What’s the Right Amount of UBI?
Universal Basic Income (UBI) has the potential to revolutionize our society. But a key question remains: how much should every household receive? Here, I propose a model that combines universality with financial responsibility.
Universal Support at the Poverty Line:
Every nation has at least one poverty line (most have several). Choose a poverty line that is an inflation adjusted, national amount determined as the minimum amount of money needed for food, clothing, shelter and transportation. This ensures everyone can afford essential needs, lifting them to a minimum standard of living.
DO NOT SELECT A NUMBER FOR NATIONAL UBI!!!
I know it is hard to resist nice round numbers like $1,000 a month or Fight for $15. Don’t do it! You will struggle to get that number increased and it will eventually fall well below necessary levels. Instead, choose conceptual value like the poverty line that is already in use, and already adjusted each year for inflation.
Selecting the poverty line as the UBI amount comes with several major advantages.
- Achieve concrete goal of ending absolute poverty
- Inflation adjusted
- Avoids long delays in updating amount
- Low enough to avoid impacting wages and job market
- High enough to drastically reduce and/or eliminate homelessness and hunger
- Leaves plenty of incentive for people to work for an improved lifestyle
- Adjusts for household size
- Utilizes existing tax codes as most countries determine eligibility for current social welfare programs using the poverty line
In the push for UBI, the debate inevitably becomes about numbers. Yes, a well-designed UBI can save tax payers trillions of dollars over the next decade. Particularly when UBI at the poverty line is combined with a flat-tax phase out. However the societal benefits to UBI at the poverty line far outweigh the financial returns.
Reduced Inequality: A universal approach fosters social cohesion and reduces stigma associated with poverty programs.
Foundation for Growth: This provides a solid base upon which everyone can build a better life through work and entrepreneurship.
Work Incentive: The phase-out structure maintains a financial incentive to work. Once the flat tax equals the UBI benefit, additional income is not subject to this extra tax.
Fiscal Responsibility: The flat tax generates revenue to fund the universal UBI, ensuring long-term sustainability.
Reduced Administrative Costs: Shifting from complex, means-tested programs to a universal system and flat tax can significantly reduce administrative overhead.
Improved Health Outcomes: Studies show poverty reduction leads to better health, potentially lowering healthcare costs.
Improved Overall Well-being: Reduced poverty equates to less stress, hunger, and homelessness, leading to a healthier and happier population.
Greater Educational Attainment: Financial security allows families to prioritize education, creating a more skilled workforce.
Increased Civic Engagement: Individuals freed from the constant struggle for basic needs can actively participate in their communities.
And did I mention, not having poverty anymore?!?!
Selecting an arbitrary dollar amount is a wasted opportunity. Link UBI to absolute poverty measures and the impact becomes far simpler to measure. Estimate the economic benefit of eradicating poverty in your country, and that’s your benefit. There’s tons of literature on the economic costs of poverty to every society. The investment needed is the dependent upon your selected phase out amount.
Please do let me know your thoughts and ideas for how to best implement a national UBI below.
You can learn more by reading End Poverty. Make Trillions. on Spotify or Amazon (For those in need, the text is available in its entirety for free through Google Books Preview)
