Could Universal Basic Income be Coming to California?
The introduction of AB 271 is a significant development for universal basic income advocates.
On February 21 California Assemblyman Evan Low introduced AB 271 to create a universal basic income (UBI) of $1000 per month for California residents over 18, except those receiving certain other state assistance. The Cal UBI would be funded by a new “value-added tax of 10 percent on goods and services, except medicine, medical supplies and equipment, educational materials, including textbooks, tuition or fees for education, food, groceries, and clothing.” The bill has not yet been scheduled for committee hearing.
What is UBI?
The idea of a universal basic income is at least a couple hundred years old and refers to guaranteed payments made to the population from the government. The details vary regarding the quantity of income, how income is generated, and exactly who in the population receives the funds. It differs from other forms of social security in its scope and lack of requirements. Most UBI proposals are not strictly “universal”, for instance Low’s proposal excludes children and those receiving certain assistance, and several UBI trials only apply only to those under a certain income threshold, but are still much more broad than other forms of government assistance.
Variations on UBI have been tried a few times on different scales. In Finland from the start of 2017 to the end of 2018 unemployed citizens received a little over $634 a month, in a trial of UBI that had mixed results. In the U.S. in the 60’s and 70’s under President Nixon the Office of Economic Opportunity (OEO) conducted experiments with what they referred to as “guaranteed-income”. The trials were run OEO Director Donald Rumsfeld and Dick Cheney and were largely seen as a success. However, when Nixon tried to expand UBI the bill did not make it past the Senate.
Opponents of UBI believe that it encourages people not to work and that the amount of taxes that would be needed to generate the necessary revenue for the program would discourage business. Supporters say that UBI can have a range of benefits from improved health and happiness, to job growth, and even improving gender equality.
Democratic Presidential Candidates on UBI
When Assemblyman Low announced his introduction of AB 271 he mentioned former Presidential Candidate Andrew Yang. UBI was the key issue for Yang, who dropped out of the race on February 11. Yang may have failed in his presidential bid but did succeed in bringing some national attention to the concept of UBI. He has pledged to throw his support behind any remaining candidate who supports UBI but there don’t seem to be any takers among the current front runners. Senator Bernie Sanders (D -VT) would seem like the logical choice to back UBI but he’s been critical of the proposal.
In the end it is probably a moot point where the Presidential Candidates stand on the issue as it is extremely unlikely to gain traction on the national level. There are some high-profile businesses supporters of UBI. However, any UBI program would create a substantial new tax burden most likely for businesses and or wealthy individuals so it would face considerable opposition there. In spite of its Republican history in the U.S. the concept of UBI is generally seen to be anathema to the current Republican party, and many moderate Democrats also may not support the necessary tax increase and social welfare expansion. A Federal UBI bill would stand no chance of passing in the near future so for the time being any action on UBI will take place at the state and local level.
State and Local UBI
Alaska’s distribution of oil dividends is sometimes mentioned as a form of UBI, but the payments received by residents usually amounts to around a hundred dollars a month which is below what most UBI proposals call for. Because the dividends are generated from oil sales rather than taxes, this program also doesn’t share the revenue generation challenges and drawbacks of UBI in other places.
In 2017 Hawaii got some media attention as the “first state to pass a bill supporting basic income”, but this was something of a misrepresentation. What passed in Hawaii was a resolution, not a bill, and it did not mandate that the state create or study potential UBI programs. House Concurrent Resolution 89 requested the Department of Labor and Industrial Relations (DLIR) and two other departments to convene a working group. Per their testimony on the measure, DLIR would have needed funding to participate in the working group, which they did not receive, so in the end no action was taken.
The first real test of UBI in the U.S. since the OEO trials has been undertaken in Stockton California. Called the Stockton Economic Empowerment Demonstration (SEED) the program is giving 125 low income residents of the town $500 a month from February 2019 through July 2020. So far the results in Stockton seem to be positive, residents are spending the money primarily on food and other essential items. Several states are also considering UBI trials but at the moment Low’s AB 271 is the only real attempt at getting a full scale state wide UBI program off the ground.
The success of limited small-scale programs is notable but doesn’t not necessarily mean that UBI would work on a larger scale. SEED was funded by private donations and grants, rather than a tax increase. Finland’s program was tax funded but only applied to lower income citizens and Finland’s population is about 5.5 million so it still does not really provide an accurate idea of what would be needed to provide UBI to all adults in California where the total population is almost 40 million. Even in fairly liberal California many of those 40 million residents will not be happy about an added 10% tax on most business transactions in the state. Assemblyman Low and the other proponents for creating large scale UBI will have an uphill battle, but the introduction of AB 271 is a start.
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