UBI for California

The case for a universal basic income is more relevant now than ever with the economic fallout of the pandemic and the acceleration of automation. A Universal Basic Income has been proposed in the California State Legislature and some California cities such as Stockton have experimented with UBI pilot programs. Stockton pioneered a successful UBI pilot program and other cities such as Oakland have put forth intersectional versions which depart from the universal component.

Regardless the national handling of the pandemic has come short in delivering adequate direct payouts, taking into account the price tag of the American Rescue Plan, with massive Pork spending and bailouts for institutions rather than directly to the citizens. The UBI is most notably associated with the campaign of Andrew Yang and his particular proposal would rely heavily upon a VAT Sale Tax for revenue. There are plenty of criticisms of using sales tax as a revenue source, but combining it with other revenue sources may be the best strategy.

The State of California has a 19 Billion budget surplus in large part due to Tech Profits and if the sate were a nation it would have the world’s 5th highest GDP, ahead of India. The state is obviously very wealthy but has come short in allocating resources. If California were to implement a UBI there would need to be diversified revenue sources as taxes alone are not adequate.

For starters California should look to Alaska’s model of an Oil Extraction Dividend, a fund that is worth approximately $64 billion from oil revenues. There are restrictions on who can receive the dividend, such as having a criminal record, but as of 2020 the annual citizens payout was $992 and was as high as $2,072 in 2015. In contrast to Alaska’s “average daily production of 477,000 barrels in February,  2020” California produced  “426,000 barrels of oil from both onshore and offshore.” While California may phase out oil extraction, taxing oil extraction is enough to fund a large portion of a basic income and other energy sources such as solar on public land could also contribute revenue.

Big tech including Apple, Facebook, and Google, all based in California, have shattered $75 Billion in profits in the first quarter of this year. Big Tech’s Billion dollar pandemic year might just be the beginning but these corporations must pay back their fair share as part of a tech dividend, which could include ownership of personal data, to partially fund the UBI for Californians.

Existing California state benefits include, MediCal, the California Medicaid program, CalFresh, the California Supplemental Nutrition Assistance Program (SNAP / Food Stamp program), CalWORKs, the California Temporary Assistance for Needy Families (TANF) program, and other welfare and public housing programs. With the exception of providing healthcare many of these programs could be consolidated into a general UBI fund. While this could face political barriers, we need to look into automating bureaucracy, using artificial intelligence to reduce the size and cost of inefficient state bureaucracies with the freed-up revenue helping to fund the UBI. All these sources of revenue combined could fund an adequate UBI for Californians for years to come without having to raise taxes on citizens or cause inflation.

Besides revenue sources there are many proposed models to look into. The concept of a negative income tax which would reverse “the direction in which tax is paid for incomes below a certain level” has garnered the support of figures as divergent as Martin Luther King and Libertarian icon Milton Friedman.  Richard Nixon, for another example, proposed a modified version.

Another model is Social Credit or a Citizens Dividend, based upon empowering the individual through self-development with a respect for private property. Basically under this model the basic income would be introduced and created through the treasury and then go directly to the citizens. This model would not require raising taxes and coincides with proposals for a public bank. It could be implemented through a new California State Bank.

On top of direct cash payout there should be a crypto bonus payout. It would be a California based crypto currency with agreements with CA business. It would be new money but would have less of an inflationary impact: a hybrid of the new crypto currency and cash. It is also necessary for there to be protections in the State Constitution to guarantee the citizen’s right to payouts in case of a scenario where there is a cashless society and the model is used to cancel dissidents.

As for eligibility there needs to be residency restrictions to prevent a free for all from outside of California. The basic income would be limited to US citizens who have been residents for at least 5 years. Other than that there would be no limitations or means testing. There should also be a bonus for artists, bloggers on the grounds that they are providing a public service and not served by the existing economic structure.

California has a unique opportunity to act independently as the inflation of the US dollar will likely get worse, and this California UBI must be a successful model for the rest of the nation. Economic trends of automation and income inequality will likely continue to get worse and the case for a guaranteed income will only be stronger with many competing proposals being put forth.