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As researchers observe a growing income and social divide in the United States, some are calling for a Universal Basic Income (UBI) approach to remedy the problem. Oren Cass, a senior fellow at the Manhattan Institute, argues in a Washington Post article that he does not believe a UBI is the answer to America’s social woes.
Cass said he does not think that the rise of income inequality has created the “collapse” of social well-being in the United States. Instead, the article argues that addressing the weakening of community ties should be the focus of bettering society and a UBI may be a counterproductive approach.
The large cost of the UBI, and the potential to erode ties between workers and employees are two reasons Cass provides as opposing the UBI concept. He argues that an aggressive wage subsidy would be a more effective method of tackling poverty.
Oren Cass, “Basic income won’t fix America’s social divide” The Washington Post, Sept. 29, 2015.
“Above all, one should strive to introduce proportional taxation, i.e. taxation in proportion to a person’s income, instead of a system that imposes equal tax burdens on everyone without regard to a person’s means; it is the ultimate purpose of all taxes to achieve the great ends of government, and everybody who is to enjoy their fruits should contribute as best he can; if practicable, it would certainly be best therefore to have the net incomes of all citizens taxed proportionately, taking care, however, that the poorest classes be left with a sum sufficient to provide the ‘minimum of subsistence’*; above all, the unpropertied citizens are entitled to demand from the community the protection that they cannot provide for themselves. The major interest of the state is to foster and support the spread of general prosperity, as best it can, so it should first of all attempt to lower all taxes as far as possible, particularly those of the poor.
In those grievous circumstances when a person and often entire families are not in a position to save even part of the wages earned by hard labour because the whole sum is required for satisfying the most elementary needs and maintaining a miserable existence, the state cannot possibly ruin its most upright and industrious members by taxes, and even where there is an incipient, as yet insignificant stock of capital saved from wages, the state cannot tax this sum, since the small amount of revenue it foregoes is not commensurate with the great advantage that it gains from the thrift of its labouring class, from incipient small capitalists. Once those men have acquired a certain prosperity, they must be considered strong support for any state because they have been steeled by the bitterest misery and by their struggle for existence.
Government has to leave them the minimum of subsistence; however, to exempt them altogether from paying taxes would mean excluding an entire class of the population from contributing towards the maintenance of a well-ordered political system whose advantages they enjoy like any wealthy person**; in the eyes of many, this class would thereby lose its claim to demand and exercise its own rights.
Affluent citizens, however, would have to be charged by progressive taxation of the net incomes; this would definitely prove to be the best and most expedient system in any case; exact information on the income of all citizens would mean that the general wealth of the state were also known, and that taxation could be carried out in a just manner.[1]
* Commenter Note: This may imply a negative income tax for the unstated case of those that are living below a minimum of subsistence, before taxation, unless the author believes that such poverty fosters and supports general prosperity and the good reputation of the state to it’s own citizen’s and neighboring states. And a negative income tax is pretty much the same thing as a basic income[2].
** Commenter Note: He may well be referring to indirect taxes on consumption, i.e. sales tax, since immediately subsequent expounds on the pros and cons of direct and indirect taxation.
[1] Carl Menger’s Lectures to Crown Prince Rudolf of Austria | 1876 |pages 197,199 | Edited by Erich W. Streissler and Monika Streissler, Translated by Monika Streissler and David F. Good | Published 1994 by Edward Elgar Publishing Limited.
[2] The Negative Income Tax and Basic Income are pretty much the same thing
http://www.adamsmith.org/blog/tag/basic-income/