Census Bureau Data shows Basic Income Works

US Census Bureau data shows basic income works and successfully fights poverty.

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Government assistance (cash payments) lifted 45.4 million?Americans out of poverty in 2021, a Census Bureau press release claims. The Census Bureau estimates cash benefits lifted 38.9 million people out of poverty in 2021. Adding noncash benefits lifts raises the number to 45.4 million.

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Furthermore, Uncle Sam’s official child poverty metric, the Supplemental Poverty Measure (SPM), fell to the lowest recorded level in 2021, the Census Bureau claims. The Census Bureau claims the SPM fell by 46% in 2021, falling from 9.7% in 2020 to 5.2% in 2021.

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How Cash Fights Poverty

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To elaborate the number of people, the Census Bureau classifies as poor fell by 45.4 million, from 64.5 million to 19.1 million in 2021, the Census Bureau claims. In contrast, government assistance lifted 31.5 million people out of SPM poverty in 2019.

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The government benefits that lifted people out of poverty were the Economic Impact Payments?and the Child Tax Credit. To elaborate, the Economic Income Payments were the stimulus checks.

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These programs were modest. The Child Tax Credit provides $250 to $300 per month. The Stimulus Checks were $1,200 for adults and $500 for children in March 2020 and $1,400 to $2,800 per household?in 2021. Yet the Census Bureau claims the payments lifted 46 million people out of poverty in 2020.

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If the Census Bureau’s claims are true, cash fights poverty. Unfortunately, politicians cannot see it. Notably, the US Senate allowed the child tax credit to expire?in April 2022. To explain, the American Rescue Plan of 2020 raised the child tax credit from $3,000 to $3,600, from $1,400 to $2,000. Under the old system, the tax credit was $2,000 for households that pay income tax and $1,400 kids in families too poor to pay income tax.

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America’s child poverty rate fell from 15.8% to 11.9% in July 2021?because of the credit, the Columbia Center on Poverty and Social Policy claims. That’s the lowest child poverty rate since the 1960s and possibly the lowest child poverty rate in US history, Vox?claims. So yes, cash fights poverty.

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Could Basic Income Eliminate Poverty?

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I think the Census Bureau’s data shows basic income could work. Under a universal basic income?scheme, the government gives every citizen a cash payment regularly, usually once a month.

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My favorite basic income scheme, Andrew Yang’s Freedom Dividend, pays every American over 18, $1,000 a month each month. A Freedom Dividend could reduce poverty by paying every American $12,000 a year. This could lift people out of poverty and create millions of new jobs by expanding economic activity.

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One change I will make to the Freedom Dividend is to have it start at birth so each family could get $1,000 a month for each child. Pro-family Republicans and conservatives should support this because it gives people an incentive to have children. Note you never hear all the right-wingers bellyaching about the falling birthrate mention such a scheme.

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I want two other changes to the Freedom Dividend. First, I suggest giving anybody working as a public school teacher a $2,000 a month or a $24,000 year Freedom Dividend. Second, I will give every active duty military member, reservists, National Guard members, and honorably discharged veterans a $2,000 a month or $24,000 a year Freedom Dividend.

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These $2,000 dividends will thank those people for their service. They also fight poverty among those important professions.

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Could a Freedom Dividend Fight Poverty?

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Yang wants to pay for the Freedom Dividend with a 10% Value Added Tax (VAT) on all goods and services. Yang claims a VAT could raise $800 billion a year for basic income.

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I think a Freedom Dividend could lift 32.53 million to 38.23 million people out of poverty. To explain, the Official US poverty rate was 11.4% in 2020 the Census Bureau estimates. In contrast, the SPM poverty rate was 9.7% in 2022.

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The US population was 335.322 million?September 2022 WorldOMeter estimates. I calculate 11.4% of 335.322 million is 38.23 million and 9.7% of 335.322 million is 32.53 million.

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The government could distribute a Freedom Dividend without an elaborate social services, or tax infrastructure. Mailing out checks or sending electronic funds transfers (EFTs) is cheaper and easier than hiring tens of thousand of bureaucrats to “help” the poor.

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Moreover, the US government is an expert in distributing money. The Social Security Administration sends payments to 70.3 million people?each month. Hence, the infrastructure to distribute a Freedom Dividend exists.

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Is a Freedom Dividend Better than a Child Tax Credit?

A Freedom Dividend or a basic income could be more stable because everybody receives it. Hence, politicians will be afraid to oppose it.

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One reason the Child Tax Credit expired was that politicians think those who benefit it from don’t vote. Conversely, even Republicans such as Donald J. Trump (R-Florida) defend Social Security because senior citizens are more likely to vote.

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I think politicians will not let a Freedom Dividend expire because the middle class could profit from it. A 2020 Columbia University study found only 46% Americans?with household incomes less than twice the federal line voted in 2016, The New York Times?reports. In contrast, 68% of Americans with incomes over twice the poverty line voted in 2016.

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One reason people with more money vote is to protect government benefits. Giving a government benefit to all citizens ensures its survival. Notably, Social Security has survived since 1935, when Congress dismantled the rest of Franklin Delano Roosevelt’s (D-New York) New Deal decades ago.

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Thus, a basic income has advantages over the present welfare state or tax credits, which are easy for politicians to dismantle.

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Income Inequality is Rising

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I think America needs new programs to fight poverty because income inequality is increasing. The Census Bureau estimate the USA’s Gini Index, the most common measure of income inequality, grew by 1.2% from 0.488% to 0.494%?between 2020 and 2021. That was the first increase in US income inequality since 2011.

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Notably, the Census Bureau blames “real declines in income at the bottom” for the rise in income inequality. Hence, income inequality and poverty could worsen in America and hurt the greater economy.

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The Census Bureau’s data shows a Basic Income could be good for America. Unfortunately, our leaders refuse to see that data.