Currently we have the Earned Income Tax Credit which can greatly change the amount of money that a family takes home in a year. Milton Friedman was one of the earliest proponents of this system, at the time called the Negative Income Tax, but wanted it to be a minimum guaranteed income. In the current program, essentially, you get paid to live in the United States instead of paying taxes in the normal system.
Surprising to most, a lot more people get this amount of money than one would think, and the IRS site for 2014 taxes recommended that earners of up to 52,000+ check to see if they were eligible.
Combined with the EITC low-income families often qualify for SNAP which are usually called Food Stamps, and other forms of welfare and safety net programs which include unemployment, Medicare, CHIP, and Social Security. The latter few programs literally account for nearly 50% of government spending.
My question is, do you think it would better to just guarantee that there will be a small income for all people (in the United States for example) in order to unify and streamline these programs, and to better provide for the common welfare?
I think that maintaining an strong incentive to participate in the labor force is crucial to pursuing a unified political system. This may be somewhat tangential, but one of the main factors economists and migration scholars have identified in determining the success of integration of immigrant populations has been labor force participation. Here is one free article on the subject, and here is one paywalled article--you can read the abstract I think it is important to consider how government services can increase the incentives to work. Harris Rosen's philanthropic project in Orlando, FL is a great example. All he did was promise to pay college tuition for any high school graduates of Tangelo Park, and he offered to cover child care costs for young, single mothers who were in school. That's a very simple program, and it has had astounding effects: nearly 100% high school graduation, most go on to college, quadrupled property values, and plummeting crime rates, all for only $11 million. That's really cheap for such a turn around. For me, ideas like this lead less to focusing effort on welfare, and more to effort on providing and incentivizing education and making sure people get paid well. Both of these are why I tend to more support the Bernie Sanders line of reforms (free education and guaranteeing decent wages) rather than welfare. I know this doesn't really address your prompt that well, but I just thought I'd share the bit of thinking I've done on the topic. EDIT: I screwed up the links.
One of the primary issues that I relate to a minimum income is the rise in automated jobs. When employers find it cheaper to automate most labor, which will happen, productivity will continue to rise while available jobs will continue to fall. This brings up a real issue, in that some people will not just be unemployed but unemployable. Do you think that a basic income will eventually become necessary, due to a lack of available work?
I actually ask the question with that in mind. I have an interest in economics and see employment ending up as mostly automated. Technology is just moving faster than ever, and we've automated so many of the jobs that are out there already. In fact, I'm typing this to you while I'm at work since I automated my job and have time now. I did not tell my boss. Even if we were to automate everything in the world, there will still be a few jobs left. I don't know if we would be able to automate judges for example. But maybe we will. Either way, by the end of the transition there won't be enough jobs to sustain everyone. And in actuality, that will happen sometime during the transition. It would even make sense to wonder if we would recognize the point if we saw it. Perhaps it is next year? I doubt it, but I don't know. We also have to decide what sustaining someone means. In the case of a mincome, there will still be wealth inequality. If we all started making the same amount of money tomorrow, Bill Gates is still rich. Most home owners would be the wealthiest as they would actually have a piece of land. Governments would essentially have to be paid by the federal government as they won't be generating any revenue from pay checks, and sales taxes will be less due to lowered sales. That would hold them hostage to a higher powers' whims (see Greece) regarding spending. To me, it would feel like going back to live with your parents if they were paying all of the bills. So if the powerful have more power because they are also now feeding you, there is a dystopian figure hiding in the shadows of mincome. Could be nothing in practice, but I don't know. However, at this point I think that there are still significant opportunities to offer employment to those who will work to attain it. With the rapid onset of new industries and not just the mechanization of old ones, there is a lot of transitional unemployment as laborers move from one industry to the next. We see that as workers unemployed by the auto industry have moved into renewable energy (just an example) and unemployment bottomed out again. As there is sufficient employment at the time, it would not make fiscal sense to offer someone more money to not work. This would discourage workers, discourage gains in efficiency for the capital owner for a period while inflation crept up, cost a lot, cause businesses to relocate, etc. But we have to start talking about this now before we need to make decisions about it. It's a very interesting topic.
I think we tend to overestimate the capacity of people to retrain for new jobs. Sure, in the example you brought up (auto to renewable energy), people moved from a manual labor job to a manual labor job, but what happens when we run out of manual labor jobs? What happens when we automate white-collar work? Will accountants, for instance, need to retrain to become programmers? Will manual laborers? I think that we'll eventually reach a point where we've made entire types of jobs obsolete, and thus made people who are only capable of being competitive in that field obsolete as well. Transitional labor, I think, is a deferment of the problem, not a solution.
Really a lot of white collar jobs are already automated. The example you use with Accounting is mostly capable of being run by much fewer people than in the past. As an example, many businesses used to keep a payroll department as a separate functional department within accounting. Now, if a businesses even handles their own payroll instead of outsourcing it to ADP or a similar company, they have many fewer people doing it. And ADP is able to handle with their small staff what could only be handled by a dozen people for a single company before. So you could argue that we're already well into the phase of automating white collar jobs as well.
As johu and oecolampadius have pointed out, there are some issues with the benefits of the situation, but this is more of a cost analysis. Our upper limit for a Mincome would be the GDP of the United States. Currently that would be around $53,042. Of course that doesn't make sense as it would require the redistribution of all income a company had received in the interest of the common good. When in actuality it would prevent the company from investing in future goods and technologies and cause the future decline of the GDP and the Mincome in kind. But there's the upper limit of what is possible. Then there's a lower limit, which is nominally 0. But in practicality there is already a lot of government assistance going on. Including all the income transfers which government engages in to promote the social welfare, we have a total welfare spending bill of 2.3 trillion dollars. Divided by the population of the United States, welfare spending per capita is $7,210. So at the current levels, our practical lower limit is around $7,210. And our upper limit is $53,042. Neither of these are very practical since the poverty level is $11,770 for a single person. The problem with using the poverty level is that it doesn't include non-cash support in its evaluaton of poverty, which is another way of saying we don't count welfare in terms of making the poverty line 'work'. You have to add in SNAP and other welfare resources to make that poverty level livable. If we were to add the entire welfare per capita amount to $11,770 we would get $18,980 per person. That level is probably a little higher than the Mincome for a poverty level because it counts income transfers that we wouldn't normally consider 'welfare' like Pell grants. But without going into the numbers in more detail, which you could and I just don't want to, that's the best number I am going to come up with. For a single person, the current Mincome would be around $18,980 which would be an increase in per capita welfare spending of $11,770. To generate this amount we would have to increase government revenue by 3.76 trillion dollars bringing the total welfare spending to $6.06 trillion. This would increase welfare spending to 36.1% of GDP. That number is also on the high side, since most welfare recipients don't live alone. The average US family size is 2.54 people and has been relatively declining only very slowly for years. This means there are around 126,000,000 families in the US. Because the poverty level changes by $4,160 after the first family member, we can estimate the smaller number. This is a change in poverty level at a rate of .26 of the original amount per additional person. Extrapolating this rate to our Mincome of $18,980, the additional person adds $4,934. Thus the Mincome would cost closer to ($18,980)(1)(126,000,000) + ($4,934)(1.54)(126,000,000). That comes out to 3.35 trillion. This would increase government welfare spending by 1.05 trillion to a total 19.97% of GDP which would be an increase of 6.27%. That's less than I thought it would be.
Social Security isn't funded by income tax, so it's difficult to count it in total spending, especially as it relates to EITC. I think this is a mistake, because we're heavily taxing low earners (as there's no exemption for paying SS tax), then giving them an credit on their income taxes. I would prefer to do away with payroll taxes altogether, as I think they're pernicious. We can argue all day about the merits of a flat vs. a progressive tax system, but I think most rational people would agree that a regressive tax (and SS is very regressive) is unhealthy for the economy. What's worse is that they hide half of it by making your employer pay on your behalf. In my informal anecdotal evidence, it seems to me that most people don't know how much they're paying (and they don't know that there's a cap after which income isn't taxed). To me, before we can even talk about what to do with income taxes, this should be addressed.
I don't think it shouldn't be counted in government spending. It's basically funded in the same way that other government programs are funded; an income tax. To me the only real difference is that they take it before it's 'your' income, and then make it so it can't be used for other purposes instead of introduced into the general fund. However it is extremely regressive and most people don't understand it as a tax. I just wrote a paper in which a worker is given their 7.65% payroll deduction back, invests 50% in a conservative fund with a 6% return over the life of it. Not only does this beat the payments of social security by $230 a month, but it only requires 10% of the original business contribution. That drastically increases the income of the worker (it's equivalent to getting a 3.8% raise), better provides for their retirement, creates jobs, etc. All by giving people back their money. The only problem is that some people are going to just spend the money instead of saving for retirement.
I'm leery of privatizing SS for the reason you state: you can't force people to save the money. So in the end, even if the return is better for people who take advantage, taxpayers will still end up footing the bill for people who don't use the money efficiently. My point is that income is income, so if we're going to have a government program funded by income tax, then it should be the same for all income for all people. Who cares if the benefit is capped? Why should that cap the contribution? I don't get to pick and choose which programs I support with my taxes. Anyway, as I understand it, SS was designed as a social safety net, not a retirement savings. If it's a safety net, then we all have to pay into the system. If it's a retirement savings, we should have a choice. Right now, we have a hybrid that ends up just being unfair and expensive. I would like to see it vastly reworked (actually I would like to see our whole tax system reworked, but that's another topic, I suppose).
That's a good way to think about it in terms of safety net vs. retirement savings. My main problem with social security is that as people age and there are fewer workers for each beneficiary taxes will have to be raised to sustain it and benefits will be delayed to a later age. Essentially we will be paying more and retiring later. This will not stop until people stop living longer or the birth rate in the US kicks back up. Neither are going to happen so we're stuck with it.
The real problem is that it never should have reached the point where a smaller workforce makes the system incredibly unstable. Unfortunately for decades Congress saw it a a bottomless fund and kept borrowing from it, so now all that is in the SS fund is a bunch if IOUs from long dead assholes. One way to deal with it, that will probably never fly, is actually only paying out to retirees that are below the poverty line without it.