Amazon's automated warehouses become K-Mart's automated stock rooms. Check-out lines are replaced by assisted self-checkout, allowing one cashier to run 4-6 checkouts. Hamburger makers are replaced by hamburger making machines. Auto manufacturers use a fully machine-tooled line with only a few workers for final assembly. It's coming.
Our welfare system, in 2013, cost $1.62 trillion, of which $1.28 trillion was Federal spending. This is made up of Social Security Old-Age Pensions, Supplemental Disability Insurance, Food stamps, WIC, income security programs, unemployment, and the HUD direct housing voucher program. Just the Federal spending accounts for 37% of Federal spending, 46% of Federal taxes taken, and 55% of all Corporate and Individual income taxes taken at the Federal level.
If we drop the payroll OASDI tax and roll OASDI into general income, all income taxes increase by 9.34%. If we then slice those incomes by 55% and apply a 17.0% separate Dividend Tax on all currently-taxed Income, our tax brackets move from 16.2% on the lowest income earners and 39.6% on the highest income earners to 25.69% and 38.99%. Low-income earners around $9,000 income will take home $5000 more per year; middle-income earners at the $120,000 level will about break even; above that, it increases as high as a 3.17% take-home decrease around $400,000, again breaking even around exactly $2,000,000.
The base income tax system is progressive, and can be adjusted to smooth this out as appropriate; reducing the income taxes at the lowest level to around 0% would return the system to something resembling our current tax structure, with a 3% increase at the highest end. Considering this along with the above, the total taxes taken can raise from 16.2% to 17% on the most poor, and 39.6% to around 43% on the most rich. This compares favorably against current proposals to tax Millionaires and Billionaires at 45%, 50%, 60%, and 80%. Minimizing the taxes in the poor and middle-class ranges is a practical matter: it reduces their wage demand, reducing the cost of labor and slowing down all future transitions to new management strategies designed to reduce labor expenses; such management strategies have higher base cost, but lower labor utilization, and thus are cheaper only when labor is expensive or when the base costs factors of the new strategy have been refined into a significantly inexpensive form.
The 17% Dividend tax would be distributed among every natural-born, resident, American citizen over the age of 18. This specifically excludes the abuses of immigrants flooding to America to live on free Government money, and immigrants crossing the border illegally to birth an American citizen who then goes to live in Cuba or Mexico or wherever with a pension coming at age 18. It also excludes the abuse of welfare families popping out more babies to get at an additional per-child stipend by simply not providing one. The Dividend amounts to $6,558 in 2013; with the typical 3.4% total income growth per year, this amounts to $7,010 in 2015.
In 2013, a 750sqft apartment in a lower-class neighborhood rented for $725/mo, or $0.96 cents per square foot. Assuming an inflated $1.34/sqft, a 224sqft apartment could rent for $300. The model apartment houses a single adult individual and consists of a 6'x9' bedroom suitable to contain a twin bed and a small end-table dresser; a 10'x9' sitting room; a bathroom including a 3'x3' shower stall with corner sink basin and spigot mounted inside, totaling 20 sqft; and an 80sqft kitchen, one counter surface separating it from the sitting room to function as a prep surface and a dining table. These living arrangements provide an improvement over the standard soggy cardboard box inhabited by 600,000 of the United States's poor.
Assuming $300 for rent, out of the 2013 $546/mo, $246 remain. The cost of food is an important consideration. A survivable, but sub-optimal, diet largely including starches such as rice and sweet potatoes as well as vegetables will sustain a human being readily for under $100/mo; chicken and pork, at $0.01 per kcal and $0.005 per kcal, provide valuable fat and protein sources, although rice at $0.00043 per kcal is almost 10% as expensive as chicken and can make 2000kcal per day for 30 days at $25. A dry pound of pinto beans provides 1,572 kcal, a rate of $0.00025 per kcal, roughly $15 to satisfy the caloric needs of a human for 30 days. The $100 budget gives room for meat, beans, rice, vegetables, sweet potatoes, and squash to provide adequate macro- and micronutrients to sustain an individual human, allowing even for culinary flourish with a variety of ingredients, cooking methods, oils, and spices.
In 2012, I paid $57/mo for gas and electric in a 750sqft apartment. I have calculated $30/mo for utilities for a single person. The water utility carries the highest risk, due to the combined use of shower facilities; laundry facilities are predictable. By the same token, as a single male, I pay the minimum water fee 100% of the time: my household doesn't use 1 unit (6000gal) of water, so is charged for 1 unit; a combined low-income housing unit would divide this cost among many, so that 5 units among 10 households is still half as much. The heating utility carries the second highest risk; recommend thermostats locked to 72F or below heating, 76F or above cooling, with ceiling fans.
I have been generous with personal care items of soap and toothpaste, shaving cream, tampons, and so on at $35/mo; I spend $10-$15 on these things every 3-5 months. I have also amortized clothing at $35/mo, although I spent $500 on clothing in 4 years, averaging $10/mo.
This leaves $46 in the budget as a risk control on top of the conservative estimates for rent, clothing, and personal care. The Great Recession of 2007 represents a 5% loss of total income, translating to a 2013 decrease of $27.30/mo, leaving roughly $19 of this margin in the case of another major economic disaster; likewise, my calculations base on 2013, during a great recovery swing: economic growth will outpace the base 3.4%, so the error margin is actually higher and risk is lower. Finally, this policy creates several enormous markets, increasing job availability and, more importantly, total income--either the businesses or the individuals make more money in the end, but, either way there is more to tax and more to hand out.
This policy doesn't care about income distribution: when automation comes, goods will cost less to produce, and so prices will drop or businesses will become richer; either way, the buying power of the Dividend increases: it is either larger, or it is able to purchase more. The policy makes no attempt to tax the rich for being rich, or to effect any other policy by way of taxing carbon emissions or the like. Overall, it attaches itself to no specific economic condition, and avoids the risk of changing economic conditions.
This policy tracks inflation, but ignores wealth. As inflation continues, the dollar amount of the Dividend increases. Our economy also becomes more efficient and, thus, more wealthy over time: more things are produced with less labor and less energy, decreasing the inflation-adjusted cost of goods and services. Over time, the Dividend increases in buying power, but remains the same share of buying power: as the poor become more wealthy, so do the middle class and the rich. This policy makes no attempt to keep the poor at their lot, nor to elevate them at the cost of anyone else; it will naturally elevate them as scarcity decreases.
This policy survives economic downturns. It has enough padding to provide in the worst times.
This policy operates entirely from the Federal budget. The State welfare costs aren't addressed here; it is left to the States to decide how to handle their welfare systems. It is predicted that this policy will largely obsolete State welfare, causing a rapid decrease in welfare costs. It is also predicted that State welfare will remain, greatly reduced, to cover families with children, ineligible immigrants, any other corner cases not addressed, and any shortcomings such as less resilience to economic strife than I have predicted. As HUD and many food security programs are handled entirely at the State level, transition risk is mediated and mitigated by this strategy as well: businesses will have time to recognize the low-risk profit opportunity and construct a market to capitalize on it before food stamps and housing vouchers start disappearing.
The full plan includes a 15-year transition away from Social Security. Simply cutting off Social Security would be a bad political and economic move: A lot of people would not survive the immediate loss of income. Existing and soon-to-be retirees need advanced warning of a reduction of benefits, and the economy needs time to fully respond to the profit opportunity of the Citizen's Dividend. Instead, all Social Security benefits are reduced immediately by the Dividend; all recipients continue to receive exactly the same total dollar numbers combined from Social Security and the Dividend; and anyone reaching retirement age within 15 years of the passing of the Dividend is grandfathered on Social Security Old-Age pensions until they die. This cuts away most of the Social Security taxes immediately, and then eliminates the remainder over the next two generations.
It is a simple, well-examined, strongly risk-adjusted plan. It is 100% saturated 100% of the time, ignorant of economic conditions, and responsive to economic growth. It does not suffer or strain the economy in periods of high unemployment and high welfare need, because the welfare need is always 100% satisfied. It eliminates welfare traps and desperation, completely eliminating the need for a minimum wage and reducing the incentive for crimes of necessity (e.g. shoplifting food when starving, prostitution). It completely eliminates homelessness and hunger, thus reducing stress and exposure to physically adverse conditions, improving national mental and physical health.
I solved this problem a long time ago. It only took, like, a week to solve poverty.