A Conversation with GPT-4 about UBI
Not perfect, but progress
To enact UBI requires many conversations about the details. ChatGPT doesn’t make the decisions, but it helps set parameters. Here’s a conversation with it:
Using the latest United States income tax data, consumption data, and all available economic data, create and explain a system that replaces income taxes with consumption taxes and generates enough revenue to fully fund an unconditional basic income for all United States citizens. Include savings from reducing welfare spending and housing subsidies in the system. The UBI should fully offset the cost of the consumption taxes for any citizen earning less than $60,000 per year.
To create a system that replaces income taxes with consumption taxes and generates enough revenue to fully fund an unconditional basic income (UBI) for all United States citizens, we can follow these steps:
Eliminate income taxes and replace them with a broad-based consumption tax: We would need to eliminate both federal and state income taxes and replace them with a progressive consumption tax, such as a value-added tax (VAT) or a national sales tax. This consumption tax would apply to all purchases of goods and services, excluding necessities like groceries, housing, and healthcare. The tax rate would be determined based on the consumption level, so that higher consumption would be taxed at a higher rate.
Establish a UBI program: Set up an unconditional basic income program that provides a monthly payment to every U.S. citizen, regardless of income or employment status. The UBI amount should be sufficient to offset the consumption tax burden for those earning less than $60,000 per year, as well as to provide a basic standard of living.
Calculate the UBI amount: To find the UBI amount, we first need to estimate the cost of living for an individual earning $60,000 per year. Assuming a consumption tax rate of 25%, the annual tax burden for someone earning $60,000 would be $15,000. To fully offset this tax burden, the UBI should be set at $15,000 per year, or $1,250 per month.
Calculate the total cost of the UBI program: Multiply the UBI amount by the total number of U.S. citizens to find the total cost of the program. According to the U.S. Census Bureau, the population of the United States is approximately 332 million people as of 2021. Assuming a similar population in 2023, the total cost of the UBI program would be roughly $4.98 trillion per year (332 million x $15,000).
Offset the cost of the UBI with savings from welfare programs and housing subsidies: Since the UBI would provide a basic income for all citizens, many existing welfare programs and housing subsidies could be reduced or eliminated. This would result in significant savings for the government, which could be used to offset the cost of the UBI program. According to the 2021 data, the United States spends around $1 trillion on welfare programs and housing subsidies. Assuming similar spending in 2023, these savings could offset roughly 20% of the UBI program's total cost, leaving a net cost of approximately $3.98 trillion per year.
Determine the required consumption tax rate: To generate enough revenue to cover the net cost of the UBI program, the consumption tax rate would need to be set at a level that generates at least $3.98 trillion per year. Based on historical consumption data, the United States had a consumption expenditure of around $14.7 trillion in 2021. Assuming a similar level of consumption in 2023, a consumption tax rate of approximately 27% would be needed to generate the required revenue.
In summary, to replace income taxes with consumption taxes and fund a UBI for all U.S. citizens, we propose implementing a progressive consumption tax with an average rate of 27%, establishing a UBI of $15,000 per year, and offsetting the cost of the UBI with savings from welfare programs and housing subsidies. This system would ensure that citizens earning less than $60,000 per year are not burdened by the consumption tax, while still generating enough revenue to fully fund the UBI program.
Rewrite the plan to improve it with additional revenue from a 25% marginal tax on annual income exceeding $500,000 and a 40% tax on income exceeding $1,000,000. Balance a reduction in the consumption tax rate and an increase in the UBI benefit when calculating optimal improvements in the system.
To create an improved system that combines consumption taxes with a progressive income tax on high earners and generates enough revenue to fully fund an unconditional basic income (UBI) for all United States citizens, we can follow these steps:
Implement a progressive consumption tax: Establish a progressive consumption tax, such as a value-added tax (VAT) or a national sales tax, on all purchases of goods and services, excluding necessities like groceries, housing, and healthcare. This tax would be designed to be less regressive by applying a lower rate on lower consumption levels and a higher rate on higher consumption levels.
Introduce a progressive income tax on high earners: Implement a 25% marginal tax on annual income exceeding $500,000 and a 40% tax on income exceeding $1,000,000. This would generate additional revenue from the top earners, allowing for a reduction in the consumption tax rate and an increase in the UBI benefit.
Establish a UBI program: Set up an unconditional basic income program that provides a monthly payment to every U.S. citizen, regardless of income or employment status. The UBI amount should be sufficient to offset the consumption tax burden for those earning less than $60,000 per year, as well as to provide a basic standard of living.
Calculate the UBI amount: To find the optimal UBI amount, we first need to estimate the cost of living for an individual earning $60,000 per year. Assuming a consumption tax rate of 20% (lower than the previous 27% rate), the annual tax burden for someone earning $60,000 would be $12,000. To fully offset this tax burden and improve the system, we could set the UBI at $18,000 per year, or $1,500 per month, which provides an additional $3,000 per year compared to the previous plan.
Calculate the total cost of the UBI program: Multiply the UBI amount by the total number of U.S. citizens to find the total cost of the program. Assuming a population of 332 million people, the total cost of the UBI program would be approximately $5.976 trillion per year (332 million x $18,000).
Offset the cost of the UBI with savings from welfare programs and housing subsidies: Since the UBI would provide a basic income for all citizens, many existing welfare programs and housing subsidies could be reduced or eliminated. This would result in significant savings for the government, which could be used to offset the cost of the UBI program. Assuming similar spending in 2023 as in 2021, these savings could offset roughly 20% of the UBI program's total cost, leaving a net cost of approximately $4.781 trillion per year.
Determine the required consumption tax rate and additional income tax revenue: To generate enough revenue to cover the net cost of the UBI program, the consumption tax rate would need to be set at a level that generates at least $4.781 trillion per year. Based on historical consumption data, the United States had a consumption expenditure of around $14.7 trillion in 2021. Assuming a similar level of consumption in 2023, a consumption tax rate of approximately 20% would be needed to generate $2.94 trillion in revenue.
The remaining $1.841 trillion needed to fund the UBI program would come from the additional income tax revenue generated by the 25% marginal tax on annual income exceeding $500,000 and the 40% tax on income exceeding $1,000,000.
In summary, to create an improved system that combines consumption taxes with a progressive income tax on high earners and funds a UBI for all U.S. citizens, we propose implementing a progressive consumption tax with an average rate of 20%, establishing a UBI of $18,000 per year, and implementing a 25% marginal tax on annual income exceeding $500,000 and a 40% tax on income exceeding $1,000,000. Additionally, we would offset the cost of the UBI with savings from welfare programs and housing subsidies.
This system would ensure that citizens earning less than $60,000 per year are not burdened by the consumption tax while still generating enough revenue to fully fund the improved UBI program. The additional income tax on high earners would help balance the reduction in the consumption tax rate and increase the UBI benefit, making the overall system more progressive and equitable.
Analyze the political possibilities of both proposals based on current political factors such as election results, polling data, representatives’ voting records, past implementation of major social and economic reforms, and any other data or information helpful to implement either system.
As of my knowledge cutoff date in September 2021, the political possibilities of implementing either of the two proposals could be analyzed based on the following factors:
Partisan divide: In the current political climate, there is a significant divide between Democrats and Republicans on issues related to taxation and social programs. Democrats generally favor progressive taxation and the expansion of social programs, while Republicans tend to advocate for lower taxes and reduced government spending. Both proposals would likely face opposition from Republicans, who may argue that these plans represent an overreach of government and could discourage economic growth. However, the second proposal, which includes a progressive income tax on high earners, may garner more support from Democrats.
Election results: The results of the most recent elections, particularly the 2020 presidential election and the 2022 midterm elections, could influence the political feasibility of either proposal. If Democrats retain control of both the House and the Senate in the 2022 midterms, the chances of passing either proposal may increase, particularly the second proposal with the progressive income tax component.
Polling data: Public opinion on issues related to taxation and social programs can also impact the political feasibility of these proposals. If polling data shows strong support for progressive taxation and the idea of a UBI, it may encourage lawmakers to consider implementing these proposals. However, if public opinion is more divided or leans toward opposition, it could be more difficult to build a consensus around either proposal.
Representatives' voting records: Examining the voting records of current members of Congress can provide insight into their positions on issues related to taxation and social programs. If a significant number of lawmakers have historically supported progressive tax policies or social programs like a UBI, it may be more likely that one or both proposals could gain traction in Congress.
Past implementation of major social and economic reforms: The history of major social and economic reforms in the United States, such as the New Deal, the Great Society, and the Affordable Care Act, can provide insights into the challenges and opportunities of implementing significant policy changes like the proposed tax reforms and UBI programs. These past reforms have often been the result of strong political leadership, broad-based public support, and a willingness to compromise in order to achieve meaningful change. The success of either proposal would likely depend on similar factors.
In conclusion, the political possibilities of implementing either of the two proposals depend on a variety of factors, including the partisan divide, election results, public opinion, lawmakers' voting records, and the history of major social and economic reforms in the United States. The second proposal, which combines a progressive consumption tax with an income tax on high earners, may have a higher likelihood of gaining political support, particularly from Democrats. However, both proposals would likely face significant challenges in the current political climate and would require strong leadership, public support, and a willingness to compromise in order to become a reality.