Taiwan’s Historic Leap Towards Universal Basic Income

In a groundbreaking move, Taiwan recently announced a one-time universal cash payment of $6,000 New Taiwan Dollars (NTD) for every citizen. This historic move is a first for the country and is heralded as a monumental step toward embracing Universal Basic Income (UBI). But what does this mean for the Taiwanese, and could it set a precedent for other countries to follow? Let's delve into the details.

Outflow of money via corporate taxes. The Taiwanese government reported a budget surplus of $450 billion NTD, much of which came from soaring corporate taxes. This unexpected outflow of money from the economy created a financial cushion, from which the government decided to inject NTD 140 billion for direct payments to residents, while the rest will be used to improve labor and health insurance systems and support local governments.

Victory for UBI Advocates. UBI Taiwan, an organization committed to promoting unconditional basic income, hailed this development as a monumental win for the Taiwanese. According to Tyler Prochazka, the founder of UBI Taiwan, "This is a huge victory for the basic income movement." UBI Taiwan has been vocal about the nation's stagnant wages and escalating housing costs. Through universal cash payments, they believe that many Taiwanese will be better equipped to pursue educational and career opportunities.

The Economic Context: Growth vs Real Wages. Although Taiwan experienced robust economic growth in recent years, the fruits of this growth have been unequally distributed. It turned out that real wage growth was nearly non-existent in 2022 due to inflation. In light of this, the universal cash payment could serve as a small but significant way to redistribute Taiwan's economic success more equitably.

Political Consensus and Implementation. What is truly remarkable is the bipartisan support for this cash payment initiative. The plan is straightforward and universally applicable, minimizing administrative costs and time. This is in contrast to previous cash assistance schemes, which were often targeted and came with cumbersome restrictions. The fact that the blanket variant of the universal benefit for all won over the variant of targeted benefits for the most needy is a significant step toward the implementation of the basic income concept in the future.

Criticisms and Future Considerations. While the announcement has been mostly well-received, there are critics who express concerns about inflation. It's essential to note, however, that this is surplus tax revenue—meaning it is not newly minted money where inflationary pressure would have to be considered. Looking ahead UBI Taiwan has proposed the idea of establishing a Sovereign Wealth Fund, similar to Alaska's Permanent Fund, as a sustainable way to share the nation's economic success with its citizens.

The Bigger Picture: Basic Income and Mental Health. Beyond the immediate economic benefits, research has consistently shown that basic income can positively impact mental health and overall societal trust. By alleviating financial stress, a universal basic income could serve as a pillar for a more resilient social welfare system.

Conclusion. Taiwan's one-time universal cash payment may be a "first small step," but it represents a monumental leap in considering how the benefits of economic growth can be shared by all. With bipartisan support and a growing recognition of the merits of UBI, Taiwan could be setting the stage for a more equitable future, contributing to the global acceptance of basic income as a path to sustainable distribution of economic wealth.

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