Shares in America's Model Proposal is a universal basic income proposal built around six core principles and fully funded by a progressive income tax surcharge. The proposal is meant to illustrate how a UBI of $1,000 per month per adult would effect household income distribution, and how it could be "paid for".
It is not a detailed legislative proposal, but is a complete numeric illustration, something that is missing in much of the literature. This proposal was developed in the book, Shares in America: The Case for a Universal Basic Income, Many of the charts and posts on this site are based on the calculations in the book.
Model Principles
The Shares Model Proposal is built around six core principles.
Universal
Every adult receives Shares. Children could receive a benefit through an individual savings account established in their name. Benefits are individual-based rather than household-based, similar to Social Security.
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Unconditional
Eligibility is not based on income, wealth, employment status, or any other requirement. There is no means testing and no work requirement.
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Cash
Benefits are paid in cash, allowing individuals and families to decide for themselves how best to meet their needs.
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Periodic
Shares would be paid on a regular basis, most likely monthly, although quarterly or annual payments are also possible.
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Not Counted as Income
Shares should not be included as income for federal taxes or federal means-tested programs. States could be encouraged through legislation and funding incentives to adopt the same treatment.
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Substantial
Shares should be sufficient to keep an individual from experiencing extreme poverty. In the US that means at least $1,000 per month. The amount should be adjusted for inflation and for changes in the labor market that change income distribution.
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Model Economics
The Shares model as described in the book, shows how household income distribution would change under the proposal and how the UBI transfer could be financed using a simple income tax surcharge. Both are based on a distribution of national personal income analysis published by the US Bureau of Economic Analysis. A spreadsheet showing this data for 2019 and the calculations used in the Shares model can be viewed and downloaded online. The calculations have been thoroughly vetted.
Two charts below show the before and after tax distribution of personal income in 2019 without Shares UBI and with it. These charts tell the story visually. Total personal income gets distributed differently but remains essentially unchanged. The rich stay rich, the poor get a boost, and most of the middle class benefits. Below is the graph of actual personal income distribution in 2019 as reported by the BEA.
The second chart shows the income distribution after a $1,000 per month per adult UBI is applied.
The spreadsheet shows calculations for a UBI of $1,000 per month for working age adults as well as a calculation for a UBI of the same size that includes seniors. The yellow bars on both charts include all local, state and federal taxes, and in the second chart a model income tax to fund UBI.
The black rectangles in the second chart are approximately $20,000 per year which is about how much UBI each household would get on average. Note that the black rectangles overlay part of the added taxes paid. In other words, part of the tax increase required for the model is returned as UBI for higher income groups. It is also obvious that the income distribution in the second chart is a bit flatter, but still skewed at the top end.
Both charts include the value of government benefits in income, UBI in the second chart is on top of those benefits, in accordance with the Shares model core principles.
The spreadsheet shows the progressive UBI income tax used in the model to calculate the above chart.
For a universal basic income targeting working age adults (18-64), the UBI tax raises more money than needed, generating an extra $4.5 trillion over ten years, while if seniors are included (as we believe they should be) there is a $1.3 trillion shortfall over 10 years.
To address that shortfall, we note that:
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Eliminating the cap on Social Security contributions would raise approximately $3.4 trillion over 10 years.
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The IRS estimates that $500 billion in owed taxes are not collected per year (net of recovery) coming to $5 trillion over 10 years.
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Our 9,000 page tax code includes provisions that result in tax expenditures of roughly $2.2 trillion a year ($22 trillion over 10 years). Many provisions of the code allow clever accountants and tax lawyers to devise tax avoidance schemes that may or may not have been originally envisioned.
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Tax cheating - illegal evasion rather than legal avoidance - estimates run from $100 billion to as much as $1 trillion per year. Every dollar spent on tax enforcement results in $5 to $9 in revenue.
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In short, the progressive income tax surcharge used in the Shares model could be made much smaller or perhaps even eliminated with a tightening of the tax code and better enforcement and/or eliminating the cap on social security contributions.
The Shares Model Proposal
We support most basic income proposals, here's ours