The idea of Universal Basic Income (UBI) has been around for a long time, and has recently gained more mainstream traction. Every adult citizen is granted a certain, equal amount of money by the government each month, taken from tax dollars. Ideally, at least to the Libertarian, this UBI should replace all ineffective government-run welfare programmes. It is a fair, non-discriminatory system, reduces the size of the government, and gets money into the hands that need them the most. It is an elegant solution to a complicated problem.

However, I do think something imporant is lost if we do not place the discussion within the larger context of our current tax system.

The roots of UBI: Georgism

Georgism might sound like a casual made-up philosophy, like Dudeism. But it is in fact a set of economic policies proposed by the American economist Henry George. The idea of UBI can probably be traced farther back than him and independent of his school of thought. In fact, his ideas weren't really that original to him either. He set out to answer the question "why is there so much poverty despite all the economic and technological progress?" and published his findings in Progress and Poverty in 1879.

The short answer? Taxes. Not the very concept of taxation, but how it is applied. He started with the philosophical tenet that we rightfully own everything we earn. If a factory worker earns money and buys a fish, he now rightfully owns the fish as if he himself had fished it. Therefore, putting a tax on what rightfully belongs to us, mainly income tax and value-added taxes, without our consent, is theft. And it harms the poor. The factory worker is entitled to 100% of his income - the fruit of his labour - but only gets to keep 90%, or 80%, 0r 70% of it.

Secondly, he made some observations about land. No man has made the land, so no man is entitled to any piece of land. Or rather: everyone's claim to land is equal, as everyone put just as much work into making the land. That is: no work, for the land was already there. In addition, land is a scarce resource. True, we can make more land habitable, but land as in the surface area of the Earth is limited. Therefore, by claiming exclusive rights to use a piece of land (i.e. ownership), you are depriving everyone else of the same opportunity to use that land.

Enter: the Land Value Tax, or LVT. When owning a piece of land, you should compensate everyone else by paying everyone else a small sum representing the economic value they lost by losing access to the land. As this is highly impractical to do yourself, the government can collect this value instead as a land value tax.

"The perfect tax"

The Land Value Tax has been described as "the perfect tax". Income tax, sales tax, value-added tax, these take away money which rightfully belongs to the individual. But with the land value tax, you give back to the community what you deprive the community of. Thus it is the only just tax. Keep in mind that this is not the same as property tax - the buildings on the land are not taxes, because they rightfully belong to the owner. What is taxed, is the value of the economic opportunity the land itself offers.

The value of the land will depend on the community surrounding it. A plot in New York City will probably be more valuable than a similarly sized plot in the middle of Nebraska. And two similarly sized plots in the same place would be taxed equally, regardless of how many buildings stand on that plot. This promotes efficient land use.

Many people don't agree with the philosophy here, and others think this is simply Socialism in disguise. That concern will be addressed in a minute. But back to UBI:

The Citizen's Dividend and UBI

Where does UBI fit in? George further proposed that the Land Value Tax collected by the government, should be paid back to all citizens equally as a "citizen's dividend". This is a form of UBI. By people owning land, you lose access to land you rightfully should have access to. But by receiving a citizen's dividend, you are compensated for that loss. This way, we can still justify private ownership of land. In fact, private land ownership is vital for the system to work properly.

So the Georgist programme has three steps. (1) Abolish all taxes. (2) Introduce a full Land Value Tax. (3) Redistribute that tax back to the citizens as a form of UBI, or give this money back to the citizens indirectly through politically agreed-upon welfare or infrastructure programmes.

The genius of George is that this system places a hard cap on taxation. The government can only collect the Land Value Tax, and "they ain't making any more land." This forces the government to become effective. If they run out of money, they simply cannot conjure more by increasing taxes. (They could print more fiat, but that's a whole different issue!)

Under this system, people not owning land wouldn't pay any taxes and might actually receive money from the government! At first, Georgism was criticised for giving the government too much money. Interestingly, critics of Georgism today argue that the government could never collect enough taxes to keep chugging along, through the LVT alone. This alone shows how much the government has increased over the last 140 years.

Why now might not be the right time for Georgism

People often criticise Georgism for simply being "land-based Socialism", where the government owns the land and leases it to private citizens. I hope I have shown that this is, conceptually, not the case. The government isn't the owner, but simply a collector and distributor of money based on an agreed-upon social contract, founded on Left-Libertarian principles. And with emerging crypto technology, it might even be possible to decentralise the process and remove the need for government totally.

However, with today's corrupt governments and their Socialist tendencies, I think Georgism might be a dangerous idea. In the wrong hands, Georgism will be abused to abolish private land ownership altogether - the very right Georgism seeks to philosophically justify in the first place.

I would love to see a full Georgist society, where the LVT is the only tax and the distribution of the UBI is the government's only job. But I simply don't trust the governments of the world enough for this to be possible. And neither should you.

I will support a UBI if it is ever introduced. But I think beginning with the UBI is tackling the issue from the wrong end. I think it would be better to begin with abolishing income tax and as many other taxes as possible, before introducing UBI together with the LVT. That is to say: the UBI is most effective in eradicating poverty and bringing about a just society if we don't pay taxes, save the LVT.