This paper discusses the impact of Universal Income on taxation and how the government funds its day-to-day operations. It shows that although it does not have to affect taxes at all, it could be a means to simplify the tax system. Universal Income could also be used to shrink the influence of government and empower the people.
Universal Income Credit: Taxes and Public Services
Universal Income can operate entirely independent of the tax system, and thus does not require the tax system to change in order to implement it. However, Universal Income can solve a number of social problems that would make it possible to SIMPLIFY the tax system. Plus, it could also transform the way in which the government funds its day-to-day operations.
Simplifying the Tax System
Universal Income does NOT eliminate the need for taxes—it is not a magic bullet to cure the world’s ills—but it can greatly simplify the tax code. First, because ALL citizens receive enough money to live on, there is no longer a need for Social Security, Welfare, or Disability. Thus, those taxes can be eliminated from the system. Second, because we have a base-line income, we can do away with the graduated income tax and switch to a flat-rate tax.
By coupling Universal Income with a flat-rate tax, the entire system of deductions, returns, and credits can be eliminated. Universal income provides for everyone’s basic needs, while also providing incentives for industry and charitable service. And, the flat tax makes it more difficult to cheat and would be easier to enforce. Together, these two accomplish everything the current system wishes to achieve, and does it more efficiently.
Simplifying the tax system would save private industry BILLIONS of dollars each year plus millions of man-hours in tax preparation. It would free up those resources to be invested in more productive activities. In addition, Accountants and Lawyers could also put their talents to better use in other areas of the economy.
Transforming Public Service
In addition to simplifying the tax system, Universal Income could change the way the government gets funding for projects. Today, it is very difficult to get money to fund government projects—even for things that everyone agrees needs to be done. Politicians wrangle for months or even years over funding because they either need to raise taxes, or incur debt to pay for it.
Universal Income creates a third option for government funding: VOLUNTARY contributions. Rather than debating over whether to FORCE everyone to pay for a given project, funding and labor could be obtained directly from the people. This bypasses Partisan and Pork-Barrel Politics and allows The People to vote with their time and money whether or not a project is worthwhile.
An even more radical approach would be to make ALL government positions voluntary. Because everyone receives Universal Income, politicians have no need for a salary or pension. Government positions would become genuine acts of SERVICE rather than a way to make money. It also means that government employees must deal with the same challenges faced by every other citizen.
Although Universal Income does not require the tax system be reformed, it opens the door for radical changes in government funding. We could replace the current tangle of tax laws with a simple flat tax, and fund new programs with donations. We could also eliminate all government salaries and pensions, making all positions voluntary. The government could be smaller and get more done.