The simple, but unpleasant, arithmetic of a simple UBI

A nice straightforward explanation of the unaffordability of a universal basic income is even when pitch at the low annual rate. Few advocates of a universal basic income even make these basic calculations. The Morgan Foundation in New Zealand went to the length of calculating whether people currently receiving each type of welfare benefit were worse or better off. They were a notable exception.

John Quiggin

In discussions about Universal Basic Income, lots of people are attracted by the idea of making things as simple as possible. Sadly, that doesn’t work well once you take a closer look.

The simplest UBI would pay every Australian an amount equal to the single age pension, which is just above the poverty line. That’s $20000/yr per person or $500 billion for a population of 25 million, about equal to total Federal government expenditure. That would replace about $180 billion in existing social welfare spending. That leaves $320 billion, approximately equal to total revenue from personal and income taxes.

To fill the gap, we would need either to double income tax revenue, scrap all other public spending, or some mixture of the two. Assuming that’s not feasible, we need to start complicating things. The most obvious step is to treat children differently, for example by giving them half the benefits…

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