Here’s how to implement a guaranteed minimum income

By Chelsea | January 6, 2021 |

Photo by Debate.org

By Ralph Dickerson

This country needs to engage in a serious discussion on how to enact a guaranteed minimum income in an economically feasible way, a way that does not cause hyperinflation and cause the economy to implode. Our economy exists as a delicate balance between supply (items produced in the economy) and demand (things people purchase). While demand needs to increase in the economy from year-to-year, it must do so at a pace that allows the production side of the economy (supply) to remain in balance with the demand side (things people purchase), or massive inflation results.

Share the wealth tax
I propose we enact up to a 15-percent “share the wealth” tax to help fund the guaranteed minimum income. This tax goes so solely to fund the guaranteed minimum income, and if the time comes where it takes less than a 15-percent tax to fund the guaranteed minimum income, the tax rate drops to bring in the amount needed that year. This tax applies to each citizen, legal resident and business in this country.

For businesses, the tax applies to gross receipts, not net income.
Since we need revenue to fund this tax, we allow individuals to make as much money as possible each year. The left in this country wants to eliminate all millionaires and billionaires, but eliminating them eliminates the revenue needed to fund this proposal. For example, 540 billionaires exist in this country, and collectively their wealth totals approximately three trillion dollars. If we confiscate their wealth, where do we get the revenue to fund this proposal when we spend that three trillion? Letting the rich make as much as possible creates a never-ending stream of revenue to fund the guaranteed minimum income.
The guaranteed minimum income is not added to wages already paid by employers, but replaces the system whereby employers pay employees wages. Under the guaranteed minimum income system, the government sends each eligible individual a monthly check similar to how Social Security works now. To qualify for the guaranteed minimum income, a person must work at gainful employment at least 25-hours per week. This proposal does not reduce the workweek to 25-hours per week, the person works the number of hours scheduled by the employer.
For example, if an employer schedules an employee to work 40-hours per week, but the employee fails to report to work after working 25-hours that week, the employer possesses the right to terminate the employee for failing to report to work. Nothing in this proposal interferes with the employer-employee relationship in regards to the number of hours worked per week.

Eligible persons receive the guaranteed minimum income for life.
When the person retires, he or she continues to receive the income each month, and the income increases yearly just like for everyone else receiving it. The only change is the work requirement for retired persons goes away.

Enacting a guaranteed minimum income
So, how do we enact a guaranteed minimum income? The first year each eligible person receives from the government the same income as the prior year, given out in monthly installments, up to $45,000 the first year. If a person made $30,000 in income the prior year, that person receives a $2,500 check each month from the government. If someone made $65,000 per year the prior year, the government issues the eligible person a $2,500 monthly check, and the employer pays the remaining $20,000 per year. An employer cannot reclassify its wage scale to escape paying its share of the wages over $45,000. As the guaranteed minimum income increases each year, the amount of wages paid by the employer decreases each year until eventually employer based wages disappear entirely.
Next, we increase the guaranteed minimum income each year by the historic rate of inflation plus $25. The historic rate of inflation starts with the year 1985, and averaged with each year since then. For example, inflation averaged 3.9-percent in 1985, 1.9-percent in 1986 and 3.6-percent in 1987. The three-year average totals 3.13-percent. The first year we take the $45,000, add $25 to it for an amount of $45,025. We then multiply this amount by the historic rate of inflation, which equals $1,409.28, and add this amount to the $45,025 to arrive at $46,434.28.

We follow this formula each year.
In year two, we take the $46,434.28, add $25 to it, and then multiply this total by the historic rate of inflation. We follow this formula until the inflation-adjusted income (the 2020 wage) reaches $50,000. At $50,000 we add $20 per year for a decade plus the historic rate of inflation. We reduce the dollar amount added each year by $5 until it falls to $5 per year, and then we hold it there. While it does not sound like much, the wage increases by a percentage each year, not just a dollar amount. Over time the percentage of income growth above the rate of inflation builds up, which allows real wages to increase each year.

I did not forget about lower income levels in this proposal.
We bring the lowest income levels up each year until it finally equalizes with everyone else. We bring the lowest income levels up to the guaranteed minimum income amount over a 30-year period. It works in this manner. Let us use the same numbers from the earlier example. In year two, the guaranteed minimum income totals $46,434.28. The current minimum wage rate is $7.25 per hour. Multiplied over a 40-hour week, this amounts to $15,080 in yearly income. To arrive at how much to add to the $15,080 we subtract the $15,080 from the $46,434.28, and arrive at a figure of $31,354.28. Next, we divide the $31,354.28 by 30, and arrive at $1,045.14. We add this figure to the $15,080 to get $16,125.14. The next year we subtract the $16,125.14 from the new guaranteed minimum income level, divide this amount by 29 and add it to the $16,125.14. The next year we divide by 28, the next 27 and the next 26. We do this each year for 30-years until everyone makes the same guaranteed minimum income.

Different income levels reach the guaranteed minimum income at different times.
Six different income brackets exist under this proposal: $45,000 and under, $40,000 and under, $35,000 and under, $30,000 and under, $25,000 and under and $20,000 and under. For people making from $45,000 to $40,001 per year, we follow the formula mentioned for the low-income brackets, but the yearly difference is divided by five the first year, four the second the three the third year until the amount equals the adjusted guaranteed minimum income.
For persons in the $40,000 and under income bracket, the difference gets divided over a 10-year period until the guaranteed minimum income is reached. As we go down the income bracket scale, we add five years to the time required to reach the guaranteed minimum income until we get to the 30 years for the lowest income bracket.

Guaranteed minimum income applies only to citizens and legal residents of the U.S.
People here illegally do not qualify. The guaranteed minimum income does not prevent a person from making as much money as he or she wants; it is simply the floor, and the floor rises a slight percentage above the rate of inflation each year. As true income rises each year, the economy also grows which leads to a situation where we have an ever-expanding economy. Though the economy expands each year, it does so at a measured pace, which prevents massive inflation from happening.