A Proposal for Universal Human Dignity in America

By Sean Diamond

(This is part 2 in a series on Universal Human Dignity.  See Part 1 here.)

Shortcomings of the Current American Tax Code as a Public Policy Instrument and the Shame of Public Entitlements

Since the institution of the federal income tax in the 16th Amendment to the United States Constitution, the American tax code has grown in complexity as political actors have sought to use it as a means of forming public policy while avoiding the unfavorable perception that they raised taxes. Over essentially the same period of time, the members of our society most in need of help – whether through medical tragedy, institutional discrimination, economic misfortune, or simply the natural aging process – have had their dignity subjected to the political will of elected officials and the public at large, with bureaucratic obstacles and social shame bestowed upon those unable to provide solely for themselves.

The economic windfalls provided by the tax code for those at the top of the socioeconomic ladder and the social shaming and bureaucratic harassment of those at the bottom perpetuates a sociogovernmental state of economic inequality. By convoluting the tax code and the benefit distribution process, existing federal policies have allowed underlying socioeconomic pressures to simmer in a bureaucratic malaise, introducing unintended inefficiencies and inequities, metastasizing into a Kafkaesque nightmare for many American families and communities.

A Technological Proposal for a Universal Basic Income

In order to support Universal Human Dignity with the least social and economic cost, the Federal Government should create and distribute a virtual currency in parallel with the traditional dollar. The administration of the virtual currency should be aimed at providing a Universal Basic Income to every citizen.

These virtual credits, unlike traditional economic currencies, should be limited in their usage and duration. That is, credits should only be redeemable for certain categories of good and services, specifically those required for survival and dignity. Also, these credits should be designed so that they cannot be accrued over prolonged periods of time, particularly across generations; they should expire if they are not used.

In practice, the government should setup an agency to manage a Universal Basic Income (UBI) Reserve Fund, which has two primary functions: (1) distribute credits to every citizen and (2) allow registered vendors who sell goods and services for survival and dignity to redeem credits for traditional currency.

As an example, this agency could provide every citizen with a steady stream of virtual currency (that is actually legal tender in parallel with the dollar). However, unlike a standard currency, it would be time stamped to change its value in relation to the dollar over a particular window of time. Whenever a citizen files their annual tax return, their virtual currency account would be filled with “fresh” currency that is time stamped to “activate” over the next 18 months (allowing for people who submit their tax returns at some point between January and April of each year with a little leeway for stragglers).

Each month a certain basic amount of virtual currency would “activate” that represents the amount that Congress deems necessary for a basic but dignified lifestyle. For the sake of example only, let’s suppose that this amount might start at the nominal equivalent of $2000 per person (for simplicity each credit will be represented as C1 and 100 credits as C100).

These credits could be designed to be spent immediately to cover each citizen’s cost of living, but not their cost of luxurious living. To encourage people to spend their credits and not hoard them, during the month that a credit is activated, it could be redeemed for $1.02 by vendors (or some other amount slightly higher than $1 to encourage its use by vendors). However, each month following the month of activation, the redemption value of each credit would reduce by half (rounding down) until it is worth less than 1 cent. For example a credit activated in January would have a time value of:

December (and earlier) C1=$0.00

January C1=$1.02

February C1=$0.51

March C1=$0.25

April C1=$0.12

May C1=$0.06

June C1=$0.03

July C1=$0.01

August (and later) C1=$0.00

If for whatever reason, it was necessary to adjust the redemption rates and/or the depreciation rates of credits, these rates could be easily adjusted every 2 years without causing any sort of panic, because no one would ever have credits that were more than 18 months in the future or about 6 months old. In the example, each time a citizen submitted their tax return, their account would be topped up with 18xC2000=C36000 on into the future (in addition to any lingering/depreciating credits that remained), but each block of C2000 would only be able to be spent starting in the month of its activation. One could easily envision how the credits could be redeemed through credit cards and smart phone applications, with the accounts of dependents linked to those filing tax returns on their behalf.

To ensure the legitimate redemption of credits, vendors would have to register to redeem credits.  At the register and on the price tag, all prices would need to continue to be listed dollars. Any vendor accepting credits for anything other than eligible necessities (e.g. food, healthcare, rent/mortgages, clothing) and utilities (e.g. water, electric, gas, cell phone, basic internet service) could be subject to losing the ability to redeem credits from the UBI Reserve Fund.

These measures could help ensure that everyone’s basic needs are met plus a modest but dignified quality of living. However, the inability to purchase everything with credits should encourage people to continue to seek out gainful employment to rise above a basic standard of living, go on vacations, buy luxury items, get additional internet based services such as streaming copyrighted entertainment.

By creating parallel currencies, society could potentially ensure a minimum standard of living, save on bureaucratic waste, and still encourage innovation and economic activity. Furthermore, a universal approach would remove the sting of shame associated with certain benefits provided to people of lower socioeconomic means.

See the next article in this series: How to Fund Universal Human Dignity in America

…or download the entire document here: Universal Human Dignity – Sean Diamond