How much does UBI cost? | Basic Income News (original) (raw)

I just completed some simple, “back-of-the-envelope” estimates the net cost of a UBI set at about the official poverty line: 12,000peradultand12,000 per adult and 12,000peradultand6,000 per child with a 50% “marginal tax rate.” They are in a paper entitled, “the Cost of Basic Income: Back-of-the-Envelope Calculations.” It’s currently under peer-review at an academic journal and available in un-reviewed form on my website.

Here are some of its most important findings:

• The net cost—the real cost—of a roughly poverty-level UBI is 539billionperyear,lessthan16539 billion per year, less than 16% of its often-mentioned but not-very-meaningful gross cost (539billionperyear,lessthan164.15 trillion), less than 25% of the cost of current U.S. entitlement spending, less than 15% of overall federal spending, and about 2.95% of Gross Domestic Product (GDP)
• This $539 billion UBI would drop the official poverty rate from 13.5% to 0%, lifting 43.1 million people (including about 14.5 million children) out of poverty.
• This UBI will be a net financial benefit to most families with incomes up to $55,000, making it an effective wage subsidy (or tax cut) for tens of millions of working families.
• The average net beneficiary of this UBI is a family of about two people making about 27,000peryear.Thefamily’snetbenefitfromtheUBIwouldbenearly27,000 per year. The family’s net benefit from the UBI would be nearly 27,000peryear.Thefamily’snetbenefitfromtheUBIwouldbenearly9,000 raising their income to almost $36,000.
• Lowering the marginal tax rate to 35% would spread the benefits of the UBI program to more of the middle class while increasing the cost to $901 billion.
• The cost of a UBI of 20,000peradultand20,000 per adult and 20,000peradultand10,000 per child is $1.816 trillion per year, less than 85% of total entitlement spending, less than 45% of total federal spending, and less than 10% of GDP.

-Karl Widerquist, Begun in New Orleans, completed at Cru Coffee House, Beaufort, North Carolina, May 21, 2017