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A VAT is a straightforward means to pay for BIG, and instituting VAT would also assist with another problem the United States faces. This problem has to do with taxes and international trade. The sleep-inducing powers of the US tax system are exceeded only by those of international tax codes and agreements, so I will be brief. Basically, income tax is a tax focused on producers while VAT is a tax focused on consumers. European nations have VAT and income tax, but it will help to assume that all their taxes come through VAT. When exporting goods to Europe, US companies must pay tax as a producer and then, when the goods arrive in Europe, consumers are charged VAT. When Europeans export goods to the United States, they do not pay VAT, and Europeans do not pay American income tax. So, goods exported from the United States are taxed twice (once on American producers and once on European consumers) while European goods are not taxed at all. This is a greatly simplified description, but it is in essence the truth. If the United States introduced a VAT, it would put the country on a fairer playing field with the rest of the world in terms of international trade. There are only two reasonable options for rectifying the current situation. One would be to change international trade laws to alter how VAT and income tax applies to imports and exports. The chances of doing this are slim to none. As noted, the United States is the lone holdout that does not charge VAT, and so other countries are not going to be particularly motivated to change a system that now favors them. The only realistic choice is for the United States to change to the model that most other nations have adopted. As it stands, US companies are forced to compete with a heavy tax disadvantage; a situation that does not seem tenable in the long run.

Tension across the Pacific is heightening as China’s grand strategy seeks to reorder the world to its interests. China’s fiery economic growth has rapidly cooled in recent years, but rather than curtail its plan, Beijing has doubled down, releasing short-term military modernization priorities for 2027. U.S.-China cooperation is now at the lowest point since relations were normalized, and Washington is increasingly concerned that a revisionist China may act brashly to grab what it still can in the near term, especially regarding Taiwan. If the United States seeks to engage a country with over four times the population in long-term competition, it is imperative that it approach the challenge by leveraging all available advantages, particularly soft power.

To successfully compete with China, the United States should seek to capitalize on the substantial benefits derived from increased immigration. The best and brightest of the world want to go to school, start businesses, and pay taxes in the United States of America. Instead of welcoming these individuals, restrictive policies have led America to mirror China’s demographic slump. In the past three years, the United States has issued visas to fewer than 3 percent of the over 20 million annual visa applicants, and even denies citizenship to veterans who served with the promise of citizenship. Population growth has depressed to the lowest level in recent history due to declining birth rates, increasing death rates, and persistent Trumpian immigration policy.

We’ve got kind of a problem here. On the right side of the pendulum, consumerism has reached an all-time high, with products reaching their planned obsolescence within absurdly short timespans and new products being rolled out (and bought) by the millions every day. And, since every action has an equal and opposite reaction , we have to expect consequences. So, on the left side of the pendulum, we’re looking at the very real possibility of a mass extinction, the sixth on record for our planet and the first since the extinction of the dinosaurs – sixty five million years ago.

You could argue that extinction is a natural phenomenon and you’d be right, in isolated situations. But considering the scale of this potential mass extinction, we’re talking the possible loss of three fourths of earth’s current species, it’s hard to view it as anything other than grossly un natural. Rather than the large-scale natural disasters like meteors or successive volcanic eruptions believed to have caused past mass extinctions, scientists say this one’s different. Human activities including deforestation, over-fishing, poaching and global warming could be to blame for a sixth mass extinction: Human activities largely driven by our society’s demand for having more than we need, resulting in the highest ever annual global waste generation on record. I’m not saying our garbage is the only or even the primary cause of our current environmental situation, but it plays a significant role, and the ‘must-have mindset’ driving it an even bigger one.

Population extinctions today are orders of magnitude more frequent than species extinctions. Population extinctions, however, are a prelude to species extinctions, so Earth’s sixth mass extinction episode has proceeded further than most assume. The massive loss of populations is already damaging the services ecosystems provide to civilization. When considering this frightening assault on the foundations of human civilization, one must never forget that Earth’s capacity to support life, including human life, has been shaped by life itself (47). When public mention is made of the extinction crisis, it usually focuses on a few animal species (hundreds out of millions) known to have gone extinct, and projecting many more extinctions in the future. But a glance at our maps presents a much more realistic picture: they suggest that as much as 50% of the number of animal individuals that once shared Earth with us are already gone, as are billions of populations. Furthermore, our analysis is conservative, given the increasing trajectories of the drivers of extinction and their synergistic effects. Future losses easily may amount to a further rapid defaunation of the globe and comparable losses in the diversity of plants (36), including the local (and eventually global) defaunation-driven coextinction of plants (3, 20). The likelihood of this rapid defaunation lies in the proximate causes of population extinctions: habitat conversion, climate disruption, overexploitation, toxification, species invasions, disease, and (potentially) large-scale nuclear war—all tied to one another in complex patterns and usually reinforcing each other’s impacts. Much less frequently mentioned are, however, the ultimate drivers of those immediate causes of biotic destruction, namely, human overpopulation and continued population growth, and overconsumption, especially by the rich. These drivers, all of which trace to the fiction that perpetual growth can occur on a finite planet, are themselves increasing rapidly. Thus, we emphasize that the sixth mass extinction is already here and the window for effective action is very short, probably two or three decades at most (11, 48). All signs point to ever more powerful assaults on biodiversity in the next two decades, painting a dismal picture of the future of life, including human life.

A number of researches study the impact of inequality on innovation through price- and/or market-size effects (Foellmi & Zweimüller, 2016). On the one hand, price effect implies that inequality positively affects innovation, because willingness of rich consumers to pay high prices for new products allows innovators to increase the mark-ups that increase their incentive to innovate. On the other hand, inequality shrinks markets for new products, as only a small number of consumers can buy them. Thus, inequality negatively affects innovation. Whether inequality enhances or weakens the innovation depends on the relative importance of these price- and market size effects.

Inequality can reduce also a number of people capable of investing in innovations, which also can have a negative effect on innovation.

Equally skilled children from lower income households are less likely to become inventors than their higher-income counterparts, according to a study published by the Equality of Opportunity project. Race and gender discrepancies were reported, as well. "These gaps don't seem to be about differences in ability to innovate — they seem directly related to environment," study author Raj Chetty told The Atlantic's Alana Semuels.

The bottom line: Lower income children, children of color, and female children aren't being encouraged to become inventors, according to the study authors. This means people who have the potential to innovate are entering other fields. And since innovation leads to economic growth, the gaps are harming the U.S. economy, they argue.

The problem is commonly understood as an issue for those who have less, and it certainly is. But recent studies demonstrate that inequality is bad for everyone in society.

Some of the pain is economic: The studies suggest that the inequality depresses economic growth, leaving less for society to divvy up — regardless of how its members decide to do so. And some of it is social: Studies have found that inequality, particularly the high level seen in the present-day United States, gives rise to criminal behavior.

One way to summarize what these data tell us is that the vast majority of households (those outside the top 1 percent) are losing out in claiming their proportionate share of total income growth in two significant ways. First, workers as a group are losing out to capital owners, with the shift from labor to capital income explaining a significant portion of the rise of the top 1 percent. Second, the bottom 99 percent of income earners in America are able to claim only an ever-shrinking portion of the overall wage bill, with the highest-paid workers in the top 1 percent more than doubling their share of labor income over the last three and a half decades.

In our view, these are simply two sides of the same coin: a pronounced reduction in the collective and individual bargaining power of ordinary American workers that led to pay growth lagging productivity so badly in recent decades. If wages of the bottom 99 percent had kept pace with productivity growth for most of the past generation (the way that typical workers’ wages did in the post-WWII generation), then most of the increase in income inequality we have seen simply would not have had space to develop, as concentration within labor incomes would not have grown and the share of total output available to be claimed by capital owners would have been significantly smaller.6

The Freedom House report underscores how inequality and authoritarianism reinforce each other. Researchers have found that when people are unable to improve their economic situation through hard work they may come to believe the system is "rigged" against them. Many become more likely to support authoritarian, populist leaders who promise to do things like "drain the swamp" and "make America great again."

"The central message of populist movements has historically been that the common people are being exploited by a privileged elite, and that radical institutional change is required to avoid such exploitation," as a United Nations report described last year.

Most democratic societies have experienced a rapid increase in income inequality over recent decades. Across OECD countries, the average share of disposable income earned by the top 10% has increased and is about 9.3 times higher than the income of the bottom 10%. Income inequality has probably further increased during the Covid-19 pandemic. What does this unequal allocation of economic resources imply for liberal democracies?

In the last couple of decades, liberal democracies have found themselves contested by populist parties. These parties separate society into two homogeneous groups – “the pure people” versus “the corrupt elite” – and aim to implement the general will of the people irrespective of existing liberal democratic institutions. While mainstream parties have suffered dramatic electoral losses, right-wing and left-wing populist parties are on the rise all over Europe. More than one in four voters cast their vote for an authoritarian populist party the last time they voted in a national election.

There are multiple interactions and feedbacks between the planetary boundaries (Lade et al., 2020). The same is true for the social and ecological crises. The effects of the latter are borne disproportionately by the poor, resulting in an even greater transfer of wealth to the rich (Hsiang et al., 2017). The social crises of poverty, inequality, and indebtedness are also likely drivers of the ecological crises, particularly in rich nations (Grunewald et al., 2012). Inequality exacerbates ecological harms through status-based consumption (Wilkinson & Pickett, 2010) and via the wealth effect, whereby greater wealth correlates with a larger ecological footprint. It is also associated with longer working hours and higher levels of debt, “both of which stimulate consumption and emissions” (Gough, 2017, p. 81). High inequality also facilitates elite political capture (Oxfam, 2019), allowing the rich to “set agendas and inculcate selfish values” (Gough, 2017, p. 81) and so erodes the social capital required to “demand, enact and enforce environmental legislation” (Raworth, 2017, p. 172).

Poverty and inequality are among the most pressing and persistent problems in US society, and the COVID-19 pandemic underscores how perilous—and deadly—inaction on these issues can be. People with low incomes work essential jobs in transportation, food production and delivery, health care, and other service-oriented industries that put them at risk for contracting COVID-19 and may compound existing health, social, and economic challenges they faced even before the pandemic. Additionally, about half of these low-wage workers are non-White and are more likely to experience barriers to health care and suffer from comorbidities than their White counterparts because of systemic racism.1 Beyond occupational risk, people with low incomes suffer from more comorbidities that heighten the risk of infection and hospitalization. Data from Medicare, for example, showed that low-income older adults were more likely to be diagnosed with and hospitalized for COVID-19 (Figure 1)2; once hospitalized for COVID-19, older adults and those with certain underlying medical conditions face a mortality risk of 30% or higher.3 The COVID-19 pandemic clearly shows that income inequality is a matter of life and death.

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A VAT initiated in 2020 at a 10 percent rate would raise $247 billion, or 1.1 percent of GDP, even after funding a UBI that provides families payments equal to the VAT rate times twice the poverty line (Table 3). Over the course of 2020– 29, the policy would raise $2.9 trillion. If a UBI were not implemented, the VAT would raise revenue by a whopping $842 billion in 2020, or about 3.8 percent of GDP.6 The 10-year revenue total from the stand-alone VAT is about $10 trillion. The net revenue generated by a stand-alone VAT would provide an enormous pool of resources to address social and economic problems.

Since the 1970s, economic inequality has soared dramatically across the globe and particularly in the United States. In that time, one of the obstacles of using fiscal policy to address inequality has been the growing myth of the “overtaxed American”—the misguided notion that U.S. taxpayers pay more in taxes than residents of other advanced, industrialized countries. This myth has persisted, in part, because of the peculiar and distinctive nature of the fractured American fiscal and social welfare state. Even a cursory review of comparative tax data shows that the United States, by most measures, is a low-tax country compared to other affluent nations. One reason for this shortfall is the missing U.S. value-added tax (VAT).

Unlike the United States, other developed countries fund robust social spending through a balanced mix of levies, including by relying on broadbased national consumption taxes such as a VAT, which produces a tremendous amount of government revenue. By contrast, the United States has historically rejected comprehensive national consumption taxes, suggesting something distinctive about American fiscal policy. This American fiscal exceptionalism leads to a series of important research questions that may help us understand the relationship among fiscal policy, social welfare spending, and economic inequality: Why is the United States such an outlier in global comparisons of national taxes? Why have Americans historically resisted broad-based national consumption taxes of any kind? Simply put, why is there no U.S. VAT?

It is well-known by now that income and wealth inequalities have been soaring for the past half-century across the globe. Although some developing countries have seen a decrease in poverty and a rising middle class during that period, much of the world has experienced dramatic increases in within country economic disparities. In the United States, the growing concentration of wealth has been particularly pronounced, especially at the top end of the socioeconomic spectrum. While the details of this increase have been debated recently by experts, most agree that both income and wealth inequality have increased significantly.

One prominent obstacle to addressing U.S. inequality has been the fractured nature of the modern American fiscal and social welfare state. The combination of a highly salient federal system of direct and progressive taxation and a more shrouded social welfare state has led to a unique type of political cognitive dissonance that, in turn, has helped perpetuate the myth of the “overtaxed” American—a myth that has been exploited by anti-statist politicians and lawmakers for decades.

If taxation could undermine the effects of the Basic Income, then we must consider whether those advocating Basic Income have identified any innovative tax policies that might be able to meet such a criticism. Some of the ideas for paying for Universal Basic Income that are practical, like a flat-rate sales tax or an income tax that affects most transactions, would nonetheless be flawed in the way they account for economic change. However, one method for taxation that is practical but different than normal taxation is a value-added tax (VAT), a method that taxes the value added at each part of the manufacturing process of a product. European governments have employed a VAT in order to generate revenue from businesses that are traditionally left out of taxation. The efficient manner of value-added taxes cannot be understated with most of the Organization for Economic Co-operation and Development (OECD) members finding a significant amount of funding from it. As William Gale of Brookings Institution observed, “The VAT can raise substantial amounts of revenue. Among OECD member countries in 2016, VATs were the third largest source of revenue behind the individual income tax and social security contributions and raised about 7 percent of GDP on average.”25 Other professionals also agree that a value-added tax is much more preferrable than other forms of added taxation, “a VAT is a consumption tax. Economists of all stripes agree that if there must be a new tax, a broad-based consumption tax will do the least economic damage. Further, all the world’s other leading economies have VAT regimes.”

One way to pay for BIG is to institute a new tax to cover it. The proposal would work for a new income tax as well, but I will explore the idea of what is known as a “value-added tax” (VAT) to pay for BIG.

[Table 2.1 omitted]

Humans have fought over food and the means of producing it for 20,000 years, as rock art in Australia shows. Food, water and land scarcity are primary drivers in two thirds of modern conflicts today. Indeed, many people seem to have forgotten that the primary German war aim in World War II was to take farmland from the Soviets and put German farmers on it. It is very likely that controlling the Ukraine’s bountiful and reliable food bowl is among Putin’s main aims also. In the short run this is imposing hunger and even starvation on hundreds of millions of people far beyond Europe. 

Spreading hunger in turn snowballs into government failures, civil wars and refugee tsunamis around the world – as it did in 2008 when a shortfall in Ukrainian grain exports led to revolutions in three Arab countries. Already, a third of a billion people – equal to the entire population of Europe – leave their homes each year, either as refugees or economic migrants, to seek better lives in countries which seem more stable and food secure. War will add to the flood.

One of my favorite liberal policies is the basic income proposal. The idea is that all citizens have a basic guaranteed income, below which no one may fall. As the argument goes, this supplies more flexibility than basic provision of essential services, and renders recipients much more autonomous than they currently are, since the government tends to spend redistributed money on the things it values the most, rather than the things that the poor value the most. There’s also a fairly easy way to run such a program: instead of making the basic income available only to the poor, you can make it a citizenship grant available to everyone who files tax returns, like social security. This radically simplifies the administration and eliminates the wasteful need to inquire into the deservingness of the recipients. If you’re a citizen, you get a check. Alaska has a system like this for all residents.

As I wrote recently, the dark side of the basic income proposal is that it privileges citizens over non-citizens. Perhaps this dark side is mitigated a bit if every nation-state in the world enacts a basic income, but there’d still be horrible inequalities between nations. However, in this post I want to argue that this kind of inequality is better than the status quo: “second-best” ideal theorizing… with a dash of public choice caution for good measure

Assuming technological progress and rising labour productivity, slower growth (not to mention degrowth) might generate higher unemployment (see Chapter 4 of this Handbook). Basic Income is essential to ensure that everyone has an income whether or not they are working. It also makes it attractive to engage in other non-employment activities, which are typically ‘far more labour-intensive and less natural-resource-intensive than formal production is’ (Van Parijs 2013: 270).

For real freedom to be ‘at as high a level as is sustainable’ (Van Parijs 2013: 271), the level at which the Basic Income is paid will need to be at the highest possible feasible level, but that in itself does not tell us whether it will be below or at a sufficiency level. If it is below sufficiency level then it will not enable individuals to exit paid employment and it will tend to increase consumption, whereas if it is enough to live on then it will not (Gorz 2002, 1999; Mylondo 2010, 2012; Birnbaum and De Wispelaere 2016).