Legislators should scrap idea of ‘basic income’ and just lower taxes

The idea of a so-called guaranteed national income or “universal basic income” (UBI) has become fashionable as a way to address concerns about everything from wealth inequality to a future in which technology has run amok. It has the appealing simplicity of a bumper sticker: Everyone in society should be paid a cash grant from the government, enough to prevent any person from living in poverty.

And because it is fashionable, it should be no surprise that it has found traction in Hawaii. The Aloha State has a long tradition of adopting (or attempting to adopt) “cutting edge” legislation, regardless of how good a fit it might be for a small island state in the middle of the Pacific. There are few social and political experiments that don’t get at least a hearing in the Hawaii Legislature.

This year, the legislature passed House Concurrent Resolution 89, which directed the state to convene a working group to study the feasibility of both a full and partial universal basic income.

{mosads}The resolution itself is full of references to automated cars and retail checkout lines, doctors being replaced by smartphones, and other technological advances that it alleges will “soon” displace human workers. Like a fever dream concocted from YouTube videos and threads from the /Futurology subreddit, it’s a vision of a dystopian future that convinced enough Hawaii legislators (almost all of them, actually) to consider researching UBI as a way to address the human fallout of technological advancement.

After it was approved, sponsor Rep. Chris Lee posted it on Reddit, crediting  /Futurology and /BasicIncome as resources for his resolution. But once we push past Lee’s “Black Mirror” scenario, there are some serious problems.

In principle, a universal basic income (or its cousin, the negative income tax) isn’t automatically anathema to a fiscal conservative. Given the incredible rate and debatable efficiency of spending on government entitlements, some have asked whether a UBI might be a more effective, efficient and fair way to help people escape poverty.

After all, a UBI is simple and transparent. It treats its recipients like adults rather than trapping them in the complex maze of requirements that welfare embraces. It applies to everyone, with Bill Gates and an impoverished homeless man getting the same payout. Moreover, it allows one simple program to replace the 126 anti-poverty programs currently run by the U.S. government at a cost of $668 billion per year. Add in state and local spending and total anti-poverty spending could be as much as $1 trillion per year.

The most obvious problem with the UBI is its cost. Average per capita income in Hawaii is $48,288, and residents often complain that the high cost of living in the Aloha State makes it difficult to get by on fewer than two incomes.

Obviously, paying a UBI at the federal poverty rate won’t do much to achieve the goals set out in Rep. Lee’s resolution, but for the sake of keeping things affordable, let’s assume that every citizen in Hawaii receives $13,860 (the 2017 federal poverty line for Hawaii). With a population of 1,428,557, that comes out to an annual cost of about $19.9 billion. If you exclude children, and assume the benefit is available only to people over the age of 18, then only about 1,056,483 Hawaii citizens would need to be paid, making the cost “only” $14.6 billion.

Hawaii’s entire state biennial budget for fiscal years 2016 and 2017 is $26 billion — and that’s without getting into the issue of its unfunded liabilities, which makes Hawaii sixth-worst nationwide terms of state debt per taxpayer.

What’s more, it’s highly unlikely that such a pared-down idea as a UBI would make it through Hawaii’s legislative process without a bewildering and additionally burdensome series of addendums and conditions being added on, though perhaps that shouldn’t be such a surprise, because despite its supposed simplicity, the UBI concept does raise many questions.

What about large families? Would they get a windfall, or would the rules of distribution mean that the UBI would barely make a difference for them?

Would we be disincentivizing work and innovation? If the UBI made it possible for every citizen to live outside of poverty in Hawaii, then why continue to work?

But if people didn’t work, who would pay sufficient taxes to help fund the UBI — unless you took taxes out of the UBI to pay for the UBI, in which case why not forget the whole UBI altogether?

On the other hand, we could just let people keep the money they earn and lower their taxes to almost nothing.

Now that’s a beautifully simple idea I can get behind.

Malia Blom Hill is the policy director of the Grassroot Institute of Hawaii (@GrassrootHawaii), a public policy think tank dedicated to the principles of individual liberty, free markets and limited, accountable government.

The views expressed by contributors are their own and are not the views of The Hill.