16 Dec 2015

So what are the advantages of a Basic Income?

My students had to write a briefing (less than 700 words) on Basic Income (BI), i.e., an income of $X per month, as a means of replacing welfare, providing security and enhancing life.

I invite you to read some of the best briefings. Feel free to email the authors or comment here.Here, FYI, are my notes [pdf] on the assignment and "correct" answers, and here's a CATO post on BI with a link to a nice whitepaper by Michael Tanner (he's too quick to dismiss BI because he assume it has to come in at the poverty line).

Bottom Line: There are a lot of advantages to helping people help themselves. BI can work, especially if it starts off at a lower (tax-affordable) level.


  1. Milton Friedman advocated something similar to a BI. He called it the negative income tax. Here's a nice article published as a sort of obit. As usual, if MF was on board, I'm inclined to buy in as well.


    Another nice thing about BI, negative income tax or similar schemes is that you can leave that income untaxed while taxing earned income at a flat rate. That achieves the same outcome as a progressive tax without the complexity.

    1. BI is easier than a neg income tax (EITC in the US is modeled on it) b/c there's no information required for means testing. Awkward that "the rich" get paid too, but if' they're just 1% of the population than easier to pay them from 0.1% higher taxes.

      Aside: I'd tax property more than income, b/c it's easier to find and value -- and it's held by the rich (maybe a reason it's not often taxed!)

  2. You're right about BI being simpler and the only thing that makes me question the virtue of the negative income tax over BI is the opinion of Milton Friedman. I know that's a logical fallacy but it's Milton F***ing Friedman so I'm going to stand by it. Either approach is preferable to the kludge of payouts, coupons, tax credits, minimum wage, and subsidies that we have now.

    I agree on property (wealth) taxes vs. income tax but we're on an income tax right now and the political will to get off of it just doesn't exist. Coming full circle, that same kind of logic is likely what led MF to advocate negative income tax over BI.

    1. I think he went there b/c of a desire to reward effort (income) as well as means test (low income). BI weakens incentives. The question is whether that's actually a bad thing (e.g., mother taking care of kids).


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