A UBI would require progressive taxes to be redistributive

Estimating overall distributive outcomes would need to take into account the effect of abolishing other cash benefits and the impact of UBI on real wages. Most proposals assume that a UBI would replace existing minimum income schemes. In relative terms, the removal of these schemes would reduce incomes at the bottom and middle of the distribution more than top incomes. For overall distributive effects of UBI to remain progressive, financing of the UBI would need to correct for this by putting higher burdens on rich households. Modelling by the OECD (2017) has shown that while the richest income groups would tend to be the greatest net losers from a UBI, there are some scenarios in which low to middle income groups would be the greatest net losers due to the removal of existing cash benefits. Furthermore, distributional outcomes of a UBI would depend on effects on real wages. In response to a UBI, employers might decrease wages (Zamora, 2017) because they know that people's living costs are now partly covered by the basic income. In addition, producers might increase prices in response to higher taxes on capital or profits, thus passing costs on to consumers and reducing real incomes. Impacts on wages might differ by sector. For instance, wages of unpopular, low-pay jobs may increase if workers can reduce their labour supply for such jobs due to the greater financial security they would have with the UBI (Calnitsky, 2018). Conversely, wages in higher paid sectors might fall, for instance if a UBI would lead to higher labour supply here due to the impacts of progressive income taxation. Such shifts in wages may have additional redistributive effects.