Universal Basic Income, Taxes, and the Poor

Nora Lustig and Valentina Pabon ()
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Valentina Pabon: Yale University

No 2205, Working Papers from Tulane University, Department of Economics

Abstract: A Universal Basic Income (UBI) is often seen as an attractive policy option to replace existing targeted transfer and subsidy programs. However, in a budget-neutral switch to a UBI there is a trade-off between the generosity of the universal transfer, and hence its poverty impact, and the implied increase in tax burden. We summarize our results for fourteen low- and middle-income countries. We find that, with the exception of Russia, a poverty reducing, budget-neutral UBI would entail a significant increase in the net tax burden of top deciles. The efficiency cost and political resistance for such a policy would likely be too high.

Keywords: universal basic income; microsimulation; inequality; poverty; tax incidence (search for similar items in EconPapers)
JEL-codes: D31 D63 H22 I32 I38 (search for similar items in EconPapers)
Date: 2022-09
New Economics Papers: this item is included in nep-cis, nep-cmp, nep-dev, nep-lam, nep-pbe and nep-pub
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http://repec.tulane.edu/RePEc/pdf/tul2205.pdf First Version, September 2022 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:tul:wpaper:2205

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