A UBI would require mass taxation and funding – it’s unsustainable

There are over 300 million Americans today. Suppose UBI provided everyone with $10,000 a year. That would cost more than $3 trillion a year — and $30 trillion to $40 trillion over ten years.

This single-year figure equals more than three-fourths of the entire yearly federal budget — and double the entire budget outside Social Security, Medicare, defense, and interest payments. It’s also equal to close to 100 percent of all tax revenue the federal government collects.

Or, consider UBI that gives everyone $5,000 a year. That would provide income equal to about two-fifths of the poverty line for an individual (which is a projected $12,700 in 2016) and less than the poverty line for a family of four ($24,800). But it would cost as much as the entire federal budget outside Social Security, Medicare, defense, and interest payments.

Some UBI proponents respond that policymakers could make the UBI payments taxable. But the savings from doing so would be relatively modest, because the vast bulk of Americans either owe no federal income tax or are in the 10% or 15% tax brackets. For example, if you gave all 328 million Americans a $10,000 UBI and the cost was $3.28 trillion a year (about $33 trillion over ten years) before taxes, then making the UBI payments taxable would reduce that cost only to something like $2.5 trillion or $2.75 trillion (or $25 trillion to $27.5 trillion over ten years).

Paying For It

Where would the money to finance such a large expenditure come from? That it would come mainly or entirely from new taxes isn’t plausible. We’ll already need substantial new revenues in the coming decades to help keep Social Security and Medicare solvent and avoid large benefit cuts in them. We’ll need further tax increases to help repair a crumbling infrastructure that will otherwise impede economic growth. And if we want to create more opportunity and reduce racial and other barriers and inequities, we’ll also need to raise new revenues to invest more in areas like pre-school education, child care, college affordability, and revitalizing segregated inner-city communities.

A UBI that’s financed primarily by tax increases would require the American people to accept a level of taxation that vastly exceeds anything in U.S. history. It’s hard to imagine that such a UBI would advance very far, especially given the tax increases we’ll already need for Social Security, Medicare, infrastructure, and other needs.