The US Could Help Solve its poverty problem with a Universal Basic Income.
Universal basic income would not cause adults to quit their jobs, and it could help lift millions of kids into better futures.
The tax credits for children, initially created at the end of 1997 was extended to a full year in 2021 this was a significant social and political win for the nation.
In a time where the epidemic was causing the financial burden of many families as well, the Biden administration’s move not only made it easier to claim the tax credit, but also converted the tax credit from a one-time lump sum at the end of the year to monthly installments, but also eliminated the requirement to work for parents.
This affected immediately one-third of all youngsters within the U.S., including 52 percent of Black children and 41 percent of Hispanic children who were previously exempted because their parents did not make enough to qualify to receive the tax credit. The tax credit extension helped lift 3.7 million kids from poverty until December 2021 without drastically reducing parents’ participation in work.
In Jan. 2022 the tax credit ended and led to the plunge of 3.7 million people back into poverty and a higher percentage of increase within poverty in Hispanic as well as Black children.
The credit proved that cash assistance can assist families to stay afloat contrary to certain views, parents will not quit the system of work due to it. However, the inability to extend the program shouldn’t negate this significant historic political event: Congress came within one vote of eliminating the requirement for parents to work in order to receive cash aid in their households.
The expansion of child tax credits is one of the steps towards creating a Universal Basic Income which could end poverty, without causing more unemployment. The number of people living in poverty is 37.9 million people living in poverty across the U.S., according to 2021 Census Bureau figures.
A government-funded monthly allowance to each person would generally lift them out of poverty while giving millions of children a better chance of getting a high-quality education, healthier lifestyle and a better future earning.
Since there are 11.6 percent of the population within the U.S. living at or less than the poverty level the benefit of this program would be millions of people and could save billions in the process of cutting down on the cost of poverty to the society. The question is: Can you convince your elected representatives that being poor isn’t morally unjust and is a social issue which can be addressed through creating an income threshold that no one can fall below?
The universal basic income, also known as UBI is defined by the term “a periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement,” according to the Basic Income Earth Network.
A universal basic income wouldn't lead to adults leaving their jobs and could lift millions of children into brighter futures, writes Michael W. Howard, @UMaine professor emeritus, in @sciam. #UBI https://t.co/UsIReoNumO
— MDRC (@MDRC_News) January 6, 2023
The tax credit for children isn’t the same since it’s only available to families with children. It is also phased out at higher income levels , and basically requires people to prove that they are “poor enough” to need assistance–a test of means.
A more radical legislation that would consider the concept of UBI proposed by representatives Rashida Tlaib and Mondaire Jones will eliminate the means test, creating the Universal Child Allowance. Universal benefits have many advantages over benefits that are tested on a means test. They eliminate the divisions in between “us” and “them,” getting rid of the stigma associated with specific benefits.
The rate of participation by those in need, which is a constant issue with benefits targeted to specific needs, is enhanced when stigma and bureaucratic barriers are eliminated. Benefits that are universal are more well-known and therefore more secure in the political sphere and more well-funded.
Universal benefits, which are dispensed with means-testing, are easier to administer. Universal child allowances would include all children born at birth which means that no child will be left out.
There is no country that has yet introduced the universal basic income necessary to meet the basic necessities. However, there is a precedent in the U.S., Alaska has adopted their Permanent Fund Dividend that is a one-time cash payment which is averaging $1,600 and is available to everyone who is not subject to a working or a means test. It helps reduce poverty and has no adverse impact on the people’s determination to work.
The U.S., a universal child allowance as well as Social Security for the elderly will mean that two of the most vulnerable age groups of our population would receive a universal and guaranteed income.
However, the idea of extending an income of a minimum to the adult population is not without its challenges. The first is that no one wants children younger than 18 to earn a living or earn a living, and keeping them in poverty can be costly for all.
According to one study, social benefits outweigh the fiscal cost of universal child allowance by about 8 one. There is a general belief that adults with a disability should be employed to earn their money. Evidence from the test-of-means minimum income studies from the 1970s in the U.S.and recent study of a similar experiment in Manitoba in addition to other studies, support the belief that only a few people stop working if they also receive an income that is guaranteed.
Research also suggests that those who cease working for a wage are doing it for legitimate reasons for example, like having completed high school or caring for young children. Furthermore, having a small guaranteed minimum income could allow people to go to work when they would have been unable to. Even if just a few are willing to take cash and not make a contribution to the community, the advantages could far outweigh the cost.
The notion that every person who receives cash payments must be looking for a job could be questioned. First, obtaining an occupation isn’t the only kind of work. The care of elderly and children is work which is carried out mostly by women who are not paid. Basic income is a means of recognizing and supporting those who work without the intrusive oversight of the state and a reaffirmation of the gendered work division.
The second, and most important, research conducted by Belgian philosophers of politics Philippe Van Parijs and Yannick Vanderborght uncovers that a large portion of the income of an individual or absence of income, comes not from work but through luck.
This is apparent when it comes to inheritance wealth however, it is also relevant to income derived from work in capital-intensive fields or income from inherited knowledge or technology. On the other hand there are many people who have inadvertent disabilities are caught between the gaps of cash transfer systems targeted to specific needs.
A basic income is a method to even out this unfairly random luck. The universal basic income doesn’t provide people with a free meal but rather, it equalizes all of the chances. Fair sharing and giving will then be able to take place with an equitable beginning point.
Alongside the notion that people would quit their jobs with a minimum income, this idea has another obstacle: apparent cost. A minimum income of $1,000/month for each person living in the U.S. would have a total cost of around $4 trillion per year.
A guaranteed minimum income that is means-tested which is phased out once earned income rises above an amount that is considered to be a threshold, may raise amounts by that same sum, for about one-fifth of the total cost of an income of a minimum. Yet, the net cost for taxpayers is not higher in the case of a basic income than the means-tested minimum income because the higher taxes people pay are in contrast to the basic income they get.
In the event that the simple fact of “churning”–money flowing out to everyone but then returned as taxes by some — is a hindrance in gaining political backing, a guaranteed income based on a means test might be the more economically feasible option, however it will eliminate some of the benefits from universal policies.
In the meantime, if an universal child allowance eventually is implemented, it could shift the balance towards a more basic income later on.