The guaranteed annual income was to ensure the welfare of the people, but it is turning out to be a burden. With the revival in the policies, it is very important to note that it is going to cost the taxpayers a huge chunk of money. The people are going to bear the burden of the increased interest rates on the guaranteed annual income. These annual income interest rates are not only being implemented on the rich class but also the middle class as well. The huge impact of this is still to be seen soon as the country moves towards making rational decisions about this prospect. It is very important to understand that this guaranteed income was targeted to ensure a minimum wage amount for all citizens.
It is very important to estimate the cost of guaranteed annual income which the country, as well as the taxpayers, must bear. Multiple policy options can be used to estimate this cost on the part of the government. One can easily understand that this entire program is dedicated to providing a fixed annual income to the lower class. But this does not mean that the government is not going to bear the expense of it. Therefore, it is significant to know the importance of this project and how much it is going to cost in the future.
If all the citizens are catered to regardless of their age factor and are provided with $24,000 taxable income annually, it is going to cost a lot. According to an estimate, the total cost of providing this amount of money can add to a sum of $464 billion. This huge amount is to be borne by the people and the government alike, as the people is the ones providing taxes that can then result in the welfare of the overall society. This impact can leave a huge difference in the taxable income of the people and it is expected that the overall taxes will increase. The provision of $24,000 means that a total of 132.4% increase will be seen in the federal program spending.
One thing is to be kept in mind that the guaranteed annual income could be reduced in the future. All this will be dependent on the overall society’s working and how they are showing their turnover. The government cannot fulfill every person’s need and it is the responsibility of the citizen himself. The idea behind a second scenario is clawing back as the individual starts earning more money. It has been decided that a threshold of $77,000 will be considered as a benchmark for this action. Once the income has reached this threshold a claw-back rate of 15% will be applied to it. This will help lessen the burden on the part of the government and eventually on the citizens.
One action that the government can take is to treat guaranteed annual income as old age security. But this will mean that the overall benefit will decrease by three times. In the long run, it means that the government will be able to save more than $300 billion. The total cost is expected to reach up to $131 billion only. This overall decrease must be considered as a positive sign and must be implemented if possible credit provided. This will not only exclude the old age security from the guaranteed annual income, but the entire system will work on the age demographics.
The overall cost cannot be estimated without addressing the different opportunity costs that come with it. The overall impact on the economy is going to be devastating if such guaranteed annual income is taken away from the people. The people are always looking forward to the government providing them with necessities of life. But certain times it is easier for the government to introduce income programs rather than giving out incentives. The government must factor in a lot of aspects before making any decision about the guaranteed annual income. From a sociological point of view, the guaranteed minimum income tends to deconstruct the social solidarity and regulation offered by work.
When you pay your social contributions, you receive a guaranteed income from the government as a self-employed person in the event of pregnancy, maternity leave, informal care, forced termination, and pensions, but also in the event of long-term incapacity for work due to illness or accident. Even if you can therefore always count on a financial safety net from the public office, the amount you receive is not proportional to your professional income and is generally not sufficient to cover your on-going costs.
There is also an idea of guaranteed income insurance? In this case, you get an advantage in addition to the additional financial security. Indeed, guaranteed income insurance is attractive from a tax point of view. The allowance you receive when you are unfit for work is taxable, but you can deduct the premium paid in your professional expenses. This reduces your taxable income, so you have to pay less tax. Also, take this into account when considering the price of your guaranteed income insurance.
Guaranteed income insurance for the self-employed allows you to remedy this situation. This is flexible and simple additional insurance that protects you against loss of income if you are unable to work for a long time due to medical reasons.
The discussion of the cost of annual guaranteed income will be incomplete without the discussion of the tradeoffs in the designs. The government must work on cost control and make sure that the overall cost of annual guaranteed income is kept to a minimum. This will help the government to understand the tradeoffs related to poverty in the country and work accordingly. The reason for introducing their system is to ensure that poverty can be eliminated from the roots.
The guaranteed annual income debate is the subject of a strong contention, defended by both the right and the left, but suffers from serious weaknesses.