. It is directed specifically at the problem of poverty. It gives help in the form most useful to the individual, namely, cash. It is general and could be substituted for the host of special measures now in effect. It makes explicit the cost borne by society. It operates outside the market. Like any other measures to alleviate poverty, it reduces the incentives of those helped to help themselves, but it does not eliminate that incentive entirely, as a system of supplementing incomes up to some fixed minimum would. An extra dollar earned always means more money available for expenditure. "                                                                                                                                                                                                     

Milton Friedman

  Smart Contracts could be really awesome to work with something like this. Today, all Basic income models use banks as a middleman. So, a business or people pay tax, the money goes to a bank account, then go to another for the program, them go to someone else account. It is too expensive and inefficient. With a smart contract, the money could go from A to B and the government will only need to verify the public ledger.

[legendster]

I'm no millionaire by any stretch of the imagination but I don't see the point of sharing my income to enable freeloaders. I'm sorry. I'd much rather share my torrents rather than my income. The idea of giving away free stuff and in this case money is idiotic.
Off course the idea of receiving free money is very alluring so there would be many who'd want this. Even if they don't want it.

[mimienamphine]

Hehe,this is ridiculous,even if we share all the money in the world equally for all people in the world there will still be poor people in no time.Sometimes the way some people behave makes me tempted to say that some people are destined to be poor.Yes  some people will never be rich because of the way they behave when they earn a small income.Besides tax is not even the way to deal with poverty.Tax rather increase poverty and retards development.It is not corrupt politicians who embezzle our taxes and live in affluence? Even if we increase taxes to this said amount, corrupt official will only grow richer that is all.

[hase0278]

There are a few good points made here.

What good points are you referring to? Are you referring to the ones I quoted here:

In a time of immense wealth, no one should live in poverty, nor should the middle class be consigned to a future of permanent stagnation or anxiety.

They might not experience poverty, but society itself will suffer from abundance of negligent people if ever Chris Hughes' desire comes into fruition. Wouldn't it also be unfair for rich people who worked hard for that money?

There are many ways to pay for a guaranteed income. However, I do think that the resources can and should come from the people who most benefited from the structure of the economy.

I agree that resources should come from people who got the most benefit out of the economy's structure but I think they shouldn't provide it for free. With their money, they can open more business to help give jobs to others who needs it.

We had tax rates at 50 percent for several decades after [World War II]. In the same period, we had record economic growth and broad-based prosperity. I’m not making the case, in the book and in general, that we just need higher taxes. It matters what our tax dollars are going to.

Rulers of that era and now are different. Economic growth and prosperity by that time came from spoils of war, not mainly from taxes.

Cash is just the simplest and most efficient thing to eradicate poverty and stabilize the middle class. -Bloomberg

Cash would not simply eradicate poverty and stabilize the middle class, it would just make them more negligent and slothful.

[Hydrogen]

What good points are you referring to? Are you referring to the ones I quoted here:

In a time of immense wealth, no one should live in poverty, nor should the middle class be consigned to a future of permanent stagnation or anxiety.

They might not experience poverty, but society itself will suffer from abundance of negligent people if ever Chris Hughes' desire comes into fruition. Wouldn't it also be unfair for rich people who worked hard for that money?

There are many in middle class america who pay 50% or higher taxes. Years ago, Warren Buffett's tax rate was 17%. That was without him utilizing tax loopholes or making a real effort @ tax evasion. Many wealthy pay less than 17% income taxes. Recently it came to light that 1% of the worlds population owns 40% of the wealth in the entire world. Some wealthy individuals complain that they pay the majority of taxes. Then again if they own 40% of all the wealth in the world isn't it difficult to imagine a scenario where they do not pay higher taxes than the poor or middle class whose global holdings of wealth are significantly less?

If the middle class is willing to part with 50% of its earnings, then I think the wealthy should expect to pay at least 20%. The way things are now, there are wealthy businessmen in america who pay around 2% income taxes, without factoring in the AMT(alternative minimum tax). There are many large corporations like google who utilize tax loopholes then have the cost of constructing their server farms funded by government tax subsidies. Then they receive tax cuts which give it an unfair advantage over its competition. Its like a form of rich peoples welfare.

Its easy to think the rich are being treated unfairly, I'm certain those are the only stories people hear about in the media. But once fundamental details about how things are implemented in the real world become available a very different portrait of things can emerge.

There are many ways to pay for a guaranteed income. However, I do think that the resources can and should come from the people who most benefited from the structure of the economy.

I agree that resources should come from people who got the most benefit out of the economy's structure but I think they shouldn't provide it for free. With their money, they can open more business to help give jobs to others who needs it.

There are corporations like apple and intel who sit on $80 billion dollars in stockpiled funds that they don't use for creating jobs nor anything. The myth about large corporations being the largest creator of new jobs doesn't pan out. Its small businesses who are the biggest source of new jobs in the country. Not big established names. If anything large corporations repress new and emerging technologies, they also centralize markets and create monopolies, all of which kills jobs.

We had tax rates at 50 percent for several decades after [World War II]. In the same period, we had record economic growth and broad-based prosperity. I’m not making the case, in the book and in general, that we just need higher taxes. It matters what our tax dollars are going to.

Rulers of that era and now are different. Economic growth and prosperity by that time came from spoils of war, not mainly from taxes.

Cash is just the simplest and most efficient thing to eradicate poverty and stabilize the middle class. -Bloomberg

Cash would not simply eradicate poverty and stabilize the middle class, it would just make them more negligent and slothful.

I agree high taxes and economic prosperity post WWII is a terrible example.

Post WWII a good portion of the developed and civilized world was bombed back to the stone age except for russia and the united states. America had a prosperous WWII as they were in the business of helping other nations rebuild--at a profit. They made reconstruction loans to foreign nations--with interest.

Its not evidence high taxes are a good or even sustainable policy.

[amishmanish]

The problem with any such program is the handling of money by institutions. The moment it becomes institutional, only those with authority and connections can pull the levers for releasing them. This is where personal discretion comes in and people are not immune to the corrupting influence of having to handle a lot of money.

This could probably work if it was done all with BTC in a completely transparent and traceable way rather than setting up separate bodies for disbursement of UBI. Also, people taking individual responsibility rather than delegating it to one big body would be a much better solution. Not everybody has the time and intent, but it can still work.

[Typex]

Wouldn't it also be unfair for rich people who worked hard for that money?

Or maybe its unfair for others who work hard but arent rich.  Im no socialist but its naive to assume that working hard gets you rich or that all rich people have worked hard.  Being rich is more a matter of circumstance than working hard.

[Typex]

The problem with any such program is the handling of money by institutions. The moment it becomes institutional, only those with authority and connections can pull the levers for releasing them. This is where personal discretion comes in and people are not immune to the corrupting influence of having to handle a lot of money.

This could probably work if it was done all with BTC in a completely transparent and traceable way rather than setting up separate bodies for disbursement of UBI. Also, people taking individual responsibility rather than delegating it to one big body would be a much better solution. Not everybody has the time and intent, but it can still work.

Yeah im sure it would work great.  The general public can barely tie their own shoes.  How many millions of dollars would get lost or hacked in the first month of such a scheme?

[jaysabi]

Facebook co-founder Chris Hughes wants to tax anyone who makes over $250,000 to the tune of nearly $3 trillion over ten years, then use the proceeds to provide universal basic income (UBI) to every working American who makes under $50,000 a year, including those providing services such as child care and elder care.

Hughes, 34, now devotes his time to evangelizing for higher taxes on the rich, such as himself. He's proposing that the government give a guaranteed income of $500 a month to every working American earning less than $50,000 a year, at a total cost of $290 billion a year. This is a staggering number, but Hughes points out that it equals half the U.S. defense budget and would combat the inequality that he argues is destabilizing the nation. -Bloomberg

Hughes, who has a related book coming out, has made tackling income inequality his top priority by partnering with the Economic Security Project - a major recipient of his philanthropic efforts. The group is focused finding solutions to provide "unconditional cash and basic income" in the United States due to the effects of "automation, globalization, and financialization" forcing the discussion.

The plan would essentially be an expansion of the Earned Income Tax Credit (EITC) for low-to-moderate income individuals and families.

The Economic Security Project is a network committed to advancing the debate on unconditional cash and basic income in the United States. In a time of immense wealth, no one should live in poverty, nor should the middle class be consigned to a future of permanent stagnation or anxiety. Automation, globalization, and financialization are changing the nature of work, and these shifts require us to rethink how to create economic opportunity for all. -Economic Security Project

While Hughes notes that the annual $290 billion annual price tag is half the U.S. defense budget, he contends that income inequality is destabilizing the nation - and that there is a "very practical concern that, given that consumer spending is the biggest driver of economic growth in the United States and that median household incomes haven't meaningfully budged in 40 years," a Universal Basic Income is vital to maintaining economic national security.  

"Cash is just the simplest and most efficient thing to eradicate poverty and stabilize the middle class," Hughs told Bloomberg at the Economic Security Project's New York offices at Union Square.

There are many ways to pay for a guaranteed income. However, I do think that the resources can and should come from the people who most benefited from the structure of the economy. We had tax rates at 50 percent for several decades after [World War II]. In the same period, we had record economic growth and broad-based prosperity. I’m not making the case, in the book and in general, that we just need higher taxes. It matters what our tax dollars are going to. Cash is just the simplest and most efficient thing to eradicate poverty and stabilize the middle class. -Bloomberg

https://www.zerohedge.com/news/2018-05-04/facebook-co-founder-wants-slap-3-trillion-tax-rich-pay-universal-basic-income

There are a few good points made here.

This is one potential scenario under which universal basic income might have a hope of succeeding and balancing out global economies.

It could easily turn into a disaster like social security where excess collected taxes are consistently spent on things which have absolutely nothing to do with social security. Many taxes like road taxes, which are supposed to be utilized towards maintaining roads. And telecom taxes which in theory, are supposed to be spent on maintaining or upgrading internet or telecom infrastructure are often spent on war in the middle east / programs which are 100% unrelated to those things.

The potential for disaster or misuse of funds is very high. But there is a slim chance the program could be successful and achieve its intended end goal of redistributing wealth from the rich to the poor, like robin hood, in an effort to stabilize economies and prevent societies and civilization from ultimately collapsing. And things like that. Whatever the worst case, scorched earth, scenario is here in regard to things like UBI.    

From the perspective that the rich have absolutely designed the government and the tax laws to their own advantage, universal basic income is appealing as an instrument to help balance the scales that have been tipped so far in the wealthy classes' favor to the detriment of other classes. From the perspective that automation is continuing to destroy jobs and more and more industries will be disrupted by it, and full employment is becoming less and less likely in the future, universal basic income is even more appealing. We've seen what happens to countries that have a high degree of permanent unemployment in younger demographics, and they become incredibly violent without much, if any, exception. A program like UBI could alleviate the need for the social security program and all other welfare programs. It would likely make our social programs more efficient while also expanding the economy as it would provide people the economic freedom to create new things. However, the numbers being proposed seem too low at $500 per month to do properly. Finland started a universal basic income experiment in 2017, but sadly I think it has already been abandoned.

[Hell-raiser]

From the perspective that the rich have absolutely designed the government and the tax laws to their own advantage, universal basic income is appealing as an instrument to help balance the scales that have been tipped so far in the wealthy classes' favor to the detriment of other classes. From the perspective that automation is continuing to destroy jobs and more and more industries will be disrupted by it, and full employment is becoming less and less likely in the future, universal basic income is even more appealing. We've seen what happens to countries that have a high degree of permanent unemployment in younger demographics, and they become incredibly violent without much, if any, exception. A program like UBI could alleviate the need for the social security program and all other welfare programs. It would likely make our social programs more efficient while also expanding the economy as it would provide people the economic freedom to create new things. However, the numbers being proposed seem too low at $500 per month to do properly. Finland started a universal basic income experiment in 2017, but sadly I think it has already been abandoned.

Yes, it has been abandoned as it looks like it is not going to do any good to a society at whole. It could make some sense if UBI was paid to everyone, irrespective of the employment status (that is whether you are employed or unemployed) but it would be financially impossible as I come to think. Otherwise, it would do more harm than good as it would discourage people from employment. Really, who would want to work for 1,000 euro a month if you could get 700 euro a month doing nothing? On the other hand, how is this universal basic income different from welfare programs if it is not really universal and not depending on whether you are employed or not?

Regarding automation destroying jobs, you should not forget that jobless people won't be able to buy the goods produced by the automated plants, so there should necessarily be a balance between automation and employment. Automation without demand is meaningless (it would only cause overproduction), but demand is not possible without employment.

[5ensei]

We should give credit to the idea of wanting to distribute wealth but it needs to be testing on a pilot city first. If people receive free money then we would have a generation of lazy kids who won't bother to get a job and just live off the free distribution.

[dothebeats]

While the idea presented by Hughes is genuine and can really be helpful, I don't think his fellow rich people would like it, knowing that they have twisted the laws into their own benefit so as to avoid paying exorbitant tax rates. Also, knowing the government, they could try to be the 'good guys' and put the idea into talks, but it will never progress because if they're really into it, they've done this a long time ago. Interestingly, people with lower incomes tend to get higher tax rates, as you put it, while these 1% people weren't even paying 20% of their income to taxes. It is a great proposition, though I highly doubt it will come to fruition and if it did, are we sure that these tax dollars would go to the right place? :/

[green_fish]

The greater the ability of people to contribute to society should also increase accordingly! It is indeed a good proposal to raise the income of high-income people to help low-income earners!
The United States is truly an enviable country!
The government does practical things for the people!

[jaysabi]

From the perspective that the rich have absolutely designed the government and the tax laws to their own advantage, universal basic income is appealing as an instrument to help balance the scales that have been tipped so far in the wealthy classes' favor to the detriment of other classes. From the perspective that automation is continuing to destroy jobs and more and more industries will be disrupted by it, and full employment is becoming less and less likely in the future, universal basic income is even more appealing. We've seen what happens to countries that have a high degree of permanent unemployment in younger demographics, and they become incredibly violent without much, if any, exception. A program like UBI could alleviate the need for the social security program and all other welfare programs. It would likely make our social programs more efficient while also expanding the economy as it would provide people the economic freedom to create new things. However, the numbers being proposed seem too low at $500 per month to do properly. Finland started a universal basic income experiment in 2017, but sadly I think it has already been abandoned.

Yes, it has been abandoned as it looks like it is not going to do any good to a society at whole. It could make some sense if UBI was paid to everyone, irrespective of the employment status (that is whether you are employed or unemployed) but it would be financially impossible as I come to think. Otherwise, it would do more harm than good as it would discourage people from employment. Really, who would want to work for 1,000 euro a month if you could get 700 euro a month doing nothing? On the other hand, how is this universal basic income different from welfare programs if it is not really universal and not depending on whether you are employed or not?

These are the types of assumptions the experiment was designed to test on a larger scale, so it's disappointing the program is being terminated without adequate data or longevity to satisfactorily provide any useful data on the matter.  Such a program wouldn't be financially impossible though, especially if it replaces all current welfare programs. In that sense, the additional spending is quite limited and easily sustainable with a modest tax on the rich or a reduction in other expenditures, say military spending for example. A modest cut in military spending would easily fund the difference, and considering the US spends more on the military than the next 8 or so countries combined, can afford it.

Regarding automation destroying jobs, you should not forget that jobless people won't be able to buy the goods produced by the automated plants, so there should necessarily be a balance between automation and employment. Automation without demand is meaningless (it would only cause overproduction), but demand is not possible without employment.

While true in very general and over-simplified terms, this doesn't pan out much in the real world. The US used to be the manufacturing hub of the world, but when those jobs started getting lost to automation and outsourcing, the US didn't suddenly become a country of poor, unemployed workers. People pursued other opportunities and created new services and products.  The difference here is that the loss of manufacturing jobs happened on a decades-long scale, and the displacement of jobs allowed the economy time to absorb the displacement, which happened rather slowly.  The difference now is that automation has become so much faster and affected jobs that were previously thought to be immune that there is no clear way for the economy to absorb the loss of millions of jobs in such a short time frame.  It will be far more destabilizing now.  UBI can help by providing people the basic income to survive and the opportunity to then pursue new products and services, thereby growing the economy, instead of being forced into survival mode and scraping to get by.  UBI would never be enough to let people live in the middle class comfortably, just enough to keep people out of destitution. 

Also, production comes from demand, not the other way around. You can produce anything, but if there's no demand for the product or services created, the venture will soon fail. When people demand a good or service, you can afford to employ people to provide it, or create it through automation. There is little risk of overproducing anything because the market naturally adjusts price, so it's a problem that solves itself.

[yoseph]

Why should the rich be the way that they are able to find this program. I believe that they should be taxed just like everyone else if the government wants to make things better for the average Americans they have enough funds to make things better for them.

[aso118]

The rich have a disproportionate say in formulating economic policies. I doubt if anything like this will ever see the light of the day. Plus, the risk have become very efficient at tax planning. you just have to find the right offshore trust to keep your money safe

[gambitcoin53]

I'm no millionaire by any stretch of the imagination but I don't see the point of sharing my income to enable freeloaders. I'm sorry. I'd much rather share my torrents rather than my income. The idea of giving away free stuff and in this case money is idiotic.
Off course the idea of receiving free money is very alluring so there would be many who'd want this. Even if they don't want it.

agree, this sounded like an authoritarian to me, i think many rich men will not be supporting this. universal basic income is only applicable to communist type of government and miitary-ruled country, i could imagine how huge money they can milk out of the rich people, not fair not humanitarian either.

[Hydrogen]

The rich have a disproportionate say in formulating economic policies. I doubt if anything like this will ever see the light of the day. Plus, the risk have become very efficient at tax planning. you just have to find the right offshore trust to keep your money safe

Well, here's an interesting point.   

When the US income tax was originally passed in 1913 (if I remember right) I think it was marketed and sold to the public as a way of punishing the rich. The proposal was the rich would pay 6% income taxes. Everyone else would pay 1% income taxes. Today it has completely reversed. Some rich americans pay around 1% to 2% income taxes (without factoring in AMT - alternative minimum tax). Everyone else pays around 40% to 50% or higher income taxes. Some american politicians believe those in the poor to middle class tax bracket should pay as high as 80% taxes.

It might be said that universal basic income (ubi) is being marketed to the public as a way of "punishing the rich" is virtually identical to how the US income tax was passed in the first place. The rich have many more loopholes and methods of avoiding taxation than the average person. Sometimes tax hikes encourage them to make a stronger effort at tax evasion. There could be evidence for this with Donald Trump's recent tax cuts where we saw record tax revenues collected in the month of april 2018.

Good point with offshore trusts although if its denominated in dollars or euros, that money may not be worth much if either the USA or european union defaults on debt. That could be part of the reason why we're beginning to see negative media coverage of some things where in the past elites presented a more united front and did far less to educate the average person on potential negative circumstances associated with deficit/debt/economic imbalance.

[squatz1]

I never understood people thinking that this would ever happen, do you really think the rich would EVER allow politicians to pass something like this? If they tried, corporations and people would pay GROSS amounts of money in lobbying in order to ensure that it is shot down ASAP and never thought of again. But let's live in this fantasy world for a second and say it does pass.

Universal Basic Income doesn't work, it makes people less motivated to work as they're receiving money for just breathing. People need to work, it's the thing that stimulates. Plus the fact that UBI isn't even working in nations it's being tried in now, why ruin the USA with it?