Yang

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Central Texas College *

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2301

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Economics

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Feb 20, 2024

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Under Andrew Yang’s Freedom Dividend, every adult over the age of 18 would receive a monthly payment of $1000 and an annual payout of $12,000, regardless of their wealth, income, or job status. According to Yang, the program's objectives are to avoid or lessen poverty and to promote greater equality among citizens, as it is a “type of social security that guarantees a certain amount of money to every citizen within a given governed population, without having to pass a test or fulfill a work requirement” (Yang, 2020). There are a few issues with his strategy. First, in order to obtain cash payments, residents who now receive certain types of government assistance must give up such benefits (Mitchell, 2019). Second, the Freedom Dividend might encourage indolence. Third, it may discourage work that is done part-time. Fourth, it might be more expensive than the assistance program that is in place now, which would mean greater taxes. Consequently, higher income taxes may discourage people from working, which may also result in the provision of welfare support only to criminals (Pettinger, 2020). The Freedom Dividend has a number of benefits, including being simple to implement and avoiding the means-tested support poverty trap. It also discourages injustice, poverty, and homelessness, encourages socially beneficial endeavors like elder care, and inspires people to take risks and start their own businesses (Pettinger, 2020). Additionally, studies indicate that the program would result in a rise in full-time employment (Malinsky, 2022). Yang would create revenue in five distinct ways to cover the higher costs associated with the Freedom Dividend. They would include a 10 percent VAT, a tax on financial transactions, regular income tax rates applied to capital gains and carried interest, the repeal of the Social Security payroll tax salary cap, and the application of a $40 per metric ton carbon price. Yang

contends that the federal government would save money if people were given the option to forego their present benefits in favor of the cash benefit, as well as if they were allowed to keep their current benefits in lieu of accepting the cash transfer. According to the UBI Center, this effect will yearly counterbalance $151 billion (Pomerleau, 2023). In theory, I believe Andrew Yang's Freedom Dividend to be an excellent proposal. However, I don't believe it would be effective in real life. The American people are opposed to paying more in taxes, particularly in light of the current high cost of living. Moreover, it is quite unlikely that the Freedom Dividend could continually produce significant growth in the economy, even though it might in the short run. It would ultimately result in an annual increase in the budget deficit of $1.5 trillion, even after accounting for compensating reductions in government spending and improvements in economic performance. That is something we cannot afford. Mitchell , B. (2019, November 15). The “Freedom Dividend”: Inside Andrew Yang’s plan to give every American $1,000. cbsnews.com. https://www.google.com/amp/s/www.cbsnews.com/amp/news/the-freedom-dividend-inside- andrew-yangs-plan-to-give-every-american-1000/ Pettinger, T. (2020, March 18). Universal basic income - pros and cons. Economics Help. https://www.economicshelp.org/blog/17048/government/universal-basic-income/

Yang, A. (2020). The freedom dividend - yang2020 - Andrew Yang for president. Yang2020. https://2020.yang2020.com/policies/the-freedom-dividend/ Malinsky, G. (2022, July 15). 19% of people think universal basic income would alleviate work frustration-here’s what experts say. CNBC. https://www.cnbc.com/2022/07/15/how-likely- universal-basic-income-is-in-the-us.html#:~:text=UBI%20studies%20found%20that%20’full,to %20use%20at%20their%20discretion. Pomerleau, K. (2023, July 24). Does Andrew Yang’s “Freedom dividend” proposal add up? Tax Foundation. https://taxfoundation.org/blog/andrew-yang-value-added-tax-universal-basic- income/

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