Considering Tax in a World with UBI
Starts somewhere, ends somewhere else.
The current system, in the US, operates something like this:
Work —> taxed —> fund gov
The new system will look something like this:
gov pays you UBI —> no work —> (tax?)
Where is the UBI coming from?
Where is government funding coming from?
How does it all sustain?
Obviously there are a myriad of different factors, mostly unknowns—
Is this a USD economy? digital? crypto?
Are people creating and selling their creations?
Can the money distributed be used to purchase anything? Only certain items?
How can you make more money?
Does your income change if you are doing certain tasks?
What tasks can you do?
Who controls what?
In this world, I imagine stratification persists, just reshaped:
AI, tech, space, and finance
Entrepreneurs
Physical and service labour
Digital/metaverse workers
UBI-supported
Or some sort of structure resembling that breakdown.
I am also assuming that we have tax being paid by all of the people not on UBI. But let’s consider that it’s only, perhaps, 30% of the economy.
To be clear, I assume UBI itself isn’t taxed—though that may not hold true.
Therefore, it seems that higher tax rates would inevitably end up on the 30% segment. That would suggest a role reversal: the productive minority funds the dependent majority—through higher taxes or productivity tithes. Historically, that’s both politically volatile and economically unsustainable.
I wonder then about two factors that I still truly don’t have answers for:
where does UBI come from?
and how does it sustain itself?
I’d like to have a entire map, but I don’t.
I will say this: it seems to me that the first nations that can work with UBI will be those that are less productive.
For instance, global powerhouses are not yet ready for UBI for several reasons:
we cannot separate productivity from worth
we like capitalism
we enjoy being able to create our own destinies
Ergo, if you presented most people with a cheque and said, “take this—you no longer have a job but we’ll pay you each month,” some people would be fine with that, but many would not. Many people enjoy not “working,” but autonomy.
Fine.
So we then consider nations where this is not the case, where there is inflation, stagnation, lower GDP growth. Therein lies the use case for UBI.
It also enables a power play for nations such as U.S., China, etc.
If you control the funding supply, you can control the output.
[Scenario 1]
If UBI was offered in a nation where opportunities are limited, the people there do not need to work, per se, but they can participate in some way in data collection.
Or let’s say:
[Scenario 2]
Country X deploys AGI. This boosts economic output. The output of AGI then yields UBI in the form of digital tokens. Economy = uplifted.
Presumably that is an incredibly romantic view of how this would actually go, but that’s Phase 01. (Exact scenario unclear)
Phase 02 would be some transition from lower GDP countries to mid-tier.
And finally Phase 03: global powers.
In the world of global powers, there are several new scenarios to consider—all of them would require an entire reconfiguration of government, tax, employment, banking.
I believe what is now most important is preparing for that. However, we already see pushback from banks like JPM who are trying to hold onto: control over employees, rejection of crypto, and resolutely maintaining the status quo.
We shall see what happens.
Moral of the story at this point—
UBI is not for high-productivity nations. It’s a leapfrog tool for the economically sidelined.
A breakdown of the JPM/general bank temper tantrum is on deck.