Both companies and consumers make purchases, and both will pay VAT when they make those purchases.

Yes, but companies get back 100% of the VAT they pay. I live and run an international business in a VAT country for 25+ years, so I’ve been dealing with VAT filings internationally and intra-nationally for more than a quarter of a century.

… VAT, as implemented all over the world, is 100% paid by consumers and 0% paid by businesses.

Nobody is arguing VAT is not regressive.

So why fund the Freedom Dividend with a regressive tax? The US already has massive wealth inequality and numerous regressive taxes and fees. Why choose to fund a new program regressively at all? That is one of my 3 problems with Yang’s Freedom Dividend.

The US has some of the lowest marginal tax rates in the industrialized world. The estate tax continues to be modified to allow passing on massive fortunes to the heirs of the very wealthy, creating a permanent US aristocracy. Wealth taxes, land taxes, progressive investment taxes are all examples of taxes that Yang could have proposed to fund his FD. There is no shortage of money in the US. The question with a new policy is, where will the money come from? Yang chooses to base a huge amount of his funding on the poor and middle-class. Again, that is one of my 3 problems with Yang’s Freedom Dividend.

Does the fact that Medicare and Social Security could theoretically be eliminated mean we should never have implemented them? Of course not.

That is a red herring. We’re not talking about eliminating them, we’re talking about how to start them. If I had been around in the 30s and FDR had proposed funding Social Security with a VAT, I would have made the same arguments I’m making here.

Let’s continue with Social Security and the Freedom Dividend and my second problem with Yang’s Freedom Dividend. If you pay into Social Security, you get to draw from it. The government does not say that you don’t get to draw from Social Security if you are getting some other governmenet subsidy. Yang says the Freedom Dividend should be a right of every American citizen over the age of 18. He describes his Freedom Dividend as Universal Basic Income. But he doesn’t want to make it Universal. He has set it up to compete with existing social safety nets in the US, which are already woefully underfunded. There is no need for this limitation. It will create a huge amount of administrative overhead and has the stated goal of reducing or eliminating existing social safety net programs.

$1k in cash will never have the buying power on the open market as subsidized housing, to take one huge example. It is a libertarian approach which looks great to people who are cash poor, but it is a gift to the owner class. Similar to how Obamacare was a gift to private insurers. Government subidized healthcare, housing, transportation and food have the huge advantage in costs of having no profit margin.

Which brings us back to point 3. If you take all the funding, minus VAT, from Yang’s proposals, we could fund existing programs. Why use a higher cost (to the public) Freedom Dividend than democratic socialist programs that exist and work well all over the world — similar to Medicare for All.

Nobody’s situation will be worse with Andrew Yang’s Freedom Dividend.

That is false. Those who opt out of the Freedom Dividend will still pay VAT. In his Pod save America interview, Yang addressed exactly that point. He said, “The simplest thing is to scale up their current benefits so that they are unaffected by VAT.” Really? That is simple? Every single person who gets benefits will then need an additional test and their non-stacked benefits will be “scaled up” to cover what they pay in VAT? How will that calculation be made? Where will the money come from? And most of all — if it is “simple” to “scale up current benefits” then it must also be simple to fix current welfare so that there is no disincentive to work — meaning no hard cut-off line, but a scaling so that getting work never means getting less than you had in total benefits without work.

I half agree with Yang. It should be simple to scale current benefits to make sure there are no “disincentives to work.” With the increase last year to the Defense Budget, we could fund current programs to a level so that all of those in need could be covered, rather than only the current 25%. And then we don’t need the Freedom Dividend to replace current public support.

To finish this thread for me, I’ll again state that I’m not against UBI. I just have three problems with Yang’s implementation of it. Get rid of funding with VAT, make it universal, and fix and fund the current system first. Then I’m open to it.

Thanks for a nice discussion.