“A VAT is currently used by 160 out of 193 countries, including every developed nation except the US, because it is a more efficient way of generating revenue with no loopholes . Big companies and rich people are excellent at moving things around to avoid taxes... [and] funnel hundreds of billions in earnings overseas. A VAT makes it impossible for them to benefit from the American people and infrastructure without paying their fair share.” — yang2020.com
70% GDP is consumer spending and 7% (($4,049 on food at home + $707 on personal care) / ($74,664 - $6,863)) of consumer spending is on staples which will be VAT-exempt. The product with GDP is estimated consumer dollars spent on VAT-exempt purchases.
EU countries on average collect 9.7% GDP in VAT. Yang has been quoted as saying proposed VAT rate will be half that of European levels. Assume this also means our VAT receipts as % of GDP is half of EU countries. 9.7% / 2 = 4.8%. See VAT % GDP sheet for further analysis.
"Their analysis indicates that starting with a $50 per ton carbon tax and increasing it by 5 percent per year would lead to a 63 percent reduction in total U.S. greenhouse gas emissions by 2050." Starting at $50 per ton and at 5% annual increase, it will take approximately 15 years to reach Yang's proposed final tax of $100 per ton. For simplicity's sake, let us also assume carbon reduction as a function of carbon tax is linear. MIT study statement was made in 2018, so approximate a 30 year timeline in the study to 2050. 15 years is halfway between 30 years, so let us conclude half of the estimated 63% carbon reduction will be achieved after 15 years.
projected tons produced per year by U.S. at $100/ton tax
Per policy proposal, Yang suggests ending lower (15-20%) capital gains tax rate. It is not entirely clear if Yang proposes all gains to be taxed at income tax rates. We chose to adopt Tax Policy Center's Option 15 (p.27) to "Replace lower rates on long-term capital gains and qualified dividends with an exclusion of 40 percent" for our calculations. Their Dynamic 10-year revenue forecast estimates $309B over 10 years, of which we took the annual average.
Cost Analysis Footnotes
Model based primarily on 2017 statistics due to availability of public data.
Freedom Dividend Math
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Andrew Yang is running for President as a Democrat in 2020 to implement the Freedom Dividend. This form of UBI that he is proposing for the United States is a set of guaranteed payments of $1,000 per month, or $12,000 per year, to all U.S. citizens over the age of 18.