![]() ![]() ![]() The NIT, popularized by Milton Friedman, is an extension of the progressive tax system into negative territory. And one of the first things it clarifies is how every working UBI proposal is really, at heart, a Negative Income Tax (NIT) proposal in disguise. Indeed, adding in the tax system is necessary for conceptual clarity. Īny definition of "Basic Income" that speaks only of transfer payments and ignores the tax system is a stupid definition. On Twitter, the economist Nick Rowe was a bit more blunt. You might as well call taxes negative transfers, so to propose a lump sum transfer like UBI without an explicit discussion of how it’s financed only tells half the story. ![]() Taxes and transfers are two sides of the same coin. Namely, universal transfer programs like a Basic Income cannot be analyzed outside of the tax system that pays for it. The reason is a constant source of frustration for economists trying to assess transfer programs of all types. Switzerland just rejected a UBI proposal in a landslide referendum, largely because of confusion over how it would be funded.īut this doesn’t have to be the case. Writing in the New York Times, Eduardo Porter points out that, even if cut in half to $5,000, a UBI would still cost “as much as the entire federal budget except for Social Security, Medicare, defense and interest payments.”Ĭost estimates like this are damning to the UBI cause, and hurt its potential of ever being enacted. That implies an over $3 trillion dollar price tag. The representative proposal is $10,000 per person per year. The only problem is that, as it’s currently being discussed, UBI comes across as expensive. Proponents argue a Basic Income will raise workers’ bargaining power, reduce poverty, and provide subsistence after robots take our jobs, all while condensing the current potpourri of welfare programs down to a single check in the mail.įantastic. As Matt Yglesias recently described it, it’s essentially a plan to make social security universal. The idea of Universal Basic Income (UBI) is for the government to transfer a lump sum to every individual or household, regardless of how much they earn on their own. ![]()
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