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Universal Basic Income and Progressive Consumption Taxes

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  • Juan Carlos Conesa
  • Bo Li
  • Qian Li

Abstract

We provide a comprehensive quantitative evaluation of Universal Basic Income (UBI), evaluating different degrees of generosity and the fiscal alternatives to finance it. Replacing existing targeted transfers with a UBI of equal fiscal cost results in widespred welfare losses. In contrast, a combination of generous UBI (at least $15,000 per household) with a switch to progressive consumption taxation could be beneficial from the perspective of ex-ante expected welfare in the long run. However, the quantitative analysis of the transitional dynamics reveals non-trivial transitional costs for most current households.

Suggested Citation

  • Juan Carlos Conesa & Bo Li & Qian Li, 2020. "Universal Basic Income and Progressive Consumption Taxes," Department of Economics Working Papers 20-01, Stony Brook University, Department of Economics.
    • Handle: RePEc:nys:sunysb:20-01
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    Cited by:

    1. Conesa, Juan Carlos & Li, Bo & Li, Qian, 2020. "Welfare implications of switching to consumption taxation," Journal of Economic Dynamics and Control, Elsevier, vol. 120(C).
    2. Universidad Nacional de Mar del Plata, 2022. "Emprendimientos 4.0: desafíos actuales y futuros. Resultados de investigación y prácticas docentes," Nülan. Deposited Documents 3933, Universidad Nacional de Mar del Plata, Facultad de Ciencias Económicas y Sociales, Centro de Documentación.
    3. Wakolbinger, Florian & Dreer, Elisabeth & Schneider, Friedrich & Neumärker, Bernhard, 2020. "Konsumsteuer finanziertes BGE in Deutschland," FRIBIS Discussion Paper Series 01-2020, University of Freiburg, Freiburg Institute for Basic Income Studies (FRIBIS).
    4. da Costa, Carlos E. & Santos, Marcelo R., 2023. "Progressive consumption taxes," Journal of Public Economics, Elsevier, vol. 220(C).
    5. Łuczywek, Beata & Lippold, Kye & Betts, Julian & Berman, Eli, 2024. "Boosting Take-Up of the Expanded Child Tax Credit through School-Based Outreach," University of California at San Diego, Economics Working Paper Series qt1dh1n103, Department of Economics, UC San Diego.
    6. Suzuki, Tomoya, 2021. "Basic income, wealth inequality and welfare: A proposed case in New Zealand," Economic Analysis and Policy, Elsevier, vol. 72(C), pages 118-128.

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