While healthcare spending touches on both the private and public sectors, the next source of UBI money comes entirely from government spending. Meet the single largest source of discretionary spending on the Federal government’s balance sheet - the Department of Defense. Before you run screaming to your keyboards with demands we SUPPORT THE TROOPS! Or THEY DEFEND OUR FREEDOM!!! Consider this: for the last seven years, the Pentagon failed every single audit Congress subjected them to. On average, the Pentagon could account for only 4 of every 10 dollars we gave them. You read that right; in 2023 the Department of Defense couldn’t account for 63% of their annual budget. I’m sure every one of our readers can imagine how their employer would react to finding out 60% of their budget was unaccounted for. And last year, the Pentagon budget came in a $997 billion.
The obvious rebuttal to a policy of cutting military spending would be that it would harm the troops or effect military readiness or not keep us at the cutting edge of being able to vaporize people from space or what have you. Looking at the FY 2024 Defense Department budget, we can see that operations and payroll cost “just” $463 billion. While this number doesn’t include procurement or VA funding, the point here is that, broadly speaking, it looks like there’s a lot of room to cut the military budget. So what would it look like if we simply returned the missing 60% to taxpayers. Spread out over the whole population (minus the top 1% of course), we could give back $1812 annually, or $151 per month. To every man, woman and child. And, we would still spend more on defense than our nearest rival China.
Our final contribution to the UBI pot comes from a part of the tax code highlighted in our book, Inequality by Design. In 2022 the IRS identified $600 billion in capital gains going to just 0.1% of households. That’s right, about 160,000 households made $600 billion of selling capital assets in 2022 alone. And keep in mind that figure is just the amount of money they made off selling assets, This tax does not touch the initial investment or the value of the good or asset being sold, just the profit. If we taxed those gains at 90% instead of the 20% they nominally (though not effectively) get taxed at, we could add $1636 annually or $136 monthly to the UBI pot. And that’s without even having to seize any assets. And given the amount of wealth siphoned off by the top 0.1%, we should be asking at a minimum if a wealth tax should be on the table.
So what does it all come to? How much money is floating around in the system which could fund a UBI program? The total would be about $2.9 trillion in one year, or 10% annual GDP. And the program would pay out $7,540 per person per year, or $630 per person per month. And this number comes just from identifying some low-hanging fruit. And while $7,540 might not seem like a life-changing amount to people in the top quintile of incomes, it would be for those in the bottom four quintiles. Not only would this money allow people to retire debts, get out of bad jobs or bad points in their lives, or even allow some to start up new businesses, we could almost guarantee that this money would go right back into the economy, spent on goods and services Americans need now, but cannot otherwise afford. A UBI would not only allow millions of Americans to take care of their bills, it would stimulate the economy through increased spending by the vast majority of the population. It is time to try the opposite of tax cuts for the rich and instead budget boost for everyone else.